Here is how you can review your retirement portfolio. 1. What is the retirement corpus worth today? If you retire today, how many years can you be financially independent? If this number equals the years you expect to be alive from today, you are financially independent! For example, suppose I can be financially independent without…

A reader asks, “Sir, what return should I use while planning for retirement? I wish to retire by age 55. I am currently 35”. 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 utilising that figure to calculate…

DIY investors often ask us, “What withdrawal rate do you recommend for retirement planning?” — a discussion. The withdrawal rate is defined as the annual expenses in (the first year of) retirement divided by the corpus. Typically, this is estimated before or at retirement and is known as a “Safe withdrawal rate” (SWR). Backtesting is…

A reader asks, “Sir, you have shown in many articles that the freefincal robo advisor tool uses a four-bucket strategy. Can I DIY a three-bucket strategy using the tool?” Short answer: Yes, you can, but we do not recommend it. Those who wish to start with the basics head over here: What is a retirement bucket…

A reader asks in response to – I am 30 and wish to retire by 50; how should I plan my investments? – “Can I use a single bucket to manage inflation-indexed income?”. The article details the retirement bucket strategy adopted by the freefincal robo advisor tool. We reproduce an extract below for a discussion….

“Can we use the freefincal robo advisory tool to track the progress of our financial goals?” is a question we often get from users and potential users. The robo tool, as many readers would know, is a financial planning tool. It automates the process of systematic risk management and suggests a variable asset allocation schedule…

We have recently witnessed a big shift in how young earners manage money. Investing is getting popular instead of saving. Many more think of future money management (a better-sounding phrase than “retirement”) earlier than ever. However, not all of them sit down and do a proper retirement planning exercise. Here is why this is essential….

A reader asks, “If there is a Real estate component (physical) in a retirement planning portfolio, what is the best way to consider this during the rebalancing of assets? Or when considering the equity vs debt allocation”. “For example. Without considering RE investment, my portfolio is at 65: 35. ( 65 % equity). However, if…

A reader says, “I have a generic question about retirement planning. Can you retire if your annual expenses equal 6% of your corpus?  Say my monthly expenses are 1 lac. My corpus is two crores. I do SWP for 1 lac monthly. If the returns exceed 6% pa, it will also cover inflation. Is there…

We discuss how to create a resilient investment strategy for retirement. This 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…

Chandran is 30 and salaried and hopes to retire by 55. In this case study, we shall find out how he can plan for financial freedom in retirement.  That is, we shall find out how Chandran can derive an inflation-protected income and be financially free after retirement. What is inflation-protected income? A retirement income that…

An ideal retirement portfolio should (1) generate an income that will keep pace with inflation and (2) have some buffer in the corpus to handle unexpected expenses (recurring or one-time). Here are the elements of an ideal retirement portfolio. 1. Pension: This is a prominent and important component. Also known as income flooring. This will…

A reader asks, “What is the corpus required to retire in 2026 at age 55 with monthly expenses of about Rs. 1 lakhs?” We shall use the freefincal robo advisor tool for this exercise. The retirement corpus is assumed to be invested in five buckets. Please note that the numbers provided below represent an example….

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 utilising 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…

30X refers to the retirement corpus that is thirty times a person’s current annual expenses (X). 25X, 45X, etc., are all corresponding multiples of X. What does 30X mean in retirement planning? Suppose my current annual expenses are Rs. 12 lakhs. I expect inflation after retirement to be about 6%. I expect the post-tax return…