Thread by @warikoo

Do you want to retire in your 30s?

Here's how you can do it logically 👇

First, I want to share what I actually mean by retirement.

Retirement doesn't mean you stop working.
No!

By retirement here, I meant you STOP working for money, and instead, do things that you actually love, without worrying about making money.

How?

You retire when the annual return on your investments is enough to cover your annual expenses.
Forever!

This is called F.I.R.E [Financial Independence Retire Early].

Let's understand how you do it.

You do it by:

- Increasing your income by 20%, every year
(what? 20%? kya pookh raha hai be! Hold hold. Hear me out, below)

- Living below your means.

- Investing, but also INCREASING the amount you invest annually.

Put it simply,
1) Earn more
2) Spend less and invest more.

However, you don't have to live like a saint or a pauper.
You can practice these 2 points without giving up on your YOLO theme :))

Here's how...

1) Earn more

It's the most crucial part of your journey to retire in your 30s.

In your 20s, you need to build multiple income streams

- Freelancing
- Internships
- Side business
- Working with people you admire
- Building a network of trust

Let's say you have started off by earning Rs. 15K every month. That's Rs. 1.8L/year.

Let's set a very achievable goal: To increase the income by 20% annually.

With 20%, you will increase your income by 22X in 18 years.

And with 30% it will be 87x in 18 years!

But how do you actually increase your income by 20% every year?

- Constantly upskilling yourself
- Increasing your sources of income
- Building your personal brand to increase your network and promote your skills/services

Let me explain this to you with an example...

You're 20 y/o, & just started as a freelance writer with Rs. 15K/month.

You do a fabulous job and increase your rates by 20% next year.

You do this for 2 years, grow your body of work, your network & eventually start your agency.

The goal of the agency becomes
- Onboarding higher paying clients
- Increasing your rates with higher quality work.

Your income grows with it.

This was a simple example of how you can aim to increase your income by 20% annually.

I started charging for corporate talks in 2020, and my per hour rate back then was Rs. 47,000/hr

Today I charge Rs. 6,97,000 per hour - which is a yearly increase of ~400%!

(Sorry for the humblebrag - just to illustrate the point that its doable)

A few months back I made a video on 9 simple and highly effective ways to earn money online.

Check it out here:

2) Spend less and invest more

To spend less:

- Make a budget.
The 50:30:20 budget rule is a great start.
50% for your needs (EMI, Rent, food, transport etc)
30% for your wants (phone, car, vacations etc)
20% for your investments.

The key here is the 30% wants.
The latest phone, a car you fancy, clothes - whatever you want, needs to come from this 30% allocation.

So if you 20%/mth comes to 3K and you want to buy a 15K phone, you save for 5 months and then buy. That is how it works.

- If you want to buy something, wait for a month.
Chances are you will not need it after a month. If you still do, go for it.

- If you cannot afford to buy an item twice, do not buy it.

All these techniques have worked for me immensely.

I wrote a thread on 13 smart hacks to save money, sometime back. You can check it out here:

https://twitter.com/warikoo/status/1560504566243766272?lang=en

While you continue to increase your earnings & savings, you also have to invest.

The GOAL is to reach a point where the annual return on your investment will be enough to cover your expenses.

That is when you can retire.

Let's understand this with a SIMPLE calculation.

Assume in your 20s your monthly expense = Rs. 10K
Money in your bank = Rs. 10L

If you invest all that into an index fund & get a 12% return, you will get Rs. 1.2L on that amount, after 1 year

1.2L divided by 12 months is Rs. 10K, which is equal to your monthly expense

But wait

This was a VERY simplistic view, and illogical to an extent. It does not take into account the following:

- Inflation
- Emergency funds & insurance
- Future expenses
- Market Volatility
- Taxes

and 17 other things

So what's the logical way?

Excel excel khelte hai :))

In this example:
- Every month, WITHOUT fail, you will invest Rs. 12k into a SIP
- Over the years, your SIP amount will have to increase too, let's say by 25% (remember your income is increasing by 20% annually)

This means, year 1 you will invest 12K/mth, year 2 you will invest 15K/mth (25% higher) etc.

Invest where?
Let's start a Mutual Fund SIP.

We can assume to get a 12-15% annual return on it.

If you assume that at age 30 your monthly expenses will be 2L, then the numbers suggest your investments will not be enough for your life.
You will run out of money by 34 itself.

So sadly, even if you start at 20, you can't retire by 30 :(
At least, not with these numbers.

But let me show you the magic a simple tweak can do.

Let's increase the retirement age from 30 to 35.
Everything else remains the same.

The money accumulated will last for ANOTHER 20 years!

How about we increase the retirement age to 38?

Now, you have enough money to last till you are 100, WITHOUT any additional income ever!

Needless to say, these calculations look beautiful on an excel sheet.

Real life is harder and unpredictable.

What I wanted to show here with these calculations, is that early retirement is possible through discipline!

If you are young, the BIGGEST asset you have is time.

1. Increase your income by 20% every year
2. Use 30% of your income to live life
3. Invest with discipline and keep growing the investment

Today I work less than 15hrs/wk:
- Making content on social media, with my incredible team @wariCrew
- Building courses
- Mentoring people & startups

I do all of this, because I GENUINELY enjoy it, not because of the pressure to make money.

But I got here at 42, not 30!

Remember, you need to reach a certain mindset to retire, NOT age.
And I hope for all of you to reach there soon enough.

Here is the excel sheet I used to show you the calculations.
Play around with it, you will be amazed :)
docs.google.com/spreadsheets/d…

I hope you've found this thread helpful, like & retweet the first tweet below to help others.

Follow me @warikoo for more.

https://twitter.com/warikoo/status/1638414703717404673

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