Fit vs healthy? Liability Free vs Financially free?

If given a choice for you to choose, would you rather be fit or you rather be healthy?

If you can regular run, swim or cycle fast, you are certainly fit. Somehow we do concluded being able to do such activity is the same as being healthy. Being healthy, in fact, involves having every system of the body functioning properly. For example, if a person have not been eating, sleeping properly, no matter how he exercises, he will not be able to reduce the damage done on his body from such a life style. Exercise won’t be able to remove the toxins from the body or improve the immune system of the body if you do not rest or eat properly. Being fit and having good exercise are just one of the many factors contributing being healthy.


This is parallel to being Liability free and being financially free.

Recently, while I am doing my regular training with my team, one of my teammates Christine asked me a question. Her client currently has no liabilities. Her client’s HDB’s flat is fully paid and there are no loan for them at the moment. So is the client in a good financial position? That really sets me thinking. After some thoughts, I said that being liability free is good, but it can be better. I ask her:

Do you want to be liability free or financially free?

Which one are you trying to help your client to work towards?

Fit vs healthy? Liability Free vs Financially free?
Christine and I


Before I share the reasoning behind my answer, let me give you my definition of what being liability free and financially free are.


Definition of Liability Free

Free of any financial obligations (e.g. debts, loans, moneys owed)


Definition of Financially Free

Not to worry about money, and because of that, you have the freedom to be who you want to be and freedom to do what you want in life


This instance really relates to me.

Sometime back, I was once liability free. My house is fully paid and there are no other loan outstanding for me. However, one day, when I started to think of the life that I want to have, I discover that I cannot do whatever I want because I am not financially free. I have worked hard to be liability free (which is a good thing), however I did not worked towards being financially free. I may not owe anyone any money or have any outstanding loan, but I am also not able to retire comfortably with the assets I am having. For me, I feel that I need to build an additional income stream. Therefore I started to invest in investment instruments that can provide me with income.

Will this move give me some liabilities? Yes!

However in the long run, this will give me a better chance of being financially free.

So what are some of the investment instruments that can provide income stream? For example property investments, REITS, stocks and shares etc. These investment can possibly help me to build my additional income stream, so that I can work towards being financially free.

I will elaborate this in details in my next article.


Update: You can read part 2 of liability free vs financially free here.


If you’re looking purchase your first property, you should read my recent article about the risk management while purchasing property.