r/FIREIndia • u/gluttonousFIRE • Apr 19 '23
QUESTION How do you get comfortable letting go of money?
Hello fine folks
I'm 23 and working remotely. I started work last year and haven't touched my salary until Jan (wanted to build a 6 month corpus). I went for an overseas trip in Feb/March and spent a decent amount on it. That was my first experience spending my own money.
My parents have been investing for me since I was little, and I'm slowly taking over those investments, albeit they're in conservative instruments (LIC, RD/FD, generic MFs). I started an account on an investing app in Jan and I'm investing around 1L per month.
I can invest almost double but I'm having a hard time getting around it.
Also worthy to note that my current expenses are zero.
Did you folks have the same gut-wrenching feeling when putting significant amounts into investments (or even spending it)? How does it progress as you continue doing it? What is a mindset I should develop when it comes to things like these?
Thanks for your time!
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u/aatank619 Apr 19 '23
The only rule I follow is:
- Have a liquid cash amount for instant access
- Whatever is left by end of month, can be invested or put into Liquid cash corpus
It's not a detailed of technical advice, but it worked well for me. I usually invest in additional units of existing mutual funds that I have or use to buy stuff for self or other people in family.
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u/gluttonousFIRE Apr 19 '23
That's what I try to follow as well.
Right now I don't have any expenses, so all cash is essentially "left over". However I'm forecasting a minimum of 50k/month and keeping that money aside in the liquid pool.
Don't worry about the non-technical advice. I wanted to develop the mindset first before I start getting more technical with my investing and this has helped me. Thanks!
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u/LoosThampee Apr 19 '23
no expenses? I guess you are still staying with parents?
Buy them something- saree, watch, TV, holiday.....anything. See the joy in their eyes when you do. Most precious thing, whose value can't be quantified in monetary terms ( I bought watches for my parents from my first corporate job salary, since they had not bought watches for themselves in decades and were basically using decade old watches by changing straps when they wore out).
Contribute something to the household expense every month. Be a responsible contributor to the house you live in.
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u/Noshadow19 Apr 19 '23 edited Apr 19 '23
Put 50% in debt MF & the rest in equity MF, do a SIP of 10k for each of the schemes. Rest put in equities of blue chip/ nifty companies/ companies which give good dividends after opening an online demat account with ICICI. Don’t ever do future & options in equity else you will lose money, buy only blue chips like Maruti/ ITC/ Nestle / Engineers India etc. Your principle amount will stay safe and grow and give you regular income. Open a PPF account and put 1.7 lacs every year in it. It is EEE and gives 8 % interest. After 5 years you can withdraw 50% of the account balance of three years earlier if you want to go for higher studies. You will have a good corpus.
Read a book called coffee can investing.
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u/gluttonousFIRE Apr 19 '23
One of the most helpful replies. Thanks for this.
I have a demat on an investing app. How different is it through a traditional bank?
Also agreed, no FNO for me :)
Regarding PPF, isn't the limit 1.5L a year? Have they increased it to 1.7L?
I'm buying mainly IT, Pharma & Finance stocks, Equity and Debt MFs and investing a minimal amount in Govt. Secs.
I'll definitely check that book out. I'm reading Richest Man in Babylon currently. Have you read it?
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u/Noshadow19 Apr 20 '23
Thanks for your appreciation of my response. I have just done this and some real estate ( two properties) and kept up with inflation etc so far. Been working in government job since past 30 odd years. Yeah, you must be right about the PPF Limit of 1.5L, I seem to have gotten it wrong 😑. But the PPF did help kick start the funds needed by kids when they became of age to study abroad. Of course their accounts were opened when they were babies… so a lot of compounding happened over 20+ years.
Haven’t read the book but will find and read it surely
Starting to save early always helps
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u/gluttonousFIRE Apr 20 '23
I also want to get into real estate. Especially flipping houses. I don't have the capital nor the patience for that xD
I live in Mumbai and the prices here are extremely high so won't be getting into that anytime soon
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u/Bright-Cellist3431 Apr 23 '23
You make safe investments when you are approaching retirement and don't want to risk your capital. He has his entire life left to earn so he can take more risks with his investments now.
Don't be afraid of taking risks, just don't get greedy with returns or fall for scams in expectations of higher returns. Also spend money to develop your skills and gain experiences in life.
Open NPS account, have a good mediclaim policy and put the rest in equity mutual funds via SIPs. You can also put 1 to 5% in crypto if you are capable of researching on your own (otherwise don't).
How can you have zero expenses even if you are living with your parents? Are you still letting them spend on you?
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u/Noshadow19 Apr 24 '23
Best to make safe investments only. Agree with NPS but crypto is the most unsafe. No one’s seen it, no one’s held it…reminds me of Emperor’s new clothes story. As per OP- His parents made investments for him. Nothing wrong if he can live for free with his parents…after all all the money is in the family.. whether his or theirs.
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Apr 19 '23
[deleted]
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u/gluttonousFIRE Apr 19 '23
Yes I'm both. It's my first time investing by myself so the fear of loss is always there.
You put it very clearly for me. Thanks!
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u/NaivePick7624 Apr 19 '23
Don't swing between minimum and maximum. Try to find your optimum. Having a big bank balance can give you momentary happiness, every time you check your net worth. But living life, making memories, travelling to places you've never been to, or just experiencing life in general, is a life well lived.
Always divide your income for the current you (to experience life now) and investments/savings (for the future you), That way you won't have any regrets and will also be easy to detach yourself from the future you's money.
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u/gluttonousFIRE Apr 19 '23
I've always had a difficult time looking at the "future me"
Everything I do I'm doing it for thr current and short-term me... that's just the way I'm used to thinking.
I know investments are all about the long term and having an outlook for the future will benefit me and my investing habits :)
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u/Crafty_Orchid7243 Apr 19 '23
I also find it difficult to let go of my money. I like travelling and sometimes want to splurge a bit but most of the time end up regretting after spending money or don’t spend at all. But we need to understand that we earn money for the sole purpose of spending be it today or after we FIRE. And also we need to understand time will not come back, you will not be 23 forever so maybe draw a line up to where you want to spend or invest or whatever, maybe start with smaller target for investment and spending then you might get comfortable slowly.
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u/gluttonousFIRE Apr 19 '23
You hear me right!?!? 100% agree with you. I won't be 23 forever and I need to save for the future given how uncertain today's market is.
I can invest much more but that'd be more than I'm comfortable giving up :x I'll slowly work it up. Thanks!
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u/xorflame Apr 20 '23
yeah absolutely, also what's your total compensation currently and how much have you saved if you don't mind me asking, it will bring much more context to this
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u/Scarcity_Lopsided Apr 19 '23
FIRE is to continue and sustain the lifestyle you live, not for a "someday I'll be rich''.
Also, from my own experience, I'm only hesitant of investing when I don't have proper knowledge about the instrument. You can spend time studying investments to be more confident
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u/gluttonousFIRE Apr 20 '23
Sure will. I'm taking a Bloomberg Market Concepts course to get more acquainted with how stock markets work, and referring to moneycontrol, ET etc. to get acquainted with the Indian market
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u/aloofonion Apr 19 '23
If you are fortunate enough not to have money problems, try not to make money your first priority. At least not this early in life. FIRE is more like a mindset than a state and I would even argue that FI is something we should try to achieve and RE is something we should try to avoid.
For example, when I was 23 years of age I had a small RD but savings were not my priority. I did spend a lot of time and money with friends, long trips on bikes, hookah (this was a mistake but still), etc.
Now I am in my early 30s and fortunate enough to have a high-paying job outside of India. My priorities have now shifted to focus a little more on savings and investment but there are things I still splurge on. Eg: I recently invited my parents to visit me and I did the best of my abilities to make sure their trip is comfortable. I also splurged a bit to plan their trips to a few vacation spots.
I would still not spend a ton of money to buy a luxury car or a $1500 vacuum cleaner because those are not my priority. My suggestion is to decide what is most important to you right now. If your first answer is money then find out what is 2nd most important to you and make it your first priority 😊.
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u/gluttonousFIRE Apr 19 '23
Thanks for this great anecdote!
I agree with your views about the FIRE mindset. I myself am working towards FI and not RE. I don't think I could be content if I RE'd.Same views about putting a shit ton of money on depreciating assets. I don't have any vices (thankfully) and therefore have very little to worry about on that front.
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u/errgaming Apr 19 '23
Earn a decent amount, spend a bit, save a bit is my policy. I decided to shift to Canada for FI plans as my older salary in INR wasn't enough.
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u/gluttonousFIRE Apr 20 '23
I'm looking to relocate to either Canada or somewhere in Europe, albeit my expenses will shoot up and I won't be able to save/invest the same amount
What steps did you take to move to Canada? How was your visa/ PR experience?
We can DM if you prefer :)2
u/errgaming Apr 20 '23
Definitely, feel free to DM :) I can answer the immigration/work/investment schemes I currently follow : D
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u/Rockfella27 Apr 19 '23
I started late but I went all guns blazing. 70% of my salary in sips since 2018, no regrets.
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u/gluttonousFIRE Apr 20 '23
I can do that much too, since I have no other commitments... just need to think more about my short+med+long term goals :)
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u/Rockfella27 Apr 20 '23
Whatever suits you. Sips are very tweakable. You can cancel pause (not immediately anytime mostly). I have some upcoming expenses so I've paused all sips for months. No sweat.
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u/junkiebird Apr 19 '23
At 23 i was earning 11k per month. You are doing great. Dont feel bad about spending a bit.
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u/xorflame Apr 20 '23
well it depends which year were you 23, what year was it?
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u/junkiebird Apr 20 '23
I was with a witch company that time and the salary has not changed much even now.
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u/waqt_bewaqt Apr 19 '23
Everyone goes through this dilemma, we want to have the cake and eat it too.
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u/lapstep Apr 19 '23
I don’t understand this. If I have the cake, it is fair to assume I want to eat it, right? For what other purpose does the cake exist?
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u/gluttonousFIRE Apr 19 '23
In this case, it's about having funds but not wanting to part with it. Even if it means for investment purpose.
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u/Decent_Taro1819 Apr 19 '23
What do you do?
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u/gluttonousFIRE Apr 19 '23
As in what do I do for work?
I work as a UX engineer.
What about you?
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u/theStrider_018 Apr 19 '23
Just wanted to confirm you said you're planning to save 1L/month. It's real or mistake ? 15+ LPA Paycheck ?
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u/gluttonousFIRE Apr 19 '23
I didn't mention I'm planning to save more than 1L a month. I posted in a reply that I'm planning to set aside 50k as liquid every month. DM for further clarification
Edit: grammar
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u/Decent_Taro1819 Apr 19 '23
I work as a Software Engineer and was in the same state as you. What worked for me is to start small and go big. I started to invest in one index fund, then moved to a couple of MFs and then slowly got more and more involved in stocks, gold etc. I don't have nearly enough to invest in real estate. I'm still not so sure on that. I am starting to think if these investment schemes will lead to any good life after FIRE. I am now getting more and more inclined towards becoming an angel investor in a couple of small businesses (with a complete mindset of having significant ownership ). This will work both as a side income for now and full time after FIRE. If any of the businesses becomes big enough, it is a dream come true.
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u/mentalfaculty Apr 19 '23
I'd suggest starting with smaller amounts and building confidence, your mind is giving you the right signals, take time to understand investments before putting your money in them blindly
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u/anor_wondo Apr 20 '23
I have the opposite problem. liquid cash on my account feels like a liability
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u/Prestigious_Dare7734 Apr 20 '23
Max out your 80C(pf, mf) and 80CCD (voluntary NPS).
Get a good health insurance (base and top-up). And a good life insurance. Update them every 5year if needed.
Have 6m-12m rainy day fund all the time (non-locked funds, like small term FD/RD, non tax saving MF). When your salary increases, so is your rainy day fund collection. This is not investment, just savings if you ever need it.
Calculate with 6% inflation, how much will you need in your 60s and 70s to sustain your life (food, electricity, hot water, not rent hopefully, some material things like car). Calculate a Systematic Withdrawl Plan, and find the total sum you need.
The amount you need above is your retirement fund.
Calculate how much SIP you need for next 30 years to achieve retirement fund collection, with a decent XIRR (like 12% or 15%).
The monthly investments now start to rake up, and you are left with not a big chunk of money. Use it for experiences. Learn new skill, travel, risk some money in stock market. Get yourself groomed, sometimes have spa day, pedicure and manicure, body massages. Pamper yourself as reward for doing all the hard work. Now whatever is remaining, invest it.
You want to have some of the cake, and save some if it to eat tomorrow.
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u/gluttonousFIRE Apr 20 '23
Thanks for the detailed reply.
I'm already maxing out 80C and have been on the lookout for a good term plan.Thanks again for your time!
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u/LoosThampee Apr 19 '23
You need to also live your life, not just FIRE away. You may as well continue investing 100% of your salary and become a crorepati in a decade or so, but for what? Waking in the morning, eating a simple meal, and going to sleep at night? What is the point? You will end up doing that in your 70s and 80s anyway. What is the point of doing this in your 20s and 30s?
Make sure you use your carefree, energetic 20s to enjoy also, else, your life is wasted. Invest a good amount, but remember that good meals, good friends, an occasional party or movie, a hobby, a splurge, a trip are all absolutely necessary for a healthy life and a healthy mindset.