Become F.I.R.E (Financially Independent and Retire Early)

Become F.I.R.E (Financially Independent and Retire Early)


Darshit-Shah-is-co--Founder-of-Leader-Care

Darshit Shah is co- Founder of Leader Care

Shockingly, 67% retirees work to earn bread and butter and other stat depicts every 7 out of 10 adults are dependent on their children after retirement. Time for millennials to seriously ponder upon it.

As per the 2011 census, there are 104 million people above the age of 60 which is expected to increase to 176 million by the end of 2026. Becoming financially independent is must now a day’s because of increasing nuclear families. We are getting into smaller families and moving out of towns to cities or metros for better opportunities. To extend this, our children might go abroad for their betterment, leaving us high and dry at the time of our retirement. Health and social securities are well-known to us for Indian market Pandemic and Global warming has shown us the possibilities of uncertainties in one’s life. At the same time, advances in medical science have proven to be impactful in increasing life expectancy. Just imagine, spending a good odd 20-30 years without a stable source of income or a retirement corpus to rely upon! Three general scenarios for retirement:

  • Dependent on Child/children
  • Work for self
  • Make money work for you

Well if you are smart enough to select the third option then continue reading.

Money works for you!

Sir Newton said Power of Compounding is 8th wonder of the world. Many of us knows but rarely we understand its importance or have experienced it. The key here is – invest long term and let it grow for 20-30 years at least. Invest as if you would need it only when you surpass 60. With right Asset Allocation and Investment Plans, one can not only retire well but can leave a Legacy behind. There are ways to secure your wealth as well as grow it to fund yourself later.

Importance of Asset Allocation & Investment Planning

Start early to grow better with power of compounding. There are ways to generate Passive Income and Retirement Corpus but right proportion of exposure to the correct asset class plays a vital role. Time to reconsider our conventional modes of investments- FDs, Gold, PPFs etc. due to inflation and reduced % returns.

FDs and PPFs were suitable instruments to invest all your money for a hefty return of 10-12% pa. Rate of return are declining YoY and are near 5-7% and are going to decrease further. Also, share market might be the most lucrative option as of now but can’t be trusted with all of the investment. As a single crash can whipout your capital. So, never invest in only one asset class. Diversify your portfolio as per your risk apetite and years to retirement. As a simple thumb rule you can consider ‘Rule of 4’. Invest at-least 4% of your income for your retirement every year till you retire.

Sufficient corpus can be gathered during the span of your 25-30 years of work. Inflation is a major aspect to be considered for retirement planning. Refer the image below just to have a glimpse of it at 6% pa.

Investments need to beat inflation YoY for capital appreciation. Gold used to be considered as hedge against inflation. But if you analyze the returns over decade then it has been fluctuating and hardly beating it.

Views are personal: The author is Darshit Shah is co- founder of Leader Care from Ahmedabad

Disclaimer: The views expressed are of the author and are personal. TAML may or may not subscribe to the same. The views expressed in this article / video are in no way trying to predict the markets or to time them. The views expressed are for information purpose only and do not construe to be any investment, legal or taxation advice. Any action taken by you on the basis of the information contained herein is your responsibility alone and Tata Asset Management will not be liable in any manner for the consequences of such action taken by you.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

Disclaimer: Content Produced by Tata Asset Management



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