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What is Financial Independence & How to Achieve It

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When I was young, my friend ajak me to join an event.

The event started with an emcee, introducing the big shot, who earns near to 6 digits monthly. Then this big shot told his sad childhood story of being poor and the journey of how he got here today.

“If you want to be financially free like me, join our team and we will teach you how”.

MLM companies usually run these events. They earn money by recruiting more people & selling their products. New members have to pay some money to join this group. I was once a victim too.

Reflecting on this event, it cringes me to the bone. At the same time, I also have a question in mind.

Is financial freedom actually achievable?

In this week’s newsletter, let us talk about it.

What is Financial Independence

Some people called it Financial Freedom, but I prefer to call it Financial Independence because FI sounds nicer than FF. (Don’t get me started on the news of someone buying that car plate with RM900k+)

To explain what is FI, it is a state when we are no longer dependent on working a job to earn a living.

Imagine you are free from the clutches of money and able to escape the routine of adulthood in which you have to go to work every day just to earn money and pay the bills.

Yup, you no longer need to do things above when you achieve FI.

Isn’t that awesome?

It may sound like a dream, but I believe this is possible if you have built a sizable amount of assets that generate passive income for you.

So, how does this work?

The Formula of Financial Independence

The formula is surprisingly simple. You achieved financial independence when you fulfill the formula below:

Passive Income > Annual Expenses

When your expenses can be fully paid by your passive income, your active income becomes optional. It also means you can still live even without having a job that pays a salary.

Calm down. I can already see you’re about to ask how to get that amount of passive income.

How to Build Passive Income

Let’s define what passive income is.

Passive income is a type of income which doesn’t require you to actively spend your time or effort to earn it.

Normally, it is in the form of rents collected from properties or dividends received from stocks. It can also be generated from businesses in which you are not actively participating.

Personally, my favorite passive income is definitely stocks’ dividends as I can manage it simply by tapping on my phone.

Now you know how to get passive income, let’s proceed with the next step, which is…

How to Achieve Financial Independence

To achieve financial independence, we need to do these 3 steps until our passive income covers our annual expenses.

Here are the 3 steps:

  1. Become debt-free
  2. Invest your money
  3. Repeat Step 2 until you reach FI

Become Debt-free

When we have zero debt, our annual expenses will be significantly lower. This will increase our chance to achieve FI, that’s why it’s an important step.

Invest your money

Duh! How can you even get passive income without investing your money? Even starting a business requires you to invest a huge amount of money to get started.

The challenge here is to choose which type of passive income sources you would like to invest in.

Repeat Step 2 until you reach FI

After you select your investment, all you need is to keep saving money and invest in it. As your investment grows, so will your passive income.

Pursuing FI is a long-term endeavor that is going to take decades. All you need is time, patience, perseverance and consistency to keep going.

When you finally reach FI, you will be so grateful for all the hard work you have paid.


Steps are not in-order, as it is not wrong to start with step 2 first then step 1. These are just a simplified way to explain how to achieve FI.


While you may be eager to achieve FI as soon as possible, I will recommend you take it slow. Remember, life is uncertain. We may not know how long we are going to live, or if we will ever achieve FI in our life.

Remember to enjoy the journey while you lay bricks on building your FI castle.

Nevertheless, it is worthy to hop onto this journey even if you know you can’t achieve FI. Because clearing off debts and investing your money are 2 basic steps to being financially stable. There is no harm in doing those at all.

That’s all for this week, my friend!

What did you think of today’s newsletter? Comment below and let me know what you’d like to see more of.

Talk with you again next week.

Your Money Buddy,


Whenever you’re ready, there are 2 ways I can help you:

1) Book a 1-to-1 Call Session with me if you want to pick my brain, either money management or any topic you would like to learn from me.

2) If you’re not sure which platform to invest your money, here are 3 platforms that I personally use:

Rakuten Trade – Where I invest in US index fund ETFs. Get RM30 worth of RT points if you register & unlock foreign trading with my referral link.

Wahed Invest – Where I invest in Shariah-compliant US ETF. Get free RM10 if you register a new account with my referral code “markeo1

Versa – Where I invest my emergency fund with 4% return (until Aug 2023). Get free RM10 if you register a new account with my referral code “AL9JZJ9H

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