When are you financially independent? What is that number? Obviously your life style keeps on changing with the time and money that you earn. But if you fix your life style to a level then we can calculate that number where you can financially retire. Lets take an example, I am 30 and living in a life style where i need 12L per annum for basic needs and luxuries. In 15Years with inflation at 6%, this number can go up to 29L per annum. Here comes the most important 4% rule. you are ok to with draw 4% of your investments yearly through SWP (article on SWP https://shorturl.at/SxVik ). You need 7.25 Crores by the age of 45 to be financially independent. (as 4% of 7.25 Crore is 29L). Wait...., money doesn't decrease with the time? Yes, it may!! To over come this, you have to make sure that your remaining investment is growing at least at 10% Y-o-Y. So that, you withdraw 4% and Inflation eats 6%. Ideally your money is sufficient for the rest of your life. But how to reach that number? If you start investing into assets through Step-up SIP and assuming they are growing at 12% CAGR. Age : 22, Step-up : 10% YoY, Start-SIP: 24,000 pm. Age : 30, Step-up : 10% YoY, Start-SIP: 85,000 pm. Starting Investment early will be easy on your pockets with the time. Plan your own number and start your investments now. Never is too late to start investment. follow Fortune Box to support our content. #SIP #financialindependence #compounding #markets #swp #sip #stepupsip
Generating more value requires sensible thinking over pessimistic doubting This article helps to understand the SWP in mutual funds vs Postal/Fixed deposits. #swp #fixeddeposit #mutulfunds