How I Earn Passive Income Without Chasing Stocks | Financially Free at 37

ELI5/TLDR

A chartered accountant and former investment banker (Sandeep) walked away from work in his late thirties and now lives off the interest from a portfolio that’s almost entirely in debt — bonds, debt mutual funds, REITs — not stocks. His core claim is contrarian: stocks didn’t make him free, and they won’t make you free either. You get rich by being excellent at your job; investing only keeps you rich after that. Once the money was enough, he chose to optimize for sleeping well rather than for higher returns.

The Full Story

The path to early retirement was an accident, not a plan

Sandeep finished his CA, joined Citibank in Bombay as an investment banker, then moved to Dubai. One day the unit he worked in shut down. The bank offered to relocate him to another country, but his kids were young and his social circle in Dubai was good, so he refused. He spent eighteen months looking for the right job — not just any job — and the market was weak.

Then he did the arithmetic. He found that even in Dubai he was already at roughly 25x his annual expenses. If he moved back to India (Pune), his expenses would drop and the ratio would get even more comfortable.

“I calculated and I felt, okay, even if I don’t work, it works out for me. And that was how I moved to early retirement.”

He’s blunt that this was luck, not strategy. He stopped working at around 37.

Why he’s 85% in debt, on purpose

Here is the part that breaks the usual personal-finance script. Most of the internet — especially the FIRE crowd — insists equity is the only road to financial independence. Sandeep is the opposite.

His logic is purely about need. If his portfolio is 100 rupees, debt throws off about 6 rupees a year, which is 3 rupees post-tax. His annual expenses are also about 3 rupees. So his interest income alone already covers everything, and his corpus actually grows year over year. Think of it like a well that refills faster than you drink from it. There’s no reason to chase 8% in equity and risk capital loss when 6% already does the job.

“I don’t want to lose my capital. I don’t lose sleep. My allocation in debt is very high.”

He’s not dogmatic — he was 95% debt a few years ago, is now around 57% equity, and plans to drift toward 50%, partly into overseas markets — but the move into equity is for “wealth preservation,” not because he needs the returns. (He prefers the term FI, financial independence, over FIRE.)

”Investing keeps you rich, it doesn’t make you rich”

This is his sharpest idea, and worth sitting with. The dream — put 10 rupees in one stock, watch it become 1,000, retire — is, in his words, something that happens to maybe one in a million.

His math: Indian equities have historically returned 12–13% CAGR. Strip out ~8% average inflation and ~1.5% tax, and you’re left with roughly 4% real. So in real terms 100 rupees becomes ~160 over a decade. That’s preservation and modest growth — not the 10x you’d need to retire early off investing alone.

“If you want to achieve financial independence, the only way is excellence in your area of expertise.”

Doctor, engineer, podcaster — whatever you do, do it well enough to grow non-linearly every 5–10 years. That’s what produces a FIRE-able corpus by 40–45. Pure investing might get you there by 60.

How much is enough

His rule of thumb is the standard “multiple of annual expenses” framework, which he says he arrived at on his own before reading it anywhere. The brackets:

10–15x expenses: bare minimum. You can call yourself financially independent, but it’s fragile.
20–25x: a genuinely safe floor.
30–35x: a level where even bad market years barely touch you.

He’s personally at around 30–40x, which he describes as very comfortable.

A working map of debt instruments

Because he lives in debt, he has opinions on the whole ladder, ranked roughly by return and risk. His one hard rule: if you’re in the 20%+ tax bracket, move out of FDs, and don’t touch anything offering more than 8% unless you genuinely understand the risk. (His benchmark: the 10-year government bond is ~6.7%, so anything above ~7.7–8% carries real risk.)

FDs (~7–7.5%): simplest, most liquid — you can break one at the bank in five minutes. But taxed every quarter, which is bad for high earners. Keep some portion here for liquidity only.
Debt mutual funds (~6–7.5%): slightly lower return, but tax-efficient (you’re taxed only on sale, and after 3 years) and someone else manages it. His default recommendation. He sticks to high credit-quality funds — check the portfolio’s average credit rating, avoid anything below the average.
REITs and InvITs (8–12%): newer, SEBI-regulated, and he treats them as debt-like. The key safety feature: they hold finished, revenue-generating assets — a built road already collecting toll, an office building already collecting rent. Worst case is a flood or disaster, not a project that never completes.
Risky debt — debentures, credit-fund AIFs (8–15%): off-limits for a normal investor. Some are run by good managers and pay 15%, but the asymmetry is brutal: if it goes right you earn your 7%; if it goes wrong you can lose the whole principal. As Buffett says, “don’t touch it.” Only for people who can actually research the risk.

The asymmetry point is the heart of it: in debt, the upside is capped and the downside is total, which makes it more complicated than equity, not less — and there’s far less public research available to help you.

The operational headache nobody mentions

Living off debt means running your life like a treasury desk. Interest payments arrive on different schedules — some every six months, some annually — and if you miss one because of a bank glitch and don’t notice, your whole return profile takes a hit. He tracks everything: what matures when, what cash is coming, what’s liquid and sellable. This is precisely why he tells ordinary people to use debt mutual funds and let a manager handle the plumbing.

Real estate, kids, and emergencies

A few crisp side-rulings:

A builder-built home is never an investment. It’s a place to stay. When you calculate your FI number, subtract the money in your house entirely — treat it like a car, money spent and gone. Land and commercial real estate can be great investments, but only for people who understand them (he doesn’t, so he won’t even look).
He’s against buying property at all, even to live in — the killers are illiquidity (selling takes 3 months to 3 years) and rigidity (own a house in Pune and you can’t easily decide to move to Mysore or Uttarakhand). His family wanted a house, so he eventually bought one — took a 20-year loan, then repaid it in ~12–14 months because his FDs hadn’t matured yet and he needed to pay the seller now.
Planning for a family vs. being single: exclude your kids’ future education from your net worth before running the FI formula. If you think education will cost 50 lakh, carve out a full crore — inflation and the many other child-related costs will eat the gap.
Emergencies: he’s recently put ~10% of net worth in instantly-liquid assets (savings account, liquid funds — withdrawable in 1–2 days) and carries 5 crore of health insurance, sized not for today’s costs but for what hospitalization will cost in fifteen years.

Parting advice

“Don’t restrict yourself to just financial independence — keep a big vision. Why not a yacht, a private plane? When you’re young, work very hard and enjoy a lot. Money is a slave to your hard work and your luck. Don’t take extra tension over an FI target — it’ll happen. Enjoy life.”

Key Takeaways

Investing keeps you rich; it doesn’t make you rich. Wealth comes from excellence in your career, not from picking stocks.
After inflation (~8%) and tax (~1.5%), Indian equity’s 12–13% nominal return becomes ~4% real — enough to preserve and grow, not enough to 10x your way to early retirement.
FI corpus benchmarks: 10–15x expenses is fragile, 20–25x is a safe floor, 30–35x makes you market-proof.
If you’re in the 20%+ tax bracket, exit FDs (quarterly tax drag) for debt mutual funds (taxed only on sale after 3 years).
Hard rule: don’t buy any debt instrument yielding more than ~8% (the govt bond benchmark is ~6.7%) unless you can personally research the risk.
Debt’s risk asymmetry is the opposite of equity’s: upside is capped, downside is total loss of principal — which makes it harder, not easier.
REITs/InvITs (8–12%) are debt-like because they hold finished, cash-flowing assets (built roads collecting toll, buildings collecting rent).
A builder-built home is an expense, not an investment — subtract it entirely from your FI number.
Carve out children’s education (and then some, for inflation) from net worth before computing financial independence.
Living off debt is operationally demanding — you must track every maturity and interest payment; debt mutual funds outsource this headache.

Claude’s Take

The headline framing — “without chasing stocks” — is doing some marketing work, but the underlying argument is genuinely sound and more honest than most FIRE content. The one-liner “investing keeps you rich, it doesn’t make you rich” is the keeper, and the real-vs-nominal math behind it is correct and well-stated. Most personal-finance influencers won’t say this because it’s bad for engagement; “be excellent at your job” doesn’t sell courses the way “12% SIP returns” does.

Where to keep your guard up: this is a survivorship story. He retired at ~25x expenses partly because he’d already had a high-earning IB career — the advice is downstream of a large corpus he doesn’t dwell on. His debt-heavy allocation is rational for him (corpus already covers 2x his spending), not a universal template; someone at exactly 20x expenses leaning 85% debt is far more exposed to a long retirement and inflation than he lets on, and his own quiet drift back toward 50% equity tacitly admits this. The 8% “never exceed” rule is a clean heuristic but it’s a snapshot of a ~6.7% government-bond environment, not a law of nature. And the “5 crore health insurance / big vision / yacht” notes are aspirational texture more than actionable.

Docking points for the medium being an INDmoney brand show (mild platform bias, no product pushed but the framing favors their world) and for some hand-waved numbers. But the core mental models — career-first wealth, real-return math, the FI-multiple ladder, debt’s capped-upside/total-downside asymmetry, house-as-expense — are clear, correct, and useful. A 7.