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Rahul is 23 years old software engineer.
He has been working as a Web Developer for Amazon in Mumbai. His monthly take-home salary is ₹ 1 lakh/month ($ 1,350).
(1/n)
Rahul is 23 years old software engineer.
He has been working as a Web Developer for Amazon in Mumbai. His monthly take-home salary is ₹ 1 lakh/month ($ 1,350).
(1/n)
Rahul is single and currently living in a shared apartment with his friends. His monthly expense is ₹ 30k/month($ 406). He is saving ₹ 70k/month($947).
Rahul is considering buying a house in Navi Mumbai.
(2/n)
Rahul is considering buying a house in Navi Mumbai.
(2/n)
His parents are recommending to take a 2 BHK flat in a society with all the luxury facilities like spacious garden, swimming pool, gym, etc.
He has shortlisted one of the property. The overall estimate for this property is around ₹ 1 Crore ($135290).
(3/n)
He has shortlisted one of the property. The overall estimate for this property is around ₹ 1 Crore ($135290).
(3/n)
His family can provide financial support of ₹ 30 lakh($ 40,586). He has a savings of ₹ 10 lakh($ 13,529).
So in total, he would need a home loan of ₹ 60 lakh ($81,173). The EMI for a loan of ₹ 60 lakh($81,173) would be around ₹ 58 k/month($785) for 20 years.
(4/n)
So in total, he would need a home loan of ₹ 60 lakh ($81,173). The EMI for a loan of ₹ 60 lakh($81,173) would be around ₹ 58 k/month($785) for 20 years.
(4/n)
Considering his expenses, he can still manage to pay the EMI.
However, the savings would just be ₹ 12k/month (100 k - (58k + 30k)). He would require the remaining amount for emergency purpose.
(5/n)
However, the savings would just be ₹ 12k/month (100 k - (58k + 30k)). He would require the remaining amount for emergency purpose.
(5/n)
However, Rahul is considering another option. This another option is 2 BHK flat in an upcoming society near Navi Mumbai without a swimming pool, gym, and playing fields.
(6/n)
(6/n)
Building construction quality is good with all the basic amenities like 24*7 power supply, security guards, parking, CCTV camera.
The overall estimate for this property is around ₹ 70 lakh (including registration, etc.).
(7/n)
The overall estimate for this property is around ₹ 70 lakh (including registration, etc.).
(7/n)
After the financial support of ₹ 30 lakh from the family and ₹ 10 lakh savings, he would need to take a home loan of ₹ 30 lakh ($ 40,586).
The EMI for a loan of ₹ 35 lakh would be around ₹ 29 k/month ($393) for 20 years.
(8/n)
The EMI for a loan of ₹ 35 lakh would be around ₹ 29 k/month ($393) for 20 years.
(8/n)
Now, with given options - What will you choose ?
Rahul opted for option 2.
Now, he is left with ₹ 41 k/month to invest (29k EMI vs 58k EMI). This is ₹ 29k/month “extra” saving as compared to option 1.
(9/n)
Rahul opted for option 2.
Now, he is left with ₹ 41 k/month to invest (29k EMI vs 58k EMI). This is ₹ 29k/month “extra” saving as compared to option 1.
(9/n)
Rahul started with investing ₹ 29k/month in mutual funds. This is to build a corpus for retirement.
He invested in ELSS fund ( also to save tax), a large-cap fund, a large and mid-cap fund, a mid-cap fund and a debt fund and expecting an average annual return of 12%.
(10/n)
He invested in ELSS fund ( also to save tax), a large-cap fund, a large and mid-cap fund, a mid-cap fund and a debt fund and expecting an average annual return of 12%.
(10/n)
He is planning to retire at the age of 50.
At a 12% annual rate, his 29k/month investment would generate an amount of ₹5.33 Crore($0.72 Million).
If we consider annual inflation of 4%, the amount would be equivalent to ₹ 1.85 Crore($251,363).
(11/n)
At a 12% annual rate, his 29k/month investment would generate an amount of ₹5.33 Crore($0.72 Million).
If we consider annual inflation of 4%, the amount would be equivalent to ₹ 1.85 Crore($251,363).
(11/n)
Conclusion: Rahul understood the importance of the power of compounding with early investment and wisely invested his salary. With this decision, he not only bought a house for himself but also planned his retirement.
(12/n)
(12/n)
This is a completely no brainer strategy to retire rich, where he don't need to know anything about company's valuation or analysis & his CAGR was 12%.
Never confuse simple with EASY &
hard with Complex.
RT if you like this thread !
Cheers
Prabhat
(13/13)
Never confuse simple with EASY &
hard with Complex.
RT if you like this thread !
Cheers
Prabhat
(13/13)
@UnrollHelper Please "unroll"
