Financial Independance - who is truly wealthy?
People with high income may have rich life style.
Luxury cars other such high value material possessions, costly dinners, exotic vactions and such.
But are they wealthy?
Robert Kiyosaki suggests that wealthy are those who never ever have to work in a job to maintain the lifestyle of their choice.
The passive income streams from the assets owned by the truly wealthy, greatly exceed their needs and the surplus is ready to be invested in more such assets.
You are wealthy if you have financial freedom.
You are wealthy if you never ever have the compulsion to trade your time to maintain the lifestyle of your choice.
The assets must keep increasing such that the passive income generated by them also grows more than enough to offset inflation.
If you are wealthy, your time is completely yours. You spend it exactly the way you want, and at a location you want to be at.
You have geographic freedom and temporal freedom.
That is being wealthy!!
So, how is financial freedom achieved?
1. Live within your means, never get into debt.
2. Pay yourself first. Set aside atleast 10% of your income for investment.
3.Keep adding assets that put money into your pocket regularly.
4. When the sum of passive cash flows from all your assets greatly exceeds your current expenditure and leaves sufficient surplus to keep further adding more such assets, then you are ready.
5. Make sure that you have a ready corpus of to cover atleast 36 months of expenses in liquid form that is not tied to market cycles. Rest can be in Markets.
This is how financial independence is achieved.
Those who start early in this path can retire early too.
This is the path to popular acronym 'FI/RE'.
Financial Independance and Retire Early.
Best Wishes!!
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