Wealth Rate: The Thermometer of Financial Independence

Have you ever heard of the "Wealth Rate"? Anyone who has read a few works by Robert Kiyosaki, such as the famous "Rich Dad, Poor Dad," or "Retired young and rich," books that are very important in building the mindset and beginning the journey of most investors, must have heard. The Richness Rate, shown in some of Robert Kiyosaki's books, is a kind of financial independence 'gauge', which shows the relationship of passive income to a person's monthly expenses, the investor's first major goal being to make it grow consistently and make it higher than 1, at least. At the moment the rate reaches 1, it means that the investor is receiving in dividends, interest and income, the same as his monthly expenses, and in this way, it would be a passive income level capable of sustaining him at the moment. To calculate the Wealth Rate is simple and the formula is as follows: Wealth Rate = Passive Income / Total Expenses. In other words, monthly (or annual) passive income must be divided by monthly or annual expenses. Remember that it is passive income, not active income, that is, consider income from your assets, such as dividends, income from real estate funds, rents you receive, interest on equity, etc. To illustrate, imagine that an investor, young and single, has a passive income of R $ 300.00, as a result of his investments in stocks and real estate funds, and has monthly expenses of R $ 2,000.00. In this case, this investor's wealth ratio would be 0.15, which shows that he is still far from reaching 1, which is when he could only keep the proceeds at that moment. On the other hand, the young man of the hypothetical example finds himself in a better position than the great majority of the population, who has never seen his wealth rate come out of the 0, since we know that most people do not have passive income and do not invest. It is a fact that more than 99% of people depend solely on their active income or their pensions from the fragile INSS system, for example, and do not have passive income from investments. In my particular case, I, since entering the variable-income market, and also after reading "Rich Dad Poor Dad", important book for the beginning of my journey, there by my 18 years, I established as a long-term goal make my wealth ratio equal to 1, which is when my passive income would be at least equal to my monthly expenses. That is, we can say that by reaching 1, we are in the early stages of financial independence, but not yet in full financial independence. Why early stages? I say this because I understand that the ideal is not the investor just having enough to pay his expenses, his bills and his current standard of living, but rather have enough to pay his expenses, his cost of living and still reasonable) to invest, precisely to enable a constant increase of equity and income in the long term. Therefore, the ideal is that after the investor reaches level 1, his passive income continues to grow, and the investor does not necessarily stop working, until he reaches a rate of 2, 3 or even more, maybe even because our living costs tend to increase as well and we may even want to have a higher standard of living in the future. Another factor that should encourage an investor to continue raising their Wealth Rate is the fact that companies or FIIs may face reductions in their earnings, and thus the investor's income would also fall, and therefore continuing to reinvest dividends is essential to generating a safety margin. Is that you? Have you started focusing on growing your wealth rate? If not already, start as soon as possible, because without doubt, having focus and persistence, you will achieve your goals in the future.