Retire Early with Financial Independence

Reading Time: 6 minutes

Retiring early !!! Financial Freedom by 35. Sounds like a dream, isn’t it? Can this really be achieved? Can we start with Zero and still achieve it? If yes, how? Read on…

Most of us love to achieve Financial Independence early in life. We dream of enjoying the best holidays, wearing the best clothes, owning cars, gadgets, farmhouses, bungalows, etc. in this lifetime. But, how many of us really work towards achieving them? How many of us save to enjoy all our dreams? How many of us have a plan in place? Think.

There are many success stories in the Indian stock market. Stories of rags to riches. Stories of 0 – 1000 Cr, 0 – 10000 Crore, etc. These stories are not the stories of the majority of investors. The people who made such returns were in the markets and that was their bread and butter.

The majority of small investors always play a zero-sum game since they don’t know how to play it the right way. Win a few times. Lose a few times. The losers outweigh the winners most of the time. Then, again playing to retrieve the loss. This is a normal story. Most investors are in the dream world and try to make quick money to achieve Financial Independence.

When we try to play aimlessly in the market, we end up wasting our time and missing out on the real wealth the market can create for us.

So, what are the steps for Financial Independence? Can the Markets really give us the independence we are looking for? Can we really Retire from our 7 AM – 11 PM work-life (includes travel nowadays)? Let’s see.

Step 1 – Begin Early: The Habit of Saving

Most of us begin our careers when we are 22 years old. This is the time when our responsibilities are restricted to close family – ourselves and our parents. If our close family doesn’t depend on us financially or is not having any major commitments, it’s definitely a huge advantage. We get good time to focus on our learning curve in the job and work really hard to stand out.

The early years are the ones when the habit of saving needs to be inculcated with understanding. This is also the only time when we can save a good part of our salary and spend the rest.

Save more and spend less should be the mantra in the early years of career. The more we can save, the speed towards Financial Independence exponentially increases.

Step 2 – Knowing our Expenses

Financial Independence is achieved when we have enough wealth to cover all our monthly expenses. So, knowing our monthly expenses is the key.

I have been maintaining an excel sheet of monthly expenses for the last 10 years and it has helped me enormously to understand where the outflow really is.

This record also helps us to retrospect and understand where we can cut costs and spend more. If we can document exactly to the rupee, it will help us enormously. If we know our expenses, we will know how much we can really save. Sometimes, a small cost-cutting here and there would give more money to invest in our future.

Step 3 – Instant vs Delayed Gratification

The biggest mistake we do in our early years is spending on unnecessary wants.

Please remember – every rupee unspent on an unnecessary desire, is a rupee saved. In our early years, we need to ensure that we make each rupee count. Whenever you spend, always ask – Do I really need this now? Or can it wait? Let us delay our gratification sometimes. It is hard, but very much possible and highly rewarding in the longer run.

Step 4 – No Early Commitments

The biggest mistake anyone can ever make in their early years is taking a heavy debt. Any early major commitment is detrimental to Financial Independence. The early years must be used to create wealth and not to get locked for 15 – 20 years in EMI Debt.

Settling for a good 2nd hand car, a decent house on rent closer to work, avoiding regular visits to fancy restaurants, cooking at home, using public transports etc. would give us peace of mind and good health as well, especially in early years of career.

If we lock ourselves in a property worth 40 – 50 Lakhs early on with a heavy monthly commitment, we will never be able to achieve Financial Independence in our prime.

Step 5 – Avoiding the Ego Trap

The biggest trap is the ego trap. Many times we take decisions to please our ego and impress others. We always try to buy things, which we don’t really need, with the money which we do not have, to please someone who really doesn’t care.

Buying a car to show your position in office instead of using Ola/Uber, buying an expensive house just to have a high position in family and friend circle, regularly spending/treating in big hotels etc to impress others, visiting racecourses and gambling dens to show off are just a few examples of cases where we are denying ourselves Financial Independence.

Step 6 – Taking the Right Medical & Term Insurance

Taking a basic Term Insurance early on helps because the premium is less when you are 22 years old. As we delay this, our premium will increase. Having a good Medical Insurance early on also helps.

Try not to get stuck in Insurance plans which give lots of unnecessary features. Insurance is basically to help us in medical needs and in case a major catastrophe happens. It is not an investment, rather protection. It should not be treated as an instrument that gives us returns.

When we follow the above steps, we will have a spare amount every month to invest for our Financial Independence.

Now, where do we invest this money?

Well, investing in well-managed Mutual Funds or Compounders in Equity is the best way to create wealth over the long term.

For instance, Amit and Prachi are two close friends with big dreams and have just finished their graduation at 22 years. Both of them decide to save a part of their monthly salary for their future right from the age of 22. They are in a decent job which pays them around Rs 15000 per month initially.

Amit has some family commitments. Hence, his monthly allocation is lesser than Prachi who allocates a major part of the salary to her savings. In their workplace, they meet Ramlal who works as office staff. They explain to him the importance of saving and he also starts saving from the age of 22 years.

Here is how they move towards Financial Independence with the Magic Power of Compounding !!!

As you can see, small drops added early makes a mighty ocean.

In 15 years’ time, Ramlal will accumulate around 25 to 60 Lakhs. Amit will end up with 70 Lakhs to 1.42 Cr while Prachi with 1 – 2 Cr of liquid cash. And I have not included dividends in this calculation which are tax-free.

The beauty of investing in Equity or Mutual Funds is that with a click of a mouse button, all the money reaches your account within two working days. It is not a virtual asset like a house and a depreciating asset like a car. It is REAL MONEY !!!

With a little bit of early discipline, we can all become Financially Independent by the time we are 40. The earlier we begin, the faster we can achieve Financial Independence 🙂

Also Read on FinMedium:  Quantum Dynamic Bond Fund - A credit risk free debt fund

Cover Image Source: Brunch and Budget


Disclaimer: The opinions expressed in this publication are those of the authors. They do not purport to reflect the opinions or views of the FinMedium or its members. The presentation of material therein does not imply the expression of any opinion whatsoever on the part of the FinMedium concerning the legal status of any company, country, area, or territory or of its authorities. For more info. please read our ToU & Privacy Policy here. If you have any concerns regarding this post, please reach out to us at

Every Wednesday and Saturday, we send Info-Graphic and FinMedium Weekly Digest newsletters to our 25000+ Subscribers.

Join Them Now!

Fundamental Investor

Fundamental Investor

Retired at the age of 33, FI is a proud owner of quality Indian Businesses. He is an Educator, a Motivational Speaker and a strong supporter of Home-Schooling.
Please Share Now :)

Leave a Reply

Your email address will not be published. Required fields are marked *