Posts tagged with "corpus"
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Why Is Financial Planning So Hard?
I’ve seen people with various kinds of behaviors when it comes to financial planning. I find it strange. Perhaps it is not strange. Perhaps it is just their history and their experiences in life that make them behave in a certain fashion. I have seen people living in the moment and not worrying about the future and I have seen people with a lot of assets who could have retired 10 years ago, but wouldn’t. The worst part is that they still worry and stress out about losing their job. I am like, – “Dude, if you lose your job, that is the best thing to happen in your life. You can enjoy all the super huge assets that you have saved up”. Crazy world I tell you or perhaps crazy me (more likely).
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Reached A Milestone
We have finally reached an important milestone! But not in a good way :(. While we are sort of minimalists, we still spend quite a bit. As a result, we recently reached a milestone of Rs. 50 lakhs spent on various expenses since we became financially independent in January 2018. Generally people should be proud of their achievements, but this is not one of them :). Still, it is not all too bad. According to my projections of expenses I should have reached the Rs. 50L lakhs milestone by end of 2022, yet we did not reach it until July 2024. So not too bad.
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Our Income Sources In Retirement
While I mentioned my retirement income sources many times before in my blog, I still get questions about that. So I thought I will revisit our income sources after our early retirement in 2018. It has been more than 4 years since we retired and nothing has changed in terms of income sources. I think most people are skeptical when I say I retired early and wonder if I am getting income from multiple sources. Actually that would be a good, probably correct way to retire early. But like many things in my life, I have taken huge risks with very little recourse if things fail. Having a plan B means I don’t have enough trust in Plan A. So plan B really is to make plan A work (you heard that one before didn’t you?). So in this post I will list out all our income sources again.
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Expenses Revisited: 2022 Edition
Hopefully you understood how I funded the purchase of a new car. The summary of it is that I already anticipated all kinds of expenses I might encounter in retirement and then some (called as miscellaneous). Based on those expenses I figured out a corpus big enough to handle not just our living expenses (called as monthly expenses), but the major expenses such as buying a car or laptop or new furniture etc called as annual expenses. I will get to that number in a minute. So using my investments, I was able to fund my car. Basically, I sold a few units of my debt mutual funds and paid for the car in full. In this post I would like to revisit our cumulative expenses and corpus as on date after the major car purchase expense.
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How I Funded Purchase Of A New Car
If you have been following my past few posts, you already know that I purchased a new car. You might also recall that the budget I set for the new car was Rs. 6 lakhs. In this post I want to answer some of the questions that might be popping in your mind including why I have a specific budget and how I funded it. I have just one portfolio which is my retirement corpus. I don’t maintain different portfolios for different goals, because I only have one goal which is to stay retired for ever :). The retirement corpus is supposed to fund all expenses in my retirement. It could be any monthly expenses like food, petrol, electricity, kids expenses etc. Or it could be some big annual expenses such as buying a car or painting the house etc. If you want more details, I suggest you follow the links above and read about my expenses first. I explained everything in detail.
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How Is 4% Rule Working Out For Me?
I ended the previous post with a resounding “yes” for the question on whether 4% rule works in India or not. I also mentioned that given what we know about current inflation and return expectations in India, we can assume that the investment will last about 50 years assuming a conservative 30% asset allocation. In this article I want to show you how my portfolio was performing because I retired based on 4% rule with a bit of a buffer. So how is that working out for me? Given the market correction in the past few months and the increasing inflation, am I draining more money than I expected and am I at risk of out living my corpus? Lets find out.
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How Is Your Portfolio Doing?
When ever the market falls, people are curious about my portfolio. They want to know how my portfolio is handling the crash (according to them). I shrug my shoulders and reply “same old”. Yes, that is pretty much my attitude whether the market is going up or down or under. The portfolio is doing exactly what it is supposed to do. Actually, to tell you the truth, the market is certainly not crashing. It is just a correction, at least so far. May be if it falls a lot more from here, I may call it a crash.
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Real World Application of 4% Rule
I have not even completed 4 years into retirement, yet I wanted to check how the 4% rule is working for me. Please keep in mind that this is such a short time in retirement that we can’t make any conclusions about whether 4% rule really works in this day and age at all in India. We will only know its usefulness in a much longer duration like a decade or so. This exercise is to understand how a 4% rule will work with and without the 20% buffer I usually talk about. Lets get started.
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How Much To Invest To Accumulate 5 Crore By The Age Of 45
I read an interesting article where someone wanted to know how much they need to invest to accumulate Rs. 5 crores by the age of 45. It would be interesting to see how I would answer that question. I was also wondering if there are enough tools on my blog to be able to answer such questions.
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Three Years Into Early Retirement
It is now exactly three years into early retirement! I can't believe how time flies. I can now officially say that I have lived through retired life, although three years is still a short time. These years have been quite eventful to say the least. Stock market crash, a new virus that affects the whole world, lockdown for several months, raging bull market while in pandemic. I've seen things in a few years than I have never seen my whole life :).
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