How You Can Retire In Your 40s?

Hi folks,

I welcome you all to another fascinating post on how you can retire in your 40s.

How You Can Retire In Your 40s? (Source: canva.com)

Most of you might be thinking that I am joking or building castles in the air.

Believe you me, this post will absolutely going to blow your mind. My previous post was about how you can generate sustainable monthly income from your Investments and how a monthly SIP of Rs. 6,000 can give you Rs. 17 crores. Check the links below

How You Can Generate Sustainable Monthly Income From Your Investment?

How A Monthly SIP of Rs 6000 Can Give You Rs 17 Crores

First of all, let us understand “what is retirement?”

Retirement

We have witnessed the retirement of our parents at the age of 60. In short, there is a regular monthly pension and gratuity amount kept in a bank account, and they need to work anymore to earn bread and butter for their family.

However, the definition of retirement has completely changed. If you ask someone from Gen Z, they would say that having a sufficient amount in the form of investments and savings, and returns is fulfilling all the yearly expenses. You need to work anymore to earn even a single penny.

This doesn't mean you have to stop working at all. You must engage in some form of activity or hobby.

Even if someone asks to work for free, then it must be an opportunity for you to learn or network with people.

In short, there shouldn't be any money pressure, and live life the way you want.

Now, you must be thinking how is this possible?

Let us understand with an example.

1. Assume that your current age is 25 years
2. You want to retire in the late-40s.
3. You assume life expectancy till 80 years.
4. Current savings are nil.
5. The monthly investment is Rs 15,000
6. Asset allocation is 0% in fixed returns, 40% in large-cap mutual funds, 30% in mid-cap mutual funds, and 30% in small-cap mutual funds.
7. The weighted average of taxes is 20%
8. The weighted average return on investment is 14.70%
9. The increase in investment each year is 5%.
10. The present value of monthly income after retirement will be Rs 50,000
11. After retirement, the investments are going to be 50% in large cap mutual funds, 20% in midcap mutual funds and 30% in fixed Returns.
12. Inflation is assumed to be 6%

At retirement, you will have savings of Rs 4 crore. Annual expenses of Rs 6,00,000 (Rs 50,000 monthly) will have a value of Rs 20,31,813. This means you will spend Rs 20,31,813 each year.

For more details, comment on my post and I will share the detailed analysis, where you can change the numbers as per your choice.

Disclaimer: You must invest after considering your risk-taking capacity. The above information is not any recommendation or suggestion. It is only for an educational purpose. You must seek the advice of a professional financial advisor before making any investment.

For more articles, check below

Best Way To Invest Money

Is Autopilot Investing App Safe?: A Deep Dive into Automated Investments

Artificial Intelligence in Finance: Changing the Financial Landscape

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