A Roadmap to Financial Freedom

Financial freedom refers to a state where an individual has achieved a level of financial stability and independence that allows them to have control over their finances and live the life they desire without significant financial constraints. It means having enough wealth and resources to support one's desired lifestyle, meet financial goals, and have the freedom to make choices without being limited by financial considerations. Financial freedom is a goal many individuals strive for, and with proper planning and guidance from a financial planner, it can be within reach. In this blog, we will explore a case study that demonstrates how one can attain financial freedom and pave the way for a secure and prosperous future.

As a financial planner, let's analyze a case study of a client who is currently a 40 years old professional working as a software engineer, He has a desire to achieve financial freedom by the age of 55 years. His current household expense is ₹50,000 per month. The client has a goal of retiring at the age of 55 years, Inflation can erode the purchasing power of money over time, so it's important to account for potential increases in living costs when planning for retirement. Then what will be the Household expense after his retirement? Let's assume that the client wants to maintain his current standard of living and that his expenses will increase from ₹50,000 to ₹1,00,000 per month upon retirement. The client would need to accumulate approximately ₹2 crore to support their desired lifestyle in retirement, considering the specified increase in expenses and accounting for inflation.

After accumulating a retirement corpus, it is essential to make informed investment decisions that align with his financial goals and risk tolerance. How can one Make the Most of their Retirement Corpus? In the year 2000 the Fixed Instrument Coupon rate was 10.5%, now the rate is approx 7.5% which has decreased by 3% within 23 years. Then can we predict the coupon rate 15 years from now? If the coupon rate will be half of the current rate then how can one survive?

Retirement marks a significant transition in one's financial journey. During this phase, ensuring a regular cash flow becomes crucial to maintain a comfortable lifestyle and meet ongoing expenses. As a financial planner, I understand the importance of addressing the cash flow needs of retirees.  Generating a passive regular cash flow is a key objective for many investors seeking financial stability and independence. As a financial planner, I have witnessed the power of regular investing in helping individuals achieve their cash flow goals.

Here, We're sharing a Strategy for a fixed passive cash out flow after retirement which can be obtained by regular cash in flow before retirement. In this concept if The Client starts a regular cash inflow of 10000/- per month in a disciplined manner divided into two plans, 5000/- for next 12 years and 5000/- for next 15 years will enjoy the benefits of a monthly cash outflow of 10000/- after 12 years and 15000/- after 15 years for lifetime. He can accumulate 25000/- surely after his age of 55 Years. The 25% of his desired household expenses (1 Lakh) can be managed easily through this strategy. If the market goes down there will be no effect on the future return. The amount will remain the same. The concept is made in such a manner that it can sustain in all market conditions. Please check the timeline below.

If you aspire to attain financial freedom, consider consulting a qualified financial planner who can guide you on your journey toward a brighter financial future. Our expertise is crucial in helping clients make informed decisions about their post-retirement investments. Each client's situation is unique, so it is important to tailor the investment strategy to their specific needs, regularly review the portfolio, and adapt as necessary to ensure their post-retirement financial well-being.

Raja Bhattacharjee

This blog is purely for educational purposes and not to be treated as personal advice.