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Financial Planning Manual: Map Out Your Freedom
Wealth Planning• 14 min read
Financial planning is the map that turns your dreams of freedom into actionable savings targets. Learn how to structure your accounts and secure your financial future mathematically.
1. The 4% Rule for Living Off Investments
The 4% Rule, derived from the famous Trinity Study, states that if you accumulate a portfolio equal to 25 times your annual expenses, you can safely withdraw 4% annually (adjusted for inflation) for life without fearing you will run out of money.
- Multiply your target monthly expenses by 12 to calculate your annual requirements.
- Multiply that number by 25 to get your Financial Independence Number (FI Number).
- Apply the habit of consistent compound interest to reach that number exponentially faster.
SafeInvest Professional Tip
Review your net worth balance sheet at least once a year to ensure your debt does not balloon and to rebalance your portfolios.