{"id":3001,"date":"2010-09-10T00:50:20","date_gmt":"2010-09-09T19:20:20","guid":{"rendered":"http:\/\/www.bhagwad.com\/blog\/?p=3001"},"modified":"2014-09-05T11:50:42","modified_gmt":"2014-09-05T06:20:42","slug":"saving-for-retirement-year-two","status":"publish","type":"post","link":"https:\/\/www.bhagwad.com\/blog\/2010\/personal\/financial-matters\/saving-for-retirement-year-two.html\/","title":{"rendered":"Saving for Retirement \u2013 year two"},"content":{"rendered":"

Exactly one year ago, I bared my finances to the world<\/a> and explained how I needed Rs. 3.11 Cr<\/strong> by the time I reach 55. This would give me a monthly income of Rs. 3 Lakhs which I determined would be enough in 2037. A year ago, my net worth was just 8 Lakhs, but even with that limited amount, I just needed to save only Rs. 5,000 per month to achieve my goals.<\/p>\n

The last one year has been good to me. But I’ve also begun to think that I’ll need more than 3 Lakhs a month in 2037. That’s the equivalent of just Rs. 30,000 now and just to be safe, I’ve increased my retirement goals to Rs. 4 Lakhs a month, or Rs. 40,000 in today’s value. That should cover expenses like Insurance premiums too. I think a middle aged couple can get by these days on 40 grand a month no?<\/p>\n

It’s time for the yearly review of my retirement goals to see how much more (or less) I need to save. Keep in mind that I’m a paranoid bugger – I like to assume the worst!<\/p>\n

Here’s my net worth as of today (Click to Enlarge):<\/p>\n

\"Net<\/a>
Net Assets as of 9th September 2010<\/figcaption><\/figure>\n

I’ve increased my assets by 4 Lakhs compared to last year to bring my total to 12 Lakhs<\/strong>. A goodish amount and as I said, the stock market has been good to me. I’ve invested mainly in mid cap companies because my long term risk appetite can stomach it. And of course, ELSS tax saving mutual funds. But with the DTC on the anvil, those are set to be abolished. I’m not about to start investing in the NPS though. 100% equities are still a much better investment<\/a> for a long term retirement guy like me.<\/p>\n

So given my current situation, how do I go about netting myself 5 Crores? As before, the awesome retirement calculator<\/a> from RBS comes to the rescue:<\/p>\n

\"Need
Need to invest a little over Rs. 3000 every month to reach 5 crores in 27 years<\/figcaption><\/figure>\n

To get Rs. 40,000 a month today, I’ll need around 50 Lakhs capital – and that’s what I’ve put into the calculator.<\/p>\n

Just Rs. 3300 per month and I’m through! It makes me happy to see that even after the increase in my retirement goals I still have to invest a little less that before. I’ve just made two changes. First, I’ve increased the inflation rate to 9% just to be on the safe side. Of course, over 27 years the inflation rate is bound<\/em> to come down dramatically, but that’s just icing on the cake. Also, I’ve increased the projected rate of return to 14% from 12%. This is more realistic and in fact I expect it to get much closer to 20%! But as before, I like to prepare for the worst.<\/p>\n

The great variable in all this is medical expenses which I will expect to see shoot up as my wife and I get old. Incidentally, these figures don’t take into consideration my wife’s own retirement savings – so that should be another bonus as well.<\/p>\n

It’s good to have your bases covered isn’t it?<\/p>\n","protected":false},"excerpt":{"rendered":"

Snapshot of my finances and how they contribute to my retirement goals. The new DTC may have some impact with the removal of ELSS schemes, but not much I think.<\/p>\n","protected":false},"author":2,"featured_media":3002,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[30,31,33],"tags":[],"class_list":["post-3001","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-financial-matters","category-nr","category-sa"],"yoast_head":"\nSaving for Retirement \u2013 year two<\/title>\n<meta name=\"description\" content=\"Snapshot of my finances and how they contribute to my retirement goals. 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