Financial Freedom: How much is enough?

What is solid biz. Dabur has been around for more than 100 years, so has been Nestle. ITC, HUL, Britannia has been there for few decades and still going strong.

Price is what you and value is what you get. Thereā€™s nothing more important than price you pay for an asset regardless of its quality.

Take the case of Hindustan Unilever. There were two ten year periods where HUL returned 0% at the end of that period (apart from dividends). Itā€™s easy to destroy wealth by investing in bluechips when they are grossly overvalued.
The two periods in question are 94-95 to 2004-05 and 2000 to 2010.

Yes I am cherry picking the two worst times to have bought it but planning is all about stress testing your assumptions.
Say you bought it on 16-10-98 at 168 and Sold at 250 on 15-09-08. Thatā€™s 45% over 10 years or CAGR of 3.45%

If you talk to older generations who had plenty of money in bluechips, a lot of them will say of what fools they were holding onto these shares while they could have bought land which went 50x or 100x. The opportunity cost of buying equity early was huge. Right now its just being talked about in terms of TINA.

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If one has 100 crore and one crore of expenses. Why he needs to invest sit on 85 crore roll down debt fund ie reduce every year by 1 crore so even if has a life expectancy of 70 he will still have sufficient. 8% growth meets inflation hoping 8 is a pivotal point. Any thing above 8 is return and as seen mutual fund have generated average 15 to 30 % cagr if invested from 2009 onwards. The expectation now is a falling range of 8 to 15 % in mutual fund. Individual investor who understands the vagaries of market should be able to hit 20% at least. Now how much is needed to sustain. It depends on individualā€™s life demands I would put at least a million dollar as that is every ones aspiration figure as a bench mark to start your journey of stock investment as a career

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Once we reach the milestone as multi millionaire, we want to reach the next goal post. Our expense has nothing to do with the desire to become a billionaire! Of course, I can increase my expense by buying a jet instead of flying commerical. When our net-worth grows, our expense keeps rising too.

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The problem in this argument is suppose your expenses are X per year. Then if one even believes that commercial RE can give one 10% yield (post tax and post variety of other expenses needed to maintain the Commericial RE can be even lower), then asset allocation principal would suggest that it would be wrong to put all the money in commercial RE. You got to have a proper mix of Residential (where you stay or you earn rental from), equities (even if you have slighest desire to raise your lifestyle you need more than inflation which can possibly only be gained from equities), debt (what if you urgently need money, you will be foolish to sell stocks if the market was low at that time and you will not be able to sell RE too soon as it is illiquid) and Gold/currency (to avoid any black swan risks).

Given that apart from commercial RE, none of the assets earn more than 2% and FDs or safe bonds will give you just 5-6%, you need a much higher multiple of expenses, say 30-40 times atleast to call yourself financially free.

And then comes the more difficult task of remaining financially free once one is already there. To not increase expenses a lot, to not succumb to constant salespersons at your door trying to (mis) sell you a variety of financial products, to not take a large bet somewhere which leads to fall in fortunes, and most importantly mainitaining the physical and mental well being of your family.

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one million is the target when you should think of investment as full time career. If you already have multi million than u are not looking for financial freedom you are chasing loftier dreams.