Personal Finance

Financial Independence

Definition

What is Financial Independence?

A condition in which assets or recurring income can support living expenses without compulsory employment income.

Example in practice

The investor reaches financial independence when portfolio income covers essential spending.

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Money set aside rather than spent, often for emergencies or future goals.

Liquid savings reserved for unexpected expenses or income disruption.

Total assets minus total liabilities.

Annual portfolio withdrawals divided by the portfolio's starting or current value.

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