Founder’s Article in Business Mandate from MMA

The Real Secret to Retire Early

The Real Secret to Retiring Early


The way we analyse whether a person is successful or not today is majorly dependent on the money the person earns and the personal network that he has developed. The majority of people are dependent on their jobs as their source of income, some are into entrepreneurship, and some are running businesses as a means to earn income and achieve their dreams and goals.

There is so much focus and time spent in schooling, and almost 22 years go by as people work through education in order to learn the skills required to start working for someone else. However, very little time is spent on learning the real ways to make money and build relationships in the real world. Salaried workers’ incomes are dependent on one single source: the employer; they also have a bracket to their earnings, meaning they only have a limited amount of time to work. Therefore, to improve their income capacity, they have to improve on their skill set, which isn’t happening in many instances. People are expecting salaries based on their experiences and the number of years in the company, so the ideal way to get promotions and increase your income is by investing on yourself. By upgrading your skills through learning more, attending seminars related to your field, and getting certifications, your salary is on the way up.

But, is that alone enough for a person to retire rich? Given the inflation rate, is it possible to gauge exactly how much money is required to maintain one’s current lifestyle for the rest of one’s life? What if the person lives beyond his/her life insured period? Does one have enough savings that will take care of one’s health no matter what age that individual is?

One of the best solutions for people to retire early and rich, and, at the same time, to never be bothered about maintaining their lifestyle is passive income.

What is passive income? I define it as an income that people receive without having to put in much effort like they do at work or running a business. This is an income in which people can make by carefully planning their investments, and executing business ideas that can help them earn income regularly every month without having to spend time or effort.

Many people are stuck in a job or business that may not be of interest to them, but they are in it only for the sake of the money they get. Imagine a life doing things that you don’t like, just so that you can live a lifestyle that you cannot maintain for the rest of your life. Really sad, isn’t it?

Generating passive income can be done in many ways. The way to start is to generate one investment/business where your income starts flowing, focus on growing it, and set systems in place, then moving on to start the next one. So, since you don’t need to spend much time in managing the business, you can start multiple, identical businesses. Now that is when it becomes interesting: you are creating multiple sources of income. Now money can start flowing from different directions instead of you being dependent on one source of income, which is very risky given any market conditions.

The goal is not earning passive income; the goal is to become financially independent. Different people have different definitions for financial independence, but I am going with what Robert Kiyosakhi, author and financial literacy activist believes. When the passive income you generate is more than your expenses, you are financially free; you don’t need to work to maintain your lifestyle for the rest of your life. Now this is interesting, isn’t it? Let me explain that with an example. Let’s say you need 1 lac rupees every month in order to meet your current lifestyle. When your passive income (money that flows as income from investments and business that can run automatically/with very low intervention) goes beyond Rs.1 lac every month, you are financially free. Now, when this is happening, this changes your world upside down, at least for most. When money inflow is taken care of, I bet many people will start focusing more on doing things that they love to do. What you love to do might be different from others. Maybe you will donate money to charity every month. Or, maybe, you might start doing a job that pays less in money, but offers you a lot of satisfaction and happiness. You can also fund others who want to start a new business, take a few months off every year and travel the world, but, ultimately, you have the freedom to choose how you want to live, rather than be constrained to the concept of money. One of the most important things to note is that you have to invest your money into assets, businesses, and opportunities that will generate income for you every month or so. You should immediately look at your liabilities column, check which liabilities are taking money away from you every month, and plan to get rid of them as soon as possible. Look at your high paying loans first and clear them using loans with lesser interest (loan consolidation). You have to analyse the properties of the potential future and see if it really makes sense on paying those huge EMI and waiting for the property construction to be completed 2 years from now.

Saving money from your account every month towards becoming financially free is very important. As many studies suggest, you should allocate at least 10% of your income towards investment. This money should never be touched; it should be transferred to another account every month and then sent towards investment. Having a disciplined approach towards investment will ensure you success at a faster rate. This 10% is not something that you will use for any emergency or any other trip plan of yours, but is to be considered as something that does not belong to you. After the money is transferred to that account, the most important factor is to look at how to invest it. Just transferring money into a different account will not make you financially free; it has to start making more money for you. The other option is to look for business opportunities that will provide you income with very minimal involvement on your part. You have to be very careful and calculative in this, as there are hundreds of bogus business opportunities online. Be sure to be smart and choose your investments carefully. My advice is to start with a business that is interesting and close to your heart, that way it doesn’t become a pain when you have to focus on setting it up.

Slowly, you’ll have multiple investments and businesses that will take care of your income without you having to work for it. Awareness is the key; keep an eye on every single opportunity that comes your way, and be ready to analyse these businesses in order to begin your journey to financial freedom.

Now you know the real secret to retiring rich and getting richer every year!!!

Best wishes. Live your Passion!!!

Ganesh Kumar S

Author, Get Rich Now – 27 Practical ways to make money while you sleep


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