How much do you need to stop working for money? A formula…
Certified Financial Planner Warren Ingram says there's a simple equation you can do to help you find your ‘Financial Freedom Number’.
Picture: @ bowie15/123rf.com
Stephen Grootes speaks to Warren Ingram, co-founder of Galileo Capital, about the importance of knowing your Financial Freedom Number (FFN).
Listen below.
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Financial freedom means different things to different people, but at its core, it’s about having the ability to live life on your terms without being constantly worried about money.
So, do YOU know your financial freedom number (FFN)?
That's the amount of money you'll need to live comfortably without relying on regular employment income.
"How much do you have to have invested, so you can sit back and live off the money that you've got and the income it generates?"
- Warren Ingram, co-founder - Galileo Capital,
"It's the number we need to know, because the day after we've acheived that number, we're working because we want to, we're working because it's fun."
- Warren Ingram, co-founder - Galileo Capital,
So, how do we work out our FFN?
Ingram says, first off, it's important to remember it's an approximation.
Also, he says, your number will depend on your age and life stage.
"Let's says you're a 25 year old; take your expenses in a year... let's say R250 000, then take that number and multiply it be 25."
- Warren Ingram, co-founder - Galileo Capital
"R6.25 million. That's your 'lotto' number, your FFN. If you hit that number, you can draw from that on an annual basis enough money to cover your R250 000 a year. It should be, that if you invest that money in a balanced portfolio, over time you should be able to get enough growth that you're beating inflation."
- Warren Ingram, co-founder of Galileo Capital
And for those who are older and don't have as many working years ahead of them?
"If you are older, 60 years old and a couple of years to go of work and hopefully your kids are out of your hair, then you can reduce that to 20 times your annual expenses."
- Warren Ingram, co-founder - Galileo Capital
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Scroll up to the audio player to listen to the interview.