Archive for the ‘Retirement Planning’ category

Book on Retirement : Retire Rich Invest Rs. 40 a day

January 23, 2010

Book written by me….

RETIRE RICH INVEST, 9789380200071

book review that I found online…

About the Book : – To most people retirement is an age. It of course depends on your health, the company you work for etc. However in the first chapter I would like to introduce you to the concept that retirement is an amount of money! After all, if you have that magical amount why not retire early?

The second chapter takes you through the steps and importance of planning, and to the dangers of not planning.

Retirement is a goal and has to be approached in a financial planning mode. Retirement Goal Setting becomes important. How much money is adequate for a person to retire? Here is a generic answer telling you what are the factors to consider while trying to answer this question. This chapter has many pointers and a calculator which leads you towards the answer.

Can you really retire by investing an amount as little as Rs. 40 a day? The answer is yes it is the power of compounding. If you do have or time on your side, it is possible to create a retirement corpus on an amount as small as Rs. 40 a day. And the fantastic thing is that this small amount can be got by making simple changes in your life style.

If you have accumulated money for your retirement, you should also know how to withdraw. Here we deal with what is annuity, what are the methods of creating annuities, what options are available, and the works about annuity.

A few chapters are devoted to answering how much and what type of insurance should you look at during retirement, the attitude of the Indian family to retirement, the need to make a will, some retirement blunders, etc.

What is interesting are the tables at the end of the book telling you how much to save and invest – and case studies about portfolio make over for retirement.

Available at the following shops:

Twistntales (Pune) Shop1, Siddarth, Gaikwad nagar, Aundh, Ph:-020-25881465 / 25899745

Paperback (Thane) Dayanand – cell no. 9967255843  022-21714414

Bookzone, Fort, Mumbai. (022-25054616/17)    All Crossword Stores in Mumbai and New Delhi.

New Delhi: Jain Book Agency (011-4151380), Land-Mark (0124-4143020), Om Bookshop (011-46075621), Pages (011-46132001).

Chennai: Landmark – has the copies. Odyssey not sure..Crossword has it..

Also available online from cnbc..check out on google..


How can a doctor retire?

September 4, 2008

How can a Doc retire early?

Docs start earning quite late in life – at least the big bucks come at a late stage. So is it really possible for a Doc to retire early?

It really looks difficult. Docs unless they are super specialized and have created some kind of aura about their capabilities do not really earn the mega bucks of sports star or a film star. However, they do have a lot of flexibility in their profession. They can be on their own, be in a partnership or grow it like Dr. Reddy of Apollo Hospitals.

Having established that it is a good idea to retire early, and to never stop, how does one go about doing this?

Investing early and well, normally means the doc can retire early and well. If things are done properly then by, say, age 55, or whenever the kids are coming off the doc’s financial hands, the income from investing starts to exceed the income from the practice. This is a great position to be in, particularly if the income consists largely of unrealized, and hence un-taxed, capital gains. Also given our current tax structure where there is no INCOME TAX on dividends, the doc may be in a good position to retire.

Interestingly, most docs continue to practice even when they are at this point. But thankfully they can skip the long hours, choose lesser locations, and work more sensibly. They can also decide to and take many more holidays and long weekends. And there is a huge difference between the doc driving to work because she wants to, and the doc driving to work because she has to. One is happier than the other.

The major issue here relates to the costs of general practice. Unfortunately Docs do not have much training in considering Fixed Costs, Variable Costs and Marginal Costs! Not all costs fall just because the doc is doing fewer sessions. Many costs, for example, rent, some wages, depreciation of equipment and so on, stay the same regardless of how many sessions are completed each week. These costs are called “fixed costs”. This is because they

are fixed irrespective of how many sessions are completed each week. It is also called a Period Cost. At the end of the period, the cost has to be paid – immaterial of whether the equipment or place got used. A common mistake is to assume that there are no fixed costs. A doc completing, say, 7 sessions a week (only Mornings) and making Rs.15,00,000 a year may reason that his income will fall to, say, Rs.950,000 if he cuts from 12 sessions a week. Sadly this is not so. More probably, because fixed costs stay the same, profit falls by much more than this, say down to Rs.700,000, if not less.

How can he avoid this? There may be some options which he can consider:

  1. He may start teaching at a Medical college including doing sessions on how to handle customer psychology. Lady docs are sometimes preferred because of better soft skills.
  2. The doc can stop practising solo or in a group practice where costs are shared equally irrespective of the number of sessions.
  3. The doc should try to change to a practice structure where all costs (or virtually all costs) are variable costs not fixed costs.
  4. The doc can join a friend who has similar ideas and become a partner. One of them could used the infrastructure in the morning and the other person in the evening.
  5. The doc could also get into an arrangement with 2-3 junior docs who will use the geography of his practice are – and split the fees.
  6. One more alternative is to sell a portion of his practice to a deserving junior and get into a fee sharing arrangement.

Many of these arrangements may look difficult, and in many cases involves the DOC selling all or part of the practice to younger Docs. In at least one case I know the doc used his practice till his age of 81, but sadly many of his customers had gone away. He had to just sell his premises to a dentist. The practice fetched him nothing. Surely retirements could have been better planned.

Retirement Planning simple steps

August 26, 2008

In every financial planning class I need to do a post lunch session. To keep them awake I ask them to do a simple exercise – calculating how much money they require for retirement.

Unless they are at least 32-33 years of age, they have no clue as to how much they need for retirement. Once they see the figure (let us say Rs. 4 crores) they get into a DENIAL mode. Immediate reaction is to say “my father did not need this much amount” or “my expenses will reduce after retirement” or “my children will take care of me”.

Once they cool down, they sit and work out how it can be put together.

What most people do not realise is that the figure looks very big because we are seeing it from a very long tunnel. If I were to tell you that YES you do require Rs. 4 crores to retire, 30 years from now. HOWEVER if you were to invest just Rs. 100 a day for 30 years in a SIP which gave a SENSEX rate of return, you will have Rs. 4 crores in your retirement kitty.

So the important lessons in retirement planning are simple – make an estimate of your needs, adjust them for time value, compute the amount that you need to invest on a monthly basis, THEN START TODAY. Do not let the power of compounding go away – harness it when you can. Simple.

Lifestyle changes and retirement blues: Lifestyle creep!

July 19, 2008

Americans do things in style. So whether it is getting into a financial debt trap, chapter 11 bankruptcy claims, or living far beyond their means, they have a term for all of that. Like subprime. Like lending $700,000 to a person earning $ 17,000 per annum. They create products like “interest only”, “balloon repayments” or “increasing mortgage” – it does not matter!

One such term they have created is Lifestyle creep.

What is lifestyle creep?

It is about people increasing their standard of living with temporary income – thus not being able to maintain it when the income suddenly disappears -Lifestyle creep is particularly a problem to those individuals approaching retirement. People, a few years before retirement are typically in their peak earning years, but at the same time many of their earlier expenses, such as paying off a mortgage, or raising a family have vanished. Suddenly with a new found surplus of cash, some people use it to buy more expensive cars, more expensive vacations or possibly a bigger home.

Since the goal in retirement is to maintain the lifestyle enjoyed in the last few years before retirement, these retirees require more funds to support their new, more lavish lifestyles. Unfortunately, they don’t have
the resources to do this because they spent their surplus cash flow.

This is somewhat akin to the ant and the grasshopper story – the advice somebody can give them is “if you were singing during the summer, go and dance in the winter”.

So suddenly you have people who have “upped” their lifestyle with temporary income (come on, you knew it will end on the day you retire) and now they can now wonder how to continue this “temporary addictions”!

How much money do you need to retire?

July 2, 2008

Financial planners, mutual fund sellers, bank RMs, all of them have a knack of racking up a large number when it comes to your retirement corpus! Normally they do this so that they can galvanize the client to act. However, from what I have seen it normally has a negative effect!

When people look at a huge number – say Rs. 5 crores – the immediate thought is “Oh, my God!” I cannot do anything about this! However this is not true, nor desirable.

You as a customer (client) should understand that this is a nice round figure, but if you do reach Rs. 4 crores, it is not the end of the world. Also you need to understand that if you start to save, say 30 years in advance, you may need to invest only Rs. 80 a day to reach there. However if you start 5 years before retirement, you may need much, much, much more – say Rs. 6 Lakhs a month (or Rs. 20,000 a day!!).

So instead of killing your adviser, start, albeit with a small amount. Starting is more important than the amount with which you start. It is like getting a root canal treatment done – do not try doing 12 teeth at a time!

Retirement planning: a reminder

June 17, 2008

Are you in Denial mode regarding your retirement financial needs?

I cannot comment for every one, but too many people are in denial about their financial needs for retirement. Most of us do not want to accept that we will buy 3-4 washing machines, air conditioners, refrigerators, maybe about 2-5 cars, at least one or two houses during our retired life!

And all this buying will happen with our own money – i.e. by selling our mutual funds, unit linked plans, shares, etc. and from our pensions!

Strong financial planning is the key to a comfortable retirement
If you’re planning to spend your retirement in comfort, you’ll need to rely on some pretty strong financial planning. You’ll want to take into account your current financial position and your anticipated retirement income, preparing for contingencies and unexpected expenses along the way. Then you’ll need to develop a strategy for setting aside money on a regular basis to fund your retirement financial planning and choose wise investments so your money will build as much as you need. It’s kind of a daunting task, and it’s no wonder that so many people planning their retirement are worried about the quality of financial planning available in the country.

Benefits of the top financial products for retirement planning – Critical need for Long Term Care Insurance
There is a critical financial aspect of retirement planning today. If you lose the capacity to take care of yourself and require either in-home assistance or be transferred to a nursing home, all the financial resources you set aside when planning your retirement may be spent in just a few years on the cost of health care. Long term care insurance will cover the cost of your medical needs without jeopardizing the wealth you’ve accumulated for retirement or want to pass on to your heirs. Unfortunately no such insurance is available in India as of now.

Choosing the right type of life insurance is also part of planning for the financial circumstances of retirement. If something were to happen to you before you retire, you likely would want your spouse to still have the lifestyle and financial security in retirement you envisioned in your planning, and the right life insurance policy can ensure that.

Keep reading……


Why you must invest TODAY!

March 26, 2008
This is not an article on market timing! I am still not out clearly on whether we are in a bear market, bull market, recessionary market, growing market or emerging markets! This article is about why you must invest TODAY!
You must invest if you wish to have a corpus available for some life time event. Normally it could be buying a holiday, a car, a child’s education, or at least for your retirement. Retirement planning is the most neglected part of many people’s investment – because nobody sits on your head pushing you to do it. Now.So procrastination is the name of the game. You should realize that the most important thing in investment is not your money, it is time. Think of it like a Gym. The amount of money that you spend in a gym is perhaps very, very small compared to the amount of time that you invest in there – if you are serious. So is the case with successful investing. Surely it is not very easy to invest successfully. You’re putting your money at risk when you invest, after all. You can wind up with less than what you started with. You either do the investing yourself (with help from websites like (or pay a fund manager a nice sum of money) and keep track of them with products like ( most important thing to realize is that the money that you are investing is coming out of present consumption foregone. Psychologically it might help you to think of postponed consumption – then it could be less painful!All that seems to work against the one true aim of investing: growing your nest egg now to have more money later. If you pick up a magazine like say Money Today ( you will see 25 advertisements. The chances are 22 of them are urging you to spend, while 3 of the ads would be talking to you about some product like mutual fund or life insurance!Retirement solutions which HAVE to be custom made are nowhere spoken about in the paying media!

Why the urgency?

Albert Einstein called Compounding the 8th wonder of the world. You will soon see why he said so. The longer you have to invest and accumulate, the better off you are. It is as simple as that. Look at the table given below. Assume you’re looking to retire by age 60 with Rs.10 million socked away, and you think you can roughly get (say) 10% annualized return. These numbers show just how important time is to meeting your financial goals:

to Go
50 Rs.577.2 Rs.34,633.25
45 Rs.954 Rs.51,514.42
40 Rs.1581.3 Rs.75,900.37
35 Rs.2633.9 Rs.110,624.19
30 Rs.4423.8 Rs.159,257.65
25 Rs.7536.7 Rs.226,102.24
20 Rs.13,168.8 Rs.316,051.95
15 Rs.2,4127.2 Rs.434,289.21
10 Rs.4,8817.4 Rs.585,808.84
5 Rs.12,9137.1 Rs.774,822.68

If you thought coming up with Rs.954 a month to invest at age 25 was tough, just try waiting until age 50 and finding nearly fifty times as much spare cash in your budget. No matter how you slice it, the sooner you get started, the less painful it’ll be.

Start simple, but start now

Of course, deciding to invest for your retirement and actually doing something about it are two different things! With all the different investing options available to you, you may run the risk of “paralysis by analysis” — not doing anything at all for fear of making the wrong choice. Or you may watch some geniuses on television telling you when to start. You may happily procrastinate waiting for the market to correct – and perhaps miss out too much of the steep rise that is likely to happen when a market turns!The easiest way to get started is with a low-cost, market index fund like the Benchmark Index Fund (’s a one-stop shop that gets you invested in companies representing a big portion of the Indian markets’ by capitalization.

And when you have some surplus to donate, go here: