Financial freedom by 40: Wealth building tips from a market guru

This Independence Day, The Federal turned the spotlight on a different kind of freedom — the power to live life on your own terms through financial independence.

In an exclusive conversation, market veteran G. Chokkalingam, founder of Equinomics Research, broke down the mindset shifts, investment strategies, and common mistakes that can make or break your wealth journey.

From why equity remains the most accessible path to long-term prosperity, to how patience, discipline, and smart asset allocation can help you retire early, this discussion offers a practical roadmap for anyone aiming to achieve financial freedom — perhaps even by 2047.

Equity as path to freedom

This Independence Day, The Federal explored the meaning of freedom beyond flags and celebrations — the freedom to live life on your own terms through financial independence. Chokkalingam stressed that the ultimate measure of financial freedom is assets, not income.

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“Income is a means. You have to make a lot of income to create assets that can sustain you, even if there is no income or after you retire,” he said. For most Indians, he emphasised, equity is the most practical route to long-term wealth creation, given real estate’s liquidity challenges.

Changing the money mindset

According to Chokkalingam, two mindset shifts are critical: prudent spending and embracing the equity asset class. Avoiding high-interest debt, such as credit card borrowing, is essential to building savings. On the investment side, he highlighted how India’s market capitalisation has grown from ₹2.5 lakh crore in 1993 to ₹450 lakh crore today — a surge that many in the middle-class have missed.

He warned against wealth destruction by investing in poor-quality stocks. “The basic premise to make wealth in equity is to avoid losses. Properly researched picks or mutual funds can help minimise risk,” Chokkalingam said.

Opportunities in equity

Chokkalingam identified two approaches for wealth creation in the stock market: spotting rare sectoral booms, such as the IT and telecom growth waves, and selecting quality small and mid-cap stocks with strong management, sound balance sheets, durable business models, and attractive valuations.

Volatility, he added, should be seen as an opportunity. Major market dips occur every three to five years, and systematic investment plans (SIPs) help investors ride out these cycles. He advised always keeping funds ready to invest during downturns.

Roadmap to 2047

For salaried individuals, Chokkalingam recommended starting with mutual funds — allocating 20–40 per cent of savings — before moving to direct equity, which demands at least two hours of research daily. Young professionals should avoid concentrating investments in a few stocks and never borrow to invest.

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He noted that while only a small percentage of India’s population actively invests in equities, those who treat it as a long-term learning process can achieve financial freedom well before retirement.

“Start your journey of learning in equity, and the wealth will accumulate along with your knowledge,” he said.

Advice for different ages

In your 20s, you can allocate up to 80–90 per cent of investable funds to mutual funds, using the remainder for direct equity learning. By your 40s and 60s, strategies should shift towards preservation and steady growth. Across all ages, avoiding news-driven speculation and focussing on fundamentals is key.

The final lesson

Chokkalingam’s Independence Day advice: “Contain your greed. Equity will create wealth only over two to three years, minimum. If you’re not ready for the learning curve, invest through mutual funds and wait at least three years.”

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