Why you should aim for financial independence, even if you don't plan to retire early
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Financial independence implies not having to worry about money anymore, but rather focus on what you want to do, in your free time and your passions.
However, being financi...
In order to attain financial independence, consider some of the below steps:
In order to feel less stressed about your expenses, start doing the research on how to achieve financial independence now.
It will save you a lot of frustration that might emerge due to wo...
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...is the process which provides you a framework for achieving your life goals in a systematic and planned way by avoiding shocks and surprises.
It’s a statement wherein you can jot down your assets and liabilities.
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The popular 50/30/20 rule states that you should reserve 50 percent of your budget for essentials like rent and food, 30 percent for discretionary spending, and 20 percent for savings.
Assuming you're in your 20s or 30s and can earn an average investment return of five percent a year, you'll need to save about 20 percent of your income so you can reach financial independence when you're older.
Financial independence means that you can maintain your chosen lifestyle entirely from the interest of your investments and dividends.
The four percent rule states that you could withdraw four percent of your principal balance every year and live on this indefinitely. That means you need to save 25 times your annual expenses to become financially independent.
The four percent rule is not perfect. There is no risk-free investment that yields that much today. Sudden inflation could also cause a problem.
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Early retirement is not defined as when you stop working forever, but as having the freedom and flexibility that saving up enough money can give you if you want to leave a job....
A good early retirement strategy is built on maximizing three aspects: Income, expenses, and savings.
To build your early retirement strategy, you need to determine your retire early or financial independence (FI) number. It is the amount of money you need for work to become optional. Be aware that the number will (and should) change as you change, and your desired lifestyle evolves.
Based on a series of papers known as the Trinity Studies, you need to save 25-30 times your expected annual expenses to have enough money to last you for the rest of your life.
This multiple is based on the percentage of your investment growth that you would be able to withdraw per year. A safe early retirement withdrawal percentage is between 3%-4%.
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