Another horrible commute.
A highly unpleasant interaction with a know-it-all
colleague.
A manager that seems to pile on more work every day – and yet isn’t nearly so generous with the recognition
.
And the work itself. What (hopefully) seemed exciting early
on has now completely lost its luster
.
The question is: How can I enjoy a fulfilling life as I leave my job behind?
Your savings rate is the percent of your take-home
you’re investing
long-term. Say you have no savings currently and you start investing 45% of your take-home; you’ll have enough to retire in a little more than 15 years!
This is assuming your investments
grow at 10% annually. (Historically Nifty 50
has grown at about 13.4% annually).
The retirement multiple I use is 30 times your annual spending. Annual spending is everything other than your savings. So, when you increase
your savings rate, it helps in two ways: By increasing
investing and reducing
spending!
Undoubtedly, 10% compounded
over 15 years will be highly fruitful
.
But with shorter time
frames like 5 or 10 years, it’s the savings rate that works the magic.
As we increase the percentage of our income we invest, we buy years of financial freedom
in the future.
I’m not suggesting we stop enjoying
our lives. We just choose how to. There are many things I spend extravagantly on:
Holidaying at the Taj Holiday Village, Goa
Adding to my sneaker collection
There are also plenty of things I hardly spend any money on.
Owning a fancy car
Wearing an expensive watch
Why? Because these are just not part of my rich
life. Maybe they are for you and that’s great.
What is your current savings rate?
Could you hike it by 5 or 10 percent if it meant being financially independent years sooner?
