I hate thumb rules, and let me repeat that, I hate thumb rules. The thumb looks very different from the other fingers, so what rules apply to it, cannot apply to the other fingers.
However, there are a few rules which work in retirement / for retirement. Let us look at 3 of them:
- Start early: This is the zillionth time I am saying this. It is so damn important. Start NOW. The cost of waiting is too damn high, and is not worth waiting. And you should be targeting to save 10-15% of your income if you are between 22-34 years of age. If you are starting at 35, you need to up it to about 20%. Attempting to save anything more than this is great, if you can do it, you will reach your target earlier.
- Invest ENOUGH in equity. On a Rs. 25L sustainable ctc if you are doing a Rs. 5000 SIP, you got to realize that it is of no use AT ALL. Make sure that you have enough equity in your portfolio. Well invested, and for real long periods of time. Cannot ignore the importance of time in the process of wealth creation. If this sounds a lot like the earlier point, yes it is. So time was point number one and Equity Asset class is point number 2. For investing in equities you need to fortify your brain and stomach. Do that.
- Target to withdraw ONLY, only, only about 5% of your retirement corpus. So if you have accumulated say Rs. 5 crores for retirement, you will be able to withdraw Rs. 25L for your annual expenses. Do you need only Rs. 12 lakhs? great. Invest the balance. Over a 30 year post retirement, DO NOT TAKE A CHANCE.
short post, just as a reminder – which you do not need !! enjoy
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