A reader wanted to know if he could invest his entire retirement corpus in mutual funds (of varying risk) and draw an income from them via systematic withdrawal plans — a discussion. Short answer: It is silly to put 100% of a lifetime’s effort, toil and hard work into capital market-linked products. Diversify keeping safety…

Broach the subject of retirement planning to a young earner, and you might get a response like, “I have just started earning. Let me enjoy life for a while and worry about this later.” When that “later” does arrive, it does so with its bag and baggage – home loan, car loan, older parents, older…

Many investors recognise the importance of equity investing pretty late. Even if they have some SIPs running, the amounts are quite small compared to their fixed-income investments (EPF, FDs, etc). This means their portfolios are loaded with fixed income. Readers often ask how to increase equity exposure from 10% to 50-60%. A discussion. In my…

Whenever I use my retirement planning slide deck to explain the importance of retirement planning, I get a few comments: “It is a waste of time to plan for retirement”. A comment on the Let’s Get Rich With Pattu in Tamil Part 1 Episode 10 goes, “Retirement planning is a big joke. Nobody knows how…

A reader says, “Can I manage with only 20% equity MFs for retirement? I am scared of more exposure to the stock market. I have about 24 years to retire.” The main aim of investing for long-term goals is to keep pace with inflation. That is, the purchasing power of the future corpus should be…

“My income is quite low. Is there any hope for me? How do I create a retirement corpus?” is a question we often receive. The rules of personal finance are the same regardless of income and net worth. Those earning less feel like they will never have the experiences or wealth of those who earn…

A reader says, “I have modelled my retirement plan using the freefincal robo advisor. The option to secure a part of retirement expenses with income flooring is particularly appealing after reading reader journeys like How I used RBI Retail Direct to buy government bonds and create an income source and The system I use to draw…

In this article, we explain the nuances of a retirement bucket strategy and discuss a method to implement it. What is a retirement bucket strategy? We have seen how our parents and grandparents manage their money after retirement. For most of them, a pension would be the main component. The remaining corpus would be distributed…

A robust post-retirement investment strategy requires the following: (1) A large cash buffer for emergencies, (2) A guaranteed income source that handles partial expenses for the entire duration of retirement (also known as an income floor) or guaranteed income that increases at a rate close to inflation for the first 10-15 years of retirement. (3)…

A reader asks, “I will turn 55 this year and would like to retire in 2025. How do I find the corpus required if my monthly expenses are close to Rs. 1 lakh?” We shall use the freefincal robo advisor tool for this exercise. The retirement corpus is assumed to be invested in five buckets….

Many people make two mistakes while planning their finances. The first common mistake is presuming that equity mutual funds provide a 12%  (or more!) return and utilizing that figure to calculate the necessary investment amount. Regrettably, this approach entirely disregards asset allocation and the reality that investing 100% in equity is not feasible. Even those…

Recently, a reader asked, “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…

Here is how one can use a safe withdrawal rate (SWR) to gauge the health of our retirement corpus. This discussion also answers broader questions like, ‘When can a retiree take risks after retirement?’ and ‘How much equity exposure can I have after retirement?’ Note:  In this day and age, using a proper retirement calculator only…

A 35-year-old reader wants to know if he can retire comfortably by age 55 and what he should do to achieve this. He is married to a homemaker aged 30. When he reaches 55, his wife will be 50. So, we shall plan for retirement income until she (the younger spouse) reaches 90. Therefore, he…

Many individuals close to retirement are unfamiliar with buying government bonds vis RBI Retail Direct and how it differs from purchasing a life insurance pension plan*. We discuss the essential differences in this article. In this article, a life insurance pension plan refers to an immediate annuity plan, not a deferred one. Always avoid deferred…