Life Insurance

Everybody needs a life insurance to protect their loved ones from financial hardships in the event that your time on the planet has unexpectedly come to an end. So I wanted to write a post about life insurance. The recommendations made in this post are for people who are planning early retirement. For others, it may not work. You requirements of life insurance will be different pre and post retirement.   Pre-retirement Life Insurance At any point in life before retirement, the amount of life insurance you need is the corpus that you would need at the time to support all … Continue reading “Life Insurance”

How to Choose a Mutual Fund

We’ve all heard it — don’t choose a mutual fund just based on past performance or star rating. Then, how does one go about choosing a good fund? That is the question I want to answer today. While I am not expert at picking a good mutual fund, I did have my share of bad pickings and hence have had some wisdom knocked into me. So here are some tips on how to choose a good mutual fund based on my experience.    Disclaimer: Information provided in this blog is to help educate you. I am not suggesting that is … Continue reading “How to Choose a Mutual Fund”

My Asset Allocation

I have discussed the 70:30 asset allocation in my previous 2 posts. However, I did not really follow the rule, not because it did not work for me, but for the simple reason that I wanted to learn market cycles and take risk while doing my investments. I would not suggest anyone play with investments like I did (unless you know what your are doing) and risk losing money. Instead follow the boring simple rule of 70:30 and it works. This is more of a case study of my investing style.   Disclaimer: The asset allocations discussed in this post worked … Continue reading “My Asset Allocation”

The 70:30 Asset Allocation

In my previous post, I talked about about allocating 70% to equity and 30% to fixed income and just keep that ratio irrespective of which stage you are in your life. But does it really work? Lets work out some examples to see how it might work under various conditions.   Pre-retirement While you are still not retired, you have income coming in and you are investing. It does not matter what markets are doing, your job is to just invest in such a way that you maintain the 70:30 split.   The way it would work is that every month … Continue reading “The 70:30 Asset Allocation”

Should You Retire Early?

Early retirement is not for every one, and it is not like everyone need to retire early. Don’t blindly follow the bandwagon and join the F.I.R.E (Financial Independence Retire Early) cult. You subconsciously know who you are, and whether early retirement makes sense for you. Here are some reasons why you may not want to retire early.   You don’t know what you will do with all the free time Just imagine, once you have achieved the goal of early retirement, and if you sit down to think “what’s next?”, then boy are you in trouble. You should already have … Continue reading “Should You Retire Early?”

How Long Will My Money Last?

How long will your money last? The oft given cliched answer is — it depends. It is true if you want someone to answer for you. But if you put some effort, you will be able to answer the question yourself. The only problem is that you should be able to make some good estimates of your expenses, inflation and investment return long into the future.   This is a continuation of my earlier post — How Much Do you Need to Retire. If you haven’t read it, I urge you to head over there first. So by now you … Continue reading “How Long Will My Money Last?”

How Much Do You Need To Retire?

I have touched upon this point briefly in step 5 of How to Retire Early in 5 Steps, but I thought I should expand a bit on that. Most people suggest the 4% rule, which basically states that if your expenses can be met by withdrawing 4% of your corpus, then that should be the corpus size. For example, if you need Rs. 50,000 per month to meet all your expenses comfortably in your retirement, then your corpus needs to be Rs. 50,000 * 12 / 4% = Rs. 1.5 crores. But does it really work?   For the skeptics, … Continue reading “How Much Do You Need To Retire?”

How Soon Can You Retire?

Like I mentioned in the previous post, there are really just two variables that you can control, which determine how soon you can retire. They are your expenses and savings. Remember step 4 of How to Retire Early in 5 Steps? Plan a Simple Retired Life. The lesser the expenses today, the less it will be in future after adjusting for inflation. If you like a rich lifestyle today, then as the years go by, not only will inflation cause the expenses to go up, but you will want higher and better lifestyle which adds up. Your savings will not … Continue reading “How Soon Can You Retire?”

Would You Rather Have Freedom or Stuff?

One of the most important trait that people who want to retire early need to practise is minimalism. If you keep buying more stuff, you will take longer to retire. I made this mistake early in my life, but I was not too late to correct course. Especially because some of the things come with a burden of lifetime maintenance; for example owning a car. The constant repairs, upkeep and insurance keep adding to your expenses. Not just vehicles but every single thing that you own, ends up owning you. So if you would rather have freedom, you have to … Continue reading “Would You Rather Have Freedom or Stuff?”

Borrow From Future or Gift Yourself in Future?

Would you borrow a gift from the future or would you rather save up for a surprise gift in the future? That is how taking a loan vs saving works. If you take a loan, then you are borrowing money from your future. If you are saving, you will gift yourself a surprise in the future. Make your choice. In this post, I want to elaborate a bit more on step 2 of How to Retire Early in 5 Steps — Rid Yourself of Debt and Save Aggressively.   Debt is almost always bad because you are borrowing from your future, and … Continue reading “Borrow From Future or Gift Yourself in Future?”