How to build a ₹2Cr+ Portfolio from ₹25k salary? | Step by step guide to retire early. — Transcript

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1. 0:00You know you and your wife together have
2. 0:01a portfolio of around 2 crores. How did
3. 0:03you plan your investment to reach up
4. 0:06till this 2 cr number? If I break it
5. 0:08down for you, there's currently I'm
6. 0:09doing seven funds. My allocation is
7. 0:11split into five buckets. So I have a
8. 0:14lot. What's been your relationship with
9. 0:16money along these years? It's my dirty
10. 0:18secret. Could you explain what coast
11. 0:20fire is and what's your math behind it?
12. 0:22If I'd like to reach somewhere around 25
13. 0:25crores, I have to only invest 15,000 a
14. 0:29month that's enough to get me to that
15. 0:32number. I moved to Bombay. My salary was
16. 0:34then increased to about 7 lakhs. And
17. 0:36then co happened and suddenly that whole
18. 0:38nice career graph that I had in my mind
19. 0:40went out of picture. That's when then I
20. 0:41started realizing that financial
21. 0:43planning is also important. It can't be
22. 0:45an endless pool.
23. 0:51Today we are meeting Nikon Jagarwal who
24. 0:54has built a 2 cr retirement corpus in
25. 0:56just 5 years. He started his journey as
26. 0:59a teacher earning just 25,000 per month
27. 1:02and now with calculated planning he is
28. 1:04on his way to achieve his fire number.
29. 1:06Hi Nikon. Uh first of all thank you so
30. 1:08much for welcoming us all of us in your
31. 1:11beautiful house and let's start right
32. 1:13away as we were talking about you know
33. 1:15you and your wife together have a
34. 1:16portfolio of around 2 kores that's right
35. 1:19so a is that your fire number if not
36. 1:22what is it and have you done the math
37. 1:23around it is it a fire number no it's
38. 1:25not right so uh I would say it is what
39. 1:28you would call a coast fire number which
40. 1:30is to say that our current corpus is
41. 1:33large enough that over the next 25 30
42. 1:36years uh it will continue to grow uh
43. 1:39such that it will become equivalent to
44. 1:41my fire number uh meaning I don't need
45. 1:43to make any additional investments. Got
46. 1:45it. So Nikon for our audience could you
47. 1:48explain what coast fire is and what's
48. 1:50your math behind it? Sure. Uh so
49. 1:53coastfire is the idea that you've
50. 1:55accumulated enough of a corpus that you
51. 1:57don't need to make any additional
52. 1:59investments
53. 2:01uh within that. uh however it is not
54. 2:04large enough that you can start
55. 2:05withdrawing yet right so think of it as
56. 2:08deferred fire right so if you put away
57. 2:11that money today and don't touch that
58. 2:14money for the next 20 years or how many
59. 2:16ever years left to retirement uh then
60. 2:19through compounding at the time of
61. 2:21retirement that corpus will become large
62. 2:23enough to become your fire number uh so
63. 2:26really in simple terms all it means is
64. 2:28that I can stop saving but I cannot stop
65. 2:31earning
66. 2:32Right. So I can take a pay cut but I
67. 2:34cannot completely stop having an income
68. 2:37essentially. Okay. And how did this work
69. 2:39for you? Like how how you said that 2 cr
70. 2:42number is the coastfire number for you.
71. 2:44How did you do that matt? Sure. So what
72. 2:46I've done is I've tried to model what my
73. 2:49expenses will be at retirement annually.
74. 2:52Okay. Uh based on my current expenses
75. 2:54accounting for inflation as well as
76. 2:57accounting for some lifestyle inflation.
77. 2:59Right. M so currently in real terms my
78. 3:02annual expenses would be individually
79. 3:05would be maybe 12 lakhs. My wife
80. 3:07actually spends a little bit less than
81. 3:08me. Uh so as a household we spend maybe
82. 3:1120 lakhs a year or 25 lakhs a year. Uh
83. 3:15I've taken uh 100% lifestyle inflation
84. 3:18value which is to say I've assumed
85. 3:20double uh for our retirement expenses uh
86. 3:24which makes it about 48 lakhs a year.
87. 3:27two lakhs per person per month is what
88. 3:29I'm assuming and then I've inflated that
89. 3:31by 6% a year okay right uh for the
90. 3:34household so uh individually speaking if
91. 3:37you take it so it's uh my current
92. 3:39expense is 12 lakhs my lifestyle
93. 3:42inflated projection is 24 lakhs uh
94. 3:45accounting for you know wanting to
95. 3:47travel or whatever uh I've then taken 24
96. 3:49lakhs a year and increased that by 6%
97. 3:52for 25 years uh keeping my retirement
98. 3:55age as 55 five uh to arrive at. So what
99. 3:58will 24 lakhs look like in 25 years?
100. 4:02Right? So I think it comes up to
101. 4:04something like 1 cr. It's a 4.5x.
102. 4:08Okay. Uh increase in terms of inflation.
103. 4:11That would be the yearly expense. That
104. 4:12would be the yearly withdrawal required
105. 4:14from the corpus, right? Uh year one of
106. 4:17retirement. Yeah. Which then continues
107. 4:19to increase by 5 6% every year
108. 4:22throughout retirement. uh and uh then
109. 4:26I've used that number to calculate how
110. 4:28much of a corpus do I require in order
111. 4:31to be able to safely withdraw this
112. 4:33amount per month for a period of 35 to
113. 4:3740 years. So I'm taking a 90 or 95 as my
114. 4:42uh life expectancy. So doing all of that
115. 4:45maths uh the required number comes you
116. 4:49know depending on whether you take 12%
117. 4:51return 13% return or 5% inflation or 7%
118. 4:55inflation changing those things will
119. 4:57change your numbers and it could be as
120. 4:59low as about 21 crores uh after 25 years
121. 5:0321 crores in that year uh will be about
122. 5:0721x of 1 cr right which is what we
123. 5:10calculated. So keeping all of that in
124. 5:11mind uh what it comes back to is to say
125. 5:14that if I'd like to reach somewhere
126. 5:17around 25 crores in 25 years given that
127. 5:21I have 1 cr today uh with 6% inflation
128. 5:2412% returns ignoring tax for now I have
129. 5:28to only invest another for the rest of
130. 5:31the 25 years if I invest about 15,000 a
131. 5:34month or about two lakhs a year or 18
132. 5:381.8 8 lakhs a year. Uh that's enough to
133. 5:42get me to that number, right? Well, like
134. 5:44what's been your relationship with money
135. 5:46along these years? My wife and I, we uh
136. 5:48don't think we're going to have
137. 5:50children, right? Okay. Maybe that will
138. 5:52change at some point. Uh and then I'll
139. 5:54watch this video and feel funny. But uh
140. 5:57but as of now, our current plan is to
141. 5:59not have kids. And uh thankfully again,
142. 6:03all of our parents and families are not
143. 6:05dependent on us financially. we don't
144. 6:07intend to get uh further educated in
145. 6:10terms of doing an MBA or something like
146. 6:12that because our careers are already
147. 6:14pretty stable I would think. Uh and so
148. 6:17really outside of retirement and
149. 6:19year-to-year expenses I I don't have
150. 6:22very many financial goals, right? Got
151. 6:24it. Uh we don't we don't think we'll buy
152. 6:27a house. I think we will rent for life
153. 6:29simply because the math doesn't make
154. 6:31sense to me and it you know it seems too
155. 6:32risky and and I've seen my parents lose
156. 6:34money on real estate etc. So it's a
157. 6:37asset I don't really have much of an
158. 6:39interest in. uh and outside of these
159. 6:41things I don't think there are very many
160. 6:43financial Indian dreams right it's
161. 6:44always like daughter's wedding
162. 6:46children's education uh retirement and
163. 6:49buying a house right and also those four
164. 6:51three of them don't apply to and how did
165. 6:53you plan your investment to reach up
166. 6:56till this 2 cr number so you know let me
167. 6:58start by giving you a rough story of you
168. 7:00know what the career has been like yeah
169. 7:02uh so I'm currently about 30 years old
170. 7:04uh I started working when I was 22 right
171. 7:06out of college uh my first year I
172. 7:10started with a company in Hyderabad uh
173. 7:12which is where I was uh I moved there uh
174. 7:14for a year. Uh truth be told my my
175. 7:17starting salary was about 23 or 24,000 a
176. 7:21month uh at the time. Uh and uh there
177. 7:24was really nothing to save. Uh right so
178. 7:26I was still able to put away maybe a
179. 7:28couple of thousand rupees a month. Uh
180. 7:31but it was not investing. It was just uh
181. 7:33it was saving for a trip. It was saving
182. 7:35for a new phone. it was saving for, you
183. 7:38know, whatever you'd like to spend 20
184. 7:3930,000 on at the end of the year. Uh,
185. 7:42and I would just put them in recurring
186. 7:43deposits. You know, honestly, at the
187. 7:45time, even a recurring deposit seemed
188. 7:47very cool to me. This idea that every
189. 7:49month you can put a little bit of money
190. 7:51and then at the end of the year, it's
191. 7:52like a bonus, right? So, that's how uh
192. 7:55the first couple of years were honestly.
193. 7:57Uh, then I went to uh within the same
194. 7:59firm I moved to Bombay. uh and so at the
195. 8:02time uh my salary was then increased to
196. 8:04about 7 lakhs uh per year uh this was
197. 8:08about 2 years into my career uh and
198. 8:10that's when I first had the opportunity
199. 8:12to actually start saving a little bit
200. 8:15given the kind of context of Bombay rent
201. 8:17and stuff relatively I was still uh not
202. 8:20paying as much uh we got a good deal so
203. 8:23to say uh and uh we were three people in
204. 8:25a two-bedroom house uh so I was not
205. 8:28paying as much as some other people were
206. 8:31uh and I didn't have travel cost. I was
207. 8:33walking distance from office. You know,
208. 8:35there were a lot of uh ancillary
209. 8:37benefits like you know subsidized
210. 8:39camping, food etc. So expenses were not
211. 8:41as high. Uh and I started managing to
212. 8:44save maybe 5,000 a month something like
213. 8:46that. Uh again largely with a spending
214. 8:49objective, not really an investment
215. 8:51objective. and I suddenly realized that
216. 8:54maybe I'm uh settling for too little a
217. 8:58compensation in the career that I had
218. 8:59decided. Uh that's when I made a switch
219. 9:02to a marketing career which is something
220. 9:05I felt would give me more growth at the
221. 9:07time. Uh so I joined an agency in
222. 9:10Bombay. Okay. uh in 2018
223. 9:14uh or 2019 sorry which was about 3 years
224. 9:16after I had graduated uh at a fairly
225. 9:19entry- level role but they agreed to
226. 9:21match my previous salary even though I
227. 9:23was switching industries things like
228. 9:24that. Uh so I was still at seven lakhs a
229. 9:26year. So I went from a a job that was
230. 9:30with about 20 people to a agency that
231. 9:33was employing 4 500 people in one spare.
232. 9:36Uh and all young people uh you know
233. 9:38within a 5 10 year age gap. Uh so uh
234. 9:43conversations around money became more
235. 9:45apparent right we were everyone was you
236. 9:47know discussing either positive or
237. 9:49negative uh about how much you know
238. 9:51appraisal will be this year or you know
239. 9:53what bonuses the seniors are getting and
240. 9:55that's when then I started realizing
241. 9:57that financial planning is also
242. 10:00important that the that you know it
243. 10:02can't be an endless goal right both in
244. 10:03terms of uh expenses as well as
245. 10:06investments or savings so I started
246. 10:08doing a lot of research just to get a
247. 10:10sense of you know what are these things.
248. 10:11I was still largely investing only in
249. 10:14recurring deposits which were my
250. 10:15favorite at the time and then co
251. 10:18happened right at that time and and
252. 10:20suddenly that whole nice career graph
253. 10:22that I had in my mind went out of out of
254. 10:24the picture because the agency lost a
255. 10:26lot of its business which also meant
256. 10:28that we had less work uh and so we uh I
257. 10:32had an opportunity then uh to start
258. 10:34getting access to some freelance
259. 10:35projects uh through you know friends,
260. 10:38family uh just referrals within your own
261. 10:42kind of personal network of very very
262. 10:45small value. Uh and I started doing
263. 10:47those simply because I could, right?
264. 10:48Like it was something to do at a time
265. 10:50where your job was not as engagated. Uh
266. 10:53and you were working from home for the
267. 10:54first time. So anyway, you were a little
268. 10:56bit bored. Uh and that's when I kind of
269. 10:59started seeing that uh the freelance
270. 11:01money could could become something much
271. 11:04larger uh than my actual income at the
272. 11:06time. Uh and there was this one month I
273. 11:09think three or four or five months into
274. 11:10co where I made the same amount of
275. 11:13freelance money as I did from my actual
276. 11:15salary right the first time ever uh
277. 11:17because we had some you know we got
278. 11:18lucky with some US project or something
279. 11:20like that and the money was good at the
280. 11:22time uh that's when me and a couple of
281. 11:25friends of mine uh and uh my wife who's
282. 11:28now my wife at the time we were not
283. 11:30married uh the three of us were all in
284. 11:32marketing and we decided that now is you
285. 11:34know as good a time as
286. 11:37uh to start our own setup and try and
287. 11:39maximize on the freelance side of
288. 11:41things. Uh so we decided that look we'll
289. 11:44start an agency uh which is in 2020 uh
290. 11:49which was about 18 months into my job
291. 11:52right in the middle of co uh with the
292. 11:54simple logic that look anyway you're not
293. 11:55getting growth in the in the job you may
294. 11:57as well try something and if nothing
295. 11:59happens and everything fails in a sense
296. 12:01just come back to the job in a year and
297. 12:03say look it was co no one's going to bat
298. 12:05an eye so it was a great risk-free time
299. 12:08actually try something and we and we
300. 12:09took a shot and thankfully it really
301. 12:12worked well. So for the first year, our
302. 12:14only goal was to match our own previous
303. 12:17salary, right? We just said, look, if we
304. 12:18can continue to earn at least this much
305. 12:21uh as we are already making in our jobs,
306. 12:23then that's still a great place to be,
307. 12:25right? At least you'll be your own boss,
308. 12:27right? Even if even if your income
309. 12:28doesn't change. Uh so that was our goal
310. 12:31for year one, but uh thankfully we
311. 12:33exceeded that. So we did end up uh all
312. 12:35three of us making more money than we
313. 12:38were making from our regular jobs. And I
314. 12:41think that's when this growth kind of
315. 12:43mindset kicked in a little bit of you
316. 12:45know we got a taste of success right we
317. 12:47got a taste of of money for our audience
318. 12:51uh you know someone who started his
319. 12:53career from like 23,000 job right you
320. 12:55know to now has such a big corpus like
321. 12:57for a lot of us it's 2 crores is huge
322. 12:59number uh tell us on investment strategy
323. 13:02in terms of where did you invest in
324. 13:04what's your portfolio allocation like
325. 13:06tell us more on that sure my allocation
326. 13:08has been 100% equity
327. 13:10since the very beginning pretty much
328. 13:12except that little bit fixed deposit RB
329. 13:15that was there uh with the logic that I
330. 13:19I think I very early understood that
331. 13:20volatility is okay at my age uh and I
332. 13:25don't mind kind of having notional gains
333. 13:27or losses right it's okay if I break it
334. 13:29down for you there's currently I'm doing
335. 13:31seven funds okay all equities into
336. 13:33mutual funds only all equity is mutual
337. 13:35funds so I don't do any direct equity my
338. 13:37allocation is split into five buckets so
339. 13:40to say but with seven individual funds.
340. 13:43Uh so I have a large cap index fund
341. 13:46which is a single fund which is 20%. I
342. 13:49have a midcap index fund which is also
343. 13:5120%. I have one active midcap fund as
344. 13:54well which is another 20%. Uh I have two
345. 13:58active small cap funds which are 10%
346. 14:00each. So total is 20%. And then finally
347. 14:03I have two flexi cap funds. Okay. Which
348. 14:05are also 10% each. Okay. Uh so in terms
349. 14:08of five buckets it's 20% uh large cap
350. 14:12index, 20% midcap index, 20% midcap
351. 14:16active, 20% small cap activives and 20%
352. 14:19flexi cap. Got it. Uh but as I said
353. 14:22because of the two actives uh for small
354. 14:24and flexi uh it's a portable fans. Got
355. 14:28it. So that's what I've stuck to. And
356. 14:29along the way are there like certain
357. 14:31mistakes that you made that you know you
358. 14:33would want to tell our audience not to
359. 14:35do? Uh yes and no. So I I mean yes I've
360. 14:39made mistakes. So I I will admit that
361. 14:42there was a time when for maybe a few
362. 14:44weeks uh I tried options trading, right?
363. 14:47I mean I did all the studying, I did the
364. 14:49research, I did all the courses. I just
365. 14:51felt like I could do it and and I still
366. 14:52did it with a very small uh allocation
367. 14:55like less than 0.1% really. Uh but I did
368. 14:59it right. It's my it's my dirty secret.
369. 15:02And and then and then I found myself
370. 15:03getting obsessed, right? like I was
371. 15:05checking throughout, you know, from that
372. 15:079ish to 3:00 p.m. kind of period. I was
373. 15:10just constantly checking what's
374. 15:12happening, you know, almost like day
375. 15:14trading behavior. And of course, I had a
376. 15:15full-time job, right? So, it's not like
377. 15:17I could just spend my entire day
378. 15:18checking markets and and and I I saw
379. 15:21that this could very easily spiral out
380. 15:23of control and so I took a step back and
381. 15:25I stopped. Thanks, Nikon, for sharing so
382. 15:27many perspectives and a lot of
383. 15:28learnings. I'm sure audience will learn
384. 15:30a lot from this conversation. Thank you
385. 15:32so much. Thanks so much. Nice for adding
386. 15:34me.