How much will your expenses be?
Ask yourself two basic questions. How much income do you need to support your early retirement lifestyle? Second, how soon do you want to retire? Put the first question in other words, such as how much your month or year will cost. A rule of thumb will help you with this. This is the 4% rule. If you retire with Rs 5 crores, then under the 4% rule, you can use 4% of Rs 5 crores each year, which is 20 lakhs. In fact, another way to do this is to change the rule. Thus, 4% upwards is 25 times. This means that your pension fund must be 25 times the amount you will withdraw in the first year. Let’s say you need 10 lakh as expenses in your first year of retirement, then multiply by 25 to get 2.5 crores. So this amount should be with you at the time of retirement.
increase your income
Set aside 50 to 70% of your income every month. However, it may not be possible to keep half of your income as some basic expenses go towards rent, food, children’s education, mortgage, etc. But you should save as much as you can around this level. We can think about increasing our income. You can increase your income by starting a side business, such as a part-time job, seeking a pay raise, changing jobs for a higher wage, upgrading your skills, or looking for some other source of income.
keep most of the income
First, you start saving 50 to 70% of your income. You must exercise financial discipline by cutting back on your expenses. You should invest your savings wisely with your preferred medium of low-cost index funds. Save more, spend less and invest wisely.
There are many tips you can use to manage your expenses. For example, driving a used car instead of a new one, using public transportation if you live in the city, consider renting instead of buying a house, cook your own meals, cut restaurant expenses, avoid credit card debt, and earn rewards. Use them for etc. This could be a very long list.
invest in the right place
We need to invest as much money as possible. A person should start investing as early as possible. People should invest their money where they have the best opportunity to multiply it. In developed countries such as the United States, low-cost index funds or exchange-traded funds are used for this. In India, index funds and ETFs are also on the rise. You can use them more intelligently and earn higher returns than the benchmark.
Passive income is important
Passive income is very important. Now there can be many types of passive income. For example, dividends from your stocks, interest from your FD, income from your blog, monetization of your YouTube channel, real estate rent, etc. Passive income is something you can constantly strive for.