The above quote is by Warren Buffett on the subject of financial freedom. Some of the many benefits of financial freedom are control over your time, the option to choose to work or not, less stress, and a greater sense of security. If you want to attain financial freedom and its many benefits you must find a way to make money while you sleep, in other words, create an income stream. The easiest way to do that is to create a portfolio income stream, which doesn't require a large investment of capital or time. This is why the vast majority of people who have attained financial freedom, Warren Buffett included, attained it this way. There are essentially three paths to choose from to create a portfolio income stream, but only one of these paths leads to true financial freedom for life and is obtainable by anyone.
The first and most common path is to buy stocks in your working years and sell them in your retirement years. The problem with this path is you don't know how long you're going to live, so you could run out of stocks to sell, and outlive your portfolio. The second path is to collect interest from fixed-income assets (usually bonds and annuities). The problem with this path is these assets generally have very low rates of return, so they require a large amount of principal to generate enough income to be financially free. The third path is dividend stocks. If you're on this path you don't have to sell assets to generate income, and if you invest in high-earning, high-yield dividend stocks you don't need a large amount of principal to become financially free.
Albert Einstein famously said “Compound interest is the eighth wonder of the world. He who understands it earns it; he who doesn’t pays it.” Like compound interest, compounding dividends harnesses the power of the snowball effect that occurs when your dividends generate even more dividends. The day you start taking advantage of the snowball effect is the day you begin your journey to financial freedom. There are hundreds of websites telling you how to attain financial freedom. In general, they tell you to pay off debt and live below your means in order to save money for retirement, which is sound advice. What they don't tell you is how to invest that money, which is the most important step on the path to financial freedom. If you want to take that step, continue to the next tab and read about INCOME INVESTING ADVANTAGES.