Thread by @TheStockBox1

Starting your journey to financial independence ?

Here’s how one should start ? 🎬

#Thread for beginners 🧵

Expecting your feedback 📣

The aim behind writing this thread is to remind you that one day you are going to retire & after that day, you’ll stop receiving your monthly salary.

Now imagine living a month without monthly salary. You may have to live more than 20 years like that. Looks scary, isn't it ?

Financial planning is more of a necessity than a choice. Now let me help you prepare for those days when active sources of income will cease to exist.

We see around many of us work through their entire life & still not being able to save enough for their post retirement life.

On an average, people live at least 20 plus years post their retirement. Surviving 20 years without monthly paycheck is not fun.

Given a choice we all would want to avoid such a fate when at the end of our working career, we are dependent on our children to take care of us.

We also notice some people do not love their job however they are forced to continue working as they can't pursue their passion due to their financial obligations or they don’t have any other option.

Many working professionals want to retire early and live a life of their dreams; a life where they can wake up and do what they want such as traveling, playing, singing or may be just sleeping all day. In fact, we all want to attain such state of freedom but don't know how ?

Let me tell you something, It is very much possible. It is possible to become financially free when your job is no longer a compulsion for you. A day when you don't need to say “Yes” to each and every reasonable or unreasonable demands of your manager.

A day when you can confidently say NO to things that do not support your ideologies and ethics. A day when you don't have to live pay check to pay check. A day when you are free to follow your passion or live the life the way you always wanted.

Now the big question is HOW?

I read a wonderful quote on internet the other day by @naval, it reads " You are not going to get rich renting out your time, You must own equity - a piece of business - to gain your financial freedom."

Now the issue with above statement is that not everyone understands business and investing. We can't take risk putting our hard earned money for something which is considered risky and on top of that we have no idea about that.

Basically there are two ways how we can start investing:

1. Learn to become an expert investor:
2. Let an expert manage it all for you

Let’s see which one suits us

1.Learn to become an expert investor:

The first way is to get inside this field and like any other profession, learn about it. Start with the basics of it and gradually move to intermediate and expertise state.

When you are fully confident and ready to invest,start investing.

2. Have an expert manage your money:

Now this one sounds simple, isn't it ? There are so many ways, you can engage an expert to manage your funds. The most common method is to do it through a Mutual funds. A mutual fund is nothing but an easier way to invest in stock market.

In Mutual funds, you invest in stock market through an expert called the mutual fund manager.

Mostly there are many asset management companies in India and around the world who provide this service. In India we have AMC companies such as Axis. ICICI and HDFC AMC etc.

They will manage your money however, will charge a small fee for this service.

If you want something even different, you can engage an expert PMS company which provides a portfolio management service. They’ll manage your money however, will charge a small fee for this service.

Now let's understand how we can achieve our retirement early goal through either of the above two investing methods. Let's assume we are "know nothing novice investors" and choose to go with option 2 above i.e. Mutual fund route.

Assuming you are 30 years old today and want to start investing. You read this thread, get motivated and enroll for a monthly SIP with a trusted mutual fund house. You are a middle level manager and are earning about
₹50K ($700) per month.

You start with a SIP (systematic investment plan) with ₹ 10K ($137) per month and increase this every year by 10%.

Lets see how much wealth can be generated by the time you turn 50 or 60. We assume you earn 15% CAGR, When you turn 50 years, you would have accumulated ₹2.61 Cr

And by the time you turn 60 years, you would have accumulated ₹13.19 Crores. Even with inflation & Tax adjusted amount would be pretty huge.

In my opinion the above should be more than enough to give you feeling of financial freedom and peace of mind.

There is another important thing which is paramount for your financial freedom. You should try and control the debt and avoid risks. Avoid inexcusable debt at any cost

The journey to financial independence is not easy & requires some very big behavioral changes.

Support from spouse is most import prerequisite along with few lifestyle changes such as living below your means, delaying gratification, practicing a frugal life etc.

Good luck 🍀

Courtesy and special thanks to @PranjalKamra @finologyselect as I used their step-up calculator from their website finology.in. Also Pranjal is spreading wonderful financial literacy in our country. Thanks again!

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