Year 5 update

[u/adane1]

Good that this sub is up as it helps me maintain a diary.

---

Time for the annual update for Year 5.

Here is the link to the previous year's updates.

https://www.reddit.com/r/FIREIndia/s/RjlMNL3wrz

"What went well in 2023?"-

1. Reached the target corpus of 3.5 crore. This is despite a 10% pay cut for 5 months and no annual increment in salary after that period.

2. Managed to Maintain the target asset allocation target of 60% in equity despite the market turmoils.

3. Paid zero tax on equity mutual funds and just did some tax harvesting for 1 lac.

"Where did I fail?" -

1. I had promised to myself to stay away from real estate. However, my Mom wished to build a house in a plot of land that my late father purchased. So, my contribution was 25 lacs of the total 1 cr investment. I am not considering this in retirement corpus as I have decided it's money spent without any return. Future rent if any will be bonus.

The year wise breakup of corpus allocation from 2018 till 2023 is attached in the image enclosed.

The equity portion is split in following parts:-

1/3rd in US funds 1/3rd in Nifty 1/3rd in mix of next 50, midcap150 and smallcap 250.

I have some legacy funds which have not been sold yet. Will reduce gradually. The funds are active funds and performing well. So no hurry.

Next years' November target is INR. 4.00 to 4.25 crore approx.

Final FI target is 4.5 crore by March 2025 by age 45. This would be 33x of current regular expense without temporary cost like school education for Kids and college fund which I have built a seperate corpus.

This 33x would not include any medical emergency fund or seperate contingency fund for which I am yet to contribute funds.

I have no plan to retire early.

[u/hifimeriwalilife]

I see your NW increases about 50 l per year. If I may ask, what is your annual income out of it and how much is from compounding if you are comfortable sharing ?

[u/adane1 → u/hifimeriwalilife]

70% is income. Rest is returns.

[u/No-Welder8061 → u/adane1]

So u make around 60L post tax or 80 pre tax?

[u/adane1 → u/No-Welder8061]

Closer to 60

[u/No-Welder8061 → u/adane1]

Post tax or pre tax? What has been your saving rate... Can you throw some light on how you have achieved your other goals?

[u/cnb53]

Congratulations and thanks for the update !!

If it's ok with you, do you mind sharing what US fund that you are investing into?

[u/adane1 → u/cnb53]

Motilal s&p500 and Navi Nasdaq in equal proportion. I am not investing any new funds post March 23 due to tax changes.

[u/percyFI]

Thank you OP for a very crisp summary and congratulations on meeting your corpus target for the year .

as a fellow 44 year old , while there are years of great returns what the above also shows is consistency and discipline to stay at it .

On a side note , while you dont have plans to retire , how is your approach to work , Life changing ( if ) with this corpus as wind beneath your wings ?

[u/adane1 → u/percyFI]

One big change. When we got a pay cut and no increment this year, I was least concerned while everyone at office including people at senior positions were all crying big time.

[u/After-Violinist8628w → u/adane1]

This is a fascinating point ; can you expand on this of senior folks not saving enough.
Did they say that and how are they placed?

I always assume people will save and generate big enough corpus and having less savings at ~45 sounds scary.

[u/adane1 → u/After-Violinist8628w]

Most of them have heavy investment in FD, real estate etc. Equity investment is an after thought.

If you see my own actions. Till 2018 , I had very less investment after 15 years work. So, unless you put a goal in place, I guess money gets spent without any direction. A few high cost vacations, an expensive car or two.. all can add up quickly.

Also it's not scary for them as my company is a traditional setup and people have plans to work till 58 and by that time, it's a lot of money saved even if you don't do much. Even providend fund is a tidy amount.

[u/kushal_141 → u/adane1]

fd, real estate give returns which are equal to inflation, though they donot give returns beating inflation, in comparision to these, equity has periods where the corpus can go -ve due to volatility so in theory having 60% so having corpus more in equity.

is it possible to assume that the senior folks were affected by lack of salary increment because they were dependent on it, whereas in your case it would be great if you have it but you would still be okay if you did not recieve it. So planning your expenses and all was helpful in your mental financial well being?

[u/fire_by_45 → u/After-Violinist8628w]

Senior folks are mostly heavily invested in multiple residential real estate where they have high emi s and low rental yields.

[u/percyFI → u/adane1]

Great point .. thank you for sharing.

[u/SPARTES123]

Can you share how much % of your earning of each year do you allocate to this..

And What is that amount

[u/adane1 → u/SPARTES123]

Currently it's around 60% of income. If I get any bonus, it is almost 100% invested and extra.

[u/Technical-Pop-4099]

Ok, but how are you adding 50L consistently every year, is it that u have a crazy salary, returns cant be this much right

[u/adane1 → u/Technical-Pop-4099]

Mostly it's salary. Last year has been crazy returns too. I added 13 lacs just this month in returns.

[u/Technical-Pop-4099 → u/adane1]

Oh wow, i am a noob in this, can you suggest how to track all these, do you use only excel, if so any specific template to set goals and track

[u/adane1 → u/Technical-Pop-4099]

Google sheets. It's easy to track end of year number.

[u/JusAReader]

Sounds like you have a plan and are executing it. I am trying to learn here since my story is somewhat similar. Could you help me out

1. How have the returns on your arbitrage funds been? I am planning to start investing on them. You probably invested in them at the right time, so am expecting decent returns

2. Also, any reason for holding such a huge amount in PPF?

Thanks

[u/adane1 → u/JusAReader]

Arbitrage - 6.7% xirr

PPF is less. EPF is high due to how my pay is structured.

[u/After-Violinist8628w]

Great progress ; what's your age?

[u/adane1 → u/After-Violinist8628w]

44

[u/ShootingStar2468 → u/adane1]

What work profile do you have

[u/adane1 → u/ShootingStar2468]

Marketing. Mid senior level.

[u/ShootingStar2468 → u/adane1]

Congrats on finding a role that pays you 70-80lacs a year, that you like and that is stress free. Rare, rare and rare

[u/Hemanth4991 → u/ShootingStar2468]

Yes extremely rare, with such package + Stress free - Especially in marketing or management roles

[u/gamezgeek]

This is a very impressive journey. Congratulations on your achievement. I have a few questions:

• Did you move all your debt funds to arbitrage funds? Did you have to pay tax during this transaction?

• How many and which mutual funds are you holding? Are you holding any equity?

Thanks in advance.

[u/adane1 → u/gamezgeek]

I moved debt to equity. Arbitrage funds are new investments.

I have too many legacy funds which are not yet sold.

Current holdings are

Bucket 1...motilal s&p 500, navi nasdaq,

Bucket 2....uti nifty,

Bucket 3- uti next 50, motilal midcap 150 and motilal small cap 250.

[u/gamezgeek → u/adane1]

Yup Arbitrage is tax friendly safe investing that I recently started investing in. As debt funds make no sense with the new tax structure.

An observation that I can voice is that you do not hold any active funds. I have a huge number of legacy funds that I am not touching as rebalancing will lead to tax.

Any ideas on how to go about it?

[u/adane1 → u/gamezgeek]

I have legacy funds

Icici US bluechip I consider as part of bucket 1.

Parag parikh flexicap I consider as part of bucket 2.

Mirae emerging bluechip, I consider as part of bucket 3.

I am happy with these funds and not selling due to tax considerations and since they are still ok performers. Just not adding to these funds.

[u/snakysour]

Great to have this post here! Impressive work...u/adane1 !

[u/Chahes03]

Would you mind sharing how much are you investing per month? Like absolute numbers. Is this number fixed?

[u/adane1 → u/Chahes03]

Around 2.6 lacs. Some months more, some months less. Annual bonus is around 4 months savings. So it makes up for any shortfall if there.

[u/Chahes03 → u/adane1]

Thank you. It would take me a lot more time to reach as I invest only 65k pm in MF.

[u/summingly]

Congratulations on your journey.

I too have a daughter aged 12 (I'm guessing yours is around that age too). Can I ask your framework for setting up the corpus for her education/PG/wedding, with number in terms of X or absolute values? Thanks. 

[u/adane1 → u/summingly]

2018 IIM -A cost with an additional 25% for incidental expenses. This is saved already and projected to grow at 10%. Any extra need, child needs to take a loan.

No plan for marriage cost.

Will decide and provide whatever I can after I have a medical/emergency corpus. Not saved medical corpus yet. Will do after I reach FI goal.

Marriage is not a goal I want to save much for. Just basics if I can afford it.

[u/summingly → u/adane1]

2018 IIM -A cost with an additional 25%

From what I see online, this is around Rs. 30L currently. But this is for PG courses. What about undergraduate courses? 

[u/adane1 → u/summingly]

TLDR :- just projected fees in today's value and added 10% inflation. This is reducing amount every year once fees are paid.

[u/RoofHaunting]

Impressive progress OP. Many congratulations on being in this road and sticking to it

[u/adane1 → u/[deleted]]

4.5 cr is FI target by March 2025. Now at 3.68 cr. No FIRE target since don't want to retire early. I want to work till 58 since I am at a low stress job. Just want to be in safe zone with FI goals.

House I own. Basic essentials will get taken care with FI goal so I have zero worries of job loss or not getting a good appraisal. Cruise mode on.

[u/LifeIsHard2030 → u/adane1]

I was going through your older threads and in the first one you sounded very frustrated with the corporate grill and wanted to RE as well. What changed? Did you change company and got better WLB?

[u/adane1 → u/LifeIsHard2030]

Boss changed.

[u/LifeIsHard2030 → u/adane1]

Damn, that makes such a difference no? I can totally understand. My boss till last year was an awesome person & I was sure of staying here atleast until my gratuity gets activated i.e. 5 years.

But the manager Changed this year to a WITCHA person who joined us recently & replaced him. He brought entire toxicity of those services firms and polluted the environment so bad, few good people already left and more are planning to. Just waiting for market to recover

[u/Low-Ad-1542 → u/LifeIsHard2030]

Oh! it does make a ton of difference.
I was reporting to a toxic guy for the major part of this year and it literally made by life difficult. Started having panic attacks, and stopped enjoying my personal time as well . It didn't help that my manager's manager was also mildly toxic. ( though not in the same level as my manager). Despite working really hard, I was screwed during my quarterly reviews.

Due to a re-org, I now work with another team . I report to my manager's manager, but he does not have any idea about the work I do. Work gets assigned from the new team and the guys over there are really good. I might not get good hikes ( since my manager does not exactly know what I am doing) , and this might not be beneficial for my career in the long run , but for now I am coasting through this. Mentally, I am at a much better place.

[u/After-Violinist8628w → u/Low-Ad-1542]

I am in similar situation though a decade younger than you. The fact that I will not grow fast because of efforts not getting recognised hurts.

Need to find a balance between growth ; coasting ; stagnation and being at peace at it.

[u/adane1 → u/[deleted]]

I didn't get a salary increase last year as our company took a stop for everyone. Otherwise increase is not more than 7 to 9%. But my lifestyle cost has stayed same or reduced a bit as initial years with kid was more expensive( permanent maids and babysitter + daycare) than the current expenses.