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Financial Freedom:How to achieve it?

This year,in 2021,we observe the 75th year of Independence from foreign forces.Although,we have achieved freedom from our subjugators,there are various fronts where we are still lacking.One of the most striking is Finances.Financial Freedom is still a dream for most of the people in our society.

It is quite certain that money is not everything in life but it is definitely an important aspect in everybody's life.Money helps you fulfill all your material dreams and makes life a bit easier!It becomes easy for you to lead a life with dignity if you are financially sound.

Let's discuss some steps which can help us to to achieve financial freedom.

I)Set a goal:
We need to set a goal or benchmark at first.Without any specific aim,we just cannot do anything valuable.Fix your financial priorities.We need to have some clarity on what to achieve as it makes all the things a lot more easier for us to work upon it.Fix a time in which you want to become financially sound.Think of the things for which you will need money in the future.A clear destination in the mind helps us to decide and search for the path.

II)Beat the anonymous robber-Inflation:
Let us assume you earn 10000 rupees every month.All your expenses are covered and you are left with some money for savings.If your salary is constant,you will soon be feeling the heat in a few years.It would become difficult to manage your finances unless you double your work and get double the salary you are presently getting.Every year on average,the prices of commodities are rising by almost more than 6% compoundingly.Soon,you will be struggling.Hence,you need to make some investments which gives you more interest than the rate of inflation.You also need to take care that your hard-earned money is parked in proper asset class.Low-interest funds or Idle money indirectly means your money is losing its value.

III)Risk Management:
Though,it is advisable to invest in shares,bonds and REITs(Real Estate Investment Trust),it is also suggested you have a corpus with you which you can access easily.If you own shares,you can sell them but Indian Stock Markets follow T+2 rule which means it takes minimum of a 2 days to get the money in your demat account.Stock markets are also closed in the weekends which makes it difficult for small retail investors to get their money quickly.A corpus of around 10 times your monthly expenses can come to your rescue during times of crisis.

Moreover,do consider having some primary insurances which are necessary.A health insurance upto 8 lakhs and a term insurance upto 1 crore can definitely come as a huge respite to one's family during crisis.Just make sure you take these policies from a good agency.

IV)Debt-Free = Tension Free:
While sometimes one is forced to take debt,it is advisable to not to take debt.This is because only a debt-free individual is called as financially independent.Middle-Class folks just cannot buy a big object such as a flat or a car without a loan as income tax issues are still there in India.However,try to repay the loan or debt as soon as possible.Nobody wants extra pressure on their cashflows in the form of EMIs,right?

V)Automate your savings : Proper Investments:
Stocks and bonds involve a great amount of risks too.So,if you want returns in proper and sustainable manner,it is advisable to invest in SIPs and mutual funds.Shares are extremely volatile.SIPs help you to invest a small sum of money in a certain time frequency in a proper way.This helps to make your investments profitable.

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Disclaimer:
We are not certified financial experts but the claims made in the blog are totally true.We will not be responsible for any kind of financial problems based on reading this blog.Investment in securities(stocks)market are subject to market risks, read all the related documents carefully before investing.

This is the 7th blog in the finance series.

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