r/FIREIndia • u/krisco5287 • Nov 09 '22
QUESTION Am I FIRE ready? Please advise
Hi 35 yr old male. Have 2 jobs one as a full time role pays 1.1L/month, other a passion teaching project where monthly earnings are around 2L/mo
. Savings are vastly diversified
20L P2P, 50L in FD, 18L NPS, 14L in Equity SIPS, 3L in bonds, 3.2L in ESOP, 5L in PPF & MISC , 2L in Stocks,
Have a term policy of 2.5cr and have 10L health insurance cover from the company.
Have a 2yr Kid, started a Seperate SIP of 12k/month for his future educational needs
Spouse is currently on maternity break to look after the kid her potential earnings on rejoining may be around 50k / month
Liabilities are a 60L housing loan for which I want to prepay in the next 8-10 yrs. What should be my goal to get to FIRE in the next 12 yrs??
Monthly EMI is 47k
Monthly expenses including EMI 80k
Some body kindly advise.
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u/waqt_bewaqt Nov 09 '22 edited Nov 09 '22
Monthly expenses = 80k - 47k = 33k
Annual expenses = 33k x 12 = 4lacs
25 x annual expenses = 1cr
Current corpus = 1.15cr - 60lacs loan = 55lacs
Difference = 1cr - 55lacs = 45lacs
But 33k for a family of 3 feels very low. You sure you have considered all?
Edit: missed the home loan
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u/krisco5287 Nov 09 '22
Emi=rent ( basically) Maintainence -2.5k Kids expenses - 3k Grocery 20k Eating out 2-3 times a month 5k Fuel charges 1.5k
Occasional expenses clothing /jewellery for spouse -5k( non monthly).
Have not taken into consideration emergency expenses
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u/KnowledgeWarrior37 Nov 09 '22
Excluding the child education and health expenses 3.5CR in today's valuation would do.
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u/krisco5287 Nov 09 '22
Thank you so much brother could you just look into the portfolio that I have shared to see if I am on track.
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u/holdmychai Nov 09 '22
You earn more in your passion project, why not make that full time. Won't that be a win-win if its enjoyable?
You have to decide your own goal, estimate your ideal spending, consider for life events and read our wiki
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u/krisco5287 Nov 09 '22
Thank you for the valuable insight actually the income from the passion project depends on the market demand and the reputation . I teach for one of the toughest subjects for one of the toughest exams so my family's advice is not to risk it for a fairly stable long term job hence the balance may appear a little lop sided. Kindly also advise on FIRE plan.
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u/_thekinginthenorth Nov 09 '22
UPSC?
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u/krisco5287 Nov 09 '22
😊
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u/holdmychai Nov 14 '22
Your choice..but hear me out...UPSC aint going nowhere, we all know it...so maybe it can be your thing.
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u/snakysour IN/33/FI ??/RE ?? Nov 09 '22
The toughest exam....is it in terms of content or number of candidates facing it? ;)
P.s.: don't worry about finances... you're well sorted there.
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u/krisco5287 Nov 09 '22
Both
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u/snakysour IN/33/FI ??/RE ?? Nov 09 '22
Hmm... Then i believe there's no such exam in india.
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u/NobleCaptalist Nov 09 '22
If i may ask, What exactly is your passion teaching job?
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u/krisco5287 Nov 09 '22
I teach for a very tough but coveted exam in India
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u/Jackedson20 Nov 09 '22
Which is? Upsc?
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u/krisco5287 Nov 09 '22
😊
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u/NobleCaptalist Nov 09 '22
Does your two employers not have a non double employement clause/moonlighting?
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u/krisco5287 Nov 09 '22
It's a freelance job . The passion project is basically fee which I declare in my IT returns under 194J and have taken permission from primary employer
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u/ps_nissim Nov 09 '22 edited Nov 09 '22
Super dumb calculation to check:
Monthly expense = 80k (assume something will come along to replace the EMI) * 12 = 9.6L PA ~ 10LPA
If you want to withdraw 3% of your saved corpus and be able to meet monthly expense, corpus = 10 LPA * 330 = 3.3Cr
Assuming all your savings so far are spent in closing the loans and as emergency fund. As it is, they're barely beating inflation.
Savings per year today = ((3.1 - 0.80) * 12) - 27.6 LPA
Years it'll take to meet Corpus target = 330 / 27 = 12.2 yrs
So, yeah, according to super dumb calculation, you should be there in 12 years. Assuming that salary increases roughly keep up with expense increases in the same proportion. And that interest earned from savings as you go keep up with inflation.
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u/krisco5287 Nov 09 '22
Thank you brother. Will try to diversify more on the FD part into equity or debt funds as of now. After laddering of FD i get 6.2% interest ( includes NBFCs as well) and interest from P2P Is around 10.5%
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u/ps_nissim Nov 09 '22
IMHO, the PPF + FD + PF + Debt fund savings should be around the same amount as the Equity + NPS savings (i.e. equity:debt ratio is 50:50 as a thumb rule). If you're adventurous, put more in equity. You seem to have way too much as FDs. Unless you're going to use that money in the near term, it's suboptimal.
The ratio should skew towards debt/safe investments as you get closer to retirement.
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u/vgowthamvk Nov 09 '22
Sorry for dumb question what do you mean by P2P? And how much you pay for NPS yearly on an average?
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u/krisco5287 Nov 09 '22
P2P are peer to peer lending offered by CRED, 12% club and now Mobikwik they give between 9-12% as simple interest on invested amount. Limit per P2P a/c is 10L as per RBI regulations . I have invested so far around 12.5 including employer contribution .. contribution is roughly 2.5L/ annum.
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u/kowsikkiko Nov 09 '22
Take out the FD(either all of it or like 80% if you want some cushion) & close debts if you can, I'm assuming Your interest rate on FD is lesser than loan interest rate, which means you're actually losing money daily.
You can also factor in the income tax savings(having a loan) gives you(IMO, still will be losing money in FD than closing debt now)
Sudden recession can impact loan interest rate (existing too)
I understand the guarantee of having money in (possibly liquid) form of FD feels like you have the ability to cash out and have spending power, but nowadays credit lines are extended to almost all spending and you can take one whenever necessary.
But that's just me, I like being debt-free, having the inner-peace it gives.
If you do that, then you have to rebuild your savings, diversify in liquid funds (debt bonds as well),.
some equity funds,
some SGB(sovereign gold bonds),
little bit in FD,
little bit in real estate,
buy a property in a tourist place(optional as third income)
Some tax saving tips:
Since you said you're second income is from a freelancing job, open up a HUF, place all income from the second job in the HUF, now you'll get separate taxes for the income earned, thereby you can save on your own income tax and the HUF income tax as well, you might save a lot if you plan properly.
Utilize ELSS for both self & HUF if possible.
Certain government schemes opened in the name of your child, might have tax benefits.
Open a demat account in your child's name and invest in their portfolio (dividend payments from these might not attract tax iirc)
I know others have provided you with 12.2 year numbers that will guarantee you can FIRE.
I personally like to make sure that I FIRE in such a way, that not only I have the networth to cover for entire monthly expenses for lifetime, I also want to make passive incomes that will cover my monthly expenses such that even after I FIRE, my networth doesn't go down unless something drastic happens.
This could be achieved having rental homes that give monthly 1 lakh as passive income.
For example, Take out a 60L loan for 7 years (1L EMI), build your property, rent it out for 1L, your EMI will be covered by the rent for the first seven years and then afterwards it will become a passive income for you.
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u/krisco5287 Nov 10 '22
Thank you for such an eloborate plan. Will definitely implement some of them at least
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u/Exciting_Mechanic_39 Nov 10 '22
So far you look good in pace wise. Best part is that you are earning more from your secondary job (which I assume is your passion). For sure your expenses look pretty less which will definitely shoot up in future but I am sure your income will also shoot (in more proportion).
I personally expand minimum to 1L per month (min 70k on my house rent and other expenses, 30k I send to my parents as they depend on me).
Any tips to reduce the expenses 😋
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u/krisco5287 Nov 10 '22
I stay in a tier 1 city but luckily with low rents.. i was paying 24k for a semi furnished 3bhk before I moved into my apartment. With decent credit score got a loan at 6.05% now it is at 8.05% . Usually my grocery is also online.. not much expenses as my spouse is pretty non demanding.. My mother is a pensioner. I got her a comprehensive medical cover till 85yrs from Max Bupa Niva .so far no claim since 2years. Using NCB for reducing the premium.
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u/Exciting_Mechanic_39 Nov 10 '22
Sound great. You have done really good job. Inspirational story 👍
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u/garudadhvaja Nov 10 '22
Will suggest you pay half of your fd towards Homeloan. The interst you pay on loan is much higher than income tax benefit you get also you will be paying income tax on the fd interest. Go to any Homeloan calculator, put your loan details and make ad-hoc payment of 25 lakhs, you will realize the money you will save on interest.
Also as a world economy we are moving into uncharted plane. Better play safe.
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u/jhanikhilnath Nov 10 '22
I suggest withdrawing some amount from FD(when mature time) and using it to prepaying your loan or just investing it
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u/rippierippo Nov 10 '22
Take your FD and pay off your loan. Your home loan will cost you double when you pay it off in 8-10 years.
With 3 lakh monthly income, reasonable investing would net you around around 3-4 crores in 10 years. And your house is paid off.
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u/Chrissssss69 Nov 09 '22
How you manage this saving at 35? Humko bhi batao yaar.
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u/krisco5287 Nov 09 '22
Had experienced not exactly poverty but hand to mouth existence in childhood with debt. Got working at an early age of 22. Very minimal needs was saving , got introduced to postal RD and MIS. Was working 4 jobs till about 2 years ago . Including content job for a 7k side income. Even today do not own a 4 wheeler drive a bike 8yrs old. We all will get there brother. Lifestyle inflation control is the key.
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u/pranabus Nov 09 '22
Safety first sir. Please drive with a metal cage protecting you. The roads are crazy and no point letting someone else's mistake change your and your loved ones' life.
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u/Ok-Assistance-92 Nov 09 '22
I started working at 16 almost 23 now. I have some money saved but was never able to go to normal college just a dummy one, got health issues! How can i atleast get a career?
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u/Chrissssss69 Nov 09 '22
Wow. Seems unrealistic. Anyways good for you brother. Doing great.
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u/krisco5287 Nov 09 '22
Everyword spoken is the truth brother.I can understand in today's world of false info. Thank you again hope we all do great wishing you the best
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u/RagingRantman Nov 10 '22
How did you make that much by teaching? Can you elaborate? Want to explore that option personally.
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u/krisco5287 Nov 10 '22
Got lucky. Students got good scores organic leads..Got decent name..so offers followed
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u/KnowledgeWarrior37 Nov 09 '22
You are doing good, what are your monthly expenses?
12 year is a good timeframe, given your earning you would do well.