The biggest mistake people made in early retirement planning is to think that they need a huge lump sum to retire. That kind of nonsense thinking is partly due to banks trying to sell you an investment products that needs 30 years to maturity.  Such thinking is flawed.

This is what early retirement is all about:

• Early retirement is about figuring a way to have your monthly income exceeds your monthly expense. This comes from reducing any excessive consumerium and increasing your monthly income from investments that give you more than 4% pa

• Once retired, you are free to explore other venues of making money. It can a website or freelance work or other things that you might actually enjoyed.

Early retirement is not about having so much cash that you can retire and live a life doing nothing. It is about giving you the financial freedom to explore things that you really love and with which you might make some money from.

The problem with having a large lump sum

Having a lump sum per ser is not a bad thing. I would love to have 2 million dollars in my bank. Unfortunately, that is now how it is for most folks. People like us need to save for probably a lifetime if we are to see 7 digit numbers in our bank account. The problem with this is that by the time I reach this destination, most of my time will be gone. Worst of all, all that time is spent on doing things that I probably don’t enjoy or loved.

On the other hand, if I can figure out how to quickly generate a monthly income that supports my monthly expense, I can retire straight away. This gives me the benefit of exploring life at a much earlier stage. Remember, money is not the most precious of your resources, it is TIME.

Do I recommend that people retire when they have no savings in their account? Of course not. You always need an emergency fund. However, most people mistaken emergency fund as retirement fund. It is not the same thing.

You don’t need a retirement fund if you have multiple income strategies that generates a monthly return for you. The latter should be your focus.