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Financial Freedom is something that every individual desires, as once they achieve it, they can spend the rest of life worry-free. Typically, people who achieve their financial freedom, they can announce themselves as a retired person even if they have not reached 60 years in age.

Experts say, achieving financial freedom is possible for every individual! Only they need to assure that amount they have saved, invested and the corpus they have accumulated is enough to take care of all their future financial needs and they do not have to work further.

Here, the question is how to create or accumulate such a big corpus that will help you achieve financial freedom?

Experts say, the early start and prudent allocation to growth assets can help an individual create a sizable amount, that will take care of all his future financial needs such as retirement, child education, child marriage, and other financial goals.

Let us know how an individual can achieve Financial Freedom!

The Right Retirement Planning…..

People plan their retirement, either early or late, but still, many of them fail to achieve the financial freedom they want, because of the lack of essential factors like inflation in their calculations.

Inflation is something that is increasing continuously, and you might wonder but it retains the capacity to eat up all your investment in the long term if not planned well.

For example, suppose today you calculated around Rs 50,000 as a monthly expense you would require for a comfortable living after you retire. However, you forget to include inflation in your calculation. Even if we include a moderate 5% inflation rate, OMG, your monthly expenses will gear up to Rs 2.16 lakh after 30 years from now!

So, just note it down, never forget to include inflation while calculating you're after retirement expenses.

Early Saving, Early Investing…….

The early you start saving, as soon you must start investing! If you invest this way, you invest for the longer term, and the effect of compounding works well in the longer term.

Due to several reasons like low salary, or blissful desires like a holiday, or any other, people at a young age find it difficult saving a good part from their salary and invest the same.

But believe me, even if you save an amount as small as Rs 5,000 per month from the age of 25 and grow this savings at a fixed rate of 12% every year, you will be able to save a hefty amount of Rs 3.5 crore at the time of your retirement. Isn’t it magical? Well, it is, and where the magic is Compound Interest!

However, if you miss planning for retirement at an early stage and start saving at a later age, say from the age of 40, you cannot create this big amount even if you save a bigger amount monthly.

#note: the return shown in the figure are calculated returns and not the actual. Actual returns may vary with volatility in the market.  

Keep Increasing Your Monthly Investments…..

Starting investing early is a key solution to creating a big corpus, however, some other factors must be taken care of along with it. Like, make sure that you have your monthly investing amount increasing annually.

This is important because your responsibilities increase after one stage, which eventually increases your expenses and financial goals. For instance, at the age of 25, your monthly income is Rs 40,000 and you start saving Rs 5,000 per month.

After you marry and have kids, your expenses increase. Along with increases financial goals. No doubt your salary is also increasing. So why not increase your monthly investment amount?

Experts say investors must increase their monthly investment by 10% every year. If you follow this strategy by the time you turn 60, you can create big corpus than the projected one, which will eventually help you secure all your financial responsibilities.

#note: the return shown in the figure are calculated returns and not the actual. Actual returns may vary with volatility in the market.  

Invest In The Right Asset Class…….

There are several financial security to invest your money in, but in the view of wealth creation in the long-term, only a few are taken as best, like Equity mutual funds and the stock market.

If we look at other options like FD’s, PPF, RD’s, all these generate an annual return between 5-8%, while equities and mutual funds, can generate an annualized return of 12%.

Equities or equity mutual funds, as an asset class, have the potential to give the highest returns in the long term. According to investment experts, one can expect an annualized return of 12% or more from this asset class if you are investing for the longer term.

Some Other Necessary Points To Consider…….

Creating a big corpus is much beneficial in attaining financial freedom however it must be assisted with some other important financial preparation like:

• Take sufficient life cover for yourself and comprehensive health insurance cover for the entire family.
• The term insurance cover should be at least 8-10 times your annual income.
• Take separate cover for liabilities like housing loans, or other big debts, like education loans.

Typically planning your finances this way can help you save big for your financial goals, and help you achieve Financial Freedom that too before you Retire!

Keep reading our article and stay updated with the latest news about Mutual Funds!

For any kind of query, you can contact us at Shri Ashutosh Securities Pvt Ltd., we are here to help you in any way possible.

Happy Investing!

(Mutual Fund investments are subject to market risk Illustrations are for example only, there is no guarantee of returns. Past performance is not an indicator/guarantee to future returns).