Posts in category "financial-planning" - page 2


  • Review Of A Reader's Retirement Portfolio

    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.

    ...continue reading
  • Cost Of Owning Something

    Whenever I plan to buy something expensive, I go through this exercise of figuring out the cost of owning something. Remember that for most material things in life, the cost of owning it is not just the sticker price. There is more to owning it. After running through the exercise objectively if I still feel the need to buy something, I sleep over it. Gives a bit more clarity on the subjective aspects. Some things are an absolute necessity and I am not talking about those ones. Moreover, what is a necessity for me may be a discretionary spend for someone else. Finally, there is no point doing this exercise if the cost of the thing you want is cheap and doesn’t affect sustainability too much. Again, for some sustainability may be important, for others it is not.

    ...continue reading
  • Can Bard Answer Early Retirement Questions?

    Ever since Chat-GPT was announced, I wanted to use it to ask personal finance questions just for kicks. But I was too lazy to sign up. Unfortunately by the time I decided to sign up, the page said it was full and asked me to wait. After a few weeks I heard about Chat-GPT integration with Bing and wanted to try it out. Unfortunately though it required me to sign up to a Microsoft account and wanted me to use Edge browser or something like that. I don’t remember all the reasons, but I am certainly not going to do any of that. I mean asking for email is one thing, but phone number even if it is for OTP is a no go for this kind of service. It is a lot more personal. Not that I don’t trust them with my data, it is mainly because I don’t want to increase the attack surface.

    ...continue reading
  • Should You Sell Debt Or Equity For Retirement Expenses

    After reading my post on “withdrawal plan in retirement”, one reader asked why I suggested that one should sell debt mutual funds to handle the retirement expenses. In that post I gave an example where an investor has only debt and equity mutual funds and in that scenario, it is preferable to sell debt mutual funds to handle everyday expenses and then do a rebalance once in a while to get the asset allocation to the ratio that you prefer. The reason for this recommendation is quite simple. It is to avoid selling mutual fund units of an asset class at their low point. Since equity mutual funds go up and down quite a bit in value, it is possible that in some years you might sell at a low point and dent your compounding effect. I will explain how with an example.

    ...continue reading
  • Withdrawal Plan In Retirement

    After my post on lumpsum vs SIP investment, a reader asked – “Wanted to understand the other side - how to redeem from our funds after we retire? Say we have calculated the number and we have enough. But, the challenge is how to get to a withdrawal mode from accumulation mode. You have showcased how you do it in some articles but can you do it with some numbers for a fictitious person? Ex: Age 40. Amount 6Cr spread across multiple equity and debt funds and US Stocks. Now, how to withdraw to last till their age of 85 for an expense of 1L per month (corpus is 50 times)?”. I thought it is an interesting question that needs answering. I will go with the numbers given by the reader and work out an example in this post.

    ...continue reading
  • Inflation Affects Poor More Than Rich

    RBI has decided to pause the interest rate hike, which indicates that the central bank thinks the inflation might have peaked. While inflation is currently high at slightly over 6%, we Indians are quite used to that kind of inflation anyway. For most of the western world, it is causing a lot of pain. Not just the inflation but the rate hikes by their respective central banks. The rate hikes even affected some banks (think SVB for example). High inflation is a problem for everyone, but it hurts the poor a lot more than the rich. Yet the media makes it sounds like everyone is affected the same way.

    ...continue reading
  • Capital Gains Harvesting

    A couple of weeks ago, I mentioned about tax loss harvesting being a legitimate way to reduce your taxes. In this post, I will explain another way to reduce taxes while taking capital gains using capital gains harvesting. A capital gain harvesting is basically a method of tactically selling some of your investments for capital gains without actually paying any taxes on them. How does that work? Let’s find more about it in this post.

    ...continue reading
  • Tax Loss Harvesting

    There are lots of legitimate ways to reduce taxes and tax loss harvesting is one of them. However, in practice, it is much harder to execute. But before we get ahead of ourselves, let me explain what tax loss harvesting is in case you don’t know. Tax loss harvesting is nothing but selling your investments for a loss when the value is below your invested amount. Then use the losses to offset any other capital gains or income that you might have. Generally tax loss harvesting works well with equity markets because there is a possibility that the markets fall and your investments could be worth less than what you invested.

    ...continue reading
  • Reducing My Asset Allocation Swings

    Ever since I started investing back in 2011, I have always wanted to do tactical asset allocation. The idea was not to maximize returns, but to minimize volatility. Tactical asset allocation is different from the general advice which you receive from many people including me which is to keep a fixed asset allocation and rebalance once in a while to make sure that the asset allocation difference remains within a small range. That advice applies for any long term goal like retirement. For shorter goals you may receive advice to reduce equity allocation as you near the goal. If I did not make any sense there, then let me explain with an example.

    ...continue reading
  • Budget 2023 And How It Affects Me

    Every year after the union budget I publish a post on how it affects me. I am doing the same again now. Usually the budget does not affect my financial planning much except for that one time when the finance minister introduced the tax on long term capital gains on equities. This budget was pretty mild and simple. No nasty surprises (at least for me). The only announcements that needed any financial planing were –

    ...continue reading