A Blueprint for Basic Financial Independence

We should plan our 20s with our 30s in mind. To take that idea further, I put together a blueprint for basic financial independence. For many people it could work as a retirement plan.

The number I arrived at is ₹80,64,900.58. That is what you would accumulate by following the plan below for 10 years.

Invest ₹25,000 per month in equity, such as index funds and stocks, for the first year. In the second year, invest ₹26,750 per month. The deposit rises 7% each year to offset an assumed 7% annual inflation. Do this for 10 years, assume an average market return of 13%, and the final balance comes to ₹80,64,900.58.

At that point you have the amount needed to live off your investments for the rest of your life. Here is how that works.

Assume basic expenses of ₹25,000 per month, rising 7% a year to match inflation.

From the corpus you could withdraw ₹50,000 per month, or ₹6,00,000 per year, again rising 7% a year to match inflation.

If you hold stocks that pay good dividends, you may not need to withdraw the full ₹50,000 at all, because dividends are credited to your bank account once announced. Your monthly spending also won't always hit ₹50,000, so whatever you don't spend stays saved.

With money working in the background, you would have time to build the things you want and shape your life the way you like.

If you doubt a 13% return, here are some index fund returns:

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