Synopsis
Earning a high salary doesn’t guarantee financial freedom, as true wealth comes from passive income generated by investments. Nitin Kaushik emphasizes that relying solely on active income can create a ‘golden cage,’ where one is comfortable but not truly independent. Building a corpus that generates enough returns to cover living expenses is crucial for achieving lasting financial autonomy.
iStock A Rs 3 lakh per month salary can still not give you financial stability claimed a CA recently Earning more than two lakh rupees every month may sound impressive, but it does not automatically translate into financial security or independence. Chartered accountant Nitin Kaushik recently highlighted that a heavy paycheck often creates a false sense of stability. Many professionals assume that a higher salary equals freedom, yet in reality, it can become a financial trap if one is entirely dependent on active income.
The Golden Cage of Earnings
Kaushik explained that even drawing three lakh rupees monthly cannot be considered true freedom if quitting the job tomorrow is not an option. This scenario, he suggested, resembles being stuck inside a luxurious cage—comfortable, but still restrictive. High income might pay for present comforts and lifestyle choices, but without proper financial planning, it does not provide lasting independence.
What Real Wealth Means
True prosperity, according to Kaushik, emerges when money itself generates returns without constant personal effort. Financial freedom is reached when investments consistently cover living expenses. For instance, if a household spends around one lakh rupees monthly, then passive income should at least equal that amount to achieve independence.
The Mathematics of Freedom
Kaushik illustrated this with simple calculations. To sustain monthly expenses of one lakh through investments, one needs to build a corpus that delivers returns large enough to cover costs. At an annual return rate of 6 percent, a fund of two crore rupees would be required. However, at a higher return rate of 10 percent, the necessary fund reduces significantly to 1.2 crore rupees. These figures show that the pathway to financial liberty lies not in higher salaries, but in productive investments.
Shifting the Focus
Kaushik concluded that salaried income merely
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