FIRE plan backFIRED!!

[yolo2324]

@ludicrus Where is the wiki? Li nk please

 

[haileylynn]

@womble7 Dude why are you trying to reinvent the wheel. The 4% rule includes inflation adjustments and investment returns(balanced portfolio).

Seems like you do not trust the financial markets if that is the case maybe you should do research about becoming landlord.

Rental yields can be around 3-4% if you invest in small flats. Also most of the time they perfectly track inflation.

You can keep buying them one at a time and renting them out until you reach your magic income one day and then you can retire.

Most of your net worth will be in real estate so be careful about location. Do not put all in one city because if something like a serious water crisis happens those investments will be worth 50% of their value due lack of renters.

 

[womble7]

@haileylynn I do trust the markets and have 60 percent equity allocation as of today

Tbh i donot know the 4 percent rule will surely explore and as someone else also pointed out read the wiki..

 

[haileylynn]

@womble7 In simple terms let's say your expenses are 4 and so you need capital of 100.

Statistically speaking average returns are 3-4% more than inflation and that is what you are consuming.

I year one let's say your returns were 12% while inflation was 8%, you consume 4% while reinvesting the excess 8% to counter inflation.

The big thing with this rule is if you capital falls due to bad market conditions your 4% will be less than 36 lacs and you will have to manage your expenses with that. On the flip side if market is good that 4% will be more than 36 lacs.

 

[alexpro]

@womble7

Will be alive till 90 yrs of age.

O.........okay!!

 

[womble7]

@alexpro Aaj se 90 saal baad "milenge aaj hi k din... Issi jagah... Bol ayega? Ayegaaaaa..."

 

[mrdean36]

@womble7 If you invest 3L every month at 12% return and increase investment by 12% every year, you will have 300cr in 30 years

 

[ssbc]

@mrdean36 I am new to finances. Can you please explain how ? And what would the projected sum look like with 75k/month after 30 years?

 

[resjudicata]

@ssbc 75K/month with 10% step up at 12% return, in 30 years will be approx 66 crores.

But keep in mind that 10% step up is very ambitious goal. You are assuming that your savings (or say Salary) will grow 10% every year for next 30 years, but marriage, kids, unexpected expenses, inflation, etc can put a dent on it.

A 5% step up would be more realistic, which will give you 39.5 crores.

 

[ssbc]

@resjudicata That's a really good figure as well. I am aiming for 25-30 crores for retirement in the next 30 years. I am 25 currently and want to retire around 50-52 maybe. Considering inflation cost and everything is 25-30cr enough to retire after 30 years ?

 

[resjudicata]

@ssbc Your yearly expense now = X

Inflation avg over 30 years = 4%

Your annual expense after 30 years = 3.24X (might increase because of added responsibilties)

Now use this SWP calculator http://easy-calc.com/financial-calculators/SIP/Advance-SWP-Calculator

where SWP amount is 3.24X/12 and initial investment amount is 25 crore. Return 10% and inflation 4%. Period= how long you want to live after 30 years from now.

 

[ssbc]

@resjudicata Thank you soo much for such a detailed explanation and taking time to reply. Means a lot.

 

[womble7]

@mrdean36 Damn... Such tips much wow

 

[mrdean36]

@womble7 You want 4cr at retirement in current value. You earn 27L. You want to retire in 18years. You need to save 22L a year, which is less than 27-tax.

 

[bukareem]

@womble7 Another major annual expenditure you skipped is tax. The withdrawals from Corpus has profits and LTCG tax has to be paid over the profits (after indextation).