I've see a lot of seniors from my office and generally from comments in LI who've managed to save up upwards 50L during the pandemic. I know we all set these targets for ourselves - i'll quit once I save up 20L for higher education, or 50L for a house or 1 cr overall - but what happens when you reach these marks? Do you seriously consider leaving or is it a trap?
I've reached a fair 35L, where I can pursue jobs that pay me less than 1L for better working hours without having to worry about emergencies. But at the same time, I feel I should wait till I make 50L at least. Will it ever stop? What advice would you give?
Even if you pursue a lower-paying job, will you psychologically be okay receiving a lower pay package every month? If yes I guess you can take up a lower paying job. Also, evaluate your career trajectory - in case you want to reach a certain goal. As humans, I guess we keep wanting things and attaining that level of nirvana is impossible. Why don’t you try out a trial period to see how things worn out? Frankly, with inflation and the rising cost of living, even 1 LPA in a city like Mumbai may not really provide one with a luxe life - of course this is totally subjective!
I see you have not spoken to a financial planner yet, who will make you live a satvik like because they will make you scared of the amount of money you need to live your life.
- marry + 2 kids - 15 cr - marry + 1 kid - 10 cr - marry but no kids - 5 cr - single but have dependents (parents, a slow sibling etc) - 4 cr - single and no dependents - 2 cr
- Each kid is 5 cr - play school, school, college, masters, health, marriage, toys, clothes, kid friendly travel and socialising. Also requires a bigger house for atleast 20 years. - Dependent parents, helping a sibling is more limited - largely Health, may be higher education for the sibling, marriage of a sister (this is the reality, I don’t support it, please don’t send me woke replies) - Your husband/wife is likely to work and earn something but even if he/she doesn’t, your expenses will likely double at most (from 2 to 5 cr) - 2 cr for a single guy because you can relatively safely earn a 3% spread over inflation which comes to 6 lakhs pa or 50k a month. I’m assuming you will still do something and earn 15-20k more. 65-70k is good enough in most cities. When you are 65, you can start withdrawing 4% of your capital each year + the spread you make. That makes it 130-140k per month at current prices.
Each kid is 5 crore in your own world if the kids have to stay in India. College fees maximum 15 lakh. And other expenses. A more than decent lifestyle will mean less than 1 crore per kid. Remember that there are no limits to extravagance.
Do you know play school costs more than school and school often costs more than college? That's ~20 years of education. Expenses are not just tuition fees but have many components. Pvt coaching is all but necessary now.
Then there is prep for intensely competitive entrance exams. If not from a top 3-4 college, your kid will struggle. Everyday I receive desperate applications for job/internships and there's simply no space to hire kids who I can see are definitely bright. So most likely prepare yourself to send your kid abroad for masters. Also masters is becoming important (not for corp lawyers may be) and virtually no Indian institutes have good masters programs. If your kid pursues medicine in India, it will cost as much as sending them abroad.
Access to good pvt healthcare is not extravagance. And it costs a lot. And insurance won't cover kids especially OPD and day care.
With kids, you need a proportionately bigger home. With partial WFH here to stay, you again need a bigger home and can expect all utility bills to increase at a faster rate. None of these things are extravagance but necessary.
Our parents' gen was able to do all this because those who invested in real estate have seen great returns. Also, there was less competition when we went to college.
Abey kya laga rakha hai tune ye sab? Kisne bol diya private coaching is essential and all? Prep for competitive exam and all? Maybe his child would like to live? Living does not cost money. Just because you are not living life, does not mean his child must also not live life.
To whoever you are that asked the main question, here is my answer. I respect you for existing. I do not respect you for your money, your designation, education or anything. I understand you treat yourself as an object, and measure yourself through your bank balance. Trust me. Please stop and listen to yourself. By that... I mean.. Listen to what your SELF is trying to tell you. Once you are capable of handling your own intelligence, then start thinking about money.
Or.. Be worried till your last breath. You will be lucky if your children come to bid you farewell. They will be happy - one less idiot to take care of. Bhai sahb, agar aapko 1 crore kamaana hai, toh aapke bachon to 100 crore kamaane hain that too 30-40 years later. This is what you get. Now please, continue doing your mathematics. How much money will sustain life. Put an excel also na? Link dedo idhar, sab dekh kar seekhenge. Bakri hain na hum sub.. Hain ki nahi?? Nahi hain??? Bhak bhos****** - lag ja drafting me, kyuki tere colleagues tere se fast drafting karte hain.
I have 10+ years work experience, and I'm a parent + also have old parents. I've been thinking about what's the magic number to chuck it all and become one of those people who are at all the conferences as "independent consultants", and these numbers are spot on. 1 crore will not last you long, even at 8% a year.
Assumptions:
* House is paid for, and you don't need to upgrade for the next 15 years (your peers will move on, and you don't fall so far behind the curve that it gets awkward for everyone)
* You're healthy and don't anticipate huge medical expenses soon.
* Your corpus generates enough to maintain a social connect with your peers and do things like holidays and spontaneous brunches (people will laugh at this as excessive capitalism/ 'if your friends don't value you for the person you are, change your friends', but this is important for your spouse and kids)
Addiction, in my case at least. I come from a middle class family, like flagbearer of middle class.
I thought I would quit at 50L never happened. Inflation ensured that I kept pace with mazdoori and thought 75L would be great.
Surpassed that and continue to slog. I am now addicted to the amount being credited into my account at the end of every month and over time, it has only swelled up significantly. Honestly, I don't think I can quit now. The decision become tougher- the longer you wait.
Because the amount which is typically discussed on retirement forums is around 50x for India (50 times annual expenses) + a little extra for medical emergencies since medical costs have been outstripping inflation since the last few decades. If you have children, then you have to add some amount for their higher education and marriage (if you intend to fund that).
So, you need something closer to 3-6Cr if you want to lead a middle class life (spending ~5-10L a year, a pretty fair amount for a single person and do-able amount for a couple at the 10L range once you're out of the Tier 1 cities).
You can coast with a lesser paying job once you've hit a certain threshold of investments but I think most people choose to stick around in a job they're competent at and prefer to struggle for a few more years rather than switching to a lesser rewarding career and then having to grind it out for longer.
As per FIRE (financial independence, retire early) – you need to save 25 times your annual expenses and then you can retire or do whatever that is you want to do! Pls do read up about the FIRE movement, if you need more details! https://en.wikipedia.org/wiki/FIRE_movement
25x based on the Trinity Study is for the US and it's based on a 30 year retirement. It doesn't work for a higher inflation and lower real return environment of India and it certainly doesn't work for longer retirements.
IIRC 25x still failed 5% of time based on a 4% annual withdrawal rate. S&P has historically given higher real returns. So, this is bad advice.
No, I don't. If you're interested, then this fellow Kitces writes and speaks about this in amazing depth. I also follow a few forums where this is discussed frequently. Not on twitter.
Well maybe we already have everything we need. My favourite FIRE story- ----- An American investment banker was at the pier of a small coastal Mexican village when a small boat with just one fisherman docked. Inside the small boat were several large yellowfin tuna. The American complimented the Mexican on the quality of his fish and asked how long it took to catch them.
The Mexican replied, “only a little while. The American then asked why didn’t he stay out longer and catch more fish? The Mexican said he had enough to support his family’s immediate needs. The American then asked, “but what do you do with the rest of your time?”
The Mexican fisherman said, “I sleep late, fish a little, play with my children, take siestas with my wife, Maria, stroll into the village each evening where I sip wine, and play guitar with my amigos. I have a full and busy life.” The American scoffed, “I am a Harvard MBA and could help you. You should spend more time fishing and with the proceeds, buy a bigger boat. With the proceeds from the bigger boat, you could buy several boats, eventually you would have a fleet of fishing boats. Instead of selling your catch to a middleman you would sell directly to the processor, eventually opening your own cannery. You would control the product, processing, and distribution. You would need to leave this small coastal fishing village and move to Mexico City, then LA and eventually New York City, where you will run your expanding enterprise.”
The Mexican fisherman asked, “But, how long will this all take?”
To which the American replied, “15 – 20 years.”
“But what then?” Asked the Mexican.
The American laughed and said, “That’s the best part. When the time is right you would announce an IPO and sell your company stock to the public and become very rich, you would make millions!”
“Millions – then what?”
The American said, “Then you would retire. Move to a small coastal fishing village where you would sleep late, fish a little, play with your kids, take siestas with your wife, stroll to the village in the evenings where you could sip wine and play your guitar with your amigos.”
For sure, it helps to have an idea of what is "enough". I feel many people don't meditate on this idea and then it becomes an endless chase of moving goal posts.
I've been meditating on this idea of what is "enough" for a while now and I've realised I can live the life I want to live with no material compromises if I spend around 50-70K a month (including rent and all ancillary expenses). I've also realised, at least for myself, the things / activities which give me happiness aren't material - it helps to have money since it gives a sense of security, but only that. Having a financial safety net reduces sources of unhappiness but it doesn't increase happiness.
The 4% annual withdrawal rate (i.e. the return on investment minus inflation) may rightly not work in India, but that has nothing to do with the number of years of retirement. The funda behind the plan is keeping the real value of the corpus intact The corpus will actually retain the real value and sustain you for thousand years as long as the annual withdrawal rate is the difference between return on investment and the retail inflation.
Now figure what you think what will be the long rate of return on your investment and what you think the long term inflation rate is going to be and decide on the corpus
Hey guys, have you heard about online retirement calculators? Just incorporate your expenses and other parameters and it calculates inflation adjusted amount needed to retire.
Also, after 3-4 years, I did make the shift to a lesser paying practice. It’s been 4 years since and am doing ok ok. At times I do feel that I ran away and that my juniors who stuck around are doing better than me but I also know that that always panic mode life isn’t sustainable. The hustle is always there, bosses always suck no matter how lesser paying the job may be and i still think maybe an even easier job in a small seaside town will be better, but I am still better off than being in a T1 corporate team.
Never worked in a Tier 1. Tier 3, 6 PQE not from Mumbai. I have managed to save exactly, 13 lakhs. Half of which are my emergency funds. Only thanks to the Pandemic. Prior to this I was at 3 lakhs.
No amount of money will EVERY be enough. Just imagine. You think the job is frustrating. You change your job. But you are still frustrated. You are always frustrated. You hate yourself. You hate everyone around you. You cannot sit one second with yourself - you always want to do something. It could be netflix, work or whatever it is. Why? Advice? Sure. Treat yourself with dignity and respect. You are not an associate or partner or some designation. You deserve compassion, love, care, safety and respect. Why? Because.. you exist. That is all.
Read Charles Darwin. You will discover that frontal lobe sets us apart from apes. This is recent, as far as evolutionary process is concerned. First learn how to handle your mind, intelligence and your psyche. Then think about money, if time permits.
Join the civil services, the govt pays for your house and basic expenses as well as your kids' education till the age of 18. F***ing disgusting this keep tied to corp slavery because kids bro thread is.
Even otherwise, everyone just assumed that you are retiring right away and there are is no further income at all. Income flows, expenses flow as well. That's the cycle. Going by the above responses, more than 90 percent of Indians CAN'T afford a decent life for themselves or their children. If you wanna party in a cruise ship or go to Maldives every year, we can't help you with that. Keep slaving!
Lol bro I get your point (broadly) but if you’re even remotely aware of the demographics of our country you’ll know that it’s no exaggeration to say that 90% of our population in fact cannot afford a decent life for themselves and their children. I may be wrong but I remember reading a couple years back that making upwards of 2 LPA puts you in the top 20% of the country. Think about that.
I've reached a fair 35L, where I can pursue jobs that pay me less than 1L for better working hours without having to worry about emergencies. But at the same time, I feel I should wait till I make 50L at least. Will it ever stop? What advice would you give?
- R
- marry + 2 kids - 15 cr
- marry + 1 kid - 10 cr
- marry but no kids - 5 cr
- single but have dependents (parents, a slow sibling etc) - 4 cr
- single and no dependents - 2 cr
- Dependent parents, helping a sibling is more limited - largely Health, may be higher education for the sibling, marriage of a sister (this is the reality, I don’t support it, please don’t send me woke replies)
- Your husband/wife is likely to work and earn something but even if he/she doesn’t, your expenses will likely double at most (from 2 to 5 cr)
- 2 cr for a single guy because you can relatively safely earn a 3% spread over inflation which comes to 6 lakhs pa or 50k a month. I’m assuming you will still do something and earn 15-20k more. 65-70k is good enough in most cities. When you are 65, you can start withdrawing 4% of your capital each year + the spread you make. That makes it 130-140k per month at current prices.
Then there is prep for intensely competitive entrance exams. If not from a top 3-4 college, your kid will struggle. Everyday I receive desperate applications for job/internships and there's simply no space to hire kids who I can see are definitely bright. So most likely prepare yourself to send your kid abroad for masters. Also masters is becoming important (not for corp lawyers may be) and virtually no Indian institutes have good masters programs. If your kid pursues medicine in India, it will cost as much as sending them abroad.
Access to good pvt healthcare is not extravagance. And it costs a lot. And insurance won't cover kids especially OPD and day care.
With kids, you need a proportionately bigger home. With partial WFH here to stay, you again need a bigger home and can expect all utility bills to increase at a faster rate. None of these things are extravagance but necessary.
Our parents' gen was able to do all this because those who invested in real estate have seen great returns. Also, there was less competition when we went to college.
To whoever you are that asked the main question, here is my answer. I respect you for existing. I do not respect you for your money, your designation, education or anything. I understand you treat yourself as an object, and measure yourself through your bank balance. Trust me. Please stop and listen to yourself. By that... I mean.. Listen to what your SELF is trying to tell you. Once you are capable of handling your own intelligence, then start thinking about money.
Or.. Be worried till your last breath. You will be lucky if your children come to bid you farewell. They will be happy - one less idiot to take care of. Bhai sahb, agar aapko 1 crore kamaana hai, toh aapke bachon to 100 crore kamaane hain that too 30-40 years later. This is what you get. Now please, continue doing your mathematics. How much money will sustain life. Put an excel also na? Link dedo idhar, sab dekh kar seekhenge. Bakri hain na hum sub.. Hain ki nahi?? Nahi hain??? Bhak bhos****** - lag ja drafting me, kyuki tere colleagues tere se fast drafting karte hain.
Assumptions:
* House is paid for, and you don't need to upgrade for the next 15 years (your peers will move on, and you don't fall so far behind the curve that it gets awkward for everyone)
* You're healthy and don't anticipate huge medical expenses soon.
* Your corpus generates enough to maintain a social connect with your peers and do things like holidays and spontaneous brunches (people will laugh at this as excessive capitalism/ 'if your friends don't value you for the person you are, change your friends', but this is important for your spouse and kids)
I thought I would quit at 50L never happened. Inflation ensured that I kept pace with mazdoori and thought 75L would be great.
Surpassed that and continue to slog. I am now addicted to the amount being credited into my account at the end of every month and over time, it has only swelled up significantly. Honestly, I don't think I can quit now. The decision become tougher- the longer you wait.
Then during WFO, I managed another 16L (full savings including tax refunds, bonus, increment arrears). Along with investment etc, it is about 35L now.
So, you need something closer to 3-6Cr if you want to lead a middle class life (spending ~5-10L a year, a pretty fair amount for a single person and do-able amount for a couple at the 10L range once you're out of the Tier 1 cities).
You can coast with a lesser paying job once you've hit a certain threshold of investments but I think most people choose to stick around in a job they're competent at and prefer to struggle for a few more years rather than switching to a lesser rewarding career and then having to grind it out for longer.
https://en.wikipedia.org/wiki/FIRE_movement
IIRC 25x still failed 5% of time based on a 4% annual withdrawal rate. S&P has historically given higher real returns. So, this is bad advice.
Good stuff.
-----
An American investment banker was at the pier of a small coastal Mexican village when a small boat with just one fisherman docked. Inside the small boat were several large yellowfin tuna. The American complimented the Mexican on the quality of his fish and asked how long it took to catch them.
The Mexican replied, “only a little while. The American then asked why didn’t he stay out longer and catch more fish? The Mexican said he had enough to support his family’s immediate needs. The American then asked, “but what do you do with the rest of your time?”
The Mexican fisherman said, “I sleep late, fish a little, play with my children, take siestas with my wife, Maria, stroll into the village each evening where I sip wine, and play guitar with my amigos. I have a full and busy life.” The American scoffed, “I am a Harvard MBA and could help you. You should spend more time fishing and with the proceeds, buy a bigger boat. With the proceeds from the bigger boat, you could buy several boats, eventually you would have a fleet of fishing boats. Instead of selling your catch to a middleman you would sell directly to the processor, eventually opening your own cannery. You would control the product, processing, and distribution. You would need to leave this small coastal fishing village and move to Mexico City, then LA and eventually New York City, where you will run your expanding enterprise.”
The Mexican fisherman asked, “But, how long will this all take?”
To which the American replied, “15 – 20 years.”
“But what then?” Asked the Mexican.
The American laughed and said, “That’s the best part. When the time is right you would announce an IPO and sell your company stock to the public and become very rich, you would make millions!”
“Millions – then what?”
The American said, “Then you would retire. Move to a small coastal fishing village where you would sleep late, fish a little, play with your kids, take siestas with your wife, stroll to the village in the evenings where you could sip wine and play your guitar with your amigos.”
I've been meditating on this idea of what is "enough" for a while now and I've realised I can live the life I want to live with no material compromises if I spend around 50-70K a month (including rent and all ancillary expenses). I've also realised, at least for myself, the things / activities which give me happiness aren't material - it helps to have money since it gives a sense of security, but only that. Having a financial safety net reduces sources of unhappiness but it doesn't increase happiness.
Now figure what you think what will be the long rate of return on your investment and what you think the long term inflation rate is going to be and decide on the corpus
Also, after 3-4 years, I did make the shift to a lesser paying practice. It’s been 4 years since and am doing ok ok. At times I do feel that I ran away and that my juniors who stuck around are doing better than me but I also know that that always panic mode life isn’t sustainable. The hustle is always there, bosses always suck no matter how lesser paying the job may be and i still think maybe an even easier job in a small seaside town will be better, but I am still better off than being in a T1 corporate team.
Advice? Sure. Treat yourself with dignity and respect. You are not an associate or partner or some designation. You deserve compassion, love, care, safety and respect. Why? Because.. you exist. That is all.
Read Charles Darwin. You will discover that frontal lobe sets us apart from apes. This is recent, as far as evolutionary process is concerned. First learn how to handle your mind, intelligence and your psyche. Then think about money, if time permits.
https://www.youtube.com/watch?v=826RUDVRmEk
Having a kid in Delhi-NCR would cost you atleast 50K to 75 K per month.
Private school -25K
Nanny (First few years) - 20 K
Medication/Diapers/Bathroom Essentials - 5K (one nappy costs INR 37)
The above is bare minimum and does not include travel, food, clothing , toys, extra classes etc.
So if you have 2 kids, that's 1.5 lakhs a month for atleast 18 years and then college/marriage/egg nest etc.
Even otherwise, everyone just assumed that you are retiring right away and there are is no further income at all. Income flows, expenses flow as well. That's the cycle. Going by the above responses, more than 90 percent of Indians CAN'T afford a decent life for themselves or their children. If you wanna party in a cruise ship or go to Maldives every year, we can't help you with that. Keep slaving!