This blog delves into perspectives shaped by Mr Kaustuban, a former call center employee who achieved financial freedom. 

In this blog, Kaustuban shares insightful lessons on achieving financial freedom, practical tips for selecting the right mutual funds, and much more.

Before we delve into how to achieve financial freedom, let us quickly understand what exactly is financial freedom. 

Financial Freedom: What is it? 

Financial freedom can be a word with many meanings to every individual. In short, it means having just the right amount of money and financial security to live the life you want without continuously worrying about your bills and unexpected expenses. It’s that point where one’s income, savings, and investments are enough to support all their needs, wants, and future plans.

Financial freedom is really not about retiring early or amassing wealth; it is about gaining control over your life and choices, unshackled from financial tension.

While the concept of financial freedom forms the groundwork for understanding its importance, it is equally inspiring to see how it plays out in real life.

Let us delve into Mr Kaustuban’s remarkable journey.

The Speaker’s Journey: A Path of Growth and Learning

Mr Kaustuban began his professional life in 2004, earning ₹8,000 per month in a call center. After experiencing personal challenges, including the loss of his father, he took charge of his career with determination. He transitioned through various roles in financial services, including stints in life insurance, mutual funds, and startups.

By 2018, after years of disciplined saving and strategic investment, he achieved financial freedom. Despite financial independence, he maintained a modest lifestyle and focused on reinvesting in new ventures. His ability to adapt, learn, and stay focused has been a key factor in his success.

Having achieved financial freedom through disciplined efforts, his story offers valuable insights into creating a sustainable path to independence. 

Let us explore actionable strategies and principles that can guide you on your own journey to financial freedom.

Your Roadmap to Financial Freedom

Achieving financial freedom is not about earning a high income alone; it is about managing your expenses, saving diligently, and making wise investments. 

Here are six key principles that you can follow: 

1. Save and Invest Early: Begin investing in high-growth instruments like equity mutual funds to leverage compounding. Gradually you can shift to debt mutual funds for stability, particularly when planning to start a business. 
2. Real Estate: You can also invest in real estate, they can offer rental returns (9-10%) and substantial appreciation. 
3. Emergency Savings: Before investing, have an emergency fund to meet unexpected expenses. 
4. Control Lifestyle Inflation: Spend the same despite increasing income to save more aggressively.
5. Diversify Investments: Spread your portfolio across equity, debt, and real estate for balanced growth and security.
6. Build a 40x Corpus: In other words, have 40 times your annual expenditures in your portfolio to ensure financial independence.

To turn these principles into action, it is essential to fine-tune your financial strategies, including selecting the right investment tools. Mutual funds, for instance, play a crucial role in long term wealth creation and stability. 

So, let us now understand how to optimize your mutual fund portfolio for a well-rounded approach to financial independence.

How Many Mutual Funds Should You Hold?

Kaustuban recommends holding 5 to 10 mutual funds for optimal portfolio management. Investing in too many funds can complicate tracking and analysis, while too few may limit diversification.

However, choosing the right mutual fund requires proper analysis. 

Finding the Right Mutual Fund

Choosing the right fund requires attention to these 3 things: 

1. Fund Size: Larger funds with proven track records often deliver consistent returns. 

2. Expense Ratio: Look for funds with a low expense ratio to maximise net returns. 

3. Historical Performance: Evaluate how the fund has performed across different market cycles. Opt for funds managed by experienced and stable fund managers.

Also, remember, a mix of large-cap, mid-cap, small-cap, and multi-cap funds can help balance risk and reward.

Once you have identified the right mutual funds, the next step is creating a balanced portfolio that aligns with your financial goals. A strategic portfolio allocation can help minimise risks while maximising returns. 

Portfolio Allocation Strategy

A robust portfolio allocation is essential for minimising risk and maximising returns. The speaker emphasises:

• Equity (5-10%): Invest in equity for long-term growth but maintain conservative exposure during uncertain phases. You can invest in different mutual fund categories. 
• Debt (40%): Debt instruments provide stability and predictable returns.
• Real Estate (30-50%): Diversify into real estate for capital appreciation and rental income.

With a clear portfolio allocation strategy in place, it is important to focus on the specifics of each asset class to ensure long-term stability and growth. 

When it comes to debt investments, understanding the key metrics can make all the difference in securing safe and effective returns.

Key Metrics for Choosing Debt Mutual Funds

Debt funds are low-risk instruments but require scrutiny to ensure safety.

Here are two things you need to check before making a decision: 

• Credit Risk: Avoid funds with high credit risk, as they can result in defaults.
• Tax Efficiency: Debt funds offer better post-tax returns compared to fixed deposits.

To assess credit risk, review the portfolio composition of a debt fund. Funds with AAA-rated securities are safer, though they may offer lower returns. 

Study fund factsheets to understand asset quality and manager strategy. Also, listen to fund manager updates that can provide clarity on the risk level.

Apart from debt instruments, understanding whether real estate is a good investment is also important. 

Is Real Estate a Good Investment?

Despite its reputation for low returns, real estate proved lucrative with the right approach. Key strategies included:

• Research Thoroughly: Visit multiple properties to identify distressed deals that offer a significant discount.
• Leverage High-Yield Areas: Focus on IT-dominated regions with high rental demand.
• Patience Pays: A well-researched property can provide both capital appreciation and a rental yield of 8-10%.

Real estate isn’t inherently good or bad—its success depends on the investor’s knowledge and diligence. With the right approach, real estate can complement your overall investment plan. 

Now, let us look at actionable tips to help you kickstart your journey toward early financial independence.

Actionable Tips for Early Financial Independence

Here are 4 actionable tips for early financial independence: 

• Start Early and Save Consistently: Begin with liquid investments like equity mutual funds, which offer double-digit returns over the long term.
• Avoid Lifestyle Inflation: Resist the temptation to overspend on luxury items.
• Invest Strategically: Diversify across equity, debt, and real estate; seek professional advice when needed.
• Focus on Long-Term Goals: Financial freedom is a marathon, not a sprint. Small sacrifices today can yield substantial rewards tomorrow.

For an individual earning ₹1 lakh per month, a recommended allocation might be:

• 50% Savings: Invest ₹50,000 in equity and debt mutual funds.
• 30% Expenses: Allocate ₹30,000 for essential and discretionary expenses.
• 20% Emergency Fund: Build an emergency fund covering at least six months of expenses.

Final Thoughts  

Kaustuban inspires us with his story saying that financial freedom is not reserved for the rich and big shots; it is available to people who are determined, disciplined and strategic in managing money.

With saving early, investing wisely, and living within your means, you can create a future in which your financial choices are led by your dreams rather than by your constraints.

Start today. Take small but meaningful steps. Remember, financial freedom isn’t just about the money; it’s about reclaiming your life and living it on your terms.

Watch the detailed video to learn more