Financial freedom: Here’s how to invest in equities with confidence
Live MintThe textbook definition of financial freedom is to have sources of passive income to support your lifestyle expenses. The traditional approach of ‘Medium Risk’ portfolio of 40/60: Stocks/Bonds – typically advised to anyone and everyone – helps attain financial freedom only by reducing lifestyle expenses and not by having sufficient inflation-protected income streams. Therefore, absolute financial freedom is achieved when one can freely invest in equities with confidence by attaining a state of mind free from the generic tendencies of greed & fear. Therefore, the intention is to remain invested in equities for long periods without the urge to move in or move out based on the market ‘noise’ so that one benefits from the long-term performance trend. Once these three types of companies are removed from the broader market portfolio and optimise on future growth prospects one can invest in a SuperNormal portfolio of capital multiplier companies which are fundamentally strong businesses with strong balance sheets and bought at attractive valuations.