One of the worst things you can do in personal finance is forget the word ‘personal’. What return a person needs to get (will get is same for all of us ONLY in each asset class) depends on that person’s inflation. Many people forget that inflation is as personal as fingerprint or worse, blood pressure! So return expectations also are a function of their own actions – for example if you and I both hold Coromandel International for say 30 years, MY RETURNS will surely be higher – much higher – because of the trading that I am likely to do on that share on a REGULAR basis, and the fact that I reinvest the dividends without fail!

Similarly at different points of view one takes a different view on Equity return. Largely my view is – if you index your portfolio over a long term you should be able to get about 2% real return. However for different parts of the book I may have made different assumptions. In fact at the beginning of the book I have said ‘don’t take the numbers seriously’ – you have to plug in your own numbers. One person doing a book review has said “the calculators and links in the “You Can be Rich too – with Goal Based Investing” is better. Thanks, 4 years after publishing, if people speak fondly about a book, it is a compliment. This current book I have said in the beginning itself “Go to Google” and look for calculators. As for myself I prefer directing people to Freefincal – whom I had called the Calculator king – long ago.

Here is a book review by Swapnil Kendhe – an RIA based out of Nagpur. Here is his CV 

There are few quality books written by Indian authors on financial planning. Many of these books are written for beginners, and they offer little for DIY investors and financial advisers. But Retire Rich can add value to beginners, DIY investors as well as financial advisers. The title of the book could lead one to think this book is only about the accumulation phase of the retirement, but it talks as much about the distribution phase which is more difficult to handle.

Retirement planning is not an exact science. Many factors that influence the outcome of the retirement plan are unknowable. It is impossible to calculate the exact retirement corpus or savings requirement. Therefore, it is important to get the thinking right and to think in terms of heuristics or rules of thumb. This book helps you think better, improves your money management wisdom and provides many useful heuristics throughout the book that makes money management simple.

Here are few heuristics discussed in the book.

Mortgage should be 2.5*Your Annual Income
House Cost should be 2.5*Your Annual Income + Down Payment you can make.
One should target a retirement corpus 30 to 35 times retirement year expense.

Most money management books, especially written for beginners, become boring after the first few chapters. But wits and wisdom of PV Subramanyam makes this book interesting even for readers aware about the basics of money management. It touches almost all relevant aspects of retirement planning.

There are minor inconsistencies in the book. Chapter 27, which is one of the best chapters in the book, cautions against keeping all money in equity. But in one of the case studies in Chapter 25, the book recommends a 29-year-old to put all retirement savings in equity funds until age 50. While recommending such high equity allocation, the book doesn’t sufficiently talk about the temperament of investors to handle aggressive equity allocation and associated behavioral risk.

Chapter 27 also cautions investors against expecting 15% average p. a. return over the long term from equity portfolio. It asks to keep expectations of about 12% to 13% average return from the equity portfolio. This is in line with the 5% real return assumption from the Index assumed in Chapter 13. But elsewhere, the book takes aggressive return assumptions from equity. As in Chapter 10, the corpus post 30 years of investing is calculated by taking return assumptions of 18% from Sensex and 21% from Equity. It says in Chapter 14 that 12% real return assumption book takes from Index in the earlier chapter is ambitious and it is better to argue for a real return of 9% from Index. But 9% real return from the Index is still an aggressive assumption.

The book doesn’t sufficiently talk about the sequence of return risk in retirement planning.

Barring these minor issues, this book is one of the best money management books written by an Indian author. It is a must-read for beginners, DIY investors as well as financial advisers.

My comments:

this is a book on Accumulation phase, so there is no chance of mentioning anything about “return of risk investing” – that is a book for the withdrawal phase. And it will take more than a chapter to explain that. Not too many people even like to think of that risk!

Consistency on equity expectation is something I have never done, and will never do. Right now I am saying 12-13%, but largely it is a function of inflation, state of economy, YOUR starting point and YOUR ending point – and more importantly are you talking of a single equity share return, a portfolio return, or a mutual fund scheme return – in the book all these 3 situations are considered to be fungible. Far more importantly, an assumption is, an assumption.

Thanks for doing a review Swapnil.



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  1. Subra – hope your next book is on the retirement withdrawal phase. After following the advice to accumulate the corpus, people are gonna need that one

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