Including one or more passive income sources in our retirement plan is crucial. It enhances our income, minimises the risk of investments in the capital market, and helps us stay active and nimble. Passive income refers to any income source that requires minimal maintenance of the actual product or service. The costs of maintaining the…

A reader asks, “Can the freefincal robo advisor tool handle my situation? I am 40 years old and have Rs. 1 Crore cash in the bank. I have no other investments (don’t ask why; it’s a long story!). I want to retire by age 55. How should I invest this Rs. 1 Crore for a…

A reader asks, “Can I retire at 47 with Rs. 5.7 Crores with a monthly expense of Rs. 2 lakhs?” Let’s use the freefincal robo advisor tool to find out more. Note: This retirement planning illustration depends on several inputs and assumptions. Not all of them are shown here. The individual must change these inputs…

A reader says, “I am 26 years old and recently started working. My monthly expenses are about Rs. 60,000. I aim to aggressively invest for retirement, aiming to achieve coast FIRE in 10 years and retire by 55. Coast FIRE then allow me to freelance, spend more and invest significantly less (I will continue to…

Let us discuss a retirement plan for a 28-year-old who wishes to retire by age 50. The following inputs and assumptions are used in the retirement calculation. Age 28; Retirement age 50; Life expectancy age 90; Monthly expenses Rs. 40,000; Current corpus is practically zero; Inflation before retirement: 7% and after retirement 6%, Return expectation…

Readers often ask us if there is any ideal or optimal equity exposure after retirement. This question is tricky to answer as it depends on the individual, but some general guidelines or thumb rules are possible. Asking this question on the verge of retirement without prior market experience can be harmful. It is essential to…

In this article, we discuss if the oft-used safe withdrawal rate is practically helpful in retirement planning. What is a safe withdrawal rate?  The safe withdrawal rate (SWR) is the annual withdrawal amount in the first year of retirement divided by the available retirement corpus. Backtests are usually used to determine an acceptable rate. We…

A reader says, “Sir, several times you have emphasized the need to gradually decrease equity allocation step-wise, well before the retirement date. I have seen some illustrations with the freefincal robo advisor tool, and all start with an asset allocation of 60% equity.” “What if a person has a debt-heavy portfolio and wants to increase…

We recently received an enquiry, and one of the questions was, “How can you call an Excel sheet a robo-advisor?” This is not the first time we have encountered this criticism. Many young earners have claimed that the freefincal robo advisor is “just” an Excel sheet with “macros” and it is not really a robo…

A reader says, ” I have used the freefincal robo advisor tool to create my financial plan. You have an option to include one or more annuities or pension plans. I was wondering, why do that? Would it not be more tax-efficient to have a simple bucket strategy without any pension product or bond interest?”…

We received this message via our contact form: “Can I retire with a corpus of Rs. 3 Crores?” How could I reply yes or no when there is no other information? Rs. 3 crores could be anywhere between ample, to a grey area, to inadequate. It all depends on the lifestyle of the retiree and…

A reader says, “I am investing next month with a corpus of Rs. 6 Crores. Please guide me on how to invest this for a peaceful retirement. My wife and I are both 55 years old. Our annual expenses are Rs. 12 lakhs (including Rs. 25 lakh health insurance cover).” We shall punch this scenario…

This article addresses frequently asked questions about early retirement and the FIRE (Financial Independence, Retire Early) movement. 1 What is the definition of financial independence? When a person has enough income from her investments or net worth to not only replace existing gainful employment but also combat inflation in essential expenses and lifestyle changes for…

We discuss a counterintuitive idea in retirement planning. The sooner you retire, the lower the retirement corpus necessary for financial freedom! But where is the catch? Let us consider a 30-year-old who wishes to plan for retirement. Let us call him Dagwood (a comic character created by cartoonist Chic Young).  He wants to decide the…

A reader says, “I was recently introduced to freefincal by a colleague. I am 48 and did not plan anything for my retirement. After reading your articles and understanding how important retirement planning is, I feel like a failure.  What can I do? Is there any hope left for me?” Please don’t despair. The past is…