3 Investment Strategies for Financial Independence!

 

Dreaming of a life free from financial worries? Achieving financial independence, where you can pursue dreams and secure your family’s future, often feels out of reach amidst debts and expenses. But fear not. This guide offers actionable steps to help you break free from financial constraints and embrace true freedom.

Financial freedom is the power that allows you to live life on your terms, fulfilling dreams for yourself and your family without the pressures of a job, with the freedom to choose any path. But this dream remains out of reach for many. Growing debt, and unwanted expenses, there are many paths that lead us away from financial freedom.

But worry not. If you are about to take your first step towards financial independence, we are here to support you.

Let’s dive in.

What is Financial Independence?

The definition of financial independence can vary for everyone. For some, it could mean a debt-free life. For others, it could be having a stable job that meets their daily needs. However, we want to tell you that financial independence is more than that.

Financial independence refers to a situation where you have enough resources to handle any situation that comes your way. Having enough resources means having enough money to cover all your expenses throughout your life.

How to Achieve Financial Independence?

Financial independence involves comfortably living without relying on a salary to meet your obligations, including sufficient income, savings, or investments. Achieving this goal is a long-term process that can be attained with proper guidance. It encourages personal growth, facing challenges, and providing the freedom to live securely and enjoy life.

So here are some steps for you to achieve financial independence:

Define Your Goals

Think deeply about what financial freedom means to you. What does your freedom look like? How much money do you need in your bank account and by when?

Remember, the clearer your goals, the quicker you can achieve them:

Let’s start with these three questions:

1- What does your ideal life look like?

2- How much money should be in your bank account to live it?

3- What’s the deadline for accumulating that amount?

Now, subtract your current age from that date, and set small milestones at regular intervals. Write down everything clearly, from the amount to be accumulated and by when.

These goals will serve as your inspiration, and you will see how they are helping you achieve financial independence.

Calculate Necessary Funds

Prepare a list of all your current expenses. Estimate future expenses. Include everything from EMI for the next 10 years, medicine, clothing bills, etc.

According to the FIRE rule, you should aim to save at least 25 times your annual expenses. Don’t forget to include inflation (the inflation rate) at 7% per year.

Set Saving Goals

After calculating the necessary funds for financial independence, you need to save that amount. Now you have to save for it. Make a plan where you save a certain amount directly.

You can also consider cutting some expenses. For example, if you have joined a gym but rarely go, consider working out at home instead.

Invest

Remember, there is no shortcut to earning money quickly. To achieve financial independence, you need to earn, save, and invest. Also, turn that invested money into a source of income. All these efforts will bring you closer to your goal of financial independence.

Diversify your investments according to your time frame and risk tolerance. Also, if you don’t understand finances well, you can seek advice from a financial advisor or start spending time understanding the financial market gradually with investments.

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