Some Tips On Achieving Financial Independence

This article from rediff.com refers the reader to the book 'Rich Dad Poor Dad', by Robert T Kiyosaki wherein he writes; that the sources of money can be divided into four quadrants. One is employment, the second is entrepreneurial- or self-employment, the third is investments, and the fourth is business.

Well, you have to live well. Make choices that will help you to achieve financial goals.

You are financially independent when your lifestyle is sustained by passive income, that is income which comes to you automatically without you having to work in any way for earning it. How could this happen?

Here are the tips.

• Assets create income and liabilities deplete income. Choose assets over liabilities as far as possible .
  Invest 10% or more of your gross income to create financial independence for yourself. This is an important step.
• Of your savings, put 15 to 20% in life insurance, 10% in post office instruments or a provident fund, 25% , you can buy mutual funds, shares or anything else of choice. Choose something that allows you some liquidity and yet appreciates quicker than the more conservative investments. Be aware that risk and return are positively correlated. Higher the risk, the higher the return.

The thumb rule is to put only as much money in these that you can put away without feeling the pinch into your day-to-day living expenses.