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From the Rat Race to Financial Freedom... A common man's journey
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The Autobiography Of A Stock
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Monday, July 23, 2012

How much time does it take to be financially free

During my recent interaction with some of my friends who are following my blogs, i realized that one of the top apprehensions in the mind of these Financial Freedom seekers is that they can never imagine themselves accumulating the corpus that is needed to get financially free.[Refer to the post -We are all so different... Know your own Corpus Amount ]

As per them, this amount is too big to be accumulated. Well, i do not blame them at all. First reaction can very well be of hopelessness.

Yes, the target Corpus amount definitely seems big relative to the current corpus that anyone may have. But in all such cases, my friends do not still seem to have realized the amazing power that compounding has. If they allow Compounding to work in combination with Time, it is never a linear extrapolation of your savings. Those who have studied mathematical and geometric progressions would quickly understand that Compounding is an exponential extrapolation. This, in simple terms, means that what they can accumulate in 10 years - the same amount can be accumulated in just one more year, if they allow it to grow. Refer to another post that was published just a few days before ie What hell will break loose by the "Amazing Power of Compounding"

Let us assume for a moment that they come to truly understand the power of Compounding and Time (though most always feel that they understand it). The biggest question that people have after this is how much time will it take for them to achieve that Corpus amount. While that is simple to calculate with reasonable accuracy, my personal experience has been that if you start from scratch (Zero Corpus), it takes anywhere between 5 - 8 years for anyone (yes, anyone) to get financially free.Well, if you start with some initial amount, the time duration obviously goes down. Beware that the assumption is that you would continue with the same lifestyle as you are having today (and would not suddenly want to shift to a different luxury zone, knowing now that you are financially free !!)

Does this time period depend upon your income? This is the next standard question i often get. But the answer to this surprises most people. The answer to this question is a clear"No". It does not matter at all how much you earn. What matters is how much you save and invest, rather than how much you earn. What matters is how much of time and compounding you are able to leverage. What matters is whether you have the fundamental understanding about money and money management. What matters is whether you can sustain the discipline needed to invest and manage money wisely. Someone earning twice the amount as I am, may never be able to get financially free in his or her whole life while i got financially free in 8 years time starting from scratch.

So, go on and get started. Calculate your corpus and get going. Time is the biggest factor to multiply your money. Every day you delay starting in your goal, you are diluting the power of compounding.....

From Rat Race to Financial Freedom provides you with a step by step guide starting from calculating your corpus and time duration needed to creating your monthly goals and also provides great free downloadable templates to track your goals.

Get ready as the book gets ready for a launch in less than 2 months from now..

Happy Starting !!

Cheers !!

Manoj Arora

Facebook : http://www.facebook.com/RatRaceToFinancialFreedom
Twitter : @manoj_216
Blog : http://ratrace2freedom.blogspot.in/

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