My take on this is - Seven steps that need to be taken to achieve financial freedom: 1. Track Your expenses 2. Improve Savings rate to be greater than 20% 3. Pay off your debt 4. Emergency Fund for 3 to 6 months support 5. Start Investing 6. Track your networth 7. Grow your networth = 25 x annual expense After Step#7 - Congratulations. You are officially ready for retirement.
Hi. Your views on being super conservative & considering an inflation of 8% is very logical and true in our Indian cultural mindset. However there are few observations: 1. Early retirement does not mean as you said sitting idle. One can choose to work less number of hours or a less demanding job. Point is to ensure after a basic threshold corpus has been accumalated, the remaining monthly expense is covered from some basic economic activity. 2. So if I choose to leave a hectic corporate career at 40, considering I am 30 now, I can choose to work less hours or do some part time job or freelance to cover family expense and ensure my corpus is not touched till the age of 55 or in case of any unforeseen medical emergency. I didn’t see you covering this aspect. 3. If one invests in a mix of Equity and Debt (FD), one can still generate 10% easily. The reason is: if you assume 8% inflation in the country then your bank’s borrowing cost (FD) rates will always be near to WPI levels. So conservatively even if you give FD a weightage of 60%, you can still achieve 10% with and inflation of 8% with 40% being invested in equity oriented funds.
The whole video comes down to this. If you want to retire early 1. Have tons of money 2. Continue to work independently provided you have the skills and expertise
Wrong, The whole video comes down to this. If you want to retire early 1. Spend money reasonably and save around 66% of your income for 8-12 years (if you are earning ~100000/- ex: Software engineers) 2. Continue to work independently provided you have the skills and expertise
@@amarkachari1839 well it's just an expression. Having tons of money means having a lot of money. To live comfortably under early retirement requires a big corpus amount which can be accumulated either thru savings or inheritance. Required corpus amount differs from person to person depending on their financial position and the lifestyle they plan to have after retirement
How to retire from 9-5 boring professional job, and want to live on the non-professional job or your hobby. The whole video comes down to this. If you want to retire early 1. Spend money reasonably and save around 66% of your income for 8-12 years (if you are earning ~100000/- ex: Software engineers) 2. Continue to work independently provided you have the skills and expertise.
Morgan Housel recommended you in Twitter. Bought your book "you too can become rich" without reading your blog or seeing much of your videos. So far, the best value of money in terms of reading the book and best value of time in terms of watching these videos. Thanks Sir 👊
In retirement calculator, it would be nice if instead of entering value needed in the first year of retirement, we could enter the current value and how far is the retirement so one doesn't have to calculate the amount needed in the first year of retirement after inflation. The calculator is still really really very useful. You are doing an awesome job. Just a small suggestion.
You didn't consider taking health insurance and paying the premium in 10 years to cover the future health expenses after early retirement. Taking national pension scheme to get pension after the age 60 till death. Especially in USA, they have health scheme and pension scheme to support themselves , so their corups amount is kinda less but not below 40x of their annual expenses.(good blogger of FIRE). Not everyone depends on equity to create passive income , they depend on real estate(rent) income, gas station franchise income , blogging, online course, book writing royality & so on. You shouldn't their idea is dump. Though few people fail to implement FIRE successfully. In India , it's possible to retire with at least 50x of your annual expenses provided you have a passive income apart from equity , have covered your health & term insurance and pension plan.
I've kept track of Mr. Money Mustache and his ideas, and I should say that they seem sound and well thought out... But I should also say that your viewpoint seems much more prudent and realistic for an Indian family where parents and family rely on each other quite heavily, and where you can't avoid helping even extended family members at certain times. That could wreck any FIRE plans that don't have enough of a safety margin.
For all the 25 years corporate workers. Pencho, CCD aur Starbucks jana bandh kar, aur faltu k kharcha kaam kar. Aur un paiso se koi low expense wala Nifty 50 Index fund mein SIP kar. Koi best performing mutual fund aur pyramid scheme mein jane ki zarurat nahi. 25 se suru kar aur 40 mein jake dekh kya hota hai.
People are telling me that I am being too conservative with 50x (assuming 2% returns over inflation, but setting aside 20% of corpus for contingencies & big expenses). Looks like even that is not enough, hmm...
Subject line says “how to retire early” and the conclusion is why and can’t retire early. The subject should have been why one can’t retire early unless one create a corpus of 5-7 Cr
Sure, it looks like that... But he also doesn't say that it can't work or that you shouldn't aim for it. He just says plan properly and be realistic. Much respect for that.
I think people need to take control of their finances and not expect everything to be handed to them... If you don't understand what you're doing, how do you expect to be able to adapt when the road-map is no longer relevant due to changing circumstances?
I have a question. The "amount needed in first year of retirement" - is this in terms of money today or is it the inflation adjusted value? If it's the former, the actual first amount needed will be more than what projected. Will the target corpus for retirement remain the same in this case? If it's the latter, i.e. the 1st year amount is inflation adjusted, how do we arrive at this figure given we don't know how long it'll take us to reach the currently unknown corpus? These calculations are spinning my brain.
Sir, Your videos are simple yet powerful. Just finished watching number of them over last one week. Keep it up. Can you please create a video on how to get better monthly income once FIRE goal is achieved by 45 years ?
Nice video sir. I like how you have tailored your video towards us indian audience, our culture and our mindset. It's a little conservative but full proof.👍 Thank you.
Nice video. I think the changing movement for many is when they have to pay hospital bills. I was shocked at the expense when both parents were hospitalised at same time(unfortunately) and realised it will get worse for me and next generation hence need medical insurance and better savings.Anybody who doubts this , should check hospitalisation expenses, thats one factor which will destroy all your savings plans.
Pattu sir. Please make a video/article on how an investor should reach an Equity:Debt asset allocation of 60:40 if most of his/her investments is in debt already (almost 90% in debt). Especially for investors between 35 to 40 age group. I understand that from your rebalancing articles you mentioned that in such scenarios, the only option is to aggressively invest in equity without any rebalance. But wanted to have your detailed opinion on this. Are there any other alternatives which you can suggest. I think this will surely help many investors. Please make a video/article on this. Thank you sir
I think if you are referring to US blog and their number, you should refer to US inflation rate, which is 3%. The, it will be apples to apple comparison.
Am 59 , alone , having own independent apartment. My total corpus is 70x invested in fixed deposits. I don't get any pension. I don't have Car. Use all modern amenities and travel twice a year. My total expenses are 175000/- a year and I invest 150000/- in PPF and 50000/- in Debt Funds every year. Life so far is reasonably good. However since this lunatic government came in to centre , a fear and uncertainity always there.
@pattu....can you tell me if iyou have taken into account that the person has completely paid his personal or home loan...if not how to factor in this...
Sir, I believe you are from India... So here's the fact... The money lenders make crazy return on capital here. We're paying loans at 24%. Your assessment of 6% return assumes that we don't have much financial literacy or look at opportunities to get higher return. Moreover, to make 7 or 8 crores is difficult for even highly paid software engineers in India. So, you're are putting off most of the viewers. But a nice video overall 👌
+freefincal - Prudent DIY Investing (freefincal) I am 58 and getting interest income of 372000 p.a. from Bank FDs. Out of above I invest 150000 p.a. in PPF, 50000 p.a. in MF and 12000 p.a. in Health Insurance. The balance 160000 I spend p.a. . Is this a sound plan looking at my age ?
Dear Pattu Sir. Excellent video and very informative. Thank you . Is the Robo Advisory template discontinued? I tried to download from your website but could not find one. Thanks Krish
sir, please make a calculator or video for how to build and where to build corpus for NRIs. Taxes are making me think whether to invest in Stocks or ETFs in India to build the corpus. Thank you
I have seen many videos about retirement or investment . No doubt videos are good but sorry to say ,all these videos are related to only middle class people and not to higher class. I am saying this because in each and every video all of you are explaining about retirement planning but before that you said about HOME LOAN ... Not necessarily each and every person is having home loan. So , please try to improve your videos...
Current inflation rate ie around 4% and there are no sign it will increase to very high levels. By your calculations if someone has to retire by 45, he should be either CEO or owner of a company.
Let's look at the monthly expense, 10L a year are we in Parliament to spend like that no max household expenses are bellow 5L if avoid those 'retail therapy'. Yet again one miscalculated advice ignored the fact of insurance also.
May be US specific blogs are good for people there. How is it irrelevant when fire movement is catching up there. They are talking in terms of geographical arbitrage, which we have not considered. 4% over inflation is realistic in US/CAN. There is growth in FIRE community in the west, looks like it’s growing as a cult in the west.
