Updates:
Original Post
I found this subreddit very useful, and I really wish I had found it a couple of years ago. Anyway, better late than never. I spent a lot of time over the weekend going over ELI5 Series and The Wiki posts.
I am a 34 yr old individual. My partner and I quit our jobs last year to go on an indefinite sabbatical. After working, living frugally and saving up over the years, our current net worth is about 25-30 times our annual living expenditure. Most of it is in fixed deposits (stupid, I know!). Some of it has been invested in PPF over the years. A small amount is in illiquid investments like a piece of land, and some gold.
I am starting to think about a plan to ensure both of us are financially independent over the long term. It is very likely that we will be earning some income over the rest of our lifetime. But it will probably be irregular, and we do not want to depend on it. We will probably inherit some money over the long term as well, but I want to ignore that too. So to simplify things, I will assume that I am not going to have any employment income for the rest of our lives.
The post A Simple Financial Plan Roadmap was very useful. I am using it as a template to illustrate what I have done and what I intend to do. One of the big goals is to keep things simple, so that I spend a minimum amount of time managing my money. This might mean we are not squeezing out the best possible returns, but that is okay. We are aiming for financial security, and if possible a modest increase in our wealth levels over the long term.
Any suggestions and advice is welcome.
Step 1: Check Insurance Requirements
We bought comprehensive health insurance coverage last year. The annual premium is a bit on the higher side, but medical expenses is not something we want to compromise on.
We have no dependents, and it is unlikely we will have kids, so we decided not to get any other sort of insurance.
Step 2: Check Level of Emergency / Contingency Funds (Basket 1)
- I want to maintain 2L INR in our savings bank account on average, which is about the money we need for our expenses every quarter. In the absence of any other income, I am a bit unsure about the best way to consistently maintain the balance amount, without keeping too much in FDs which pay out interest quarterly. Any advice on that specifically is appreciated.
- I have decided to put 10L INR (a little bit more than our annual expenditure) in Franklin India Ultra Short Bond fund - Direct as a contingency/emergency fund. This was on a tip from this comment.
Short term goals we have are around electronics/appliance upgrades (laptop, phone etc…) and travelling. So I have decided to put aside about 5L INR for that.
I was thinking of of putting that in some plan by Franklin. Again, to keep things simple I want to go with the same AMC as in Step 2 above.
Step 4: Longer Term Goals (Basket 3)
Our long term goals are focused around financial security in the long run (w/o any income) and saving for old age, when your expenses are likely to be greater.
I want to slowly move my money from FDs to a combination of:
- ELSS (Franklin India Taxshield Growth - Direct) to make use of 80C allowance
- Long term debt MFs (still thinking about the options)
- PPF
- A small amount to experiment with stocks, ETFs etc.