Forget about early retirement; Most people will not become financially independent at normal retirement (55-60). Unlike early retirement, this is a mandatory retirement. Otherwise, our quality of life will significantly decrease, and we will depend on our children. Also, why have we not seen a retirement crisis in India?
(1) For this, we need to invest an amount equal to at least 75% of expenses (that will continue in retirement) as early as possible. You can deduct expenses for your parents, children, and EMIs and travel for work. Even then, this 75% target for expenses is tough to achieve.
(2) income minus expenses should be a big enough number for this.
(3) For this, the income should be high enough
(4) This implies that expenses should not grow as fast as income. A mistake many make in the name of “I deserve” this and that.
(5) Debt should be kept to a minimum. If you “must” own your roof, there will be implications. Cash-rich is better than asset-rich cash-poor.
(6) We need luck and providence to escape huge expenditures or frequent unexpected recurring expenses due to health/hospitalization, etc. An emergency fund equal to six months of expenses has limited utility.
At least these many stars must align for an ordinary guy to become financially independent in retirement. I am sorry to say this will not happen for most people. It is not impossible, but it is pretty hard. Changing our social station always is.
So investing in that small cap fund will not save anyone unless the investment amount is large and grows larger consistently (in a risk-managed portfolio).
“This is so de-motivating. Is there no hope left for me?”
What I have stated is the ground reality. I am only saying that the cup will never be full of most people. That does not mean we stop trying to fill it.
We will have to try our best: increase income as much as possible, work our backs off, keep expenses at a minimum, etc. The more we sacrifice our wants, the better our chances.
Yes, we should not sacrifice all our dreams, but considering that financial independence at normal retirement is mandatory, some sacrifice is essential. Like everything else in life, a balance is essential here, too. We can find the balance only if we understand both sides of the coin – short-term gratification and long-term independence.
“Obstacles don’t have to stop you. If you run into a wall, don’t turn around and give up. Figure out how to climb it, go through it, or work around it.” – Michael Jordan
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Dr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over 13 years of experience publishing news analysis, research and financial product development. Connect with him via Twitter(X), LinkedIn, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free, AUM-independent investment advice.Our flagship course!Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions!⇐More than 3,500 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter the market condition!! Watch the first lecture for free! One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.Increase your income by getting people to pay for your skills!⇐More than 800 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner seeking more clients through online visibility, or a salaried individual looking for a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts and pays you. (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos! Our book for kids: “Chinchu Gets a Superpower!” is now available!Both the boy and girl-version covers of "Chinchu Gets a superpower". Most investor problems can be traced to a lack of informed decision-making. We made bad decisions and money mistakes when we started earning and spent years undoing these mistakes. Why should our children go through the same pain? What is this book about? As parents, what would it be if we had to groom one ability in our children that is key not only to money management and investing but to any aspect of life? My answer: Sound Decision Making. So, in this book, we meet Chinchu, who is about to turn 10. The narrative revolves around what he wants for his birthday and how his parents plan for it, as well as teaching him several key ideas of decision-making and money management. What readers say!Feedback from a young reader after reading Chinchu gets a Superpower!
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Dr M. Pattabiraman (PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over 13 years of experience publishing news analysis, research and financial product development. Connect with him via Twitter(X), LinkedIn, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free, AUM-independent investment advice.
Published by CNBC TV18, this book is designed to help you ask the right questions and find the correct answers. Additionally, it comes with nine online calculators, allowing you to create custom solutions tailored to your lifestyle. Get it now.
This book is designed for young earners to get their basics right from the start! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.
This is an in-depth exploration of vacation planning, including finding affordable flights, budget accommodations, and practical travel tips. It also examines the benefits of travelling slowly, both financially and psychologically, with links to relevant web pages and guidance at every step. Get the PDF for Rs 300 (instant download)