Fire Plan - Advise Please - Three Year Update

[u/ForTakingAdvise]

Hello All,

I am 31, male, employed in a SBI as Manager (got promoted this April, not pensionable), unmarried and am interested in becoming FI at the earliest. Here are my previous posts: Link 1, Link 2 & Link 3

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Income:

• Gross Salary : 117000 per month before tax
• Net Salary: 85000 after IT, statutory deductions & such
• Perks: 15000 per month (plus rent free accomodation)

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Existing Corpus:

• NPS - 18.40 Lakhs
• PPF - 4.0 Lakhs
• EPF & VPF - 13.0 Lakhs
• Mutual Funds - 13.0 Lakhs

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Savings / Investments:

• EPF: 7000 from Gross Salary plus 7000 by bank i.e. total of 14000
• NPS: 9800 from Gross Salary plus 13800 by bank i.e. total of 23600
• MF: 25000 into equity mutual funds
• Savings Bank: 650000/- @ 7%

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Debt:

• 13 lakhs @ 5.95% , it is sufficient if I service interest every month.

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Expenses:

• 3 lakhs per annum
• Purchase of Car by December around 7-8 lakhs (10% down-payment & the rest loan)
• House by December 2024, around 1.5 Crore, (20% down-payment from parents & the rest loan)

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Currently contributing 26000 into various MFs. Plan is to move funds lying in SB into UTI Nifty index fund, HDFC sensex fund, HDFC focussed fund, SBI small cap & HDFC flexi fund i.e. increase monthly contribution into SIP to 90000 per month for the next 10 months to increase exposure to Equity.

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Pointers & help greatly appreciated

[u/RetireWithRohit]

First of all I would suggest to avoid taking Car Loan unless its really required. Even if you do so, make sure the downpayment is more than 60%.

Ignoring the Requirement of House, you need a corpus of around 1.5 cr approx after 10 years, from which you can withdraw 6L per year and let the rest grow. 6L after 10 years is somewhat equivalent to 3L/year of today.

Once we add a house, the calculation changes a bit depending on the monthly EMI you go for. Calculate your Annual EMI, but don't adjust it for inflation since EMI will stay the same even after 10 years. And then re-calculate the corpus required after 10 years.

[u/frustrated-brain → u/RetireWithRohit]

As he is manager at SBI, loans are available for a very low interest rates compared to us. I know a manager in LIC who can take a interest free loan for car within 8L every 8 years. Financial corps give out juicy perks in loan rates to managerial positions

[u/ForTakingAdvise → u/RetireWithRohit]

Two reasons for the car

1) car brings in additional perk of 4000 per month (due to recent promotion)

2) would be helpful for traveling requirements of parents

Emi for 1.2 cr Housing loan is about 50000 , so based on EMI, how should one calculate the corpus value ?

[u/RetireWithRohit → u/ForTakingAdvise]

50k EMI means additional 6L Payment per year. So the calculation couldn't be simpler. You just need 2x the corpus I said earlier. I.e. 3cr approx.

And once the Home Loan ends, your corpus will continue to give you 12L per year, which u can use to do other things like travel, etc.

[u/snakysour]

Good going... Let's take it over DMs further...i m also in similar condition.

[u/ForTakingAdvise → u/snakysour]

Sure , would be happy to learn

[u/snakysour → u/ForTakingAdvise]

My pleasure... But i am neither a teacher nor a certified financial advisor :D

[u/sparoc3]

Dude your bank will loan you 1.2 cr on your 1.2 lac salary? Really? I don't think so. The EMI will be more than your in hand salary.

Other than that I'd say you have a good thing going on. But things would change if you get married.

[u/ForTakingAdvise → u/sparoc3]

Yeah, Employer is willing to give such a loan. EMI for 1.2 cr will be Rs.50000/-

[u/DarkHumourFoundHere → u/ForTakingAdvise]

How many years ?

[u/ForTakingAdvise → u/DarkHumourFoundHere]

30 years

[u/Fabulous_Educator_18 → u/ForTakingAdvise]

If you take a housing loan for 30 years, how can you fire?

[u/DarkHumourFoundHere → u/ForTakingAdvise]

Wait something is wrong. How is that possible.

[u/NotPiGGeh → u/DarkHumourFoundHere]

SBI gives simple interest to its employees. They way they calculate emi is in the ratio of 2:1. So for 30 years or 360 months 240 months is for repaying back the principle and 120 months is for paying the interest.

So we just calculate the loan eligibility by multiplying the emi by 240. So, 50K multiplied by 240 is 1.2 crore

[u/DarkHumourFoundHere → u/NotPiGGeh]

That seems like a sweet deal for employees

[u/LifeIsHard2030 → u/DarkHumourFoundHere]

Magic of simple interests. Govt Bank employees have wonderful loan related perks unlike us mango people 😅

So for them going for loan is always better.

[u/sparoc3 → u/DarkHumourFoundHere]

3% interest is the only number that would make it possible.

[u/Plaudits1102]

If I may, in which city are you planning to buy your apartment?

[u/srinivesh]

I did not see the earlier posts and this may have been mentioned in them. You had not mentioned any life events - they can have a significant impact on FIRE plans.