This Mumbai Man Is On The Road To FIRE With Equity SIPs - Mint Money

Arunava Gwen is 40 years old and he wants to retire in the next five years. Basically, he has his eyes set on fire. Financial independence, Retire early. His target is a ₹15,00,00,000 corpus, and in fact, he's nearly halfway there. But how exactly is he doing this? Let's find out when it comes to, you know, investing and saving money, like with most, you know, single men, the first few years were barely any savings was all spent off. But it's I think many years down the line actually got serious. Somebody in office introduced me to the idea of savings, mutual funds, etc. I've gone through the whole journey before the 2008 financial crisis, bought some brilliant names at ₹2000 which are today penny stocks or even or even T listed some butt my fingers etcetera. Then finally jumped in the world of mutual funds and since then it has been a stable journey. Thank thank God for that. And thus I feel over the last few years and I started reading a bit about this whole FIRE movement globally. Started following a few people on Twitter, got me intrigued more. You know, it really interests me about the whole piece of being financially independent, retire, you know, retiring earlier, retiring towards more productive and more interesting things to you for yourself. So that really piqued my interest and I said, you know, let me try and make a shot for it. Have you always lived in Mumbai? I've always been a Mumbaiker. I've been born, brought up, thoroughbred Mumbaikar. In fact, my generate, my family's been here for 90 years or so. Possibly the only time I've lived away from the city is when I did my MBA. Apart from that, it's always been Mumbai, right? And part of your, your fire journey has been the switch from living in your own home to renting. So yes, can you tell us about that? Yes. So as you know, being a heart, you know, Mumbaikar for so many years, I did have a home in Mumbai, but it was more in the, you know, in the older part of town, more those older suburbs. Typical Mumbai house, which is small, doesn't have too many amenities. We had, we were blessed with a baby during COVID, during the pandemic, we decided that's the time when you need some more space, you need a place for the child to grow up to. And that's when we thought of moving a little bit further out of the city so that we get bigger space, A more, more amenities, etc. We went through the whole journey of buy versus rent, thought of buying, etcetera, put it down to mats. And you know, being a strategy person, I tried modeling it out and it just didn't make sense to buy anything. So that's when we decided to rent. So we swapped rents, you know, basically put this on rent, put my own house on rent, put this on and went here on rent. And it's been a good journey so far. You know, it's been nice. Staying in a gated community is a big housing society, gives a lot of avenues to and things to do for my parents for and especially for the child, lot of open areas to play etc. So it's been good. So currently it's 40,000 year. Yeah, I pay a rent of around 4042 thousand over here. And you make more in rent while renting? It's more or less the same. But yeah, I'll marginally, marginally higher by renting that out. Nice. So essentially you don't have to pay anything for your stay. Technically yes, technically nice. OK. So what is your FIRE number? Fire number as of things stand today, it's anywhere between around around 15 crores or so, plus or minus. And that's what things stand today. You know, five years, six years down the line, we don't know where the dollar will be, where inflation will be. So the number may move, but as things stand today, it's around 50. And how much of the way are you there? I would say I'm slightly short of maybe halfway around there or something, but I think I'm on track to be at get there in five years or so. Right. And when you do have that status, what's your ideal vision of retirement or just independence? So there are two pieces to it. One is, as you correctly said, it's the whole idea of independence. We've gone through some, you know, financial uncertainties in the past when I was a child. Want to get away from 1:00 to get away from that. Also free up your open up different avenues and options for options for you. It's not that my retirement is like, you know, 45. I want to kick up my boots and go and stay in a Goa shack and sip beer all day. That sounds like fun. That's that's actually not what I envision myself doing maybe at 60 or 65, but definitely not at 45. It's more a psychological block to get there and then maybe maybe explore different ideas, some things around could be entrepreneurship, could be giving back to society. I have a passion for teaching a lot. So maybe I will explore that as an Ave. But it's not just, you know, kick I'm done. You know that I can't go to office. I can't see an office. Absolutely not that kind of situation, Correct. And I'm assuming your wife should also want to work a lot more years. And yeah. So The thing is, whatever we talk about, whether it is a number, whether it's a planning, it's all a joint activity. It's not that. I mean, it's going to be pretty pointless if one person is, you know, has fired and the other person is to is still doing 9:00 to 9:00 to 8:00 kind of jobs, right. So it's worth work together. Yeah. So you'll have to align both your friends. So tell me about how you began investing. Where did you see, you mentioned a few stocks that you picked randomly as before 2007, Was that like tips from colleagues or how did that journey start? So that was usual, the tips from colleagues, you know, and this was during that whole rally before the 2008 crisis, You know, where in those days you would have the Sensex move thousand thousand seems like par for the course today. But you know, I'm talking when the Sensex was at 17,000, it used to move 1000 a day. So you pick up anything, whatever is hot, you hear tips, you hear from people you meet, etc. You do that a bit, a little bit of ELSS etcetera. As you said, you know, 2008 everything started going down and after which when, you know when things were down, you kind of lost most of the money etcetera. Then you then I thought, no, let's look at something, some different avenues. Started speaking to board mutual funds, heard a lot about from it from a few colleagues. Started off with my first few sets, you know, the first SIPI still remember I started off with I think 1 of ₹1000 and one of ₹2000, you know, and I said, oh, is it, am I doing the right thing? So that's it. That's when it started off and then ballooned to six mutual funds of ₹2000 each and so on. You hit the point of 60 mutual funds. Well, yes, I, I had one stage I had, I had around 60 plus mutual funds because every few, every few months there would be a new flavor. You know, sometimes it's an FMCG fund, sometime with some other fund, PSU fund, etcetera. 2009 when the, when the government, the UPA government returned, there was a whole buzz that, you know, PS us are really going to take off. So all mutual funds started off with the PSU scheme. So I do lot of PSU, PSU scheme. Unfortunately those PSU have taken on now after after 10 years. But yeah, that's been the journey. So create this some thematic funds, some large gaps and they were just off by a mere 10 years. And yes, yeah. So that's how you land up at 60 plus mutual funds. And when did you start trimming them down? Like what were the resources that you accessed? How did your thought process? So I started this, you know, oh, I don't know if I should say this, but value research has been a go to place for me to understand the mutual fund industry, the mutual fund ecosystem really well. That's where I understood the idea of, you know, let us start trimming things out. And I started seeing some of these things and I realized that like a lot of funds will have certain particular, like the HDFC reliances, ICS of the world are there with everybody. And I'm like, you know, what am I doing with this? And I realized that I need to start trimming, trimming it down. Value research helped me a lot in understanding. And around 3-4 years back during COVID is when I started putting attention to trim this down. My idea has always been that, you know, whenever I have time and whenever it's a good day in the market, sell, get out. Whenever there's a bad day, I transfer it to whatever funds I I like trimming down. Unfortunately, it's a bit tax is not tax efficient, which I think should be something hopefully we change in the next few years. But it's it is what it is. But trimming down really helps. And now how many funds do you owe now? I think it's come down to around 2025 or so, the ideal. I know experts say it should be five or six, but I think I'll still be there around 15 or so or so over the next few years. I don't see going below 10, but I'm assuming that it's not all uniform. You'll have some funds which dominate your food. Yeah, yeah, that is obviously there. Some, some will really dominate. And the only reason I don't see it going significantly down from this number is because as you have primmed down and consolidated, rather the number in each fund is significant. As I said, you know, selling anything is tax inefficient, is a tax inefficient. So either you stop investments into it or you just or, you know, let it be when you actually need the money you sell. Otherwise selling now and paying taxes on it is pointless just to get, you know, the the magic number of 10 mutual funds. Yeah. Yeah. So apart from MF's, you also still do stocks. I do a bit of, I do a bit of stocks. I would say maybe 10 to 15% on a monthly basis is in is in direct stocks. I have tried to do a mix of that thing, but that is more a DIY kind of a thing with P and some little bit of advisory services, right As in 10 to percent of their monthly savings, you could lose their stock and the rest in funds. And apart from these two, they would do anything else, gold, real estate and anything else? No, I, I am a firm believer that real estate is not a good investment for someone at My Portfolio. You know, once you are a portfolio size of 5000 crores, it's definitely has, it has some solid reasons to do so. But at the sub 10,00,00,000 portfolio, I personally don't think real estate is a good idea to do so Gold, you know, fixed deposits, etcetera. Not not much, honestly, not much. The entire debt. Sometimes I do do do a bit of debt investments on off majorly. I again don't don't touch debt much because again, in the mutual fund journey, I've accumulated some debt which I'm happy to keep it at this. So it'll be less than 10% of your right now it's of My Portfolio. I think mutual in mutual funds it will be around 14% or so would be on debt and that I'm happy to. And you have your employees Provident fund account. Yeah, so that is anyways there. So you've got your employees Provident fund for both my wife and me going on. So that is that itself covers the debt piece. And yes, the PPF that we do a religious every year. So in fact, if you include those together, probably that, that is 3% much, much higher, much higher. Yes, the PPFEPF covers a lot of the debt requirements. How much do you think about half a third? No, I wouldn't. It wouldn't yet become half. It would still be, I think then maybe hit around 25 percent or so, maybe 25. I don't have the exact numbers for 2530 or so. And you've never withdrawn from either EPF or PPF? No, I ended up withdrawing once from EPF by mistake when I changed one of my jobs. I signed up a form and I suddenly got some money back, but never taken a conscious decision to withdraw from EPF. You actually got the money back back? People get all kinds of rejections these days. Have you been hit by the KYC issue at all? Not so much myself, but my wife was hit, you know, all her SIPS for last month were rejected and it was very randomly rejected. You know, some went through, some were rejected. So we don't know what happened. Thankfully it got sorted out, but I still need to figure out. But I think my status is the KYC status where I can't do any redemptions right now. I think it's all KYC validated or there are some 4-5 criteria, right? I think I'm not yet at the top most criteria, but we'll get that sorted hopefully. But it is, it is an unnecessary pain. Yeah. So do you invest through a distributor agent or directly? Yeah, I do only directly. I, I be, I strongly believe directly. I again, as my journey had started, I started with a distributor, a very good gentleman. He helped me a lot. But then after a while you realize once your portfolio is of a certain size, you know, a 1% outflow every year, there isn't much of A value that are distributed. As I said, most of the research I was doing, I was reading up, I was saying I need to invest this and I didn't even get cost correction. So I said, you know, there's no point paying a percent every year for the for, you know, filling up forms and now with everything digital, another touch of a laptop or your mobile. Did you direct is what it is Now you have a son, three years old, three years. Yeah. So when you have a file number of 15 crores for his education, etc, you have a separate number in mind. Like how do you factor? That's a very good question, you know, because education is a very dynamic scenario. Because you know, like my sister, my elder sister's an engineer. She did her entire engine. She graduated when the last century, so to say 99. She completed her engineering at a cost of ₹16,000. I was on in Mumbai, has a lot of free seat, paid seat. I was on a paid seat. My annual fees were sixteen ₹14,000 at that time. Today, I think engineering is upwards of multiple lakhs, you know so and that is in India and if you go abroad, it's on the question altogether. So education inflation is beats any other inflation in the in the entire ecosystem of finance. So you really don't know why to cut, you know, short answer is 12 to 50 or 15 crores should consider his education, Yes, but we don't know because it may happen that we may end up spending much more than that. We may end up spending much less than that. So we have to have that flexibility and given that he's just three, we really don't know how the future is going to panel. So essentially you factored it in when you calculated your own factored it in. But we have some but we are open to the idea that it may change drastically. Understood. Tell me what insurance do you have life insurance? Yes I do, I had purchased life insurance long back a term insurance have continued with that have term insurance from my employer, which also continues. I have I made this year. I mean, ever since the child is born, I've been thinking I've not yet done it actually when I made this year go on top of my term insurance, but that's it. How much is it currently? Right now I'm covered for barely. I mean with my employer and with my and with what I have, I'm covered with upwards of 2 1/2 crores. I made top it up a bit more, but honestly, that's about it. The very interesting thought about insurance, that insurance is something that you should do only for the time of period that you plan to be earning anyway. So a lot of the companies sell plans to 7080. But if I'm planning to work around 4550, even 50, you know, you don't need insurance beyond that technically. So let's see how the insurance. So you may stop it after I may, I may stop it. And what kind of premium do you currently pay? Currently because I've taken it long back, the premium was a little on the higher side. I pay around 8 or ₹10,000 or so. I think nowadays you get even a crore insurance at six, five or ₹6000 from term. I'm not sure if the numbers are not validated it, but it's around around 10810 thousand a year. A year, right? Pure term, no money back, no cash back, nothing. That's also very unusual. Most people have these legacy policies of LIC and no, no, no. So I've stayed away from all of all of that health insurance. Yes, health insurance we do. We are again company provided insurance covers us decently for both my spouse and myself. In addition to that, I have insured my mother also via the company because for senior citizens insurance outside or as good as you. I mean there are plans, but once you put in all the disclaimers and the TNCS, it's not so good. So I covered my mother through my my corporate insurance. In addition to that for my wife and for my kid, we I have again added a family floater cover kind of a situation with a top up with you know, in business products base and then top ups have done that. I think we are insured up to 50,00,000 or so on that apart from what is there from the company or 50 or 60,00,000 or so with the base plus top up. Got it. And company separate, company separate, company separate for myself, company separate for my wife. So together we'll have easily have like a crore of all of you around for health insurance. Have you had to claim it in the past? Any experiences? So only company I had to claim when my child was born, the maternity expenses. That's it. No actually company plans I have, I have claimed, I have claimed a few, a few times, you know, with my mother, with myself, etcetera over the last 10 years or so. But I've so far claimed only company. I've never claimed my own personal thing. You have our plans and no claim bonuses add up. Yes, that is standard. And what is the experience like the claim? So I have so far taken it. I've been with on my own private insurance for two or three years. The process has been OK. I mean we have not yet gone through a claim so we really don't know about that part. But the sale process has been pretty OK, right? No, I mean the company part where you company part has been completely smooth. No, no major issues. Only issue has been at the hospital and to process paperwork and all, but otherwise it's been completely smooth. Tell me a bit about your spending. Do you think about ways to cut down? How much do you roughly spend a month? So me we end up spending around between my wife and myself around 15 odd percent of our of our joint income, 1520% of our joint income. As I said, our rent expenses are pretty much negligible because we swear swapped in the rents that said, so that's why our monthly and otherwise day-to-day expenses are pretty low because of the because rent is not there. That said, we don't think we curb down on on any expenses. This is our day-to-day expenses. We both love travelling a lot. So our major expenses go towards go towards travelling. That's how often do you travel? We generally try to do a trip a year, a trip out of India a year. The hope is to you know, augment that with one or two more India trips. Again, the other philosophy we both share is because we are, we are planning to, you know, the time that we work then that we are working and we have good jobs is the time we should do the international trips. The moment we go, we retire. Actually retire is when we will say, OK, let us look at more of India. Yeah. Yeah. And also as you get older, it's harder to travel. Exactly. It's harder to travel. You know, you can't, you can't walk. You can't like be going to a typical European city will involve 20,000 steps, 25,000 steps a day. You may not be able to do that once you're beyond 50. So you'll need cars everywhere and India is better for that. But do you have NPS also? Yes, I do NPS has been a revelation to me, you know, because in my previous companies we didn't have that 10% basic NPS. So that's something that I'm that I'm having here. I'm very grateful and thankful to it. So I have, I really loved that product and that offering totally. And apart from the company, do you do the 50,000 that also 50,000 that I was envious continuing for many years. But the 10% I just started 2-3 years back. And one of the things I keep doing whenever we are talking finance at work is to tell people that, you know, this is something and it's surprising the number of people who are not aware of it. Yes, a lot of people who are senior and who's obviously whose compensation is higher, they are not eligible for the tax benefit because of the seven and a half lakh limit. But but for many it is, it is very much possible to do that and many of those don't know. Very true. And in fact it's also available in the new regime. So yes, it is. It is. That's actually a very good thing that's there. Are you planning to switch to new regime or how do you think about that? If I'm not, If I'm not wrong, Neil, I think it was your art one article in Mint which said if your income is between 14,00,000 to five crores old suits and beyond, five is when new suits and less than 14. So I'm very much at that threshold. I don't see myself going out of that threshold anytime soon. So old is where it it will remain. Yeah. So actually the math is the amount of reductions you claim. So above 15,00,000 income if the number of reductions you claim, including the basic. Exceeds 4.25 land, then the then old, otherwise new, otherwise new and I'm still there. So it makes sense so far to stick to the thing to the old. OK, great. Now anything else you'd like to add about your fire journey before me control so on on FIRE. I think one very important thing to understand is you know, the goal can often keep ends ends up moving. You know, when we, when we were a double income, no kit family, the goal was much, much lower. We practically reached that goal today. But then we have a kid. So we realize that things change. So that that is one thing that changes. The other thing that changes is actually both a lifestyle inflation and in one way or own desire inflation. You know, when you start off on this journey, you will think that, you know, I can live my life happily at ₹100 a month for example. But as you move ahead in your life, you're exposed to so many other things that you want, desire. So I'll give you an example. You can, when you're younger, you will travel and you'll be able to take your red and red eye flight since you can do a layover of eight hours, etc. As you grow it in your career, etc, you'll say no, I want to fly, if not business, at least premium economy. After a few years, it will be like I want to travel business. These things then end up shifting. So it's very important to manage that, that balance between your desires. I I see a lot of chatter online where there are people who like, you know, fire is the way to go and there are other people who like, you know, fire is for losers, you know, you have no ambition in your life, etc. So I think it's not that it's to each his own. It's about understanding what you want for yourself. Very important, what you are going to willing to balance, what are the trade-offs you do. And at the end of the day, it's about keeping yourself happy and productive. Yeah, very true. Thank you so much. Was lovely. Steven, thank me.