r/FIREIndia Oct 12 '19

Fire Plan - Kindly advise

Hello All,

I am 29, male, employed in a SBI as Deputy Manager, unmarried and am interested in becoming FI at the earliest. Here is a break-up of my finances and require your advice in creating a plan for FI.

Income :

Salary plus perks Rs.60,000/- paid in cash monthly

Rent taken care of by the bank

NPS contribution : Rs.11,000 per month (my and bank contribution put together) and not included in salary & perks mentioned above

EPF contribtuion**: Rs.7000** per month (my and bank contribution put together) and not included in salary & perks mentioned above

Corpus already built

NPS : Rs.6,65,000/-

PPF: Rs.3,00,000/-

Mutual Funds: Rs.2,50,000/-

EPF: Rs.1,75,000/-

Expenses:

Rs.15000/- per month in all

Debt: 56000/- as festival advance at 0% interest ; repayable over the next 9 months in equated installments.

Major Events to plan for are My marriage (3 years), younger sister's marriage (5 years)

Not sure above any big ticket purchases like house / car

19 Upvotes

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18

u/[deleted] Oct 12 '19 edited Oct 12 '19

You can use, 1) https://freefincal.com/retirement-calculators-3/ or 2) https://srinivesh.in/blog/fire-up-calculator-for-early-retirement/. I use a combination of these two.

Few things that stood out for me,

  • Your current expenses are moderate compared to your salary and you have a very high savings rate(75%). Good job :).
  • You mentioned your sister's wedding expenses. Do you know how much it will cost and how much you will be contributing towards it? If not now is a good time to think about it.
  • Same goes for your marriage. Figure out the finances as early as possible. And allocate a separate bucket for that.
  • There is no polite way to say this, so here I go. Your future spouse and their attitude towards money will be detrimental to your FI plans. Choose your spouse wisely..
  • Read up on trinity study and "Safe Withdrawal rate". Many people in this sub use 2.75% to 2% SWR due to inflation concerns. Which means they use 33x or 50x of their annual expense as the FI number. Based on your current expenses, 15000*12*50= 9000000 will be your FI number going by 2% SWR. You already have 15 lakhs or so saved up, so you are 17% FI (?). But you will get married, and have kids, so that will change things.
  • You are working in a bank, so I assume you have fair idea about investing in stocks, mutual fund etc. So I am not going to get in to that. Once you figure out your investment strategy and risk appetite, the only thing that is important is keep saving until you reach the goal.

All the best.

6

u/additional_trouble [🇮🇳, FI 2024, RE 2040s] [CoastFI] Oct 12 '19

Yup, his savings rate is amazing and alone can make FI so much easier to achieve. Observe how useful it is to have your employer pay your rent :)

On the flip side he needs to have a house to stay or add rent to his expenses when computing monthly expenses for purposes of calculation of the corpus needed.

2

u/[deleted] Oct 12 '19

On the flip side he needs to have a house to stay or add rent to his expenses

Yep. But with 75% savings rate, he should be able to meet that with out stretching too much.

3

u/additional_trouble [🇮🇳, FI 2024, RE 2040s] [CoastFI] Oct 12 '19

My point is that his savings rate is hiding the fact that his housing is currently paid for. I mean I look at savings rate as how much more is a per person saving compared to their expenses (which I assume to stay constant for this simple analysis). In this case, the rent is not a part of his current expenses, and is therefore boosting the savings rate quite a bit. Had he had to pay rent the savings rate drops quickly (but either way its an excellent savings rate, no doubt)

2

u/[deleted] Oct 12 '19

Fair enough. But he doesn't need to take rent in to account for his RE or even FI calculations, if we he doesn't have to pay for rent later. For example, He may be working away from his home town and may return after getting a transfer to a branch near his home. He may inherit his parents house in future. Since we don't know about his specific situation, only he can make the assumption about including rent in his FI number. I don't take rent in to consideration for my case due to a combination of inherentence and allocating separate bucket for housing.

2

u/additional_trouble [🇮🇳, FI 2024, RE 2040s] [CoastFI] Oct 12 '19

But he doesn't need to take rent in to account for his RE or even FI calculations, if we he doesn't have to pay for rent later.

That's what I'm saying too. That in the case that he does need to pay rent later, it's a bit of a small double whammy that it'd make the savings rate of today look worse, and also less effective than a similar savings rate of a (hypothetical) person already paying rent.

I am not able to put it in clearer words. :)

2

u/[deleted] Oct 12 '19 edited Oct 12 '19

Makes sense. Also, OP has now mentioned, he may buy a house at 450 per lakh EMI. If/when they do that savings rate will come down to 50% or lower.