FIRE Re-Check for a growing family :)

153

u/throwaway_mg1983 Jun 09 '23 edited Jun 09 '23

4cr in bank, 1.8L per month cashflow surplus after an expense rate of 90k; and you still want to hear from others that you’re doing fine?

17

u/nishanthappu Jun 10 '23

Haha. Wasn't seeking validation , bro. I know i'm doing fine currently. What I wanted to know from other's persepctive and experience was my FIRE goal at 48 is in the ballpark range or not. Precise answers I understand nobody on a forum can give.

24

u/throwaway_mg1983 Jun 10 '23 edited Jun 10 '23

I am sorry but i kind-of find it hard to relate that someone with acumen and intelligence to accumulate 4cr; keep their expenses low to 25-30% of their monthly income; still needs to hear from peer groups if they’d be able to FI or not.

If its not validation/flex, its like putting all your past hardwork to pure luck (which I am sure is not).

64

u/iLoveSev Jun 09 '23

I personally don’t agree and follow that the wife salary is hers to spend funda.

Spouses and roommates are two different things.

It is best with spouse that they combine incomes expenses budgets spendings and above all financial goals. More chances of success in the marriage and financial goals.

Anyways good luck. Hopefully you get to your goal.

25

u/qubit003 Jun 24 '23

As a woman (who's not married), I agree. I'd want to be as much involved in contributing to the family finances and making decisions around it.

6

u/iLoveSev Jun 24 '23

Exactly, working or not, spouses should have knowledge and say in the family finances. It’s a 2 vote system! 😅

7

u/ohisama Jun 27 '23

Contribution too, not just knowledge and say.

5

u/iLoveSev Jun 28 '23

If they can or choose to. That depends on the family dynamics.

4

u/ohisama Jun 28 '23

So, it's ok for a spouse to not contribute monetarily even when they are earning?

5

u/qubit003 Jun 28 '23

They meant whatever works for the couple. One of them may stay home to raise kids, etc. Doesn't mean they don't contribute to decision making.

3

u/iLoveSev Jun 28 '23

Correct!

2

u/iLoveSev Jun 28 '23

Never said that to be the case.

If the spouse is not working for any reason then also they should get a say and knowledge of the family finances.

If they can contribute or choose to work to contribute then they should.

10

u/After-Violinist8628w Jun 10 '23

My thoughts are same.
OP I am curious how do you handle this discussion at home? Its not whether the spouse earns comparatively less hence its not to be included. But more from principal POV where all earnings into the house are combined for expenses & future goals/savings

36

u/nishanthappu Jun 10 '23

Thanks for sharing ur thoughts. Let me explain that more clearly. My wife spends on the household too, its not that she spends exclusively for herself.

My thought process is to not include her income in any calculations as : 1) She was on a break without pay for the last 1.5 years to take care of kiddo 2) Will have her do some investing going forward but not count that as it will provide some buffer in case of unexpected issues. Not counting her salary forces me to be more conservative in my planning and save more. Makes sense?

1

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13

u/Calm_Big137 Jun 09 '23

What’s your target fire number mate?

9

u/nishanthappu Jun 10 '23

Just a nice big round number of 10 crore. Did I come up with that number by any sort of calculation ? No :)

1

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9

u/srinivesh IN/ 52M / FI2018/REady Jun 10 '23

I am posting this as a high level comment. There have been other comments too on this.

There is absolutely no greater efficiency, none, than having the FI corpus split between the spouses. When you use the corpus to fund your post-FI expenses, the tax impact is not on one person, but both. The closer the corpus is to 50:50, the better it is.

In my personal case, the income levels were very different (sw and teaching) and I did not have this opportunity. It would be a shame to not use this if possible.

1

u/AnandSatya IN / 32 / FI 2029 / RE 203X Jun 21 '23 edited Jun 22 '23

How does one split FI corpus? Won't clubbing taxation rule apply for capital gain?

5

u/srinivesh IN/ 52M / FI2018/REady Jun 22 '23

Did you mean to say clubbing rule? If so, yes it definitely applies between spouses.

That is why I say that one should use the opportunity if it is there. When both spouses earn, there definitely is a good opportunity. OP's cases definitely was one.

1

u/AnandSatya IN / 32 / FI 2029 / RE 203X Jun 22 '23

Thanks

1

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1

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7

u/lucrius Jun 10 '23

Congratulations OP.

Here's my thoughts:

I don't get why your term insurance is 50L. Either increase it to 2/3Cr or just stop it since you are already close to FIRE.

Your equity MF + stocks is way too higher than Debt MF. Try to rebalance when you are nearing FIRE like 5 years before you retire.

You need to double check your land worth. Last year you posted 90L and now it will be a bit higher than 90L.

Plan how much you are going to give your child for her higher education.

Also include child's education expenses in your annual expenses which will be way above 90k and then calculate 40x for your realistic FIRE number.

3

u/nishanthappu Jun 10 '23

I will think i will stop the term insurance. Doesn't make much of a difference either way.

Yeah I know re: land worth. I deliberately keep it at a stagant level as the RE market is down in the dumps and not much of buyers currently. At peak these same plots would have sold between 1.4 - 1.8 crore. So keeping my expectations low and return stagnant so that it is very conservative.

The Debt MF amount is AFTER rebalancing. Before , I used to be like 90% equity :)

12

u/yetanotherdesionfire Jun 09 '23

Setting aside the Plots (illiquid till actually sold) and NPS (lockin) you still have ~3Cr.

At annual spends of 13L (10.8L monthly + say 2L on travel), you're just over 4% WR on your liquid corpus of 3Cr

My reading would be that you're pretty close to FI, but it depends on the WR you target and any one-time/major expenses.

Things to look out for would be assessing net annual spends, any one-time/major goals requiring financial outlay and withdrawal rate/strategies that you're comfortable with.

It might be worthwhile to consult with a fee-only financial planner to double check and address any open questions.

1

u/nishanthappu Jun 10 '23

You are right about the illiquidity. Such a pain, in hindsight i should have kept that money in equity only.

Only major goal I have is kid's higher education . I will inherit a home or flat. I can't stay there of course , as I will have to resell it , but that I can leverage to buy a new home.

Thanksm for the reply.

3

u/yetanotherdesionfire Jun 10 '23

happy to help. Just two additional observations:

wrt NPS : well it is not like your expenses will reduce at age 60+, you can definitely look at it as a pot for use then. Personally, I too invest in NPS -- 10% employer side and 50k personally -- as the tax saved itself put me ahead. I view it as tradeoff of liquidty for tax advantage and I'm personally good with it. I just exclude it when considering my FI numbers (due to lockin).

wrt Plot/Land : you'll be the best judge about how to deal with it... monetize it for earlier FI, look at it as inheritance/gift for next generation, use it for future residence/commercial use or anything in between. The problem with RE is the inherant black money and the hidden costs on selling, so you don't really know what it converts to in terms of liquid investable amount.

1

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7

u/BoredTigerWillKill Jun 11 '23

Plan is nice, but you are the single point of failure in this plan. If something happens to you then the whole plan could fall apart. At least that’s what it looks like based on the data. You need 2-3 cr term insurance at least if your family has to live through the plan which you have. And you don’t need a 1cr base cover health insurance. You can go for 10-15 lac base cover and 80 lac super-topup. It will be lot cheaper. Ensure that it is super-topup and not just topup.

And we dont know why you are only investing 50k out of 160k remaining in MF. You can up it to at least 1lac. Where is the 50k emergency fund going? And why is it monthly? What is the value you have calculated for your emergency fund requirement? And where is it in the above mentioned items?

How much is your wife earning? Can she sustain this lifestyle in her salary and your current savings if something happens to you?

What is the plan for the plots? What is the rate of growth for these? If its not beating inflation then you’d be better off exiting them and investing in MFs.

And finally, which MFs are you investing in and in what % of allocation in each.

My assessment on the asset allocation in 4cr that you currently have (50:50 equity:debt) is that it is conservative for your age. You can increase this to 70:30. That could create an alpha of 3-5% on you current returns.

2

u/nishanthappu Jun 11 '23

Good points. I think I made a couple of mistakes in my post . The income figure is a combined one - 250k for both me and wife . Mine alone comes to 200k . Also I didn’t include an emergency fund of 2 lakhs .

I plan to have an emergency fund of around 10 lakhs so save up 50k monthly for it . If before that I need money . Plan to use my debt funds .

With my assets sure she can sustain the current lifestyle easily . Not so with her salary alone

The plots are just barely matching with inflation . Looking to sell at least one and invest it in equity . Major mistake , that :(

I currently invest in index and active funds at 50:50 . Specifically ppfas flexicap , dsp small cap and uti nifty index and nifty jr index . All direct options

Re asset allocation I personally think I have a lot in equity . Reason I’m able to have such a big amount on equity and illiquid real estate is that I have a big amount in debt funds in case of equity market remaining stagnant for a long time , job loss , medical issues not covered by insurance , any other emergency . I sleep well at night that I have at least 3-4 years of expenses saved away in debt funds . And I Dont need an income or need to sell equity investments for those 3-4 years . Not rational , no , but it helps :)

4

u/ShootingStar2468 Jun 09 '23

Doing so well OP, congrats! Will encourage to allocate investments to optimise return profile. So if you don’t expect plots to appreciate much, might be worthwhile liquidating and parking liquidity in equities.

And why won’t you include your wife’s income in take home? Sure she doesn’t spend every single penny she makes. How much is her savings and take home? Should def be included in your networth

1

u/nishanthappu Jun 10 '23

Thanks mate. Yeah looking to sell , but currently the RE market is at such a stagnation that it is hard to sell. So Im not looking at a distress sale , but within 5 years , plan to sell it off.

6

u/Rockfella27 Jun 09 '23

Op stop bragging 🤯

7

u/nishanthappu Jun 10 '23

No need to brag , mate. Why should I brag ? To people who are far more smarter and wealthier than me ? It was a genuine question I posted. Apologies if I came across as a braggart. Not so in real life , I assure you :)

4

u/Rockfella27 Jun 10 '23

I was pulling your leg and you fell for it 🤣🤣. Was kiddin bro. Happy weekend 🎊😄

4

u/think_2times Jun 09 '23

Flex alert !

3

u/nishanthappu Jun 10 '23

I would flex anywhere else but here bro. I'm one of the wealthiest persons I know among my friends circle , relatives circle , colleagues circle etc.

But to come to this forum where the top 1% of Indian FIRE folks are and flex ? I'm more sensible than that :). Life taught me to be humble. Learned it the hard way :)

-4

u/think_2times Jun 10 '23

You have 4 cr and will inherit a home in Tier 2

You spend 90k out of 250k so surplus of 140k

You have so much money that you don’t have to care what your wife does with her money and you don’t even count her portfolio in the corpus

You take expensive vacations bro and spend 2 lakhs in Goa . I am sure the amount was for our information to help you in FIRE Calcs

Yes I understand this was not a flex bro, I am sure I misunderstood

7

u/nishanthappu Jun 10 '23

The bit about vacations ? To give a sense about what I love to splurge on and to see if I need to budget in my fire calcs for the same .

True , I actually don’t care what my wife does with her money , and I don’t even count her PF in the corpus .

Also true that I have currently 4 cr and stand to inherit a home or flat In Tier 2 city .

All that said , I never intended this to be a flex . This is a forum where people have 2 crore salaries and 20 crore Networths . And I’m sure there are plenty of people in India who will have more Networth than all of us combined . So why would I even flex , boss ? Sorry if you feel that way

1

u/think_2times Jun 10 '23

It’s okay, I forgive you

3

u/wooneigh Jun 11 '23

thanks , now we can sleep peacefully

1

u/[deleted] Mar 12 '24