Fnancial freedom has lots of avatars and different meanings for different people. However, for a lot of people, it means retiring rich, whether they do it at an earlier stage or at the proper age of, say, 60 years or so.
In a recent panel discussion on ‘Financial Freedom: Retiring Rich’, a part of the investor education and awareness initiative of Aditya Birla Sun Life Mutual Fund in association with Outlook Money, experts discussed the nuances of financial freedom.
The panellists for the discussion were K.S. Rao, head of investor education and distribution development at Aditya Birla Sun Life Asset Management Company; Amit Trivedi, an author, speaker, blogger and trainer; Harsh Roongta, a personal finance and tax expert; and P.V. Subramanyam, a chartered accountant, trainer, educator and author. Here are some edited excerpts from the discussion:
Rao said although financial freedom would mean different things to different people, but the common denominator would be how you start your investing journey and work towards your goals.
“If people work for their goals and then accomplish them, fulfil their dreams and put in place some planning so that they can do what they love without bothering about money, they can achieve financial freedom,” said Rao.
According to Trivedi, financial freedom is the freedom to choose the life that people want to live. “In order to live a comfortable life in the society, you need money. So, you need to have enough money to be able to live the life of your choice,” he said.
In many cases this could be choosing the work that you like doing. “If you work for something you love, money will become a by-product. Hence, having financial freedom means you don’t have to be forced to work just to earn money,” added Trivedi.
One of the first steps in achieving financial freedom is to set proper goals, while also enjoying your life. Roongta said that most of the times when people think about goal-based investment planning, they assume that delayed gratification would be critical to it, but they should enjoy their present life along with planning for their future goals. “Enjoying the journey while having a secured future goal planning is what people should aim for,” said Roongta.
Giving further insight, Trivedi said people should be able to maintain their cost of living, which can be funded through a planned corpus. “In order to do that, you have to invest in an asset which has the potential to beat inflation in spite of the risk. Hence, people who want to achieve financial freedom cannot avoid equities. But in order to reduce the risk of equity investing, they should invest in a diversified basket of good quality stocks,” he said.
Subramanyam said that it was imperative to put efforts towards achieving this goal. “The question is how you look at life and how much do you desire to achieve financial freedom. Things like sacrifice, delayed gratification, others are not the questions. The question is how much effort you want to put in to achieve that goal,” he said.
He said people should also go a step ahead and plan what they are going to do after achieving financial freedom, whether it is finding a social circle or pursuing hobbies. They should also have a post-retirement plan, he said. “People should start their post retirement planning at least five to six years before they retire,” he added.
- An Investor education and Awareness initiative of Aditya Birla Sun Life Mutual Fund.
- All investors have to go through a one-time KYC (Know Your Customer) process. Investors to invest only with SEBI registered Mutual Funds. For further information on KYC, list of SEBI registered Mutual Funds and redressal of complaints including details about SEBI SCORES portal, visit link https://mutualfund.adityabirlacapital.com/investor-education/education/kyc-and-redressal for further details.
- Mutual Fund investments are subject to market risks, read all scheme related documents carefully.