Nithin Kamath, Zerodha Founder

Save, invest and plan—and do it smartly. It is never too little or late to get started on path to financial independence.

Got a mountain to climb, a book café to run, a plan to swim with penguins in Galapagos Islands or just read through that pile of books lying ignored for years? But, then most of us are chasing deadlines not dreams, shackled by the salary cheque that puts food on the table and takes care of EMIs.

As India celebrates 74th Independence Day on August 15, it is a good time to assess what it takes and means to be financially independent, especially as coronavirus ravages the economy, damages businesses and takes away jobs.

Zerodha’s Nithin Kamath, Groww cofounder Lalit Keshre and GiveIndia president Ashok Kumar, until recently the CEO of Scripbox, took the road less travelled and today they help others grow wealthy. Moneycontrol spoke to the three entrepreneurs on their journey to financial freedom and lessons it may hold for others.

What is financial independence?

It is about enjoying things that one likes, without having to worry about being employed, says 40-year-old Kamath who set up his online brokerage firm this month 10 years ago.

Keshre may be getting ready to take on Zerodha by expanding his investment platform to stock trading but here he and Kamath are on the same page.

To the 39-year-old, financial independence is having the freedom to achieve and do things without having to worry about money.

Kumar’s is a more free-spirited approach—from being able to pack up bags to travel the world to giving up a job and starting up.

Long and short of it—financially independence is being free of money worries, away from the daily grind to live the life of your choosing.

How to get there?

Save and invest—and do it intelligently. Saving is not enough, make your savings work for you. Start early so that you can build up a corpus large enough to invest in the equities and not worry about market fluctuations.

“I think the first step towards financial independence is to create an emergency fund,” says Keshre. “Focus on getting rid of all forms of debts. Unless education loans, car loans and others are paid off, there can be no financial independence.”

But not everyone takes a fat cheque home at the end of the month.

Financial independence is more about being disciplined with the money, says Kumar. It is never too little or late to start planning.

And if the 25th of every month means Maggi and no takeaways, maybe it is time to upskill. Kamath says youngsters have to constantly improve to learn and earn more, which will result in bigger savings.

Perhaps time to give up that Netflix subscription for a Coursera course.

How did they get here? 

“It almost took (me) 20 years after I started working,” says Kamath, who founded Zerodha in August 10 years ago. The Bengaluru-based startup has grown to be the country’s largest broking house.

Kamath had to take up a call centre job after losing money in his trading gig. From trying to sell AT&T connections to Americans, Kamath today is the chief executive officer of one of the largest bootstrapped fintech startups in the country. The distance he has come takes some doing, clichéd as it is but there are no shortcuts to success.

Kumar started investing when he was 25 and 15 years down the line he was financially independent. It helped that he worked for large companies like Wipro, Intel Corporation, Cisco and eventually took the entrepreneurship plunge in 2015 to start Scripbox, a popular mutual fund app in the country.

“I treated my investments like my EMIs,” he says. Kumar not only invested diligently but also put in that extra when he could. He planned for big-ticket expenses like children’s education right when they were born.

Kumar planned well before venturing out on his own, Kamath relied on his acumen to build Zerodha and Keshre invested regularly which allowed him to quit his jobs—once in 2011 and again in 2016—to follow his dreams.

In 2016, he quit Flipkart to start Groww which has now received funding from investors like Sequoia India, Ribbit Capital and Y Combinator.

The big picture

Are Indians doing enough to be financially independent?

No. Most businesses say that India is a price-sensitive market and that is on top of their mind before they launch a product. Indians, they say, have a saving habit.

But saving is not enough to create wealth. More than 90 percent of Indians save through gold, fixed deposits and real estate, says Kumar. While gold has appreciated, real estate and fixed deposits have underperformed. The only way to generate wealth is through equities, he says.

Indians did make some money in real estate but as an investment, it has given very low returns over the past five years, says Kamath.

“With increasing life spans, one needs to provide for more years. If your investments don’t beat inflation, one cannot lead a comfortable life,” says Kumar.

Keshre also thinks that if investments do not beat inflation, then investors can never attain financial independence.

Even if one does not want to invest directly in the markets, mutual funds are a safe bet. Multiple platforms are launching services in the country, offering investment options.

Healthy asset allocation across investment instruments is the key to financial independence.

There you have it, time to chart your way to financial freedom.