@@shankarnath dear Shankar Sir, Eagerly awaiting your call. Seems you've been busy churning out informative videos one after another! Really good stuff.. Although Choley BHATURE still pending 😅
Great video as always... I got FIRED in 2017 and enjoying it :) One thing I would like to add is that one should also factor in few reccuring bulk expences that will repeat every 5-7-10 yrs like purchasing a new vehice, medical expences not covered under insurance, home renovation, international or domestic travel and unforcess emergency expences etc. etc. Best of luck to everyone trying to get Fired!!😅
@@szsouvikzs Very very basic investment strategy, nothing great... My edge was a very very high savings rate from the start & on top of that a good salary growth throughout my corporate career... Secondly branded stuff, eating out, partying out etc etc never excited me as there are many other simpler and time tested ways to have fun in life... Lastly somehow I have remined single all this while😅but can't put a number to how much this has contributed to the overall success of my plan 😁
Now a days there is a lot of content on early retirement and everyone talks about FIRE methodology but I must say that nobody gives a clear picture like this one. One of the most important thing to account for is your own lifestyle e.g. savings, expenditure etc rather than following an old method from 1990s. There is where this custom FIRE calculator is really helpful. Thanks @sankarnath again for making such great videos.
Thank you very much Navneet ji for your kind appreciation. I'm glad you found this useful and can help you reach FIRE status earlier & with a lot less question marks
I don't know English very well so repeatedly listen ur video because I want to know exactly what you said. So that shows how much I Iike ur videos. Thank you very much sir for this valuable content and where you from sir?
Amazing video. One thing I hvnt understood abt FIRE. Why do we wana withdraw money from the corpus. What not put in FD or anything and life off of the interest. Even at the end of 20 years, corpus will remain.
Thanks! The general principle is .. after one retires, he/she has no income coming in but still needs to pay the bills. That's the reason why a withdrawal option is given i.e. one withdraws some money from the corpus to pay living expenses. Kindly try out the calculator, the point will certainly get clearer then.
Great presentation as always and content as well. Definitely going to try out the calculation sheet to find out my FIRE number. Thanks for the amazing work👌
Thank you very much, Sachin. Yes, please do crunch the numbers .. I sent it to a few friends and many came back saying FIRE is more now realistic & visible to them now after playing with the worksheet
Shankar, I have been following you from your first video and appreciate your responding to every querry of mine. Although i cannot connect to each of your videos, yet i am very happy for you as your subscriber base is going up gradually. Sincerely hope your hard work rewards you immensely.
Sir would appreciate a video covering these topics for a person in his 50s. Also please explain how to encash your investments on retirement. Sell mutual funds or live of interest , Sell your real estate or reverse mortgage it etc. How to manage investments and real estate post retirement to get a monthly sum.
Hi all, I have received 30+ requests for an "editor" access to the worksheet in the last hour or so. I'm afraid I won't be able to give that as there will then be no track of who is making what changes in the formulas. However, the calculator is very much downloadable -- so please save the file on your phones or laptops .. run it on Microsoft Excel, Numbers or Google Spreadsheets ... and do your own levels of customizations. Alternately, you can also make a copy of the worksheet and work on it as now you will be editor of that copy Link: docs.google.com/spreadsheets/d/1AxW5GDKXiKtFg-jvgkv7Q7XoMSZytUjlZTXM_k_Naz8/edit#gid=689980357
Thank you @shankarnath for the detailed FIRE tool. I have 1 clarifying question - The monthly expenses in Year 1 of retirement needs to be inflation adjusted right? i.e. 1L monthly expense in today's money needs to be inputed at ~2.75 L in terms of expense in year 15 ( assuming 7 % inflation)
Most welcome. Yes, that's correct .. your monthly expenses during retirement will be different from today. I didn't use today's expense for what your expense might be 20 years from now because the expense structure changes dramatically over time e.g. single now vs family later, living in city vs living abroad etc. Also please don't use the excel sheet the way it is, kindly modify it per your own requirements. Thanks
Thank you, Shankar, for the video and calculator. I'm a bit confused about why withdrawals decrease the retirement corpus. I thought the idea was that passive income would cover my expenses, preventing the corpus from shrinking. That way, I could earn monthly income from interest, etc., while the overall amount remains relatively untouched.
Hello, maybe I didn't understand the question. Perhaps you can try the calculator in my other video (th-cam.com/video/5A_BHQBiL6I/w-d-xo.html), I find this one easier to do.
I am a becoming a big fan your concepts presentation and simplicity you explicit in explaining them, thank you. It will great to hear your thought process on investing post retirement (below 60) and generate monthly income from the corpus created for retirement
I am on my FIRE journey since 2 years. As India’s Inflation rate is high my Target is to accumulate 33x the Annual expense till I am 43. Maybe that time will have change in thought process and pushback for another 2 years. Lets see how it goes.
All my answers are in this sheet. Thank you so very much shankar sir. I was ready to pay a financial advisor to plan out all this for me still he wpuldn't have explained all of this soo well. Hats of to you sir. You are awesome ! 😀
Most welcome, Vinay. Many financial advisors have a lot more to offer so don't ignore that based on what you see on TH-cam. Pls listen to what they have to say and then decide on the right course of action.
Hi Shankar, In your calculation sheet, the BIG issue is that you have considered only Running Monthly Expenses. But you have to consider Capital expenses or Depreciation for the current Capital Assets. For example, If I am having a Car now, then even if I retire today, I will have to replace my car after 5 years. Same case with Furniture, House Painting, AC, TV etc etc. I have to make provisions for replacing these items every 5,7 years. These depreciation expense is large and in some cases might be more than monthly running expense.
Hello Prasad ji - please do customize it per your requirements. Personally, I make provisions for all these expenses and just like we do with depreciation in a P&L statement, I have deducted them as Expenses from my Income to arrive at the Savings number
@shankarnath: Suggest that the value acell which shows monthly income at retirement should be auto-computed depending on inflation and current monthly expenses
Thank you so much Shankar for this amazing video. You have explained the concept in a very simple and easy to understand way. I am sharing it with my daughter and my friends. Best wishes.
Thank you very much, Sudha & Ramesh. I wish your daughter the very best in her quest to financial freedom and pray she gets to measure life not in money but in smiles, friendships, cups of coffee, books read, cities traveled, songs sung etc.
This is good video, thanks for it.. I cannot find the calculators in the link.. first link when I click it open the blog and asks to click on 2nd link for calculator.. when clicked on that it takes back to 1st link.. 2nd calculator can't find any link in the page.
Thanks for spreading the knowledge. I have a question about the calculator. If I select "post retire monthly" amount as 1L and my retirement year as 10 years from now, then "withdrawals during the year" on my first year of retirement is showing as 12L. I think 12L should be adjusted with inflation.
Most welcome. Are you assuming post retirement monthly expenses are today's expenses? For example - if you are spending 1 lakh today and inflation is 7% then you should input your post retirement expenses as 1 lakh*(1.07)^10. I purposefully didn't connect today's expenses with what would be your post retirement expenses because by the time a person retires a lot of changes happens in the expenses structure e.g. home loan debts are gone by then, the child are grown up, you already have a house or two etc. Taking today's EMI filled expenses to extrapolate what will be one's post retirement monthly expense is frat with miscalculation and therefore not suggested
Thanks for the wonderful video and attached excel .. may be you need to add a section for some milestone withdrawals .. like kids education expense etc .. but this is a wonderful start...
I have taken an ulip plan... Aditya Birla wealth assure plus plan and allocation is kept 100 percent in pure equity fund... policy term is of 15 years and PPT is 10 years....is this a right Choice sir
Hello sir. I have a request if you can please make a video on the dividend aristocrat portfolio for India since there isn’t any official index for the same. And also want to see the past track record thankyou.
Thank you for the suggestion, I'll try. I guess companies that might qualify as dividend aristocrats here would include Hindustan Unilever, Colgate-Palmolive, Bajaj Auto, TCS and others
Thankyou sir for acknowledging. I have been looking to find a way to create such a process since a long to pursue FIRE but wasn’t able to due to lack of resources. I found one smallcase named “dividend aristocrat” but due to non-transparency of process it’s difficult to have confidence.
Hi Mr Shanker. The video is amazing and very helpful. Clear & concise. One doubt i want to clarify. As i dont have a finance background. Just wanted to confirm, in the calculator. The LTCG tax - is being applied on the capital appreciation from the day 1. But shouldn't it be applied from the day you actually start a SWP. Let say we start with age 35 and retirement/start withdrawl at 45. Q1. Should the tax be applicable from age 36-37 ... Or should the corpus be increased until 45 without tax implications... And the tax applicable after withdrawal start from age 45. Q2. Also, the 10% tax be applied on the yearly SWP amount total only or the entire capital appreciation amount? Not sure if i am correct. Kindly help me understand this. Thanks and regards.
Thanks, glad you like my work 🙌 1. The LTCG tax was applied from the year when withdrawals are made & assuming there are capital gains. Since you'll need money to survive and some withdrawals are needed (i.e. you sold some mutual fund units), capital gain tax might be applicable 2. Tax is applied only on the capital gain and not on the amount withdrawn. For example - say you purchased 100 units at 10,000 rupees. You withdrew those units after 2 years but because the market was down, the amount came to 9,000 rupees. That's a capital gain of minus 1000 rupees .. a capital loss.
I have saved 35 times the annual expense I had in India at the age of 34 today. But I have been currently staying out of India since last couple of years and I think my lifestyle expenses have shot up very high since then. The problem is with more money, comes a high desire to spend equally.
There's a simple solution to this, pls see if it it helps. So many people use the equation: Income - Spends = Savings .. maybe you do too. But explore changing the equation a bit. Let's say: Income - Savings = Spends. Now this is a mindset change and all it says is "I will save first and the balance is what I will spend" Let's come to your problem. You have more income, so Income + X. Ergo, the new equation for you should be: [Income + X] - [Savings + X] = Spends This way, you maintain the same level of expense (to the extent possible) and end up upping your savings. The idea here is not to "not spend" but avoid wasteful expenditure by first-up dedicating an amount towards the savings.
Great video as always. Yours videos are precise and upto the point, no circling around. Thank you for making so great quality. Any suggestion for a person who is around 35 having very less saving. But earn decent amount. I am on my way to save 50% of my salary but investing only on Mutual funds and Stock. FD is kept only of small amount. Putting all 50% in equity mutual funds. Am I making mistake?
Thank you! With re: mistakes, I've compiled a video on some 20 mistakes investors (incl. me) have made over time. Pls have a look and evaluate (link: th-cam.com/video/_ODoI_BtWeY/w-d-xo.html)
Absolutely loved the video and very educating. But there is one problem which is incase of investment shared between US and India, the capital gain taxes are different also the PF/PPF investment, there the return is also different. But I can also put an weighted average which will work fine too. Thanks again.
Thank you Sandeep ji. Yes, since it's difficult to account for every scenario/investment .. I have kept the formulas open so that anyone can customize per their requirements.
I knew that you would come to this topic sooner than later. Nice one! I think the sheet is simplistic and could do with some suggestions already mentioned in comments! Keep up the good work! :)
The calculator is great but it can be improvised. If possible please provide separate row for mutual fund, stock, ppf, nps such that we can have a better idea. Also a column for rental income would be helpful.
Excellent as always. Such a compelling subject be it early or normal retirement. Request you to make follow-up videos on this subject that includes SWP, managing market downturns etc.
I find this tool very interesting. Thank you! CORPUS AT BEGINNING OF YEAR is given by the formula "=C28+D28+E28-(F28*(1+$D$13))". I think it should be "=C28+D28+E28-(F28*(1+$D$16))". Please correct me if I'm wrong. Thank you!!
Shankar Sir Have been watching your finance videos from et money n now in ur youtube channel. You have been helping lakhs of People like me to understand the finance in a simple way. I Thank you whole heartedly for sharing such valuable knowledge to us at free of cost and request you to share knowledge on How to Pick a stock at right valuation and when to sell and If possible please share Fundamentals of stock market analysis with your style of explanation. Thanks in Advance
Good video sir. Gives a good overview of our scenario Couple of suggestions which I feel will further solidify the calculation assumptions. Please do consider it if you feel it makes sense 1. The return on investment is considered the same throughout. Ideally, we will have higher equity exposure while working and when we retire, we tend to go to Fixed Instruments/Debt Instruments/Conservative Hybrid Funds etc type. Purely to avoid volatility we do this. So returns would go down 3-4% naturally than when we used to work and invest. That has to be factored in calculation 2. Even when we work, we will ideally taper down our equity exposure ( say from 80% while 25 years to 60% while 50 years as an example ) before the retirement age to reduce the chances of sequence of return risk. So that has to be captured in our return on investment expectation to set a realistic expectation. Keep up with the great content and presentation!
Excellent video as usual. In the spreadsheet, shouldn't you reduce the value of the corpus by inflation? You took care of increasing the expense by inflation. At the same time, the value of corpus also drops due to inflation, right?
Thanks. I prefer using nominal values as there is alignment between the corpus, income and expenses that's there with me with what's shown in the spreadsheet. If you're finding more effectiveness in the calculations using real values and if you have customized the calculator accordingly, then please do share it for the benefit of all
@@shankarnath It makes sense. It is probably confusing to use present value. If we use present value there, we shall also retain the monthly expense fixed, not expand in by inflation.
Hi Shankar, I am 62 ,going to be 72 . Someone in good health, having own business wants to retire later I tried the caculator and did not get desired results, Maybe the calculator not meant for me.
Dear Rajeev ji .. there's an old saying: If wealth is lost, nothing is lost If health is lost, something is lost If character is lost, everything is lost You are someone who understands his priorities and blessed with whats important.
Wow Shankar, i am super glad I saw this video today. In my financial journey, this is exactly what I wanted to know now in my current path and I am going to judiciously use this calculator to align on my goals and priorities!! Thank you so much!!
Sharan ankur warikoo raj shamani mva chai wala sab mile ke course bech rahe hai aur promotion karke public ka kat rahe hai. Ek dusre ko apne you tube channel pe bula ke ek dusre ka promotion karte hai
Hey Shankar, The calculation assumes a high equity return but as we age, we would want to shift some of our corpus to debt right? that would lower my return! I will make those changes in my sheet..your videos are awesome! I am a subscriber
I didn't want to complicate matters so I went with one % number. Yes, please feel free to make changes to the construct, maybe you can have different return expectations for each block of 10 years. Personally and over time, I am strongly getting the feeling that my portfolio performance will remain stable for a longish period of time so I'm still on the single % number trip.
Dear @shankarnath, Thanks for the video, it is really good and very well explained. I have one query, while finding our current monthly expenses, how do we need to take into consideration of the future expenses in account like kids education, their higher education, marriage and buying house/vehicles etc. because this could vary based upon phase of life. please advise. Thanks Veeresh.
Hi Shankar, I love your videos ,very useful contents. Past one month I am seeing your videos (Sorry...TH-cam recommended me last month).. have a request... would you please make a video on SWP. I want to know which is the best fund for SWP. This will help my parent's. 🙏
Hello Shanker if my retirement saving is all into the PF and NPS along with long term equity fund does the Pre tax % needs to factored in ? As PF , NPS are tax free along with long term equity benefit. Can you please enlighten here
Hello Hardik ji - you can do a blended pre-tax return percentage. I kept the calculator simple but please feel free to add more row and modify the formula to suit your needs. As a rule, you are right - 1. Equity funds lose out 10% from their pre-tax corpus upon withdrawals, 2. PPF loses nothing* and 3. atleast 40% of NPS will have some tax implication based on the kind of annuity you purchase. *May I request you to watch my video on PPF and especially the section on "Tax Free Pension" there. I think you'll like the concept esp. if a lot of your accumulation is in PPF
Hi Shankar, i am an avid follower of your channel and must say u have a fabulous way of explaining complex financial jargon for non accounting background ppl like me. I have been an NRI for the past 2 decades and would appreciate if you could also make investment and retirement based videos for our demographic with a skew towards the Indian diaspora in the GCC, many thanks nd keep going strong
Thanks for the suggestion, Tariq ji. I'll add this to my content queue and will certainly create a video once I have much of the information. Maybe I'll have to locate some wealth managers who work with clients in the GCC, I'll look around.
Hi Shankar, Can you make a video on tax efficient withdrawal strategies in retirement, from accumulated capital consisting of FDs, Mutual Funds, Stocks and Bonds.
Shankar Nath Sir... Please advise a retirement plan for Unmarried people and couple without Children... as this group will have a different requirement from others...big fan of your channel..Keep up the great work.
@shankarnath Dear sir while calculating returns on invested why did you take Capital gains tax? Shouldn't it be only taken into account on withdrawals?
You are right, capital gain tax is at the time of withdrawals. But I didn't want to complicate matters so settled for a simpler formula. Feel free to tweak the worksheet to incorporate capital gain during withdrawals - I have a feeling this will made the sheet heavy and complex.
Hello Sir , I'm a budding content creator and I want to start content creation along with my studies . I've been watching your videos since you had around 2k subs , also got to learn a lot from your thumbnails . But , I had a question ? How much time do you devote to this for 2 videos per week .
Hi, wishing you the best. It's more harder than it looks and you'll not know whether you like it or not until you have done 20 videos. With re: your question, I am a full-time content creator and it takes up all 7 days. 4 days to research and script, 2 days for editing support and 1 day for recording.
@@shankarnath Your videos are one of the best out there and you bring a fresh breath of air to the boring world of personal finance!! Icing on the cake is the humour you add to the videos!! Now we know how much effort goes into it... Keep up the great work 🤑🤗
@@shankarnath Have been sharing your content with friends and family ever since I discovered your channel few months ago!! Though I commented for the first time on this video as this topic is very close to my heart :)
Hello Mr. Nath. A very well-made video on the topic. Please correct me if I am wrong, but I believe there might be a mistake in the calculator for calculating the corpus at the beginning of each year. The formula right now is C[Cell Number]+D[Cell Number]+E[Cell Number] - (F[Cell Number]*(1+$D$13)). Should it not simply be C[Cell Number]+D[Cell Number]+E[Cell Number] - F[Cell Number]) since the capital gains tax has already been taken into account while calculating the value in the returns column? Otherwise, we are subtracting the tax twice from the corpus? Also, once we retire and start making withdrawals, we have to decide if the withdrawal is done at the start of the year (for the sake of simplicity). In that case, the withdrawn amount should not count towards the corpus that is used for calculating returns for that year. In other words, we should subtract the withdrawn amount from the corpus at the beginning of the year before we calculate returns for that year. Does that make sense?
Thank you very much. It's possible that there might be errors. Please feel free to modify the numbers and methodology per your comfort. This worksheet is a basic skeleton.
@@shankarnath Thank you for getting back. Actually, I am not sure that it is indeed a mistake and that is why I left a comment. If you have the time, could you check the mistake I mentioned and let me know if I am correct? I will then make the changes to my spreadsheet. I do not want to change it erroneously, you see.
sir according to the sheet that you have provided we are expected to get 12% return every year and i don't think that i possible. or may be i am unable to understand how are we suppose to get 12% return every year, i think even index may give me 12 return in 10year
Pls feel free to change in the cells marked in orange. I have kept them open as everyone has different savings, expenses, corpus, age etc. including a different expectation on returns
I guess if the rate growth of the saved corpus covers inflation / taxes / withdrawal percentage then this corpus will last for ever. Please correct my understanding.
Might work in a simplified, ideal scenario but may I request you to see the Amar-Akbar-Anthony example in this video (th-cam.com/video/5A_BHQBiL6I/w-d-xo.html) for a better appreciation of where this might go wrong
Yes I went thru the scenarios of Amar, Akhbar and Anthony. Coming back to my original point. If Capital Gain Tax is at 10 %, inflation at 8 % and my rate of withdrawal is 4 %, then ideally my corpus should grow by 22 % for me to be safe. This may happen in a particular year but is highly unlikely to happen consistently over all the years. I guess that is how the corpus would eventually erode.
RETURN ON INVESTMENT (PRE-TAX) cannot stay same for Before Retirement VS After Retirement For example: Before retirement, you can invest - asset allocation in equity:debt in 70:30 ratio. After retirement, one can, but should not invest in the same asset allocation.
This video is absolutely fire! 🔥🔥🔥
Thank you Ravi. Hope you are doing well. Been long, I'll call you next week
@@shankarnath dear Shankar Sir,
Eagerly awaiting your call. Seems you've been busy churning out informative videos one after another! Really good stuff.. Although Choley BHATURE still pending 😅
Loved the spreadsheet Shankar! And the video. This is by far the best video I have seen on FIRE system. Thank you.
Most welcome. Glad you enjoyed it!
I couldn't find excel..can u share
one of the best finance planning channel.
Glad you like the content
Great video as always... I got FIRED in 2017 and enjoying it :) One thing I would like to add is that one should also factor in few reccuring bulk expences that will repeat every 5-7-10 yrs like purchasing a new vehice, medical expences not covered under insurance, home renovation, international or domestic travel and unforcess emergency expences etc. etc. Best of luck to everyone trying to get Fired!!😅
What was your investment strategy? And how much you used to save per month?
Thanks for your appreciation and for sharing your suggestions, Saurabh
@@szsouvikzs Very very basic investment strategy, nothing great... My edge was a very very high savings rate from the start & on top of that a good salary growth throughout my corporate career... Secondly branded stuff, eating out, partying out etc etc never excited me as there are many other simpler and time tested ways to have fun in life... Lastly somehow I have remined single all this while😅but can't put a number to how much this has contributed to the overall success of my plan 😁
@@psyche1468 Any may be also the piled up family gold sitting and not doing much!!
@@ghu_makkar_saurabh Amazing man! So glad to hear your story. Thanks for sharing.
Great video i am practicing this strategy (4% rule )from last few years saving aggressively. just retired and try to live minimalistic life style.
Thanks and wishing you the best
Now a days there is a lot of content on early retirement and everyone talks about FIRE methodology but I must say that nobody gives a clear picture like this one. One of the most important thing to account for is your own lifestyle e.g. savings, expenditure etc rather than following an old method from 1990s. There is where this custom FIRE calculator is really helpful. Thanks @sankarnath again for making such great videos.
Thank you very much Navneet ji for your kind appreciation. I'm glad you found this useful and can help you reach FIRE status earlier & with a lot less question marks
Very informative content. I have watched multiple videos on FIRE. But you have made it so simple and easy.
Glad you liked it!
This is supe helpful and the best calculator for FIRE I've come across so far.
Great to hear! Glad it was helpful
I don't know English very well so repeatedly listen ur video because I want to know exactly what you said. So that shows how much I Iike ur videos. Thank you very much sir for this valuable content and where you from sir?
Thank you very much for your dedication, Chandra Sekhar. I reside in New Delhi.
Amazing video.
One thing I hvnt understood abt FIRE.
Why do we wana withdraw money from the corpus. What not put in FD or anything and life off of the interest. Even at the end of 20 years, corpus will remain.
Thanks! The general principle is .. after one retires, he/she has no income coming in but still needs to pay the bills. That's the reason why a withdrawal option is given i.e. one withdraws some money from the corpus to pay living expenses. Kindly try out the calculator, the point will certainly get clearer then.
Great presentation as always and content as well. Definitely going to try out the calculation sheet to find out my FIRE number. Thanks for the amazing work👌
Thank you very much, Sachin. Yes, please do crunch the numbers .. I sent it to a few friends and many came back saying FIRE is more now realistic & visible to them now after playing with the worksheet
A fantastic insight ! Very useful for creative people who want to productively contribute at some point in their life- not necessarily after 60 !
Glad you liked it
Shankar,
I have been following you from your first video and appreciate your responding to every querry of mine. Although i cannot connect to each of your videos, yet i am very happy for you as your subscriber base is going up gradually. Sincerely hope your hard work rewards you immensely.
Thank you very much for your good wishes, Anil ji
Hi Shankar sir,
Your custom FIRE calculator is extremely helpful! Thanks a lot!
Thank you very much. Glad you liked it
Sir would appreciate a video covering these topics for a person in his 50s. Also please explain how to encash your investments on retirement. Sell mutual funds or live of interest , Sell your real estate or reverse mortgage it etc. How to manage investments and real estate post retirement to get a monthly sum.
Thank you for the suggestion
Awesome video. Love the links in description as well.
Thank you! Glad you found it
Hi all, I have received 30+ requests for an "editor" access to the worksheet in the last hour or so. I'm afraid I won't be able to give that as there will then be no track of who is making what changes in the formulas. However, the calculator is very much downloadable -- so please save the file on your phones or laptops .. run it on Microsoft Excel, Numbers or Google Spreadsheets ... and do your own levels of customizations. Alternately, you can also make a copy of the worksheet and work on it as now you will be editor of that copy
Link: docs.google.com/spreadsheets/d/1AxW5GDKXiKtFg-jvgkv7Q7XoMSZytUjlZTXM_k_Naz8/edit#gid=689980357
One can also create a copy and edit it. For this go to File -> Make a copy. This will create an editable copy in your own google drive.
@@navneetnsit09 Useful tip. Thanks!
Unable to download or use the spreadsheet as its in html format. Can you please make it downloadable?
Thank you @shankarnath for the detailed FIRE tool. I have 1 clarifying question - The monthly expenses in Year 1 of retirement needs to be inflation adjusted right? i.e. 1L monthly expense in today's money needs to be inputed at ~2.75 L in terms of expense in year 15 ( assuming 7 % inflation)
Most welcome. Yes, that's correct .. your monthly expenses during retirement will be different from today. I didn't use today's expense for what your expense might be 20 years from now because the expense structure changes dramatically over time e.g. single now vs family later, living in city vs living abroad etc. Also please don't use the excel sheet the way it is, kindly modify it per your own requirements. Thanks
@@shankarnath Thanks !
Amazing concept.. this will certainly help in managing our current expenditure/ savings tool etc
Thanks Sharad, glad you liked it
This is exactly the kind of information I was looking for!
Glad it was helpful, Mayank. What are you going to do retiring early?
Must watch for almost anyone & everyone across age groups & financial status 👏🎉
Glad you liked it! 🙌
Thank you, Shankar, for the video and calculator. I'm a bit confused about why withdrawals decrease the retirement corpus. I thought the idea was that passive income would cover my expenses, preventing the corpus from shrinking. That way, I could earn monthly income from interest, etc., while the overall amount remains relatively untouched.
Hello, maybe I didn't understand the question. Perhaps you can try the calculator in my other video (th-cam.com/video/5A_BHQBiL6I/w-d-xo.html), I find this one easier to do.
Thanks for this sheet - absolute gold.
Most welcome. Glad you found it useful
What a presentation ......with all facts very well laid out by superb presenter.....sincere thanks for all your efforts. 🙏
Most welcome, glad you liked it
Very much thrilled by this video. Controlling once mind and regulating investments would be crucial part for success of F I R E
I am a becoming a big fan your concepts presentation and simplicity you explicit in explaining them, thank you. It will great to hear your thought process on investing post retirement (below 60) and generate monthly income from the corpus created for retirement
Thank you for the appreciation & suggestion
Thank you so much for the simple yet amazing FIRE calculator
Most welcome. Glad it was helpful!
I am on my FIRE journey since 2 years. As India’s Inflation rate is high my Target is to accumulate 33x the Annual expense till I am 43. Maybe that time will have change in thought process and pushback for another 2 years. Lets see how it goes.
Best wishes
All my answers are in this sheet. Thank you so very much shankar sir. I was ready to pay a financial advisor to plan out all this for me still he wpuldn't have explained all of this soo well. Hats of to you sir. You are awesome ! 😀
Most welcome, Vinay. Many financial advisors have a lot more to offer so don't ignore that based on what you see on TH-cam. Pls listen to what they have to say and then decide on the right course of action.
@@shankarnath sure sir 😊
Thanks a lot sir. This is simply superb explanation.
Most welcome 🙌
Thanks Shankar - this video is helpful!
Most welcome, Rhythm. Long time, hope you are doing well.
Thanks... very informative and presented well...
Thank you
Hi Shankar, In your calculation sheet, the BIG issue is that you have considered only Running Monthly Expenses. But you have to consider Capital expenses or Depreciation for the current Capital Assets. For example, If I am having a Car now, then even if I retire today, I will have to replace my car after 5 years. Same case with Furniture, House Painting, AC, TV etc etc. I have to make provisions for replacing these items every 5,7 years. These depreciation expense is large and in some cases might be more than monthly running expense.
Hello Prasad ji - please do customize it per your requirements. Personally, I make provisions for all these expenses and just like we do with depreciation in a P&L statement, I have deducted them as Expenses from my Income to arrive at the Savings number
❤
Amazing knowledge and reading material as always.
Thank you! Glad you liked it
Excellent as always.
Thank you very much
@shankarnath: Suggest that the value acell which shows monthly income at retirement should be auto-computed depending on inflation and current monthly expenses
Thank you so much Shankar for this amazing video. You have explained the concept in a very simple and easy to understand way. I am sharing it with my daughter and my friends. Best wishes.
Thank you very much, Sudha & Ramesh. I wish your daughter the very best in her quest to financial freedom and pray she gets to measure life not in money but in smiles, friendships, cups of coffee, books read, cities traveled, songs sung etc.
@@shankarnath Thank you so much Shankar. I will show this to message to my daughter.
Shankar sir can you also help in understanding REITs and its pros and cons of investment. The last 1 year returns is actually -ve 15- 20%.
I have a video on REITs that I personally like quite a bit. Please have a look : th-cam.com/video/vIceteorM94/w-d-xo.html
This is good video, thanks for it..
I cannot find the calculators in the link.. first link when I click it open the blog and asks to click on 2nd link for calculator.. when clicked on that it takes back to 1st link..
2nd calculator can't find any link in the page.
Thanks for letting me know. I have removed one of the alternative calculators and modified the link of the other
Thanks for spreading the knowledge.
I have a question about the calculator. If I select "post retire monthly" amount as 1L and my retirement year as 10 years from now, then "withdrawals during the year" on my first year of retirement is showing as 12L. I think 12L should be adjusted with inflation.
Most welcome. Are you assuming post retirement monthly expenses are today's expenses? For example - if you are spending 1 lakh today and inflation is 7% then you should input your post retirement expenses as 1 lakh*(1.07)^10. I purposefully didn't connect today's expenses with what would be your post retirement expenses because by the time a person retires a lot of changes happens in the expenses structure e.g. home loan debts are gone by then, the child are grown up, you already have a house or two etc. Taking today's EMI filled expenses to extrapolate what will be one's post retirement monthly expense is frat with miscalculation and therefore not suggested
Excellent video .. must watch .. much needed
Thank you very much
Excellent video. Thank you
Most welcome!
Thanks for the wonderful video and attached excel .. may be you need to add a section for some milestone withdrawals .. like kids education expense etc .. but this is a wonderful start...
Thank you for the suggestion
thanks for his video. i am also on path of FIRE in coming 1 2 years..
Most welcome
Your video presentation style is best ❤
Thank you! 🙌
Your FIRE calculator is quite helpful. Thanks.
Thank you Amit ji, glad you found it useful. I've kept it simple .. but feel free to customize it per your needs
I have taken an ulip plan... Aditya Birla wealth assure plus plan and allocation is kept 100 percent in pure equity fund... policy term is of 15 years and PPT is 10 years....is this a right Choice sir
Hello sir. I have a request if you can please make a video on the dividend aristocrat portfolio for India since there isn’t any official index for the same. And also want to see the past track record thankyou.
Thank you for the suggestion, I'll try. I guess companies that might qualify as dividend aristocrats here would include Hindustan Unilever, Colgate-Palmolive, Bajaj Auto, TCS and others
Thankyou sir for acknowledging. I have been looking to find a way to create such a process since a long to pursue FIRE but wasn’t able to due to lack of resources. I found one smallcase named “dividend aristocrat” but due to non-transparency of process it’s difficult to have confidence.
Thank you!
Couldn't download Xls from link
Most welcome. It's working for me. Can you try from a different browser? I use Chrome latest version
Hi Mr Shanker.
The video is amazing and very helpful. Clear & concise.
One doubt i want to clarify. As i dont have a finance background.
Just wanted to confirm, in the calculator. The LTCG tax - is being applied on the capital appreciation from the day 1. But shouldn't it be applied from the day you actually start a SWP.
Let say we start with age 35 and retirement/start withdrawl at 45.
Q1. Should the tax be applicable from age 36-37 ... Or should the corpus be increased until 45 without tax implications... And the tax applicable after withdrawal start from age 45.
Q2. Also, the 10% tax be applied on the yearly SWP amount total only or the entire capital appreciation amount?
Not sure if i am correct. Kindly help me understand this.
Thanks and regards.
Thanks, glad you like my work 🙌
1. The LTCG tax was applied from the year when withdrawals are made & assuming there are capital gains. Since you'll need money to survive and some withdrawals are needed (i.e. you sold some mutual fund units), capital gain tax might be applicable
2. Tax is applied only on the capital gain and not on the amount withdrawn. For example - say you purchased 100 units at 10,000 rupees. You withdrew those units after 2 years but because the market was down, the amount came to 9,000 rupees. That's a capital gain of minus 1000 rupees .. a capital loss.
Shankar ji can you please make a video on how to plan for SWP if someone is looking to invest for around 15-20 years...and some good funds if possible
Thanks for the suggestion
I have saved 35 times the annual expense I had in India at the age of 34 today. But I have been currently staying out of India since last couple of years and I think my lifestyle expenses have shot up very high since then. The problem is with more money, comes a high desire to spend equally.
There's a simple solution to this, pls see if it it helps. So many people use the equation: Income - Spends = Savings .. maybe you do too.
But explore changing the equation a bit. Let's say:
Income - Savings = Spends. Now this is a mindset change and all it says is "I will save first and the balance is what I will spend"
Let's come to your problem. You have more income, so Income + X. Ergo, the new equation for you should be:
[Income + X] - [Savings + X] = Spends
This way, you maintain the same level of expense (to the extent possible) and end up upping your savings. The idea here is not to "not spend" but avoid wasteful expenditure by first-up dedicating an amount towards the savings.
Wow! This reply is worth it's word count in Gold. Thanks, Shankar sir!
Great video as always. Yours videos are precise and upto the point, no circling around. Thank you for making so great quality.
Any suggestion for a person who is around 35 having very less saving. But earn decent amount. I am on my way to save 50% of my salary but investing only on Mutual funds and Stock. FD is kept only of small amount. Putting all 50% in equity mutual funds. Am I making mistake?
Thank you! With re: mistakes, I've compiled a video on some 20 mistakes investors (incl. me) have made over time. Pls have a look and evaluate (link: th-cam.com/video/_ODoI_BtWeY/w-d-xo.html)
Idk why no one mentioned but this channel is FIRE 🔥
Glad you liked it
Absolutely loved the video and very educating. But there is one problem which is incase of investment shared between US and India, the capital gain taxes are different also the PF/PPF investment, there the return is also different. But I can also put an weighted average which will work fine too. Thanks again.
Thank you Sandeep ji. Yes, since it's difficult to account for every scenario/investment .. I have kept the formulas open so that anyone can customize per their requirements.
I knew that you would come to this topic sooner than later. Nice one! I think the sheet is simplistic and could do with some suggestions already mentioned in comments!
Keep up the good work! :)
Thanks for your encouragement and feedback
The calculator is great but it can be improvised. If possible please provide separate row for mutual fund, stock, ppf, nps such that we can have a better idea. Also a column for rental income would be helpful.
Thanks for the suggestion
Excellent as always. Such a compelling subject be it early or normal retirement. Request you to make follow-up videos on this subject that includes SWP, managing market downturns etc.
Thank you for the suggestions. Yes, I have already added them in my content queue.
I find this tool very interesting. Thank you!
CORPUS AT BEGINNING OF YEAR is given by the formula "=C28+D28+E28-(F28*(1+$D$13))". I think it should be "=C28+D28+E28-(F28*(1+$D$16))". Please correct me if I'm wrong. Thank you!!
Most welcome. Yes, you're right
Shankar Sir
Have been watching your finance videos from et money n now in ur youtube channel.
You have been helping lakhs of People like me to understand the finance in a simple way. I Thank you whole heartedly for sharing such valuable knowledge to us at free of cost and request you to share knowledge on How to Pick a stock at right valuation and when to sell and If possible please share Fundamentals of stock market analysis with your style of explanation.
Thanks in Advance
Thank you for the suggestion
🏆 Here is your award for "Best Quality Description section" on the entire TH-cam. 🎉
Thank you!
Good video sir. Gives a good overview of our scenario
Couple of suggestions which I feel will further solidify the calculation assumptions. Please do consider it if you feel it makes sense
1. The return on investment is considered the same throughout. Ideally, we will have higher equity exposure while working and when we retire, we tend to go to Fixed Instruments/Debt Instruments/Conservative Hybrid Funds etc type. Purely to avoid volatility we do this. So returns would go down 3-4% naturally than when we used to work and invest. That has to be factored in calculation
2. Even when we work, we will ideally taper down our equity exposure ( say from 80% while 25 years to 60% while 50 years as an example ) before the retirement age to reduce the chances of sequence of return risk. So that has to be captured in our return on investment expectation to set a realistic expectation.
Keep up with the great content and presentation!
Thank you very much for your suggestions!
Excellent video as usual. In the spreadsheet, shouldn't you reduce the value of the corpus by inflation? You took care of increasing the expense by inflation. At the same time, the value of corpus also drops due to inflation, right?
Thanks. I prefer using nominal values as there is alignment between the corpus, income and expenses that's there with me with what's shown in the spreadsheet. If you're finding more effectiveness in the calculations using real values and if you have customized the calculator accordingly, then please do share it for the benefit of all
@@shankarnath It makes sense. It is probably confusing to use present value. If we use present value there, we shall also retain the monthly expense fixed, not expand in by inflation.
Hi Shankar,
I am 62 ,going to be 72 . Someone in good health, having own business wants to retire later
I tried the caculator and did not get desired results,
Maybe the calculator not meant for me.
Dear Rajeev ji .. there's an old saying:
If wealth is lost, nothing is lost
If health is lost, something is lost
If character is lost, everything is lost
You are someone who understands his priorities and blessed with whats important.
Wow Shankar, i am super glad I saw this video today. In my financial journey, this is exactly what I wanted to know now in my current path and I am going to judiciously use this calculator to align on my goals and priorities!! Thank you so much!!
Most welcome. Glad you found the calculations useful and you'll be making good use of it
Great Work.. Thanks!
Most welcome
I am sure this video is to destroy finance with sharan course
Sharan ankur warikoo raj shamani mva chai wala sab mile ke course bech rahe hai aur promotion karke public ka kat rahe hai. Ek dusre ko apne you tube channel pe bula ke ek dusre ka promotion karte hai
Right on the money
Sharan is just scam
😂😭yeahh!!
He doesn't even give excel sheet for free. He so greedy man.
Hey Shankar, The calculation assumes a high equity return but as we age, we would want to shift some of our corpus to debt right? that would lower my return! I will make those changes in my sheet..your videos are awesome! I am a subscriber
I didn't want to complicate matters so I went with one % number. Yes, please feel free to make changes to the construct, maybe you can have different return expectations for each block of 10 years. Personally and over time, I am strongly getting the feeling that my portfolio performance will remain stable for a longish period of time so I'm still on the single % number trip.
@@shankarnath Makes sense thank you for all the effort!
@@jean-baptistesay Most welcome 🙌
Well you really are very creative👌
Thank you so much 😀
This is amazing content, thank you
You're very welcome!
Dear @shankarnath, Thanks for the video, it is really good and very well explained.
I have one query, while finding our current monthly expenses, how do we need to take into consideration of the future expenses in account like kids education, their higher education, marriage and buying house/vehicles etc. because this could vary based upon phase of life. please advise.
Thanks
Veeresh.
Thank you. Yes, you should take into account future expenses. Pls feel free to make changes to the excel worksheet to suit your needs.
Hi Shankar, I love your videos ,very useful contents. Past one month I am seeing your videos (Sorry...TH-cam recommended me last month).. have a request... would you please make a video on SWP. I want to know which is the best fund for SWP. This will help my parent's. 🙏
Thanks for the suggestion
Hello Shanker if my retirement saving is all into the PF and NPS along with long term equity fund does the Pre tax % needs to factored in ? As PF , NPS are tax free along with long term equity benefit. Can you please enlighten here
Hello Hardik ji - you can do a blended pre-tax return percentage. I kept the calculator simple but please feel free to add more row and modify the formula to suit your needs. As a rule, you are right - 1. Equity funds lose out 10% from their pre-tax corpus upon withdrawals, 2. PPF loses nothing* and 3. atleast 40% of NPS will have some tax implication based on the kind of annuity you purchase.
*May I request you to watch my video on PPF and especially the section on "Tax Free Pension" there. I think you'll like the concept esp. if a lot of your accumulation is in PPF
Thank you so much sir ❤❤❤
Most welcome 🙌
Hi Shankar, i am an avid follower of your channel and must say u have a fabulous way of explaining complex financial jargon for non accounting background ppl like me.
I have been an NRI for the past 2 decades and would appreciate if you could also make investment and retirement based videos for our demographic with a skew towards the Indian diaspora in the GCC, many thanks nd keep going strong
Thanks for the suggestion, Tariq ji. I'll add this to my content queue and will certainly create a video once I have much of the information. Maybe I'll have to locate some wealth managers who work with clients in the GCC, I'll look around.
@@shankarnath Thank u Shankar ji 😊
hats off to your editor
Thank you
Hi Shankar, Can you make a video on tax efficient withdrawal strategies in retirement, from accumulated capital consisting of FDs, Mutual Funds, Stocks and Bonds.
Kindl refer to this video: th-cam.com/video/BH5r_CvsbKw/w-d-xo.html
Hi Shankar, love your content.
Would love to see a video on how to invest in Index funds
Thanks for the suggestion
Hi
Can you please create video on cloning philosophy of Mr. Pabrai ?
Thanks for the suggestion
Great content and fantastic presentation 😊
Thank you very much Santosh ji
Thank you Shankar for your insight on FIRE method. I have long been waiting for this video.
And thanks for the downloadable sheet too :)
Most welcome, Souvik ji .. glad you found it useful.
This is golden!
Thanks
This is much better than Ankur Warikoo's FIRE calculator.
Glad you found it useful 🙌
Shankar Nath Sir... Please advise a retirement plan for Unmarried people and couple without Children... as this group will have a different requirement from others...big fan of your channel..Keep up the great work.
Thanks for the suggestion
@shankarnath Dear sir while calculating returns on invested why did you take Capital gains tax? Shouldn't it be only taken into account on withdrawals?
You are right, capital gain tax is at the time of withdrawals. But I didn't want to complicate matters so settled for a simpler formula. Feel free to tweak the worksheet to incorporate capital gain during withdrawals - I have a feeling this will made the sheet heavy and complex.
Thanks for the excel sir much appreciated.☺
You're most welcome!
Hello Sir , I'm a budding content creator and I want to start content creation along with my studies . I've been watching your videos since you had around 2k subs , also got to learn a lot from your thumbnails . But , I had a question ? How much time do you devote to this for 2 videos per week .
Hi, wishing you the best. It's more harder than it looks and you'll not know whether you like it or not until you have done 20 videos. With re: your question, I am a full-time content creator and it takes up all 7 days. 4 days to research and script, 2 days for editing support and 1 day for recording.
@@shankarnath Your videos are one of the best out there and you bring a fresh breath of air to the boring world of personal finance!! Icing on the cake is the humour you add to the videos!! Now we know how much effort goes into it... Keep up the great work 🤑🤗
@@ghu_makkar_saurabh Thank you very much. Pls do share my videos in your whatsapp groups and pls also nudge others to subscribe to my channel.
@@shankarnath Have been sharing your content with friends and family ever since I discovered your channel few months ago!! Though I commented for the first time on this video as this topic is very close to my heart :)
Hello Mr. Nath. A very well-made video on the topic. Please correct me if I am wrong, but I believe there might be a mistake in the calculator for calculating the corpus at the beginning of each year. The formula right now is C[Cell Number]+D[Cell Number]+E[Cell Number] - (F[Cell Number]*(1+$D$13)).
Should it not simply be C[Cell Number]+D[Cell Number]+E[Cell Number] - F[Cell Number]) since the capital gains tax has already been taken into account while calculating the value in the returns column? Otherwise, we are subtracting the tax twice from the corpus?
Also, once we retire and start making withdrawals, we have to decide if the withdrawal is done at the start of the year (for the sake of simplicity). In that case, the withdrawn amount should not count towards the corpus that is used for calculating returns for that year. In other words, we should subtract the withdrawn amount from the corpus at the beginning of the year before we calculate returns for that year. Does that make sense?
Thank you very much. It's possible that there might be errors. Please feel free to modify the numbers and methodology per your comfort. This worksheet is a basic skeleton.
@@shankarnath Thank you for getting back. Actually, I am not sure that it is indeed a mistake and that is why I left a comment. If you have the time, could you check the mistake I mentioned and let me know if I am correct? I will then make the changes to my spreadsheet. I do not want to change it erroneously, you see.
Can we use 2% rule or 50X annual expenses conservatively in India
Yes. It should work
sir according to the sheet that you have provided we are expected to get 12% return every year and i don't think that i possible. or may be i am unable to understand how are we suppose to get 12% return every year, i think even index may give me 12 return in 10year
Pls feel free to change in the cells marked in orange. I have kept them open as everyone has different savings, expenses, corpus, age etc. including a different expectation on returns
Super useful❤
Glad you think so!
This man is a genius. Why isn’t he popular!!
Becz he is genius
Should i put the inflation adjusted value on my future expenses or it is already inflation adjusted
Inflation has been provided separately. Pls input gross values
sir, Your videos are very useful ,subscribed the channel.
Glad you liked them! Thanks
Cool sir ur good educator
Thanks 🙌
Very informative video
Thank you!
Hi can u make video on if person has 1cr want returns “ monthly “how to invest, its good topic to cover
Thanks for the suggestion
I guess if the rate growth of the saved corpus covers inflation / taxes / withdrawal percentage then this corpus will last for ever.
Please correct my understanding.
Might work in a simplified, ideal scenario but may I request you to see the Amar-Akbar-Anthony example in this video (th-cam.com/video/5A_BHQBiL6I/w-d-xo.html) for a better appreciation of where this might go wrong
Yes I went thru the scenarios of Amar, Akhbar and Anthony.
Coming back to my original point.
If Capital Gain Tax is at 10 %, inflation at 8 % and my rate of withdrawal is 4 %, then ideally my corpus should grow by 22 % for me to be safe.
This may happen in a particular year but is highly unlikely to happen consistently over all the years.
I guess that is how the corpus would eventually erode.
RETURN ON INVESTMENT (PRE-TAX) cannot stay same for
Before Retirement VS
After Retirement
For example:
Before retirement, you can invest - asset allocation in equity:debt in 70:30 ratio.
After retirement, one can, but should not invest in the same asset allocation.
thank you for the excel!
You are most welcome!