OPINION
Each week the NZ Herald's Cooking the Books podcast tackles a different money problem. Today, it's the financial independence movement, and whether normal people can give it a try. Hosted by Frances Cook.
Listen to the Cooking the Books podcast here or watch the interview above.
Financial independence is something you might have seen floating around, and been curious about.
On the face of it, it sounds too good to be true. Save and invest hard, and you build up enough investment income that you don't have to work anymore.
Surely that's something that's only possible for rich people?
It's open to more people than you might think.
Here's the maths behind it. The idea is that you work out how much you need in a year to live the life you want.
So you might be happy living a very frugal lifestyle, which always makes things easier. Or you might enjoy some of life's nicer trappings, and want to keep them.
Whatever that number is, you need a nest egg of 25x that, then the idea is that you can withdraw 4 per cent of it each year, in order to live that lifestyle you like.
For the latest podcast episode I talked to financial planner Liz Koh from Enrich Retirement.
We discussed whether the maths behind the idea works, the different types of financial independence, and tactics for the average person to get there.
For the interview, watch the video above, or listen to the podcast.
• If you have a question about this podcast, or question you'd like answered in the next one, come and talk to me about it. I'm on Facebook here, Instagram here and Twitter here.
• Listen to the full interview on the Cooking the Books podcast. You can find new episodes in the Herald, or subscribe on iHeartRadio, Apple podcasts app, or Spotify, or to our Youtube playlist
'Debt becomes more like a rent payment that people get so used to paying.'