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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.
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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.
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Lumpsum vs SIP
Is it better to do a lumpsum investment or do systematic investment? Like many things in life, the answer is – it depends. There is usually no one good answer. But taking some examples we can see which works better in what situation. Of course these are just my opinions and they may not apply to your situation. Also, there may be many other cases which I do not cover. Finally, remember that whether you do lumpsum or SIP, in the long run the difference in returns will usually be miniscule unless you time the lumpsums very badly. With that out of the way, lets get to some examples.
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Solar Panel Project Update - Part 5
This is the final update in the solar panel project series for now. Hopefully by now you must be quite bored with the updates because I am sure no one is going to build a project that is exactly same as mine. But in case you are following along, you might have picked up some things that you did not know earlier or may be you found somethings that you could have done differently. The reason I am writing is to keep a journal of things. While I fixed most of the issues with my setup, I still had a couple of problem that don’t happen frequently which makes it difficult to debug. In this post I will discuss the problems and my solutions. May be there are better solutions, but these are ones that I could come up with. A reader was lamenting that my posts are too short so I let this post go as long as it needs to be. So enjoy :).
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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.
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Solar Panel Project Update - Part 4
As I mentioned in my last post about solar panel setup, there still a few more issues with my sensors. One of them is temperature drift. When the weather is cool like early in the morning, the DC current sensors read one value and in the evening when the temperature is hot, they read a slightly different value. The difference is quite small but get magnified when doing the calculations. For example, in the night around 7 pm when there is no solar power, the sensor would read 2.5V which after all the transformations turns out to be 0 amps of current. All good. Then in the morning say around 5 am when there is still no sun, the sensor would read 2.52V. Not much of a difference, but it get magnified as I will soon show you.
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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.
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Solar Panel Project Update - Part 3
In my previous post I explained how I improved the accuracy of my DC sensors using ADS1115. But there is one problem though. The ADS1115 gives accurate reading even when the supply voltage keeps changing. Yet, the sensor values will not be correct. The reason is that if the supply voltage is changing, the reading on the sensor will also change, but the accuracy of the reading will be stable because ADS1115 is independent of power supply voltage fluctuations. For example, let’s say the supply voltage is 2.5V, then when there is no current, the DC current sensor will read 2.5V, and in the code we assume the current is 0 at 2.5V. Now if the supply voltage drops to 4V then the sensor will read 2V, which is still the mid point and indicates 0 current. But in the code we have a hard coded number that 2.5V is the midpoint and we mistakenly assume that some current proportional to -0.5V is passing through the wires. That is the problem.
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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.
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Solar Panel Project Update - Part 2
This is a continuation of my previous post giving updates about my solar panel setup. As you will probably remember from that post, I found a good sensor that would measure AC voltage and current accurately and I was satisfied and very confident about the data coming from the sensors. However, I cannot say the same about my DC measurements. Many components in the system should be measured in DC including solar panel current, battery voltage and current etc. My initial set of sensors were not accurate and used to drift quite a bit with supply voltage and ambient temperature. So I set out to find better sensors and upgraded them and I cover part of that story in this post.
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