Thank you Yogi, as always great help. You and Seema are my virtual mentors! I read this book some time back, here is what I gathered from it: The book dosent say don't leave anything behind, but promotes you to make active choice about your money. As per the author (if I remember and understood it right) , if you want to leave behind money for your children or for a cause, then give it when you are alive and when the receiver needs it the most. Leaving behind a huge sum when you die is not a choice you make, it is default. I think it's a powerful concept, you addressed it in your video, but I thought what you are recommending and what book says is a lot more closer than listeners might perceive.
Appreciate your comment and glad to hear that we act as your virtual mentors! You are right about what the book says. The challenge is that many in the FIRE community is taking that 'Die with Zero' approach at face value and we have reviewed quite a few corpus excel sheets of others and see they work towards a simulation of 5% - 10% of the total corpus by end of life. That is scary.
@@TheFIREdCouple Without doubt. Call me paranoid, but I would rather have a regret that I worked harder and longer than I actually needed than to have the anxiety of living on the margin. Lately I have realized that when you work knowing that your life dosen't depend on it, you are bold, you tend to do the right thing instead of for just making someone look good.
Absolutely. We had continued working for an extra few years even though we had gained financial independence. But that financial independence enabled us to make much better andbolder decisions at work.
Love your nuanced take on it. I found the book very interesting because it challenged my scarcity mindset & risk averse beliefs. At the same time, I can't abandon my "practical" approach completely either. Maybe if end-of-life healthcare options were better, I might have felt more strongly about a DwZ approach. Also the author is super rich from what I gather, which I think makes it easier for him to espouse this. Here's what Im choosing to take away from the book though: a. The goal of life is not to hoard money, it is to live a full, secure, happy life. b. The value of a rupee truly does go down depending on your age. If my parents were to give me a few lakhs in my late 20s vs (inflation adjusted) in my late 50s, there's WAY more I can squeeze out of that money when Im younger, rather and older. This applies not just to inheritance but savings in general too. Im too "scared" to completely DwZ but Im glad I read the book and it did defintiely make me think hard.
very nuanced, rhis could be in reddit easily. Die with Zero is a goal ro be persued, if you can't reach it, that's totally okay, u just have to know what you're earning the money for how it'll be used for max life fulfillment. end of life medical health is unnecessary, unless you're dying painfully it matters little if you die instantly or stretch out your life in a hospital bed without any senses. and that's a looong way off anyway. Look into annuities, they are instruments to provide you money for a lifetime. NPS has annuity schemes. Hope you can enjoy your money!
Thanks for your encouraging comment. @PriyankaBanerjeee , completely agree to the points you mention. Time is finite and there are many things to enjoy, memories to make, experiences to have... than to just hoard money. Your second point about the relationship with money and age is very thought provoking. Would love to delve more on that point. Worth addressing this as a dedicated video topic in future, I think.
I had always wondered about this concept of maximizing use of the money while I am alive and younger…Die with Zero is a fabulous new concept for me personally. I had 2 points to make : 1. There are certain joys in life which are best enjoyed at an earlier age say 30s and 40s rather than at 60s and 70s. What is your thought on not rushing to FIRE by a certain age and making one’s life tough during 30s and 40s by squeezing joy by restricting money spent. One can always work 2-3 years extra to FIRE later. How does one not fall into this trap given that not all among us would have high incomes? 2. Taking Cue from Historical returns from Indian stock markets and FD rates, 8% yearly returns seems like a decent assumption for overall return for a 50:50 portfolio. Considering inflation as 5%, do you think 3% seems like a reasonable assumption for a withdrawal rate considering inflation. Basically I want to leave the world with same corpus as that at the start of my retirement. So withdrawal rate = Yearly returns- Inflation rate.
1. Yes. Completely agree that certain experiences and memories are best had in 30s and 40s. And therefore all the more important to enjoy the journey to financial independence rather than squeezing every dollar or a minute from it. As in life with everything, flexibility is important. So plus minus a few years will not make a difference. Key is to find that balance - one end not being too frugal and retiring early while on the other end, not being too lavish and retiring really late. 2. 3% is definitely reasonable assumption. It should more or less leave same corpus behind but as I mention in the video, the purpose is the plan for a worst case scenario. With 3%, the worst case can be 'Die with zero' but chances are low of running out of money. Real case would be similar corpus and best case can be corpu++. Also, as they say - 'Past performance is no guarantee to future success!'. So one can't assume 8% returns or 5% inflation for decades to come in future.
Thanks! Next Thursday, we will be releasing a video about the expenses in Thailand. Will also make a video later about the life in Thailand in subsequent weeks
Yogi, you always have very relatable content. In this one I question the approach you are taking around the 17:19 minute mark where the net worth declines. If you use the FV of the dollar and bake in the asset growth compounded each year (S&P for example in my case which is usually less than markets in India) and reduce by your safe withdrawal rate, your net asset value will increase after the initial years rather than go lower. I have applied Monte Carlo analysis using the above to determine the confidence level of your assets left at your projected end of life.
Thanks for the comment ... especially from someone who is in an expert level of financial maturity! :-) You are right about the FV of dollar and the Monte Carlo analysis results. I need to typically keep the messaging simple in the video, so that people with all levels of financial maturity can understand the key point I am getting at (and here in this video, it's about what level of wealth they would like to leave behind). Hope that comes out well to the audience.
Thank you, very helpful content as always. A question, does the 2-3% withdrawal rate hold good even if you account for market shocks that typically occur in cycles? I came across this concept called the Monte Carlo Analysis and wondering if you have used it to plan your corpus.
Thanks and appreciate your comment. The 2-3% withdrawal rate shouldn't get impacted by the market shocks. Key is to have an emergency fund as that acts as a great shock absorber for the market roller coaster. Yup, we have done the Monte Carlo analysis.
Thanks Yogi, another great video. DwZ is a really scary concept for me. I would lean on your approach of taking a middle path and leave something behind.
Hi Yogi, when you talk about the withdrawal rate, is it a fixed withdrawal rate through the retirement years or variable? Fixed withdrawal rate does not seem sustainable when adjusted for inflation. Is that understanding correct?
The %age is fixed at the start of the retirement and then adjusted to inflation thereafter. Let's say, the withdrawal rate at the start of retirement is 3% and that translates to 1,00,000. Then for year-2 it has to be adjusted with inflation (say 5%) and the withdrawal amount for year-2 becomes 1,05,000. For year-3 it becomes 1,10,250 ... and so on. Hope that clarifies.
Hi Yogi, loved your video. What's your take on the Stree Dhan locked away in bank lockers. Do you feel a part of it should be monetized in the golden years?
Well, that would be a matter of a personal choice. Ideally, it would be best to give it to the next generation or toward's some noble cause in improving the lives of women.
just found your channel and have liked the first videos i have watched! Thank you for posting your thinking. I will admit, this one confused me. I can buy a 30 year bond today and get a very safe rate of return of 4+% So how is a 4% withdrawl rate "risky". so how is a 3.% withdrawl rate a little risky? again, i do like the videos and will watch more
Thanks for appreciating the video. I am sure you will like the others too. Yes you can definitely buy a 30-year bond today with 4+% safe returns but we can't predict inflation for the same 30-year period. If the inflation hits 7-8% or god forbid, in double digits, then it dramatically increases the risk of running out of money. In addition to inflation, the tax regulations also get revised over decade long periods. So, any negative changes to Long Term Capital Gains, Short Term Capital Gains, Income Tax or introduction of any form of Wealth Tax can deplete the returns on those bonds quickly. In the optimal scenario (inflation remains low, no changes to taxes, lifestyle inflation is managed, no financial crisis etc), 4% could be safe but as I mention in the video, important to plan and prepare for the worst-case scenarios.
Your videos are very inspiring. I have a question .. if you could help clarify that. Suppose I retire with 10 Cr, which gives me a safe return of 8% per year. Then what should be my DwZ withdrawal rate ? would it be 8% of return + 3% of Corpus?
Thanks, .Your 'safe' withdrawal rate has ~3% and not the 8% that you are getting. Your returns maybe safe but you have to take into account that 1. your expenses year-over-year will increase due to inflation (either lifestyle or regular) 2. you may be getting 8% today but can't predict decades long market upswings / downswings that impact not just the return but also the 8CR corpus The 3% is basically calculated with those in mind and therefore considered 'safe'
If someone is working on a FIRE philosophy and does a FATfire later in life then they will have a huge corpus then it is impossible to spend all those monies (well technically possible but a person with such mentality will not be able to do it!)
Spot on! People think it is very easy to spend money but for an average person who has worked hard and lives a modest lifestyle, it is bloody difficult!
@@adityantamarapu6239 that is always the plan when not being able to spend the money there will be millions at disposal to do all this but the idea of die with zero is not this.
Sir good morning ,my age 42 and my wife 33 and we have a 6 years daughter first phase now we saved 6 months emergency fund now I can save rs 1lac for investment ,am looking for long term for 20years + can give me some ideas how build my corpus for post retirement life
The formula is pretty simple - improving the earning, consistently saving and diversified investing. Make sure that you consistently save Rs 1lac (preferably increasing that saving by improving your earning potential year-over-year). Put that saving in diversified investments like mutual funds, index funds. Make an SIP so that you get the benefit of dollar cost averaging and you ride the market upswings and downswings.
You made a good point about contributing/giving when people need it. I've tried to do that with my children and others who need it. Thanks!
Thanks for sharing!!
You guys are very kind to make such videos. Thanks for doing what you do.
Thanks for watching!
Thank you Yogi, as always great help. You and Seema are my virtual mentors!
I read this book some time back, here is what I gathered from it:
The book dosent say don't leave anything behind, but promotes you to make active choice about your money. As per the author (if I remember and understood it right) , if you want to leave behind money for your children or for a cause, then give it when you are alive and when the receiver needs it the most.
Leaving behind a huge sum when you die is not a choice you make, it is default.
I think it's a powerful concept, you addressed it in your video, but I thought what you are recommending and what book says is a lot more closer than listeners might perceive.
Appreciate your comment and glad to hear that we act as your virtual mentors!
You are right about what the book says. The challenge is that many in the FIRE community is taking that 'Die with Zero' approach at face value and we have reviewed quite a few corpus excel sheets of others and see they work towards a simulation of 5% - 10% of the total corpus by end of life. That is scary.
@@TheFIREdCouple Without doubt. Call me paranoid, but I would rather have a regret that I worked harder and longer than I actually needed than to have the anxiety of living on the margin.
Lately I have realized that when you work knowing that your life dosen't depend on it, you are bold, you tend to do the right thing instead of for just making someone look good.
Absolutely. We had continued working for an extra few years even though we had gained financial independence. But that financial independence enabled us to make much better andbolder decisions at work.
Loved your video and the middle path ! I will relook at my excel and redo the numbers !
Wonderful!
Love your nuanced take on it. I found the book very interesting because it challenged my scarcity mindset & risk averse beliefs. At the same time, I can't abandon my "practical" approach completely either. Maybe if end-of-life healthcare options were better, I might have felt more strongly about a DwZ approach. Also the author is super rich from what I gather, which I think makes it easier for him to espouse this. Here's what Im choosing to take away from the book though:
a. The goal of life is not to hoard money, it is to live a full, secure, happy life.
b. The value of a rupee truly does go down depending on your age. If my parents were to give me a few lakhs in my late 20s vs (inflation adjusted) in my late 50s, there's WAY more I can squeeze out of that money when Im younger, rather and older. This applies not just to inheritance but savings in general too.
Im too "scared" to completely DwZ but Im glad I read the book and it did defintiely make me think hard.
very nuanced, rhis could be in reddit easily. Die with Zero is a goal ro be persued, if you can't reach it, that's totally okay, u just have to know what you're earning the money for how it'll be used for max life fulfillment. end of life medical health is unnecessary, unless you're dying painfully it matters little if you die instantly or stretch out your life in a hospital bed without any senses. and that's a looong way off anyway. Look into annuities, they are instruments to provide you money for a lifetime. NPS has annuity schemes. Hope you can enjoy your money!
Thanks for your encouraging comment.
@PriyankaBanerjeee , completely agree to the points you mention. Time is finite and there are many things to enjoy, memories to make, experiences to have... than to just hoard money.
Your second point about the relationship with money and age is very thought provoking. Would love to delve more on that point. Worth addressing this as a dedicated video topic in future, I think.
I had always wondered about this concept of maximizing use of the money while I am alive and younger…Die with Zero is a fabulous new concept for me personally. I had 2 points to make :
1. There are certain joys in life which are best enjoyed at an earlier age say 30s and 40s rather than at 60s and 70s. What is your thought on not rushing to FIRE by a certain age and making one’s life tough during 30s and 40s by squeezing joy by restricting money spent. One can always work 2-3 years extra to FIRE later. How does one not fall into this trap given that not all among us would have high incomes?
2. Taking Cue from Historical returns from Indian stock markets and FD rates, 8% yearly returns seems like a decent assumption for overall return for a 50:50 portfolio. Considering inflation as 5%, do you think 3% seems like a reasonable assumption for a withdrawal rate considering inflation. Basically I want to leave the world with same corpus as that at the start of my retirement. So withdrawal rate = Yearly returns- Inflation rate.
1. Yes. Completely agree that certain experiences and memories are best had in 30s and 40s. And therefore all the more important to enjoy the journey to financial independence rather than squeezing every dollar or a minute from it. As in life with everything, flexibility is important. So plus minus a few years will not make a difference. Key is to find that balance - one end not being too frugal and retiring early while on the other end, not being too lavish and retiring really late.
2. 3% is definitely reasonable assumption. It should more or less leave same corpus behind but as I mention in the video, the purpose is the plan for a worst case scenario. With 3%, the worst case can be 'Die with zero' but chances are low of running out of money. Real case would be similar corpus and best case can be corpu++.
Also, as they say - 'Past performance is no guarantee to future success!'. So one can't assume 8% returns or 5% inflation for decades to come in future.
Great video 😊 would love more videos with respect to your life in Thailand / real estate !
Thanks! Next Thursday, we will be releasing a video about the expenses in Thailand. Will also make a video later about the life in Thailand in subsequent weeks
Yogi, you always have very relatable content. In this one I question the approach you are taking around the 17:19 minute mark where the net worth declines. If you use the FV of the dollar and bake in the asset growth compounded each year (S&P for example in my case which is usually less than markets in India) and reduce by your safe withdrawal rate, your net asset value will increase after the initial years rather than go lower. I have applied Monte Carlo analysis using the above to determine the confidence level of your assets left at your projected end of life.
Thanks for the comment ... especially from someone who is in an expert level of financial maturity! :-)
You are right about the FV of dollar and the Monte Carlo analysis results. I need to typically keep the messaging simple in the video, so that people with all levels of financial maturity can understand the key point I am getting at (and here in this video, it's about what level of wealth they would like to leave behind). Hope that comes out well to the audience.
Thank you, very helpful content as always. A question, does the 2-3% withdrawal rate hold good even if you account for market shocks that typically occur in cycles? I came across this concept called the Monte Carlo Analysis and wondering if you have used it to plan your corpus.
Thanks and appreciate your comment. The 2-3% withdrawal rate shouldn't get impacted by the market shocks. Key is to have an emergency fund as that acts as a great shock absorber for the market roller coaster.
Yup, we have done the Monte Carlo analysis.
@@TheFIREdCouple thank you! Giving me a lot more confidence in my planning now
Thanks Yogi, another great video. DwZ is a really scary concept for me. I would lean on your approach of taking a middle path and leave something behind.
Absolutely! Gives good buffer while also leaving some legacy behind
Hi Yogi, when you talk about the withdrawal rate, is it a fixed withdrawal rate through the retirement years or variable? Fixed withdrawal rate does not seem sustainable when adjusted for inflation. Is that understanding correct?
The %age is fixed at the start of the retirement and then adjusted to inflation thereafter.
Let's say, the withdrawal rate at the start of retirement is 3% and that translates to 1,00,000.
Then for year-2 it has to be adjusted with inflation (say 5%) and the withdrawal amount for year-2 becomes 1,05,000. For year-3 it becomes 1,10,250 ... and so on.
Hope that clarifies.
@@TheFIREdCouple Thanks yes! This is clear now.
What are your average monthly expenses?
Will be providing a detailed breakdown in the video next Thursday!
Hi Yogi, loved your video. What's your take on the Stree Dhan locked away in bank lockers. Do you feel a part of it should be monetized in the golden years?
Well, that would be a matter of a personal choice.
Ideally, it would be best to give it to the next generation or toward's some noble cause in improving the lives of women.
I just got a chance to watch your videos today. Hope I will cover all your videos in this weekend 31/08/24
Awesome thank you!
just found your channel and have liked the first videos i have watched! Thank you for posting your thinking. I will admit, this one confused me. I can buy a 30 year bond today and get a very safe rate of return of 4+% So how is a 4% withdrawl rate "risky". so how is a 3.% withdrawl rate a little risky? again, i do like the videos and will watch more
Thanks for appreciating the video. I am sure you will like the others too.
Yes you can definitely buy a 30-year bond today with 4+% safe returns but we can't predict inflation for the same 30-year period. If the inflation hits 7-8% or god forbid, in double digits, then it dramatically increases the risk of running out of money.
In addition to inflation, the tax regulations also get revised over decade long periods. So, any negative changes to Long Term Capital Gains, Short Term Capital Gains, Income Tax or introduction of any form of Wealth Tax can deplete the returns on those bonds quickly.
In the optimal scenario (inflation remains low, no changes to taxes, lifestyle inflation is managed, no financial crisis etc), 4% could be safe but as I mention in the video, important to plan and prepare for the worst-case scenarios.
Your videos are very inspiring. I have a question .. if you could help clarify that. Suppose I retire with 10 Cr, which gives me a safe return of 8% per year. Then what should be my DwZ withdrawal rate ? would it be 8% of return + 3% of Corpus?
Thanks, .Your 'safe' withdrawal rate has ~3% and not the 8% that you are getting. Your returns maybe safe but you have to take into account that
1. your expenses year-over-year will increase due to inflation (either lifestyle or regular)
2. you may be getting 8% today but can't predict decades long market upswings / downswings that impact not just the return but also the 8CR corpus
The 3% is basically calculated with those in mind and therefore considered 'safe'
at what age did you retire? it's not really fire if you're retiring at 50 years.
We retired before hitting 50. The typical age of retirement in India is 60 and in other countries it is 65.
What are you saying, most people can’t afford to retire before 65 at least so retiring at 50 is definitely early.
Both of you make very insightful videos. I wonder why you don't make video in Hindi and leave that to your better half.
Thanks for the idea. Will do so in coming weeks / months.
If someone is working on a FIRE philosophy and does a FATfire later in life then they will have a huge corpus then it is impossible to spend all those monies (well technically possible but a person with such mentality will not be able to do it!)
Spot on! People think it is very easy to spend money but for an average person who has worked hard and lives a modest lifestyle, it is bloody difficult!
What's so difficult to create trust funds for your descendants or doing large charity donations?
@@adityantamarapu6239 that is always the plan when not being able to spend the money there will be millions at disposal to do all this but the idea of die with zero is not this.
Sir good morning ,my age 42 and my wife 33 and we have a 6 years daughter first phase now we saved 6 months emergency fund now I can save rs 1lac for investment ,am looking for long term for 20years + can give me some ideas how build my corpus for post retirement life
The formula is pretty simple - improving the earning, consistently saving and diversified investing.
Make sure that you consistently save Rs 1lac (preferably increasing that saving by improving your earning potential year-over-year). Put that saving in diversified investments like mutual funds, index funds. Make an SIP so that you get the benefit of dollar cost averaging and you ride the market upswings and downswings.
Hi Yogi, do you have children?
No we don’t