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What is financial independency? Or whendo we reach a comfort level where one can stop chasing after money
I know the wikipiedia definition of “financial independency”is when your assets bring in more money than your expense. So your stock/bonds, business, investment..needs to be more than your expense. Is this the only way of being financiallyindependent. What if you save money? Enoughmoney to survive without work for 1 year or 5 years. Would that be consideredtime to stop chasing money. How manyyears of living without income is considered financially independent
The definition varies. I personally view it as the point when you have accumulated enough money that you could live the rest of your life on what you've banked, and no longer HAVE to work. (Which isn't quite the same as the definition you quoted - assets bringing in more than expenses - as my definition allows the overall value of the assets to fall over time, just not all the way to zero while the person is alive.) So only having enough to to survive for 1-5 years wouldn't count, unless the person in question was terminally ill. Still, having that much money saved would give most people a great sense of relief, so it's not a trivial thing to achieve AT ALL!
What is financial independency? Or whendo we reach a comfort level where one can stop chasing after money
I know the wikipiedia definition of “financial independency”is when your assets bring in more money than your expense. So your stock/bonds, business, investment..needs to be more than your expense. Is this the only way of being financiallyindependent. What if you save money? Enoughmoney to survive without work for 1 year or 5 years. Would that be consideredtime to stop chasing money. How manyyears of living without income is considered financially independent
There is no such thing as "financial indepencency", although there is such a thing as "financial independence" (no "y" at the end).
If one can only live a few years without income, what comes next? That's not financial independence, but, living on one's savings while unemployed.
Suppose a retiree declared (as some do), "I'm finally retired --- now, I only need to work part time to make ends meet."
Either one IS financially independent (or retired), or one IS NOT. A caveat, such as, ... for X# years; or 'part-time work' is only another way of saying, "Is NOT."
What is financial independency? Or whendo we reach a comfort level where one can stop chasing after money
I know the wikipiedia definition of “financial independency”is when your assets bring in more money than your expense. So your stock/bonds, business, investment..needs to be more than your expense. Is this the only way of being financiallyindependent. What if you save money? Enoughmoney to survive without work for 1 year or 5 years. Would that be consideredtime to stop chasing money. How manyyears of living without income is considered financially independent
For me, it's pretty simple. If you lost your job tomorrow, would you need to seek another (ever)? If the answer is "no " you're financially independent.
How manyyears of living without income is considered financially independent [/font]
Sorry I missed this part of your question. The generally agreed upon number is 25X your actual spending level in savings and investments. So if you spend $25,000 per year, you would need a investment portfolio of $625,000. Most of that money would need to be invested in either the stock market, or income producing real estate, with perhaps a portion in lower returning bonds (up to 35%).
Some say you need more than 25X your spending level because projected future investment returns are low...but 25X is reasonably conservative and a good number to shoot for. If you achieve this level with a 75% stock / 25% bond allocation, and keep your withdrawal rate to 4% or less of the total value of your portfolio, you have a good chance of the money lasting 30 years or more.
If one can only live a few years without income, what comes next? That's not financial independence, but, living on one's savings while unemployed.
Suppose a retiree declared (as some do), "I'm finally retired --- now, I only need to work part time to make ends meet."
Either one IS financially independent (or retired), or one IS NOT. A caveat, such as, ... for X# years; or 'part-time work' is only another way of saying, "Is NOT."
It isn't true independence, but financial independence is a spectrum. It's better to be quasi-independent and to only need to work part time than not to be dependent at all. After all, it's usually easier and less stressful to get and maintain a part time job than a full time one.
The question is whether your DO or CAN live on the fruits of your assets. Many people could, but choose an unaffordable lifestyle which exceeds their cashflow.
To me it is never having to worry if either myself or my wife will ever have to work again, thus having enough in investments, SS and pensions to live on the rest of our lives, then should one of those incomes disappear, adjustments will have to be made to wants but never to needs.
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