WHAT IS FINANCIAL FREEDOM REALLY?

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People have a different answers to what being financially free means to them. Some would say they know have become financially free once they have achieved Rs 1 crore. Others would say getting out of the debt would make them completely financially independent. However, true financial freedom isn’t about getting rid of all your debt or reaching a particular amount or the freedom to pursue what they like. It is the amount of time an individual can survive without them or their family member doing any physical work and yet managing to maintain your current standard of living.

Let’s assume your monthly expenses in rupees thirty thousand and you have around Rs 9 lacs in your bank account, then you would be able to survive 30 months (9 lacs divided by 30 thousand) without hampering your current lifestyle. But, if your monthly expenses are 30,000 and you have investments that yield you Rs 30,000 each month, then you are in true sense financially free.

But, how do I attain financial freedom, you must be wondering? The process is not that easy and requires vigilant financial planning and implementation, especially if you are starting from scratch. There are three main rules to be followed to attain financial freedom

Rule No.1 is to start saving as early as possible, probably from the first pay-cheque.

Rule No.2 is to be regular and consistent with your mutual fund investments.

Rule No.3 is to stay invested for a long duration, i.e., at least ten years or probably more. Remember, the longer the investment tenure, the higher the capital creation potential, mainly thanks to the power of compounding.

The difficult task is to achieve financial freedom way before retirement, say around the age fifty or so. However, there are quite a few hindrances. For instance, if you desire to retire by 50 instead of the common 60, you get only 30 years to save than 40. Further, you need a relatively more substantial corpus to survive if you retire at 60. You’d have to have extra corpus to survive the extra ten years. How do you go about the same?

Mutual fund investments can one attain financial freedom through much simpler and effortless investment tool called SIP (Systematic Investment Plan). SIP investment helps an investor to benefit from the power of compounding in the long run apart from benefitting them with the potential of significant returns that can be earned by equity funds. In fact, you can consider SIP as a Good EMI as it is not an instalment but an investment to achieve your financial objectives, and ultimately achieve financial freedom!

Now that you have understood the importance of investing to achieve financial freedom, you might consider different types of investment options offered to an investor. Among the different types of investments offered to you, choose the one that aligns with your financial portfolio and helps you reach your goals sooner. What are you waiting for? Invest in mutual funds today, preferably via SIP mode to attain financial freedom. Happy investing!