Latest news with #AnmolGupta
Time of India
05-05-2025
- Business
- Time of India
Want to repay your home loan without a huge prepayment? This wealth advisor shares a strategy that can cut the tenure by 7 years
Anmol Gupta, founder of a wealth advisory firm, has shared a simple yet effective strategy for Indian homeowners looking to shorten their home loan tenure without making large prepayments. His latest post suggests using a portion of your monthly EMI to invest in equity mutual funds, enabling you to pay off your loan much faster than expected. #Pahalgam Terrorist Attack Inside Operation Tupac: Pakistan's secret project to burn Kashmir Who is Asim Munir, the Zia-style general shaping Pakistan's faith-driven military revival 'Looking for partners, not preachers': India's strong message for EU amid LoC tensions The example Gupta illustrates this strategy with an example. Consider a home loan of ₹1 crore at 7.5% interest for 25 years. The EMI for such a loan would be around ₹74,000 per month. Instead of making a large prepayment, Gupta proposes investing just 10% of the EMI—roughly ₹7,400 per month—into equity mutual funds. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Elegant New Scooters For Seniors In 2024: The Prices May Surprise You Mobility Scooter | Search Ads Learn More Undo How this strategy works According to Gupta's calculations, if the equity mutual funds grow at an average rate of 12% per year, after 18 years, the money accumulated from these investments will be enough to completely close the home loan. This method reduces the loan tenure by 7 years, all without the need for a huge upfront payment. Conditions for success However, Gupta points out that this strategy works only under certain conditions: Live Events Equity fund returns must outperform loan interest rates. In this example, the assumption is that equity mutual funds will deliver a return of 12%, which is higher than the 7.5% loan interest rate. Long-term investment is key. Gupta advises homeowners to stay invested for over 10 years, as equity funds can be volatile in the short term. Avoid panic selling. Investors must resist the temptation to sell their equity funds during market fluctuations, as this can hinder long-term growth. The takeaway Gupta's approach offers a practical and relatively low-risk alternative to traditional methods of reducing home loan tenure, such as making large prepayments. By committing to a disciplined long-term investment strategy, homeowners can potentially reduce their loan tenure without additional financial strain. 4% Retirement Rule not for Indians The widely-followed 4 per cent retirement rule may not suit Indian savers, especially those aiming to retire early. Anmol Gupta said the popular formula could mislead people into underestimating how much money they need to retire. What is the 4% rule? The 4% rule suggests that if a person withdraws 4% of their retirement savings each year, their funds should last for 30 years. This idea, based on U.S. economic conditions, assumes a 30-year retirement period with stable inflation, reliable returns, and strong government support. Not suitable for Indian conditions Gupta pointed out that this model doesn't apply well to Indian conditions. 'It assumes a 30-year retirement window,' Gupta writes in a viral LinkedIn post. 'That works if you're retiring at 55 or 60. But if you're planning to retire early — say at 40 — you'll need a much bigger corpus to last.' Unlike the U.S., India faces higher inflation, lower fixed-income returns, and rising healthcare costs. Gupta said that many people wrongly base their retirement needs on current expenses, ignoring how inflation will increase their cost of living. A basic example Gupta explained the gap using an example. A person aged 30 who spends ₹50,000 a month, or ₹6 lakh a year, may plan to retire at 55. With inflation at 6%, the annual cost of living at retirement would rise to ₹24 lakh. Applying the 4% rule, the person would need ₹6 crore, not ₹1.5 crore. Experts advise lower withdrawal rate Given India's economic environment, most financial planners recommend a withdrawal rate between 3% and 3.5% instead of 4%. This adjustment can help protect against the risk of running out of money in old age. Social media spreads simplified advice Despite the differences in economic conditions, the 4% rule continues to trend on social media. Gupta urged users to avoid relying on one-size-fits-all formulas. 'In the era of AI, use proper calculators to estimate your corpus,' he writes. 'Your future deserves precision — not generalisation.' Moving beyond thumb rules While the 4% rule is still relevant in some cases, it may not suit every situation, especially for Indian savers. Financial experts say it is time to shift from simplified formulas to more accurate tools. Without this shift, people risk outliving their retirement savings.
News18
04-05-2025
- Business
- News18
Is The 4% Rule Enough For Your Retirement? Expert Shares A Caveat
Last Updated: Expert advises against blindly using the 4% rule for retirement planning. He emphasizes considering retirement age and inflation. Planning for retirement can be daunting, but the 4% rule offers a straightforward approach to determine if you're financially ready to retire. This rule suggests that if 4% of your wealth covers your annual expenses, you can retire immediately. In other words, having 25 times your annual expenses means you can retire comfortably. However, it shouldn't be considered as a straightforward, with many ifs and buts exist to counter the theory. There are important factors to consider, such as your retirement age and inflation. Anmol Gupta, Founder of 7Prosper – Your Personal Financial Planner, recently shared an insightful post on LinkedIn about retirement planning. He advises against using the 4% rule blindly. Understanding The 4% Rule The 4% rule suggests that if 4% of your wealth covers your expenses, you can retire immediately. To put it differently, having 25 times your annual expenses means you can retire. However, there are two crucial factors to consider, Gupta states: Retirement Age Matters This rule is best applied if you plan to retire around age 55-60, as it assumes a retirement period of approximately 30 years. If you aim to retire much earlier, you'll need a larger corpus since you'll be living longer without income. – Current age: 30 – Target retirement age: 55 – Inflation rate: 6% Using the Rule of 72, your expenses will double every 12 years. By age 55, your lifestyle will cost around Rs 24 lakh/year instead of Rs 6 lakh. Applying the 4% rule, you'll need: Rs 24 lakh × 25 = Rs 6 crore Thus, you'll require Rs 6 crore at age 55 to retire comfortably. Why Rely On Thumb Rules? In today's era of AI, it's better to use accurate calculators to estimate your retirement corpus rather than relying solely on thumb rules, says Anmol Gupta. First Published: May 04, 2025, 17:10 IST
Time of India
03-05-2025
- Business
- Time of India
Is Rs 5.6 crore enough to retire? Bengaluru founder says think again and shares two key warnings
In today's fast-paced world, the idea of retiring early is no longer just a dream for the lucky few, it's a growing ambition among working professionals who crave more control over their time, energy, and lifestyle. Whether driven by burnout, personal passions, or the FIRE ( Financial Independence , Retire Early) movement, the conversation around early retirement is getting louder. But in this era of rising costs and longer lifespans, are we relying too heavily on old thumb rules that might no longer fit? #Pahalgam Terrorist Attack India strikes hard! New Delhi bans all imports from Pakistan How Pakistan is preparing for the worst as India weighs response If India attacks Pakistan, China & B'desh should seize 7 NE states, says Yunus' aide Bengaluru-based founder Anmol Gupta has a word of caution, don't use the popular 4% rule as your sole compass to plan retirement, especially if you're eyeing an early exit from the workforce. What is the 4% rule? At its core, the 4% rule suggests that if you withdraw 4% of your investment corpus every year, your money should last about 30 years. In simpler terms, if you have saved 25 times your annual expenses, you could theoretically retire and sustain your lifestyle. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Riyadh Modular Homes: See Prices Mobile Homes | Search ads Undo For instance, if your annual expenses are Rs 10 lakh, then accumulating Rs 2.5 crore (Rs 10 lakh × 25) would, according to the rule, be enough to see you through retirement. Sounds reassuring, right? Not quite, and that's where most people go wrong. You Might Also Like: How to retire without ever retiring? Akshat Shrivastava's explains his life upgrade formula Why the 4% rule isn't one-size-fits-all Gupta highlights two crucial flaws in applying this rule blindly. 1. It assumes a 30-year retirement window The 4% rule is best suited for those retiring at the conventional age of 55–60, where the retirement span is roughly three decades. But if you're planning to retire in your 40s or even 30s, you're looking at 40–50 years without a steady income. In that case, 25x your annual expenses may fall dramatically short, you'll need a significantly larger corpus to avoid running out of money later in life. 2. It ignores the impact of inflation One of the most common mistakes while calculating retirement needs is using today's expenses instead of forecasting inflated expenses at the time of retirement. That's a critical oversight. Let's break it down with an example Gupta shares: - Current expenses: Rs 50,000/month (Rs 6 lakh/year) - Current age: 30 - Target retirement age: 55 - Inflation rate: 6% Using the Rule of 72, which states that your expenses will double roughly every 12 years at 6% inflation, your Rs 6 lakh/year expense will become around Rs 24 lakh/year by the time you're 55. That means your retirement corpus should not be based on Rs 6 lakh/year, but on Rs 24 lakh/year. Applying the 4% rule then: Rs 24 lakh × 25 = Rs 6 crore. So, if you're aiming to retire at 55, you'd need at least ₹6 crore — not ₹1.5 crore as the unadjusted 4% rule might misleadingly suggest. Ditch the thumb rule, embrace smart tools While the 4% rule might serve as a good starting point or a back-of-the-napkin calculation, Gupta urges individuals to go beyond it. In an age where AI-powered financial planning tools are just a few clicks away, why rely on decades-old shortcuts?
