5 actions that can help you achieve your financial freedom
Today, as we gather with friends and family, or just enjoy a day off, let us not forget the millions of people who have fought valiantly for our country since he declared his independence 245 years ago. On Remembrance Day, we honor over 1.2 million people who have made the ultimate sacrifice throughout history to preserve the freedoms we have today, including freedom of speech, the right to vote and the right to chart our own financial course.
For more than a century, the stock market has offered John and Jane Q. The public the opportunity to buy stakes in large companies and build their wealth over time. While stocks have not always been the best performing asset year after year, they have circled around other investment vehicles, such as housing, bonds and gold.
If you are looking to forge your path to financial independence, the following five top actions should help you reach your goal.
Don’t let market capitalization be a deterrent. Large companies have large market caps precisely because they perform at a higher level than their competition. Even with a market cap of $ 1.65 trillion, Amazon.com (NASDAQ: AMZN) could easily double in value over the next two years.
Most people are probably familiar with Amazon’s dominant online marketplace. I mean, who hasn’t bought something in the past year or so from Amazon? According to an April report from eMarketer, Amazon now controls 40.4% of all online sales in the United States, the world’s largest economy in terms of gross domestic product. This online success has encouraged more than 200 million people to sign up for a Prime membership, which only strengthens these buyers’ loyalty to Amazon’s ecosystem of products and services.
Equally important is Amazon’s cloud infrastructure platform, Amazon Web Services (AWS). Last year, as the U.S. economy went through the worst economic downturn in decades, AWS increased sales by 30% and now has annual revenue of $ 54 billion. Since AWS’s margins are significantly higher than those of Amazon’s other operating segments, AWS will be key to the company’s explosive cash flow growth in the years to come.
Another transformative stock that can help you achieve financial freedom over time is a tech-driven real estate company. Redfin (NASDAQ: RDFN). While it has clearly benefited from historically low mortgage rates, and these rates will not stay at record highs forever, Redfin’s combination of cost savings and innovation will make the company a major player in the market. real estate for decades to come.
One of the biggest differences between Redfin and traditional real estate companies is in the listing fees. Traditional real estate agents charge around 3% of a home’s sale value when representing a client. Redfin charges 1% or 1.5%, depending on the buyer’s or seller’s buy and sell activity with Redfin. A difference of up to 2 percentage points in listing fees may not seem like much, but when home prices skyrocket due to low mortgage rates, the savings Redfin can offer buyers and consumers alike. salespeople are mind blowing. Not surprisingly, Redfin’s share of existing home sales in the United States nearly tripled, from 0.44% in 2015 to 1.14% in the first quarter of 2021.
Redfin also offers a level of customization unmatched in traditional real estate companies. For example, the RedfinNow service is offered in some cities and involves the business buying homes for cash without the hassle of sightseeing and price haggling. Meanwhile, Redfin Concierge helps homeowners make arrangements and upgrades that will help them get the best price for their home.
Healthcare stocks are known for their innovation, with the biggest growth trend over the next decade being telemedicine. This is why the linchpin of telehealth Teladoc Health (NYSE: TDOC) can play a big role in helping you achieve financial independence.
Similar to Redfin and Amazon, the pandemic has created almost perfect conditions for Teladoc to thrive. With high-risk and potentially infected people stuck in their homes, doctors have turned to virtual visits to track patients. Teladoc managed nearly 10.6 million virtual tours in 2020 after just 4.14 million the previous year.
But what people probably forget is how transformative telehealth can be. It is much more convenient for patients to stay at home and see their doctor, and it is arguably easier for doctors to contact high-risk patients. The ease of communication should help improve patient outcomes, which health insurers will appreciate. The fact that virtual tours are billed at a cheaper rate than office tours doesn’t hurt either.
The icing on the cake for Teladoc is its purchase of applied health signals company Livongo Health last year. Livongo is known to use artificial intelligence to send advice and guidance to subscribers with chronic illnesses to help them lead healthier lives. It was a profitable business when it was bought by Teladoc and its number of subscribers skyrocketed.
The payment processor is another legendary company that can help you charge with financial freedom. MasterCard (NYSE: MA). I’ll remind you once again that just because a company has a large market capitalization does not mean that it cannot deliver big returns over the long term.
One of the things that makes Mastercard such a great business is that it is cyclical. This means that it thrives when the US and global economy is expanding and struggles when it goes through an economic recession or contraction. The secret is that recessions often only last a few quarters, while booms last several, a lot years.
Additionally, Mastercard has eschewed loans in favor of payment processing. While it forgoes interest income and earning potential during boom times, the move also means Mastercard is unaffected by credit arrears during recessions. Thus, it is able to rebound from downturns much faster than other financial stocks because it does not have to set aside capital for potential losses.
And did I mention that a large part of the world still does their shopping with cash? There is a decades-long track for Mastercard to expand its infrastructure to underbanked regions of the world.
A fifth and final awesome headline that will put you on the path to financial independence is the social media giant Facebook (NASDAQ: FB).
When the curtain closed in the first quarter, Facebook claimed 3.45 billion unique visitors per month to its owned social platforms. About 2.85 billion people visited his eponymous site each month, and an additional 600 million went to Instagram and WhatsApp. Looked at another way, that’s 44% of the entire global population that interacts with a Facebook asset every month – and you wonder why advertisers are chipping away at getting their post on the platform?
Here’s something else to consider: Of the $ 84.2 billion in ad revenue generated in 2020, almost all of it came from Facebook and Instagram. Neither WhatsApp nor Facebook Messenger has yet been significantly monetized. If the business grows 20% more without running on all cylinders, imagine what it will be capable of when those assets are monetized.
Facebook also has many opportunities to go beyond ads. Sales of its Oculus virtual reality devices are booming and the company could generate significant growth through online / digital payments in the future.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.