His recent strategy which talks about a 6 percent rule has many similarities with the 4 percent rule that is popular in rest of the world, especially the developed world.
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Rohit Tripathi recently made a video his channel, Retire with Rohit, on YouTube where he spoke about a simplified early retirement strategy.
Rohit Tripathi, who is a self-made entrepreneur and multi business owner, has claimed that he will retire hi 2035 and is already half way to that goal. He doesn’t believe in making compromises when it comes to retirement and that’s how his retirement strategy has been devised.
His recent strategy which talks about a 6% rule has many similarities with the 4% rule that is popular in rest of the world, especially the developed world.
But, Rohit says that India is not a country where we can follow the 4% rule with ease. Inflation in India is different from the rest of the world and so are market returns.
S&P 500 which is USA’s biggest Index has generated 8.91% returns for its investors in last 20 years, and the inflation in USA has been around 1-4% in the same period.
If a Resident American invests in US Market, he naturally gets many tax benefits in his home country by investing in Roth IRA or other similar facilities as well.
This benefit is not available to an investor investing in US Market while residing in India. So an Indian investor has to keep in mind the advantages of Indian market and US Market both, when making a retirement plan.
For the purposes of simplicity, Rohit used only the NIFTY 50 index to create the strategy, and he explained with an assumption that if Nifty 50 Returns are at 12% for next few decades as well, then one can keep withdrawing 6% from the corpus and reinvest the remaining 6% back into it.
But to build this desirable portfolio, and investor needs to correctly calculate his requirements post retirement and consider inflation adjusted value of his requirement, and add a Margin of Safety to it as well.
Without Margin of Safety, the fund will deplete very quickly. To understand these concepts with the help of practical examples, it is recommended to watch the video on YouTube and understand all the assumptions and exclusions of the strategy.
Note – Rohit Tripathi has NISM Certifications for Series XV (Research Analyst) and Series V-C (Mutual fund Distributor). However, he is not SEBI Registered and doesn’t offer investment advisory services to anyone.
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