Financial independence

Financial independence is generally considered to be the situation a person creates where they are able to provide for all of their living costs from so-called passive income.

Passive income is broadly defined as income which arrives without you needing to work.

Such income may come from properties, bonds, listed companies or private business, to name a few – you will find more on these in the Investment module.

Interestingly, investing to produce passive income always requires somebody’s time, and often a person will outsource this role to an expert for a fee. This is the case with managed funds, where a “fund manager” is paid to manage a portfolio of assets on an investor’s behalf.

It also applies to property where a property manager is employed.

You are not alone if you associate this type of financial independence with retirement.