Lifestyle: A pattern to achieve FI
If you read the story about Financial Independence, Retire Early topic, I mentioned that FIRE is a lifestyle so it differs where you are living. I am Indian, and I am living in the US on a work visa. I am not sure whether I will stay in the US for 10- 15 years. I hope to live in the US till my retirement, but for some reason I may move to India before achieving my goal, then I have to adjust my pattern. If I save 2.5 million dollars in 10 years, then I can retire anywhere in the world. Lifestyle pattern is very important when we are in the process of FIRE. If I say, save 3 to 6 months of salaries as an emergency fund or clear your debt other than a mortgage, then it is not something you can do it only in the US. A few items on the list don’t change based on where you live. But allocation or spending patterns will change, so you have to adjust the pattern of living based on country.
Tax Saving Strategies: Once you save an emergency fund and cleared your debts, you should start to do tax planning. It is very important to increase your after-tax money, or else you are giving away money to the government for free. Even though I lived in India for 26 years, I learned nothing about my retirement plan. I should start learning more if I move to India. I will share a retirement plan that exists in the USA. There are many forms of individual retirement account, in short IRA’s, you can start contributing to the IRA based on your type of work. If you are an employee, then you will know about 401K and Roth 401K, some company contributes match your contribution. There are other plans for church workers, small business owners, state and government employees, individual IRA, and spousal IRA. You cannot contribute to all plans, but you can max out the contribution limit in any plans. Yes, it has limitations. You can invest in an index fund or bonds based on a brokerage account you own. I am using Vanguard, Fidelity, and Charles Schwab which are the largest online brokers. I recommend their Index and ETFs which have less expense ratio and good returns. There are more, I will share my investment portfolio in the next story.
Health Saving Account and Roth IRA are my favorites among all retirement plans. You can maintain HSA if you have a high deductible insurance plan. It is not easy to choose the best medical insurance plan but if you know your medical expenses in advance then you can pick out a suitable insurance plan. PPO and HSA don’t go along with each other, something we need to know if you want HSA. I would say, HSA will be a good option if you spend very less medical expenses in a year. You can invest in stocks or mutual funds based on a bank or brokerage account. Roth 401k is also a good plan if you can manage your monthly expenses by paying tax now and save later. The interest or profit earned in the Roth IRA or 401k is tax-free when you withdraw after 59 years or else pay a 10% penalty fee.
A tax-saving lifestyle is important for FIRE and you can make 5% to 10% of investment growth, which is also played a vital role in FIRE. If you read my spending path story, there I have mentioned saving interest rates in the USA. Savers are losers in the USA. But in India, it is quite opposite. Some banks in India provide 6% or up to 10%, saving interest rate or on fixed deposit. So look for an option and move money where you can grow is the best strategy for FIRE. I invest in mutual funds from the age of ’20s. I started my mutual fund account by investing 500 rupees and practicing the same investment pattern in the USA by investing $500 in the funds other than tax saving or retirement plans.
Lucky bank saving account: I like to play with luck and I feel that I am not a lucky person. For that reason, I don’t show interest in buying lottery or losing money in gambling. The UK has a program called the premium bond program and it is run by the government. People put money into the bank, can earn gifts, or price instead of interest. It is a huge success and roughly an eighth third of the entire UK Population has contributed over 100 billion dollars to the bank and making the number one savings program in the world. The same kind of saving program was introduced by Yotta bank in the USA. How does Yotta saving bank work? For every $25 you save with Yotta in their FDIC-insured account, you get a recurring ticket, which enters you into weekly drawings with prizes ranging from a few cents up to the $10 million jackpot. Unlike the actual lottery, when you lose, you still have a pile of money in your savings account. Please explore more if you like it, use my referral code. We’ll both get 100 tickets to win up to $10,000,000 when you download Yotta Savings! Just sign up with code RAMPRASAD1: https://withyotta.page.link/kRojdy7gPYXM2Tby5
We will talk about more in the next story. Stay tuned.
