What Financial Freedom Looks Like Today

Financial freedom is a goal that drives many people, and significantly influences the choices they make throughout their working lives. The recent upheavals to our way of life – both economically and socially – have made people more fearful of what the future will look like.

The COVID-19 pandemic and subsequent disruptions to the way we work, travel, shop, etc. have shaken long-held assumptions which we once relied upon to guide our choices. The effect on the global economy has upended many people’s long-term financial goals, including (but not limited to) their path to financial freedom.

What is financial freedom?

Today, financial freedom can be defined as having enough savings, liquid assets, and an investment portfolio that allows you to live a life that fulfils the needs and wants of you and your family. Achieving financial freedom will allow you to overcome the need to work, giving you the freedom to pursue passion projects, or to retire without worry.

Financial freedom then and now

In the past – even as recently as your parents’ generation – financial freedom meant a different lifestyle from what it means today. Financial freedom used to look like owning a house, having a healthy savings account, and working at a job you had been employed at for decades (which secured you a solid pension plan).

Nowadays, loyalty to a job does not guarantee you a pension. Today, financial freedom may mean having the ability to pay off high-interest debt. Escalating debt obligations, coupled with a sudden job loss or a medical emergency, can be a huge barrier towards financial well-being for many people.

People today also dream of being able to afford a mortgage and of building a solid investment portfolio that can provide a comfortable lifestyle and a safety net for a future that has become that much more uncertain.

The difference between the past and the present is that nowadays, there is a lack of stability in the economy: moving jobs every few years is more likely to increase your salary and benefits, and there are now more ways to save and invest money.

The end goal still remains the same for past and present generations: we all want to feel secure and retire comfortably, or even early.

Smart financial practices

Luckily, with some ingenuity and a solid plan, you too can overcome any barriers you have that make you worry about your financial freedom. Consider that you will have already achieved financial freedom if you develop a healthy investment portfolio. All you really need is a portfolio that is able to provide enough returns to take care of the basic needs that your salary covers, as well as a bit extra.

As such, clearly outlining your goals and restructuring your life to achieve those goals will not only bring you closer to financial independence, but will give you a sense of purpose in everything you do.

Adopt these habits as recommended by Bank Negara Malaysia (BNM) to more effectively work towards future financial freedom:

Go all out with FIRE

Some people have even turned achieving financial independence into a way of life – by setting themselves on FIRE. FIRE (“Financial Independence, Retire Early”) is a term used by a movement of people who have devoted themselves to achieving financial freedom as soon as possible.

Following the path of FIRE requires an extreme level of frugality and investing, and demands great discipline of its devotees. It is popular among the younger generations of workers — generally those in their 30s — who want to retire much earlier than the traditional retirement age. These people reject the traditional view where work is the most defining aspect of life; they want to have more control of how and where they spend their time.

Carve your path to financial freedom with KDI

No matter what your financial profile looks like, you can get started on the path to financial freedom with KDI Invest. It is a low-risk way to enter into the world of investing.

BNM recommends diversifying your investment portfolio to minimise risks and this is the philosophy behind KDI Invest’s algorithmic investing tool. It chooses U.S.-based exchange-traded funds (ETFs) based on your individual risk appetite without the risk of emotions clouding judgement.

It is also never too late to start setting financial goals for your future. BNM also recommends planning for retirement, regardless of age. KDI Invest’s automatic portfolio rebalancing features mean as you age, your investments are rebalanced based on your lower risk appetite and shorter time horizon.

Relax and rely on KDI Invest to ease your burden and grow your future wealth for you while you get the rest of your finances and life on the path to financial freedom.