My FIRE Journey

Welcome to my blog. Just to give some background about myself, I am Amar, working as Member of technical Staff in Paypal.  Moved to US in 2012 and have been staying here for 8 years. I have two boys one is 10 years and another one is 3 years old.

"Idle money is like a radio-active material, its value depreciates over-time"

I came to know above FIRE (Financial Independence and Retire Early) in 2013 while searching for investment opportunities.

Let's jump into the topic. My goal was to be financially independent by 40. I just want to have the financial independent and perceive my interests instead of wasting my precious time churning out money for my family.

The investments are broadly classified as the following categories

  • Indian Real-estate - Stable and reliable and it never disappoints as long as the decision is good
  • Indian stock market - Unreliable 
  • US real estate - Very slow growth (non bay-area) with lots of wait times and a bit unreliable
  • US stock market - No one can beat s&p 500, this index funds produced an average of 12% every year if we consider past 30 years (with two big recessions)

To be financially independent, you need to target for the investment models that gives fixed income that is more than the inflation and that income should increment based on the inflation numbers.

You should also have emergency fund to sustain the emergencies like medical expenses for parents, kids and spouse etc..,

My target was to have a fixed income of 1.5 Lakhs per month and then go for next step to have funds secure for my kid's future. 

Fixed Income:

Warren Buffet says "If you cannot make your money earn while you sleep, you will have to work through out your life" that statement had profound impact on me and i searched for venues where i can put my money to work. Nothing beat the satisfaction of getting fixed monthly income and you have to get it to experience it.

You have to remember that even a marathon is started with a single step and try to earn 5000/- per month fixed income and that kick starts your FIRE journey. For example, I paid off my loan on an apartment and getting a rental income of 9000/- per month after the expenses. 

As many of the NRIs, I dreamed of a big house and started pumping money to India to build a house for my parents in my native place. I thought it was a bad idea but now if I see that is the best decision I made as the real estate appreciation as well as the rental appreciation is good along with happy parents :)

For two years, I kept pumping money for the house and the construction estimates doubled. My only focus was to complete it at all costs as my dad is looking at the progress and all the money is going to be utilized properly. This process made me learn to focus on the goal for long time and helped me in dealing with next steps of my FIRE journey. 

Total cost of the house is 1Cr along with the land (30 Lakhs). It is earning X per month rent (1 3BHK, 1 2 BHK and 2 1 BHK).

By end of 2014, I am having fixed income of 40k which is appreciating at the rate of 10% because of rental increase. Having rental homes is best way of beating inflation. 

With two year struggle i did not even reach one third of my fixed income goal. What next???

In the mean time, rentals in Bay area are sky rocketing, my apartment rentals are increased from $1050 to $1650 and i thought it is never ending. My next goal was to kick the FIRE out and concentrate on buying a home and i did not even realize that this decision is going to be a major contributor for my FIRE goal.

Started accumulating the money for next house, I am a minimalist and was looking for a decent home that can accommodate my family of 4 and in a good school zone. By mid August 2016,  found a town home in a very good school zone and fixed my EMI to $2000 after paying 20% down to avoid PMI.

Now I have fixed rental expense for upcoming years and don't have to worry about it.  Let's get back onto FIRE track.

Looked for opportunities that generates reliable fixed income with growth to cover the inflation. 
Came across propertyshare.in and smartowner.com. Based on the feedback and after taking to the respective folks, i realized that these platforms are trustworthy for income generation. These to companies follow crowdfunding model, buying pre-tenanted large commercial assets and we can be part of that deal with a small amount. Rentals are distributed to our bank accounts directly.

Started putting money in different commercial real estate projects across country to diversify geographically as well as tenant (software vs shipping company).

Next year my concentration was to pump in the money onto these platforms and buying the properties. I learned that $15000 will earn you a $100 monthly passive income and i am very calculative to spend that money till my goal is reached.

Invested enough money in both the platforms to earn 90K per month passive income. 75K from propertyshare.in and 16K from smartowner.com. All this income is pre-tax and a tax of 15% is applied for NRIs which is entirely refundable once you do tax filing. The beauty of these platforms is that the rentals are incremented by a minimum of 5% per year based on the tenant agreements.

Above is the graph of amount being deposited and one property is yet to be registered which fetches a rental income of 15000/- more.

Here I am now with a monthly income of XK+YK= (X+Y)K per month. Almost reaching my goal.
Continued to make full contributions to 401k as I have idea of putting that amount in the FIRE model which I will explain later.

You will realize the value of money when you put it to work and coming to know how difficult it is to generate the money.

Fetched other safe avenues to put the money in. My cousin brother came up with a proposal to open up a grocery franchise in Hyderabad. Want to try it and see how it goes and that nature of taking risk in trying out new ways helped me a lot. We did set up a grocery franchise with other two partners and it was an instant click fetching me around ZK per month minimum income after tax.

Here I am earning (X+Y+Z) Lakhs per month

My goal is to settle in Hyderabad once i achieve the FIRE goal and looked for pre-launch projects as it is going to take at least 3-4 years for me to reach that and also pre-launch projects will have lots of appreciation than getting the rents from already constructed house.  Brought a villa near ORR Hyderabad as it comes with land and land value never depreciates. 


Now come the 401K with 4% rule. My idea is to withdraw 4% of my 401k every year and that comes around $10K per year and which in-turn means a total of around QK per month.
(X+YZ)+QK per month.

Kid's Future:

From this year onwards, my goal is to accumulate enough amount for my kids and put that in any of the leading PMS in India (2point2 capital and Marcellus) which I hope will be done by March next year. 

Emergency Fund:

Now comes the emergency fund, fortunately my home value appreciation along with the down payment provides me with enough amount for emergency needs and I am planning to put the same in some high liquid investments like debt Funds which will fetch a decent amount of up to W Lakh per month.

Financial freedom is not having to work on the things only for money sake.

I hope this helps. let me know if you guys have any questions. Nothing can beat the satisfaction of getting passive income.




Comments

One Life said…
Very well written, clear and Crip. You have achieved your financial freedom - Prasad

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