Under the Yoke
Posted: Fri Mar 06, 2015 5:02 am
Is FI by 41 years of age in a developing country feasible? There is only one way to find out.
Financial Independence in India:
Cons:
1. Difficult to get a high income job due to high competition.
2. Difficult to save more than your peers because frugality is the norm, not the extreme.
Solution:
1. Get a high income job. (con 1)
2. Ignore peer, familial, societal pressure. (pro 2)
Pros:
1. (Possibly) low cost of living when I'll be on my own.
2. (Possibly) low peer pressure on spending, however my experience until now has been the opposite.
3. Parents are paying for my education.
Where I am, where I want to be at and how to get there:
Requirements:
Current age: 17.
Higher Secondary Cert. and Joint Entrance Exam (for engineering admission): 17 (Result by July, 2015.)
BE/BTech CS: 21
ME/Mtech CS: 23
PGDA/MBA/BBA: 25
Job: 26-41
FI year: 41
I think 80% in all above examinations will be good enough but I don't have any idea if that is realistically possible or not.
Projections:
To reach FI by 41, these assumptions are made:
1. Principal required: INR 36,00,000 (30 years of annual expenses)
2. Annual expenses: ~INR 1,20,000
3. Annual Savings: INR 2,25,000
4. Ann. Income reqd.: INR 3,45,000
5. Savings rate reqd.: 65.21%
This is considered possible because:
1. India's per capita GDP currently: INR 3,00,000; so it will probably increase by 2023.
2. India's current average savings rate: 30%. I must be able to do better than that.
3. Successful acquisition of above mentioned 'union cards'.
This is the lower limit I have set.
Assets:
1. INR 50,000 in LTSD* for a 4 year term. Interest: 10.5% pa
2. INR 16,600 in savings account. Interest: 4.5% pa
* LTSD= Long Term Savings Deposit, similar to CD/FD but you cant touch the principal no matter what, so has higher interest.
This amount is from passing the HS scholarship exam and every other rupee I've ever got (minus 500 each spent on roller skates and table tennis racket.)
Total: INR 66,600
i.e. I have 6.6 months of monthly expenses saved
i.e. 1.85% of goal reached.
There are a lot of things that are yet to be done. I will document important steps I have taken toward greater self-reliance here.
Edit 1: Added assets.
Edit 2: Changed title from 'FI in India: fiby41's ERE Journal.' to 'Under the Yoke'.
Yoke noun
1. Something that weighs people down or prevents them from being free.
2. A wooden frame placed on the necks of oxen to hold them together and keep them in place.
Unless otherwise mentioned, all figure here on are in Indian Rupees (INR.)
Financial Independence in India:
Cons:
1. Difficult to get a high income job due to high competition.
2. Difficult to save more than your peers because frugality is the norm, not the extreme.
Solution:
1. Get a high income job. (con 1)
2. Ignore peer, familial, societal pressure. (pro 2)
Pros:
1. (Possibly) low cost of living when I'll be on my own.
2. (Possibly) low peer pressure on spending, however my experience until now has been the opposite.
3. Parents are paying for my education.
Where I am, where I want to be at and how to get there:
Requirements:
Current age: 17.
Higher Secondary Cert. and Joint Entrance Exam (for engineering admission): 17 (Result by July, 2015.)
BE/BTech CS: 21
ME/Mtech CS: 23
PGDA/MBA/BBA: 25
Job: 26-41
FI year: 41
I think 80% in all above examinations will be good enough but I don't have any idea if that is realistically possible or not.
Projections:
To reach FI by 41, these assumptions are made:
1. Principal required: INR 36,00,000 (30 years of annual expenses)
2. Annual expenses: ~INR 1,20,000
3. Annual Savings: INR 2,25,000
4. Ann. Income reqd.: INR 3,45,000
5. Savings rate reqd.: 65.21%
This is considered possible because:
1. India's per capita GDP currently: INR 3,00,000; so it will probably increase by 2023.
2. India's current average savings rate: 30%. I must be able to do better than that.
3. Successful acquisition of above mentioned 'union cards'.
This is the lower limit I have set.
Assets:
1. INR 50,000 in LTSD* for a 4 year term. Interest: 10.5% pa
2. INR 16,600 in savings account. Interest: 4.5% pa
* LTSD= Long Term Savings Deposit, similar to CD/FD but you cant touch the principal no matter what, so has higher interest.
This amount is from passing the HS scholarship exam and every other rupee I've ever got (minus 500 each spent on roller skates and table tennis racket.)
Total: INR 66,600
i.e. I have 6.6 months of monthly expenses saved
i.e. 1.85% of goal reached.
There are a lot of things that are yet to be done. I will document important steps I have taken toward greater self-reliance here.
Edit 1: Added assets.
Edit 2: Changed title from 'FI in India: fiby41's ERE Journal.' to 'Under the Yoke'.
Yoke noun
1. Something that weighs people down or prevents them from being free.
2. A wooden frame placed on the necks of oxen to hold them together and keep them in place.
Unless otherwise mentioned, all figure here on are in Indian Rupees (INR.)