Saving for Retirement – I’m almost done!

In this post, I’m going to lay bare my finances to the wide world. Most Indians I know are hesitant to discuss this aspect of their affairs (perhaps even more than their sexual ones!), and here I disclose full details with screenshots of my finances with nothing hidden. Call me an exhibitionist, but it’s fun to do what I haven’t seen anyone do before!

Retirement Goals

But to start off, this is my retirement goal: I need to have a monthly income of Rs. 3L (3,00,000) when I retire. I figure I’ll need this much when I retire since inflation will be 7.8% and Rs. 3L will be equal to around Rs. 30,000 in today’s value after 28 years (time till I retire). My wife and I feel that if we were old right now, we can easily get by on Rs. 30,000 a month.

So to get a monthly income of Rs. 30,000, I need to accumulate Rs 3.11Cr (3,00,00,000) by 2037. I want to retire when I’m 55.

So final goal = Rs. 3 Cr by 2037.

Current Status

I’ve been investing since I started earning (haven’t missed a month in 6 years) and over that period, have managed to accumulate 8L till date. The recent crash and subsequent rise of the Indian Stock Markets has more than tripled my assets. So here are my assets as of the 27th of September 2009 (Click to Enlarge):

Net Assets as of 27th September 2009

Net Assets as of 27th September 2009

(The red smudged “Other Liabilities” is a person for whom I’m temporarily holding some cash – so it counts as a liability). And to ease the fears of “other” security conscious people in my life, I have graciously consented to blur some account numbers….Ok ok, I guess it makes sense :) – As the Chief Whip said in Yes Minister – “Open, but not gaping!” In case you’re wondering what cool tool I use to generate my financial reports, it’s called Yodlee – a free online financial aggregator whose clients include Bank of America and other large corporations, so I trust them.

What I need to do to reach 3.11 Cr by 2037

I invest only in the Stock Market and as such, I expect excellent returns over the next 28 years. I never take cash out and keep investing per week. Based on historical records, I should get well over 15% per annum, but to be on the safe side, I’ll forecast for only 12%. Plugging the figures into a simple retirement calculator, this is what I get:

Monthly Investment needed to achieve goals

Monthly Investment needed to achieve goals

So the good news is that I now only need to invest a minimum of Rs. 5000 a month to reach my targets by 2037! I currently invest a minimum of Rs. 7,000 per week – half in a Tax saving ELSS scheme and the other half in Mid Cap companies (I can afford to take on risk since I have a large time span). Here are my investments for the past one month (Click to Enlarge).

Weekly Investments

Weekly Investments

So I find that I’m currently investing around five times more than what I need to invest. Ooh la la! It makes me imagine how much bare minimum I need to earn to live comfortably and keep investing at the same time. When I calculate it, I need to earn just Rs. 15,000 a month (instead of the 35 – 40 thousand I earn right now). Given that I charge $20 an hour, I need to work less than an hour a day – on weekdays only of course :) – for the next 28 years to achieve my retirement goals!

Makes me think I have quite a good life. No babies, no house rent etc. The only thing maybe I’ll need to worry about is medical expenses. Thinking of taking out some insurance when I get back to India – I’m still not convinced either way. Ideas anyone?

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Comments

  1. @Vikas Gupta
    Ah well, perhaps I'll try a new theme sometime down the line. Transitioning to a new theme is quite a bit of work for me.

    I like my h1 and h2 heading to be customized so that each post's title is also h1 instead of h2, as well as changing the margin spaces where I muck around with css files etc…too much energy.

    The bug may bite me again a bit later :)

    Reply

  2. @Vikas Gupta
    Thanks for the info! I'll refer back to this thread when theme changing festival comes around next time :)

    Reply

  3. @Manish Chauhan
    Test comment! Replying to comment no. 3

    Reply

  4. @bhagwad
    Yes new theme always takes a toll on time thanks to customization etc.

    In future try a theme like Thesis [ highly customizable, popular, SEO optimized, not free but can hunt a free copy] or the free Mimbo magazine theme or the themes by Design Disease or Woo Themes. Elegant Themes will give you all its themes in 20 dollars only per year!

    Reply

  5. as for my retirement, i plan to retire on an asian country and live a quiet and simple life.~',

    Reply

  6. Only question in a model as your is weather stock market will continue to compound our money @ 12% til 2037?

    If I were you, I would reduce it even by one or two points. YMMV

    Reply

    • In reply to SJA

      No SJA – in the long term the stock market will give at least over 15% – especially in a developing country like India. Even the US which has a poor stock market growth has a 12% index fund growth over the long term. Only debt funds will give 10% or so, and I'm not investing in those.

      Reply

  7. Hi, thanks for sharing your personal experience of investing with us. It gives users like me a clear picture of how much to invest and where to invest. Thanks again.

    Reply

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