So basically, this means that you can retire and live off your savings and investments. I discovered this thing while browsing the internet and now I have decided to dedicate my 20s and early 30s to chase this dream.
What financial independence means is that once you have enough money saved up, you can retire early and enjoy your life without working a single day again. How is it calculated? Assuming you will live till 85, take that minus the age you plan to retire, multiply that by the cost of living.
EX, if I am currently 23, and I spend 40k USD per year, and I plan to retire at 35, I need to save 2m USD.
Obviously this is not realistic for most people. But it's not impossible. In fact you don't need to make 2m at all. If you are a college graduate and make 60k+ a year and invest 20k a year. According to S&P 500's performance averaging 10-11% growth annually. You will have 1.15m to 1.3m USD in 20 years. And over 2m in 25 years.
Also, some stocks pays dividends. Enough investing into stocks that yield dividends can last you a life time. Assuming you put 1m into a stock that pays 5% dividend, that means every year you will receive 50k cash.
PS, if you know a foreign language and can move to a lesser developed country. You can retire earlier and still live like a king.
I'm chinese, and I plan to move back to China once I invested enough. 500k investment with 5% dividend yield 25k USD per year, convert that to Yuan is 162k yuan per year which is upper class life outside mega cities.
Let me know your thoughts on this. If there is any financial experts in this clan, I could use some professional insights.