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Financial Independence Basics


Get familiar with some of the words used to discuss personal finance.

Financial Independence (FI)

You have reached FI when your passive income meets or exceeds your cost of living. This means you no longer have to work for money.

Passive Income

Income generated by your assets. Interest on investments, net income from rental property after deducting management costs (your time is a cost)


An asset that generates wealth. Stocks, bonds, and rental property are all investments. The house you own and live in isn't an investment, it's an asset, but it doesn't generate income, and you can't sell it without incurring significant costs.

Index Fund

A basket of stocks, sold as one asset on the stock exchange. Common whole market index funds are VT, VWRD, VWRA, 

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