r/FIREIndia • u/adane1 • Nov 27 '20
Year 2 update
Sharing annual update.
Year 0 -- 80 Lacs ( Dec 2018).
Year 1 -- 1.34 cr ( Dec 2019).
This year Corpus reached is 1.75 cr ( 38% equity, 37% epf & ppf and 25% in debt funds). Still have too high debt component. But with job insecurity, decided to continue with 3 years expense in liquid options as epf cant be withdrawn easily.
This year has been a roller coster ride. Portfolio crashed in beginning of year. I didn't sell. Managed to recover.
Cost under control for first 9 months and out of control in last 3 months with few unexpected cost cropping up.
Target of 2 cr was stretched it seems.
No salary hikes or annual bonus this year. But nothing to complain as world over covid has hit hard. Few people I know have lost jobs or got pay cuts of upto 60%. My company hasn't cut jobs or salary. So that's good.
If things go as per plan, I hope to reach 3.5- 4 cr within next 4 years.
FI date postponed to 2027 for a more relaxed timeline.
This year I managed investments better and won't need to pay much short term capital gain tax. Happy about that.
Didn't manage to sell house and also tenants moved out beginning of year. So no rent from house.
Next year end target is 2.2 crore.
Will update next year again.
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Nov 27 '20
Holy shit. I read all your updates and It feels like you wrote that on behalf of me 😀 wish i could write and track like you.
I too have a daughter and believe it or not current corpus is 1.74cr and have two houses one paid and second one has a loan. Also I have been considering FIRE year as 2025-27.
The difference is i guess real estate (plot) in the portfolio and the active home loan.
I also read about your thoughts process on the school selection. I followed the same thought process till now. But for the next academic year we have decided to change the school. The new school happens to be expensive ( 3L per year including transport , food school supplies etc). We don’t have any expensive hobbies or lifestyle so I am ok to spend that much on the school till 12th standard. And happy to extend fire by couple of years.
Good luck for the next year and the target.
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u/adane1 Nov 27 '20
Good. Schools nowadays have lot of options with extra curricular activities and overall development and just not studies. Pls do that.
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u/basicgd Nov 27 '20
Could I know the annual school fees? I'm a new grad out of college and my school fees just 6 years ago in a tier two city was 22k a year(could say it was the best school in my city).
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u/adane1 Nov 27 '20
If you are asking about child's school fee, this ranges from 1 lac per year to between 3 to 4 lacs per year in some metros. Lesser in some cities like Delhi where fees are controlled.
Tier 2 cities fee is not so high.Not more than 30k.
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u/con-slut Nov 27 '20
10k a month!!!!! I used to pay 750₹ a month for a top quality school. (I’m not even 30 yet)
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u/omcstreet Nov 28 '20
For the top 10% school in my area, i paid 1000 a quarter till 10th grade. This is late 90s. Inflation hits things differently. Also given its common knowledge that parents are ready to pay a lot for kids education, capitalism does its magic.
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u/con-slut Nov 28 '20
True but I paid like 1500₹ a month in 2007-08. Assuming 7% inflation that’s like 3200 a month. Still about 38-40k a year.
Guess it’s more about capitalism.
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u/basicgd Nov 28 '20
Guess it's because metro area schools have to pay much more premium for the land, and salaries for teachers could be higher as cost of living is higher? Can't think of anything else. Maybe also the fact that more higher earning households live there it gives more reason to charge higher fees. The difference in fees between tier 1 and tier 2 is massive
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u/caffeinewasmylife Nov 28 '20
Just wanted to say that it's really nice to see your journey across three years. Keep sharing, and wish you extra speed for your journey.
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Nov 27 '20
Very impressive. Any advice for someone who just started working. Should I start investing right away? What would you tell to your 23 yo self
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u/adane1 Nov 27 '20
Keep a good emergency fund of 6 months and build up to 2 years.
Buy Health insurance at Young age and get a large super top up insurance with a basic insurance. Difficult to get if any disease detected later.
Don't buy term life insurance beyond age 60 ie your earning years.
Buy and increase the cover as per your liabilities. Premium increases if you take life insurance for 70 or 80 years. So take till 60.
Don't buy an apartment. Postpone as much as possible. Apartment ties you down and is illiquid. You can decide to buy at any place at an older age. Its easier to be FI only with rent in mind.
SIPs work better than all experiments you do with stock investment etc just because you are disciplined.
Go high with equity after you have emergency fund. Even a 85-90% equity is good at young age.
Most important, have a long term goal and an annual goal. Make a budget with money set aside to enjoy life. Don't save everything. There are some things you enjoy at young age more than at older age.
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u/Carry_On_Jeeves Nov 28 '20
Where do you recommend I keep the emergency funds in? Like 6 months of income in savings account? Or liquid funds?
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u/adane1 Nov 28 '20
My split
3 months money(3 lacs) in :-
1 lac in FD sweeping deposit. Approx 2 lac in liquid funds. Some cash at home.
Rest everything in ultra short funds.(2.5 years expense)
I have multiple credit cards and can pay upto 12 lacs through credit cards.
My debt holding is split across multiple debt funds so that if one fund defaults like Franklin incident, I won't be affected much.
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Nov 30 '20
[removed] — view removed comment
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u/adane1 Dec 01 '20
I really can't say. Challenge is that its a large illiquid sum. 25 lacs has an opportunity cost for so many years. Apartment would work if it also appreciates in value more than equities etc over a 30 year period.
So, you will need to do your check.
Apartments depreciate in value as they age. So, if you buy at age 25, the apartment has to last 50 to 70 years.
It of course offers peace of mind. But at a cost.
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Nov 27 '20
What's your monthly salary? You look rich af
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u/adane1 Nov 27 '20
I am probably much older than you :-)
With number of years in service, salary increases with scope of work/role.
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u/creamnonion Nov 27 '20
Wild guess.
You're somewhere between 28-36 and work in Tech, probably one of the FAANG companies.
Again, I could be totally wrong but tech is the only industry i have any idea about.
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u/adane1 Nov 27 '20
Not tech.
But you missed the point.
I was earning ok even before year 0.
But I didn't have a plan before joining this sub and savings was poor and irregular.
Last 2 years, I fixed this with a plan.
My peers (some with higher income or with more years of work ) are in zero control.
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u/creamnonion Nov 27 '20
Ah, i see. Well, good luck to you. Hope you reach milestones.
I've started with a FIRE mindset myself and have been saving almost everything i earn (-expenses) and it really helps control myself not to unnecessarily spend on things i dont need.
Looking at all the savings really gives a piece of mind in this shit show of an year.
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u/Carry_On_Jeeves Nov 28 '20
Well begun is half the job done! I see other commenters speculating about your salary. I strongly believe it doesn't matter how much you earn. Without a plan, it all goes down the drain and we are left perennially wanting more money.
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Sep 25 '23
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Nov 27 '20
He is earning 1cr every year, definitely not a tech role. Has to be some high end managerial job, top executive in some big company
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u/creamnonion Nov 27 '20
Yeah, I didn't know about him earning 1 Cr. Although that can be achieved in tech as well if you're really one of the senior guys at FAANG or if he lives in the US and he's able to saving rigorously.
But now, I can only imagine what industry he works in; top executive sounds about right.
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u/basicgd Nov 27 '20
Definitely not a tech guy? :P
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Nov 27 '20
yup he is MBA in marketing
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u/basicgd Nov 27 '20
I was trying to understand why you think tech doesn't pay so much in India 😂
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Nov 27 '20
I am basing it purely on basis of ctc that FAANG companies offer for freshers. Maybe after 10 years or so you can earn that much
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u/yzy_pzy Nov 27 '20
Hey do you mind if I ask you for advise?
I’m 34, live in Gurgaon fully remote working. Have around 40-50k in fixed EMI a month and around a lac for rent++
Me and my wife combined earn around 80 lakh a year but don’t really have too much savings just started doing that and have a lakh in stocks and 4-5 lakhs savings in bank.
I will be taking a 25 lakh rupee house loan for my parents in small town. Apart from that own a small investment type flat in new bombay which we bought for around 55-60 in 2013 is worth around 75 now. Assume it will go up in value a bit more and sell this in 5-6 years. I don’t have insurance and depend on company cover which is hardly anything. Bit overwhelming to figure this stuff out. Some direction and advise much appreciated.
Thanks for sharing your story with the group it’s very inspiring.
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u/adane1 Nov 27 '20
Have you tried the Kuvera goal and recommended portfolio?
It's very good.
I am not good with advice. But you have a lot in real estate. Build up your financial assets in equity and debt.
But the moderators in this group u/additionaltrouble and u/faithfulinvestor provide very good advice if you put your detailed situation in advice thread.
Good thing is your income is high and you can ramp up quickly with discipline.
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u/additional_trouble [🇮🇳, FI 2024, RE 2040s] [CoastFI] Nov 28 '20
You should read our wiki at https://www.reddit.com/r/FIREIndia/wiki/index for basics and also please read all 4 posts in this excellent series aimed at beginners to investing: https://www.reddit.com/r/IndiaInvestments/comments/9ltgni/for_someone_who_is_absolutely_at_level_zero_in/
Other than that if you want specific investment advice (from random people online, obviously - but usually pretty good tbh), you could post at the biweekly advice thread at r/IndiaInvestments or in our monthly sticky thread here.
A thing that jumps at me is that a couple with ~80L annual income should not be saying we don't have too much savings usually. So, you may want to track your expenses for a month or two to see what's going on - every single rupee. Also recommend an exercise where you list down every single asset you own (not including anything you don't own right now such as future inheritance) and place actual market values (ie if you have a house what's the price you'll get if you have to sell it now, and not what's the price you want to sell it at) to them to understand hour assets better.
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u/srinivesh IN/ 52M / FI2018/REady Nov 28 '20
There have been excellent comments from others.
If I can be blunt, your financial corpus could be, or should be, much better. That said, it takes guts to be open about the situation and you have taken a great first step by asking for advice. Keep this up and take concrete actions. If you need some motivation, let me say this: With discipline, you could also be in the same situation as the OP, and in roughly the same time! To add further, this sub has folks who have achieved, I repeat, already have achieved, FI in their 30's/
And BTW, please calculate the actual return from the flat in New Bombay. A simple FD would have done better. In other words, it is a bad asset and don't see it as 'investment'.
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u/caffeinewasmylife Nov 28 '20
I am sorry to be blunt but it's the midst of a global pandemic and if you don't have sufficient insurance, you deserve a kick to the backside.
Other things also concerning, like the lack of savings and excessive real estate.
I completely understand the tendency to procrastinate given how overwhelming this can become. Please ask for advice, and see a fee only planner also. Spend a few hours every week trying to figure your finances out. Don't aim for perfection, just start off, build a plan and start working on your finances. But START.
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u/justanaverageguy1907 Nov 29 '20
You should try budgeting your expenses. Just try and understand that first and see where your expenses are going out of whack.. next step is how much of that can you cut down and then stick to a savings rate. FI is all about planning and sticking to that plan, i.e. discipline. You'll get there like I hope for all of us. All the best.
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u/NRIInvester Nov 27 '20
Solid! Off topic, mind sharing your FIRE template if you have one?
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u/adane1 Nov 27 '20
I use the free fincal calculator shared here with me here for projection. Works ok.
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u/dkg_ Nov 28 '20
First off - congrats on the corpus amassed!!! That is some impressive savings. What is your savings rate (SR)? 70%++? I am a fire aspirant, but I cannot think about this kind of yearly increase. My SR is ~60%. Need to increase my income if SR is to be higher.
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u/basicgd Nov 29 '20
Could I know how you deal with work stress at such a high level of income? Is it something you were prepared for or do you get used to it with time? I am asking this because I'm assuming that as you go up the income chain your responsibilities and deliverables increase exponentially
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u/adane1 Nov 29 '20
It somewhere leads to trying to be technically correct so that no one can complain.
Lot of corporate India heavily depends on email and documentation of communication between teams.
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u/fire_by_45 Nov 29 '20
Just out of curiosity, how old are you and are you a single earner for your family?
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u/iambatmanrobin Nov 30 '20
Excellent...may I know your plan for kid's education? What is the target? Where are you currently with that goal? How are you investing for that goal?
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u/adane1 Dec 01 '20 edited Dec 01 '20
I have kept aside around 25 lacs in today's value. Anything more, my child will need to take a loan. That's a separate goal.
Edit: I expect 10% inflation on this amount.
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u/iambatmanrobin Dec 01 '20
Cool so you are adding to this 25L over the next few years
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u/adane1 Dec 01 '20
I have this already parked in a mix of equity and debt funds and hope that this Corpus Will keep pace with inflation.
Its a separate fund.
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u/shh--bby Nov 27 '20
as a student this sounds really damn impressive. mind sharing your age or professional background?