How much money you need to save to live without working from 40 years

One of the most desired dreams by many people who have reached 40 is to have the ability to live without working.That is, save enough to retire and forget about the labor market.

Is this possible?It is highly complicated, but the reality is that, if attended to the numbers, you can get.The amounts you will need, yes, are high.

But before entering into the matter, it is essential that you keep in mind that to achieve an adequate savings volume you needspend more than you enter, use applications to control the expense and a long etcetera.

Once you have all this clear, it will be easier.Of course, also taking into account your debts, so that you do not call all your financial freedom in question.All is important.

How can you then live without working?Saving and investing.Or that the lottery touches you, of course, which is even more unlikely.

Therefore, the best formula to live without working from 40 is to take advantage of the returns that generate the investment.You have to throw numbers.The amount of money you will need to do so will depend on your lifestyle: how much more money you spend, the more money you will need.It is not the same to live with 1.000 euros per month to do it with 3.000 euros.All this varies depending on each profile.

That is why the concepts of frugality and financial independence usually go hand in.People who want to leave their job and retire being young usually reduce their level of expenses to the least possible.In this way, it will be much easier for them to accumulate the capital necessary to cover those expenses through income.

Another fundamental factors is, indeed, the profitability obtained.The higher the performance that you achieve with the investments you make, the less the money you need to achieve that financial freedom.The main inconvenience is that you cannot get a control of this point.Of course, you will be at the mercy of the progress of the economy and markets.

The money you need to have saved to live quietly without working

But, going to the concrete, how much money is needed to live without working from the age of 40?Taking into account that the historical profitability of the market is 7%, the goal of living of the stock market may seem easier than it really is.

The problem is that this profitability does not remain commissions, which can be carried out between 1.5% and 2.5% of the benefit, or inflation, which will reduce between 1% and 2% more to profitability, or taxes,that will be eaten every year between 19% and 23% of profitability depending on the amount you have earned.

Imagine you need 1.000 euros to live or, what is the same, 12.000 euros a year.In that case, focusing on investing money in a product with an annual profitability of 6% and assuming some risk - some that some investment funds get in the long term - you should have saved 200.000 euros.

On the other hand, if your claims go much further, savings would have to be much greater.If what you want is to have a monthly income of 3.000 euros (36.000 euros a year) la cosa se complica ciertamente.In this case, if you put your money in a product with an annual profitability of 6% and assuming something you should have a saving of 600.000 euros.

As you can see, high amounts that not many people can afford, but maybe serve you to make a composition of place of that reality.

There is also another added obstacle.Profitability and risk are intimately related, at least in the short term.If you were thinking about passive management as a formula to live on your short -term investments, you should think about it 2 times.

The reason is that Indexarte will make your investments literally depend on what the market does, which does not have to be stable.In other words, you can find periods in which you lose money, a lot of money.

Taking into account that your income will depend on your investments and that you need them every year, it may not be the best idea.That is why when you talk about generating recurring income, the idea of buying an apartment to rent usually arises.Of course, to do it you will also need a good initial entrance capital.