Financial Freedom

What does term Financial Freedom means? 

Myth: If you have hundreds of crore rupees in your bank accounts then you are financially free.

Truth: If your monthly expense is Rs.10,000 and your monthly passive income is more than Rs.20,000 than you are financially free.

In simple words after or before your retirement if your passive income is more than twice of your expense then you have financial freedom.

Financial Freedom = Monthly Passive Income > = 2 * (Monthly Expense)

Now understand Passive Income

Passive income is the income for which you don’t have to work. Weather you work or NOT, this income will keep flowing into your bank accounts for the rest of your life.

 

Examples of Passive Income:

Interest income, Royalties, Rental income, Investment income, Stock dividend, Web properties etc.

Web properties are the best example of passive income. Web properties could be Blogs, Forums, Websites, Domain names etc.

If you can generate ample passive income before your 40s or early 50s then you can think of retiring early with financial freedom.

Also consider inflation before planning retirement because retiring financial free today in 2011 you may require 1 crore rupees and retiring financial free in 2031 you may require 4 crore rupees.