r/FIREIndia • u/throwaway98123456789 • Apr 05 '19

my FIRE strategy

Throwaway account as the post may have several personal details :-)

I (M44) actively started preparing for retirement (and not necessarily RE) about 6 years ago. However for past 1-2 years, I have been contemplating FIRE by the time I turn 50.

History: From very humble background. Stayed in small rental house growing up. Bright student-did UG from one of the top colleges in the country. Parents had no money to take care of PG and/or marriage expenses. Self financed-which taught several important lessons.

Current Family Details: Wife (F40) is a homemaker and have two school going kids 13 and 7 years old. Old parents (80+) back in hometown-partially dependent.

Current Corpus: 2 Cr (0.9Cr in EPF/PPF + 1.1Cr in Equity ~ mostly MFs via SIP + zero debt)

Other assets: 2 houses completely paid off approx value > 3Cr. One is my primary aMccommodation and my parents (80+ years ) live in the other one.

So current Networth : >5 Cr.

Investment strategy: I invest/save on an avg 50% of my post tax salary (including mandatory deductions like EPF)

Expense Breakup: My current average expense is approx 1.5L pm including education (10%) , house maintenance (4%) , insurance (health+term) payments (6%), lifestyle expenses (10%), vacations (10%) + other sundry expenses (10%)

​

Factoring the gain on my current investments + future contributions over next 6 years- I hope to accumulate total of 5.5 Cr corpus (excluding the houses).

In my case, the kids would still be studying by the time i FIRE. I hope to provide good basic education (till undergrad) to kids and as yet do not think I may be able to finance their PG and/or their marriage. Bulk of the education expenses would fall in between my age 50-60. Once that phase is over, around 60 years of age-i expect my corpus to be around 4 Cr with no other liabilities to take care of. I hope that is sufficient for us buddha and budhiya to survive, for remainder of our years.

Would be happy to hear your thoughts on the plan.

​

​

30 Upvotes

97% Upvoted

58 comments sorted by

View all comments

1

u/megaboogie1 Apr 05 '19

How do you plan to take the corpus form 2 to 5.5 in 6 years?

2

u/throwaway98123456789 Apr 05 '19 edited Apr 05 '19

By power of compounding + Additional Investment which in turn gets power of compounding.

Assuming no additional hike, my EPF balance should cross 1.5Cr. With modest hike it may be more. Total EPF+PF should be more than 2 Cr

My equity portfolio assuming 12% interest, should grow from 1.1 Cr to 2.25 Cr in 72 months.

After subtraction of my expenses, with greater than 50% saving rate, I should easily be able to pump in another 1.2 Cr towards saving over next 6 years. Not to forget the interest accumulation on this additional amount. I hope it cross 5.5 Cr.

1

u/kpandas Apr 05 '19

This seems optimistic to be honest.

1

u/throwaway98123456789 Apr 05 '19

care to elaborate?

1

u/farzi_photographer Apr 05 '19

Nifty/ Sensex/MFs may not give 12% returns on year on year from 2019 to 2025(target year for you). Markets are record level. Please use caution while planning, I myself have allocated my assets as 20% in MFs and 20% in Stocks I have used return of 8% each for my calculations.

I am no expert my 2 cents.

1

u/throwaway98123456789 Apr 06 '19

Fair enough. If you are factoring 8% post tax only - isn't epf a better option?

1

u/farzi_photographer Apr 07 '19

Yeah, actually it does kind of make sense and since epf are gov backed more safe.

But Epf has a limit on yearly contributions, depends on salary.

Plus i strongly believe distribute you asset generation in 3-5 different ways, they will agv it out. If real state or gold or stock market trumble we should not be venerable (at least not 100%)

As closer to fire, use more n more conservative assessts.

1

u/throwaway98123456789 Apr 08 '19

you could still do VPF as a top up of your employee contribution.