In reality, this desire of becoming financially independent can be achieved only with a proper plan in place. Financial freedom may mean different things to different people but essentially it is a state that is achieved when the person does not have to work anymore to fetch the daily needs required for existence. When your wealth takes care of all your financial needs for a lifetime, you can consider yourself to be in a state of financial freedom!
It is that stage of life when the household expenses for a lifetime, expenses on self and family members, and costs related to medical needs, outings, and entertainment, can be met without having to depend on a job or profession. As a salaried or a business person, when you do not have to depend on a regular source of active income, you can consider yourself to have achieved a state of financial freedom. What it means is that you would have accumulated enough wealth to meet your living expenses for a lifetime without having to be employed or dependent on others.
The idea is to create enough assets that could provide a stream of income to let the goals be met at different life stages. Let’s see what it takes to achieve financial freedom for oneself.
Start with an estimate of the retirement corpus that you wish to create. Take into account the number of years left to retire, life expectancy, post-retirement expenses, growth rate during the accumulation phase, the growth rate on corpus during retirement, and other key factors that will determine how much you need for financial freedom. Remember, all of these will be assumptions and the actuals may hugely vary in practice. Therefore, keep realistic and conservative assumptions before you venture out to carve your road to financial freedom.
This story is from the August 2022 edition of Investors India.
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This story is from the August 2022 edition of Investors India.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
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