Every once in a while I receive emails from some of my readers asking for advice on financial planning or unschooling or other things. I have posted a couple (A Reader’s Dilemma, Should I Retire Early?) of emails along with my replies in this blog. Today I wanted to post one more such conversation I had with another reader. As usual, I took permission from the person. Most of the conversation is published as is and I tried to make minimal edits. Hope you might learn something from it or perhaps have better advice. Feel free to comment at the end of this post if you want to post your advice. Lets get started.


Email Conversation #1

Reader: Hi, been a fan of you ever since I read your answers on Quora. Have commented couple of times in your blog anonymously.

re-ynd: Nice to hear from you!


Reader: Started my career in 2011, been in the first company for ~10 years , now in my second company. I don’t see myself growing up the corporate ladder - Infact, I don’t feel the drive and energy to do it. Want to survive through the grind for another few years and possibly retire by the time I am in my early 40s. ( I am 34 now ). Would it be possible for you to go over my retirement portfolio and provide a consultation? ( Of course, through email ! ) . I know that you will be extremely busy with your projects and personal life, so I am ready to pay for your time as well in case you provide paid consultations and the amount is pre-determined.


re-ynd: Happy to help out. If it is going to be a quick review (< 30 mins of my time) of your portfolio, I don’t charge to do the review one time. So if you have good clarity in what you want and have all the details of your assets, liabilities, insurance, emergency funds, income and expenses figured out, I am happy to take a look at your numbers and retirement timeline and give you my inputs. Generally you can pretty much get all the information using the calculators available on my blog. If you need advice on which mutual funds to select and what asset allocation you should go for etc, then it will be more involved like financial planning. For that I charge the following but you are absolutely free to go with any of the registered financial planners instead of me.


[canned response starts]

  1. I charge by the hour for consultation which is Rs. 2,000/hr
  2. If you want to do your own financial planning and picking of mutual funds, I have an 8 hour class on youtube which costs Rs. 5,000
  3. If you want to hire me as a financial planner to build your profile and just give names of mutual funds it will cost Rs. 10,000 (one time fees). After that you have to manage your investments as per the plan I give
  4. If you want to hire me as a financial planner to manage your portfolio on a daily basis it will be Rs. 20,000/year

[canned response ends]


Reader: Anyway-great fan of your blog . I don’t read much of your home DIY stuff , but anything finance related - I read those without fail. Regards

re-ynd: Thank you! It gives me immense pleasure to know that I am of help to someone!


Email Conversation #2

Reader: For now, I would like you to do a quick review . I would definitely love to do a one hour consultation with you, some time later this year . This email would probably help to set the context for that discussion.


Background: I am 34 years old and my wife is 33 . No kids as of now - we are under treatment for that and would incur some costs for it in the near term . Did my BTech in computer science from one of the topmost government engineering colleges in Kerala. I was in Bangalore between 2011-2020, moved to my hometown in Kerala in 2020 during covid. Changed my job in 2021, but stayed remote. Currently working from Kochi ( since my wife started a job in Kochi ) , and visits the Bangalore office for a week once every 2-3 months. I prefer staying back in Kochi ( it is not as fast and crowded as Bangalore and not as slow as my hometown ) .


Also - being in Kochi allows me to be close to my parents who are home alone( they are around 2 hours away ) . That was one of the major reasons for me to stay back . Only downside is that there are not many job options for my domain here . Eventhough , I hate my current job and work culture ( I start dreading about Monday from saturday evening - it is that bad! :) ) I am unable to move because of that . If I was in Bangalore, I might have been able to change my job much more easily. Recently ( April 2023) , I bought the apartment that we were renting in Kochi. ( Not from an investment perspective - had to buy it since the ancestral home that my parents live in , is in a flood prone area ).


Expenditure: Been tracking my expenses from January 2018. I am surprised that I have been judiciously tracking it daily till now. So my annual expenses come around 7.5 lakhs per annum. It used to be a bit more in 2018 and 19 while we were in Bangalore. This includes everything - medical expenses incurred for infertility treatments, rent, money that I spend for my parents ( I pay their utility bills ) , money spent on eating out , travel etc. Can provide a detailed split up during our consultation. For 2023, I am expecting around 11 lakhs ( Expenses - Rent + EMI ) as the total expense - this includes ~4.5Lakhs that I pay as EMI. ( took a 30 Lakhs home loan @8.7% for 10 years ).


Major expenses coming soon:

1. Car - currently drives a 13 year old wagon-R. My wife is hellbent on getting a CSUV and she has the liquid money saved up for just this purpose ( ~20 Lakhs ) . She doesnt have any other demands, and for all the other things, she is a very prudent saver.

2. IVF treatment - we might have to shelve out 2-3 Lakhs for IVF treatment in the short term . If we have kids, there might be additional expenses. Overall, ( post the early repayment of loan + kids expenses if we have kids ) , I am assuming that we would be very very comfortable with 10 lakhs per annum . ( in today’s purchasing power ) .


Income: I currently earn 1.7 in hand monthly + RSUs. I was also supposed to get quarterly bonuses and annual bonuses , but for the last one year ( and for the next year ) , the company is not in good shape and those bonuses are literally zero. Even if I get those, I will use those proceedings towards prepayment of my home loan. My wife earns around 1.3 Lakhs per month in hand. As of now, she doesn’t have any major issues at her work , and plans to work for as long as possible.


Assets:

As of 1 July 2023: ( Amount in Lakhs )

Particulars Type Jul 2023
Salary account Savings Bank 4.5
FD Emergency fund 1.75
FD2 Emergency fund 10
Saving account Savings Bank 1.2
PPF Retirals 14.8
PF Retirals 19.5
Gratuity Retirals 0
Shares/MF Investments 33
NSC Investments 2
US MNC RSU vested Investments 7
Digital Gold PhonePe Investments 0.75
NPS Retirals 7
LIC insurance 0.59
TOTAL   102.09


My wife might be having ~80Lakhs as total assets - have not considered it above. She also invests a small sum into Mutual funds every month and to some post office investments. Most of her money is in an FD ( ~25 L) , which I mentioned above she has been judiciously saving for a car.


No health insurance other than the corporate one.


Used ~32L I had as savings ( in FD) to pay down payment for the apartment in Mar-April 2023. Parents and in-laws also helped a bit to provide the rest of the down payment. Took a loan for only 35% of the purchase value.


Investments: I started investing in 2016. At that point, I used to invest 2500/- per month into one fund as SIP , and then around every couple of years increased either the SIP amount or the number of funds. All are equity oriented funds.


Through Geojit: Rs.8000/- per month in each of these funds as monthly SIP

  1. Canara Robeco Emerging Equities
  2. DSP Small Cap Fund - Regular Plan - IDCW
  3. ICICI Prudential Value Discovery Growth
  4. HSBC Midcap Fund - Regular Growth
  5. SBI Small Cap Fund Regular Growth
  6. Tata Equity P/E Fund Regular Growth Plan

Current investments: 12.33L Current Market value: 18.51L


Through PhonePe ( Started this in early 2022, mostly to explore US markets)

  1. ICICI Prudential Nifty 50 Index Fund Growth - Rs.5000/- once in a while
  2. Motilal Oswal Nasdaq 100 FOF Regular - Rs.5000/- SIP per month
  3. Nippon India US Equity Opportunites Fund - Rs.3000/- SIP per month

Current investments : 2.3L Current Market Value: 2.5L


Individual Stocks: Tries to invest in blue chip stocks once in a while. Around 70% of this portfolio is composed of Infy, Reliance, HUL and Dmart. Rest minor amounts split across CochinShipyard, Wipro, TataMotors, SBI, Prestige, TNPL, Vguard etc. Some of the stocks are in red, and have not sold any script since 2017-18.

Current investment: 13.10 L Current Market Value: 14.73L


Questions:

1. Is my investment strategy correct ? I want to have a total portfolio of 6 Cr in probably another 8-10 years ( If I can survive that much time in the industry ) . Currently all my MFs are equity oriented , since I consider PPF and PF to be the debt components. Should I increase the SIP amount ? Any other suggestions/ comments on my investments ?


2. On another note, have you ever been anxious about your work ? I didn’t have many issues in my first company, but ever since I moved to my current company, I am always kind of anxious . Was an above average student + employee all through my career , but here things are different. Have had a few bad reviews and , mild - passive aggressive behaviour from my management . Most of the time, my BP levels are all over the roof. I never had any issues speaking out my mind and putting forward my view, but here, I rarely talk in meetings! Basically I lost all my confidence about me and my career. :) And this has been continuing for more than a year now.


The only time I am peaceful are Friday evenings + Saturday mornings. Sorry about the long email. Regards


re-ynd: So here is my quick take on your situation. The first thing I would like you to try and do if at all possible is to change jobs or at least change projects in the same company if it is going to help. I don’t think this kind of passive aggressive attacks are good for your mental health. If you dread Monday mornings from Saturday evening then that is a bad sign. That is the first thing I wanted to tell you. Why did you change jobs? If the reason is not because you hated it then perhaps you can try to go back to it but work remotely? I understand that most jobs don’t have that kind of flexibility anymore. But just a thought. I also understand that the job market is a bit tough too. Still, do consider switching. Now on to some financial advice.


  • Your annual expenses are inline with what I would expect from a family of your size. So no problems there.
  • Major expenses before retirement = Rs. 20L car + medical expenses = Rs. 25L approx
  • Income = Rs. 1.7L + Rs. 1.3L = Rs. 3L post taxes without including RSUs
  • I am assuming that even if you retire, your wife may want to continue working, so there will be Rs. 1.3L income in today’s terms until she retires which is a major bonus
  • Current corpus = Rs. 100L + Rs. 80L= Rs. 180L
  • Have sufficient emergency fund
  • Medical insurance may not be adequate depending on your situation
  • Assuming the above corpus is after down-payment for house but before the other large expenses mentioned above
  • Cannot comment on MF selection without further research, but switching from “regular” to “direct” fund jumps out as an advice at cursory glance. See suggested readings [1] below
  • Advice is to avoid investing in stocks directly unless you believe you know something more than most other full time investors
  • If possible sell all stocks cancelling gains with losses as much as possible without affecting taxes. Even with some tax I would advise to get out. See suggested readings [2] below
  • Invest that amount in MFs in staggered fashion over a year
  • Equity allocation = Rs. 18.5 + Rs. 2.5 + Rs. 15L = Rs. 36L which is nearly 35% of your corpus. Not sure about wife’s allocation
  • Equity asset allocation is quite low for a lofty goal such as early retirement. Need to increase equity allocation in future. Aim for 70% equity or at least 50% of total corpus


Questions

Q: Is my investment strategy correct?

A: They are generally OK, except for the ones I mentioned above.


Q: I want to have a total portfolio of 6 Cr in probably another 8-10 years

A: Some assumptions below (conservative numbers were used)

  • expenses before and after retirement in today’s terms (includes kid and EMI expenses) = Rs. 12L per year = Rs. 1L per month
  • income = Rs. 3L
  • possible savings = Rs. 3L - Rs. 1L = Rs. 2L
  • retirement corpus available today = Rs. 180L - Rs. 30L (car + IVF) = Rs. 150L
  • salary increments per year = 6%
  • withdrawal rate in retirement = 4%
  • investment returns = 8%
  • inflation = 8%


If i plug in those numbers in https://retired.re-ynd.com/how-soon-can-you-retire/, you can actually retire in 8-10 years

From https://retired.re-ynd.com/how-much-should-i-invest/ you will have a corpus of more than Rs. 6 Cr including the Rs. 1.5 Cr that you already have assuming you can invest at least Rs. 1.5L every month.

Everything looks good if you ask me. You can retire even earlier if you can save Rs. 2L per month.


Q: Currently all my MFs are equity oriented , since I consider PPF and PF to be the debt components. Should I increase the SIP amount ? Any other suggestions/ comments on my investments ?

A: SIP should be Rs. 1.5L per month at least. Invest 70% into equity MFs and 30% into debt MFs. See suggested readings [3]. Increase SIP by at least 6% every year.


Q: On another note, have you ever been anxious about your work ? I didn’t have many issues in my first company, but ever since I moved to my current company, I am always kind of anxious . Was an above average student + employee all through my career , but here things are different. Have had a few bad reviews and , mild - passive aggressive behaviour from my management . Most of the time, my BP levels are all over the roof. I never had any issues speaking out my mind and putting forward my view, but here, I rarely talk in meetings! Basically I lost all my confidence about me and my career. :) And this has been continuing for more than a year now.

A: I did not encounter the issues that you mentioned but I can understand how frustrating it must be. My problem was I didn’t find the kind of work I enjoyed that I can get into a flow. There was one year which was quite bad where I started a project and a team which got handed over to another team in another country because my manager went behind my back to appease some TL from another project and handed over our project to them. I was spending a lot of time in meetings and working 12 hours a day attending late night and early morning meetings only to get the project stolen from me. But it just made my resolve to retire early even stronger, so no harm done :).


Suggested readings

  • [1] https://retired.re-ynd.com/how-to-choose-a-mutual-fund/
  • [2] https://retired.re-ynd.com/how-not-to-invest-in-stocks/
  • [3] https://retired.re-ynd.com/the-7030-asset-allocation/


Email Conversation #3

Thanks a lot for your email.

True - I know that I should change my job . Been trying to do that . But no options within the company - complete hiring freeze. In fact, in the last one year, we have been through three rounds of workforce reduction . I had met with my manager from my previous org - he was ready to hire me back , but they too are having a hiring freeze for a few quarters now. Another challenge is location ( not sure whether we will be able to work it out) as well as CTC . ( the inhand part would mostly be the same, but i might lose out on RSU + bonuses - which I am fine with. It is a small price to pay for mental health! ) .


I am still looking out for options in Kochi - but the options are fairly limited for my experience level even after telling recruiters that I am ready to take a pay cut . ( Entire IT workforce in Kochi would fit into less than 50% of RMZ Ecospace )


Reason for changing my previous job : pure FOMO - it was the first company I had joined straight out of college and wanted to see how it was like in other companies. And of course, the lure of a higher total CTC ( pay + RSU + bonus )


I will go through your suggestions and reading material . I have read these earlier, but would do so more carefully this time. And they would make much more clarity since I have concrete numbers with me this time.


“There was one year which was quite bad where I started a project and team which got handed over to another team in another country because my manager went behind my back to appease some TL from another project and handed over our project to them. I was spending a lot of time in meetings and working 12 hours a day attending late night and early morning meetings only to get the project stolen from me. But it just made my resolve to retire early even stronger, so no harm done :). “

I can totally relate to this. Last quarter , we were hell bent on a release milestone working long hours + weekends. ( I just got one weekend to myself between April and June end) . In the end, the milestone slipped by one week - not because of us, but because the entire system had fault lines. But, we ( especially me, since I was the lead ) got the blame for that fiasco! And our management did not have the guts to point it


Anyway, as I mentioned earlier - keep writing. I enjoy your blogs ( even read today’s post about opportunity costs ) . And I hope you won’t mind me dropping an occasional email ( Not just about retirement, but about finance/life in general ) . I promise I will not spam your mailbox much!

Once I read your references , I will take up a paid session with you at a time suitable for both of us.


Email Conversation #4

re-ynd: By the way, would you be ok if I take parts of your message, remove any personal details you want to be removed and publish a post so others in similar situations can benefit? Feel free to say no and I won’t mind at all. Hope your work situation improves soon. I can understand the work pressures. Everyone likes to lay the blame on someone else. The best leads and managers are the ones who take full responsibility and shield the lower orders. I met a couple like that in my career. Great managers.


Feel free to email once in a while if it is a quick help and don’t be obligated to take a paid session from me. Any good financial planner will do.


Email Conversation #5

Reader: Go ahead and publish - just dont use my name ( or use a fake name in case you need it !) :). Regards