Financial Freedom: How much is enough?

I believe it MAY be divided in three parts.

One, which gives annuity like dividend, interest, rent, pension etc
Two, which is reasonably liquid like, equity, equity n debt mf, gold etc
Three, to an extent illiquid like… Real estate etc

Type 1 should be planned to gv living expenses in laddered form taking care of family life cycle and inflation / ageing etc

Type 2, may take care of any unexpected or unplanned expenses or need including usage of money for larger good of family/ society.

Use of Same should be planned in a structured way to align with our expected life duration and any good usage to the extent possible when v r alive. Rest to be taken care by WILL.

Type 3, in my personal opinion should be limited to living house n any thing strongly connected with Passion.

Above r my understanding and I am sure, same will vary person to person based on

Dear @us121 , I do not know if this is the best way to manage funds but I personally agree with you verbatim as I have done the same with my portfolio as well.

There are in fact 4 types of allocations I have done with different objectives and allocations (approximate based on current values):

Type 1 - Objective: Security/Taxes / Allocation: 9%

  • Invested in life and health insurance (7%)
  • PPF account (2%)
  • Infrastructure bonds (very small portion)

Born and brought up in a middle-class family, I could never fully let go of the conservative values in managing finances. Hence, I decided to keep a small allocation of funds which can help me plan for extreme unforeseen contingencies. I understand insurance is more protection than investment but it helps in giving confidence for more risky ventures, hence in a way I call it an investment.

Type 2 - Objective: Living expenses / Allocation 14%

  • Moderate-risk FDs (14%)
  • Small rental income (from Real estate investments)

The interest from FDs suffices for my household expenses. Also, this helps me enjoy freedom to let go of my job, do things for motivations other than money, invest time in more beautiful things in life related to arts and spiritualism.

Type 3 - Objective: Wealth creation / Allocation 43%

  • Equity (24%)
  • MFs (19%)

I have a liking for investing in stocks. Over the years, as I have found more time to invest in analyzing stocks, the mix has been constantly shifting from MFs to direct equities.

Type 4 - Objective: For very long term requirements and for use of my descendants / Allocation 34%

  • Real Estate (34%) (Does not include house in which I live)

I believe real estate is a limited and scarce resource in a country where the population density is so high. The space enough for me today, might not be enough for my future needs and for the needs of my children. When I had invested, the allocation was small but, state capital where I reside developed faster than I expected, giving me very good price appreciation. However, I am in no mood at the moment to cash out and would like the assets to be there for my children who are not yet born. :wink:

Initial years of slogging is important to build a corpus if someone is starting to build a portfolio. Financial freedom was always the objective in my slogging years. Now I feel I am free but I may be wrong. Hence I would like to invite contrary views to help me identify loop holes, if any, to fine tune my allocations further.


Not much activity on this good thread?

One thing I learnt and realised from you, is first, you should not venture into full time investing if you are not passionate about it and willing to work 18 - 20 hrs a day without feeling it, second, financial freedom is just a mirage which people keep on chasing. If you keep your needs under control and not let it spiral to anything and everything then your basic requirements do not require much of financial savings (surely not Rs 5cr - 10cr I hear frequently). Infact I find Indians in general have a habit of hoarding money than Westerners or even South asian counterparts. On the other side, I have even seen people work just day-to-day and much more happy than going for a full time job (they are capable of being full time employed but still prefer working from one day to the other) but of course there is a vast difference in culture and mindset of people from different regions.


I wont be talking numbers here, but if an indication helps here it is. I have taken out 2-3% of capital for trading this year with a target of 100% return on capital to support living expenses, I almost close (96.52% today), still 5 months to go. When I was advised for a 100% return by mentor I just brushed it aside. But when you a build a process by pushing yourself, stretching yourself you are going to outperform yourself. We just want to outperform our requirements, our benchmark. Why should even we bother benchmark set by others. Unlike sport here many wins, not one.

But out performing your benchmark is like riding a tiger, as the base grew challenges become gut wrenching. A strong circle of competence and confidence will be required to make those strides. And as you know circle of competence is focused subject (eat, sleep and dream on same subject). Hopefully we all will be able to do it.


Thanks mate for providing these links. The blog of ’ Early Retirement Extreme’ was a breeze to read and replicated much of my thought process. My personal journey to financial freedom was very much similar to this. The ultimate capitalist is someone who combines the investment quadrant and the business ownership quadrant. Ever since I have set out on my entrepreneurial journey a couple of years back, it has made me a better investor as you understand the thought process of businessmen/promoters much better and have got better at identifying the key ignorbales. Mr. Radhakishan Damani’s life is the ultimate template IMHO.

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Interesting. Instead of that, how about a combination of say dividend, interest, part selling of equity/debt?. The reason why ask is that, what is the guarantee that trade will be a successful one?.. I am not doubting your skills. But just trying to probe on this approach…

Just highlighted for the purpose of circle of competence. My holding is 100% in either equity or liquid funds. That includes obviously a long long term portfolio with dividend, partial debt selling when required.

Trading or speculation was added last year as additional block.

LTCG for debt is not zero.

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Need suggestion, I keep hearing there are smarter options to park fund which are not invested into equity. Currently I am using liquid mutual funds.

What would be other options considering I want liquidity of max 48 hours?
What are the risks carried with different instruments?

Thanks in advance for help.

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I am a young earner, this year moved to 30% tax bracket, to save tax, I am investing in ELSS under 80C, again, some part is getting deducted as EPF, again planning for NPS as additional 50K will be tax free.
So looks like everything is for long term! what will I get in short term?
I have couple of equity MF. those are also 7/8/10 years time line.
So do people get money in short term? apart from FD obviously!
Is the answer trading in equity and derivatives? which can give instant money, but comes with huge risk and needs lots of knowledge.
what is your view in this regard?

I believe you are a beginner investor and as you had mentioned making short term money via equities/commodity is a very risky job and definitely something to be left for the hard and seasoned investors.You can look at short term debt funds for ease of liquidity


Best option is to park in the Airtel Payments Bank, they offer 7.25% interest rate. But the maximum limit you can have is Rs.1Lakh. Since it is e-wallet based payment bank.

Another option is Digibank by DBS. In this Digibank account I think the limit is up to Rs.5Lakh and they offer 7% interest rate.

  • Both are saving accounts, no locking period or so.
  • Both Airtel and DBS gives you UPI transactions for faster transaction. For the conventional transactions such as NEFT/IMPS, Airtel charges you, whereas in Digibank its is free.

So IMHO, 7-7.25% interest rate on a savings account is a cracker deal. I chosen Airtel payments bank since my idle cash is not more than a lakh.

that I did not know. thanks for the info. I do not trust airtel at all, had issues with them, anyways will try DBS

where in India can you earn 10 per cent from rentals? maximum yield in
residential properties in Mumbai is 2.5 per cent. from this when you deduct
society maintenance charges, repairs, etc the yield is even lower.

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Generally 30x to 40x of your yearly exp. is the money which you need for financial freedom. There are lots of calculator out there. You can search and get the figure suitable for you.

Commercial real estate as in office space …

Buying FMCG companies(similar consistent high RoCE companies like paint, etc) have worked pretty well over long period of time. Likely to playout for atleast another decade.Check below snapshot: FMCG has beaten small caps despite their huge runup in recent times.


They were not dirt cheap but did trade at lower PE. But they have clear growth drivers in place and if you intend to hold for very long term you can look at buying at corrections. As Munger says in buy and hold for decades your return will converge to RoCE.

Also you can check Terry Smith’s interviews/blogs about investing in some of good FMCG companies.

Check this out for detailed analysis of FMCG stocks.

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A textbook answer- You are financially free, if your inflation adjusted passive income exceeds your expenses, including sufficient health insurance premium for your family.

But life is unpredictable. Your expenses can go up significantly, afterall the inflation you experience can be much different from index value. Your wealth can erode due to some unforeseen financial disaster.

The only thing you can count on, is the skills and meaningful relationships you acquire along the way. Your focus should be on building that personal intangible wealth, and your own health. That is the only thing which will help you convert unpredictability into opportunities, to get back up if you ever fall down.