Everyone loves freedom and when it’s financial freedom it just not sounds good but feels even better when we achieve the same. Therefore, in this article we present to you four simple steps to achieve financial freedom. Let’s begin with the importance of emergency fund.
Four simple steps to achieve financial freedom | Emergency fund
When you build an emergency fund, it’s your first step towards achieving financial freedom. Emergency fund helps you to maintain a specified fund for unanticipated events in future. We always ensure that there is a glass of water nearby while we have our meal, why? It’s because the food might stuck in our throat or it may be spicy. People check their fuel tanks before they proceed for a journey, why? It’s done in anticipation of the fuel tank being emptied. Similarly, we must be prepared for any unforeseen events & therefore building an emergency fund is important
Four simple steps to achieve financial freedom | Diversification
Diversification is the next step towards achieving financial freedom. You should diversify your investments across a combination of different assets. This increases your chances to get better returns across different sectors of industries. Also when any one sector underperforms, your returns are balanced with the other sector which performs well. In this way your losses are reduced. When you concentrate all your investment into one sector & when it underperforms, it affects your returns to a great extent. Hence, you should go for diversification based on your appetite.
Four simple steps to achieve financial freedom | Advice
It’s advisable to take advice from professionals in regards to managing finances. A certified financial planner will help you to take appropriate decisions & provide you with the best solution.
Four simple steps to achieve financial freedom | Financial decisions
There are various examples across different areas where a team has always given good results. Consider games like cricket, football, hockey or sport. It’s only because that every member of the team contributes their effort, the team wins. Similarly, when every asset you have invested into does not work like a team contributing their returns, it will deteriorate your portfolio altogether. Therefore, you should take proper financial decisions after giving sufficient thought & taking advice of professionals & other members of your family. If you find that certain products in your portfolio are only diminishing your returns then you should withdraw from them. Otherwise it will just lead to a collapse of your portfolio & all your financial efforts.
Hence, now you know the four steps you should remember and follow to help you to achieve financial freedom.