Why salaried indian CAN NOT become rich

Added: 2026-05-23

[00:00:11]You know, a lot of my friends keep asking me, I'm going to turn 35. I want to not go to the office, escape the rat race, and withdraw money from my savings account. But the problem is if I withdraw too much money from the savings account then eventually this gada will end and I'll have to work again. So the question is if I want to retire, how much money do I need over here so I can withdraw every single month for the rest of my life and this savings keeps increasing.

[00:00:52]In this video we've researched and tested 25 years of Indian market data to figure out how much you actually need so you can start withdrawing and keep this growing. And in the end, you'll get an Excel sheet that helps you calculate your exact retirement number. So, let's start with the first thing. What's SWP?

[00:01:10]It's basically the opposite of a SIP.

[00:01:13]You tell the mutual fund that you want to exit a certain amount every single month on a certain date. On that date, the mutual fund will exit certain units and give you that cash. And because you're not exiting everything in one shot, you will average out the exit as time goes by. So the question is how much can you safely withdraw for the rest of your life?

[00:01:38]In 1994 an American financial planner called William >> one withdrawal rate that could survive or had survived under all historical condition >> looked at 75 years of data to figure out if someone retires today how much can they withdraw every year without running out of money for the next 30 years. And when he was looking at the data, there was the great depression, there were world wars and the oil crisis, etc., etc. And he basically concluded that if a retiree withdraws some 4% a year, that corpus will actually never end or last at least 30 years. My first question was, what if this guy lives beyond 30?

[00:02:22]That would be a problem. So, I think we'll solve for that in our Excel sheet as well. I want to show you another study by Trinity University. I think they did something interesting. Instead of just looking at equity like William, these guys took a mix of equity and bonds. So you can see at 3% it's almost 100%. At 4% it reduces slightly. 5 10 11 12. Point is the higher the withdrawal rate more chances of it actually completely emptying.

[00:02:56]But the point is that this 4% withdrawal rate then became a rule. But you know times change cuz this was what 1994 it's 2026 now. Maybe we should revisit ask the basic questions whether the 4% rule actually works in India or not.

[00:03:13]First what I need is I need some fund which has lasted some 26 years. So from the year 2000 to the year 2026 I found a fund and I'm going to use that NAV as data. Now this particular fund is a balanced advantage fund which shifts money from equity to debt. So one I'll start from year 2000 to 2026 because I found this data. Two I will start withdrawing every single month according to 4% a year. Three I'll make sure I increase the withdrawal every year because by mangai 6% inflation. So that withdrawal will also increase adjusting for inflation. So let me plug this in first. Let me put 1 cr as the fund in the year 2000.

[00:04:00]I know no one has 1 cr in the year 2000 but it's a easy number. You can use the link in the description. Go to file make a copy and put in your own number. This is just an example. Let's see what happens. Netn net we need to see whether the corpus is growing or not. uh the NAV I got according to the data is 8.06. So that buys some 12 lakh units. Now let's suppose the SWP is a 4% withdrawal rate.

[00:04:26]4% of 1 cr is 4 lakhs. That's 33,000 rupees per month. Now what happens after 26 27 years 1 the NAV is 7.53 and we withdrew some 4 lak rupees. The corpus value is 89.5 lakhs. It's reduced because there was a com bust and the ketan pard scan. Now let's go to year five. The corpus is now 2.29 crores. Year 9 dropped to 51 because of the global financial crisis.

[00:05:00]But the corpus is at 3 crores. By year 20 we have the covid crash and our corpus is 17 crores. I want you to think about this a little bit. Over long periods of time things smoothen out just like life in general. No, they say that the days are long but the years are really short and I think we can see it over here.

[00:05:26]Despite that COVID crash, the money is still worth more. Now let's finally go to year 26. It's now 48.8 crores and the NAV is 564. So the total withdrawal is 2.36 crores and the net in hand is net in hand. Why did I say net in hand?

[00:05:48]Because you have to pay say it with me tax.

[00:05:53]Cool. So the good thing is the the entire corpus you have you don't pay tax on that. You pay tax when you actually realize the income that is sell those units and when that money hits your account because you've sold it you pay tax on it. There are two types of tax on capital gains. This is capital and you've gained money on that capital.

[00:06:12]Therefore, it's called capital gains.

[00:06:15]There is long-term capital gains tax and short-term capital gains tax. So, for the first 1.25 lakh rupees that you earn, it is completely taxfree.

[00:06:26]About what you earn, you have to first categorize was it long-term or short-term. If it's short-term, you'll be paying a higher tax rate and if it's long-term, you'll be paying 12.5%. Now if you would compare this with say a fixed deposit, the entire amount would be taxed according to your tax slab. So there's definitely some um benefit for investing in equity when it comes to taxation especially if it's long-term tax. But there is one bias over here. We picked a mutual fund. What if the mutual fund exceptionally did well and such a mutual fund will never happen again? So what we'll do is maybe we should do the same thing but this time with the index.

[00:07:04]I'm going to take the NIFTY50 total returns index which basically takes the dividends and reinvests it as well. What I'll also do is I'll make this 60% debt and 40% equity because this person is a retiree. He doesn't want to put too much money in equity. Let's start with year number one. Just as we saw earlier, there was a dotcom bust and we can see that the portfolio's actually fallen to 92 lakhs. I'm sure this must be very painful when this is actually happening.

[00:07:35]You've retired and your life savings has fallen. But let's see what happens next.

[00:07:40]In year five, the corpus is now back to 1.17 cr. Notice these five years might seem a little uh frustrating 1.17 but also note that the person is withdrawing every single year. That's not that bad. Then let's go to year 16 and we can see that demonetization has happened and despite that market falling down the corpus is at 2.8 crores. Year 21 postco the corpus is 4.5 crores and now in year 26 the corpus remaining is 6.7 crores total inflation adjusted withdrawal because I think 26 years is a very long period of time so let's adjust for inflation so we can understand in 2026 numbers what it is um it's 2.3 cr rupees and yearly withdrawals have grown from 4 lakhs to 17 lakhs a year so this is the point even the most boring portfolio where there's 40% money in equity, the rest is in debt. The money still went up. But the question is this was at 4% withdrawal rate.

[00:08:49]Then why not increase that amount? Maybe we can do a few more trips after retiring. So at 4% withdrawal, the cus remaining after all these years becomes 6.7 crores. But if I change this 4% to 6% it actually becomes less 4 1/2 crores. And if I change the 6% to 8%.

[00:09:11]Then the corpus gets exhausted leaving nothing to withdraw.

[00:09:16]So you see if you change this number just a little bit it can actually completely run out. to yo you withdraw less or you have a larger corpus and in between that is basically your life to figure out that corpus number. So this begs the question how much do you actually need 1 cr per month? No. No.

[00:09:36]How much do you actually need? Let's calculate that. Now comes my favorite part. We're going to figure out what is your number together. But actually I'll figure it out with Nikil first. Hey, what's up? Okay. So, how old are you?

[00:09:53]You're 30. It does not look 30. And when do you want to retire?

[00:10:01]He wants to retire at 35. So, he has 5 years left. I'll start filling this up with him. 30 years old, living in a metro city. Um, monthly expenses is okay. 50,000. Now this 50,000 that he wants to make a month that's his expenses in 5 years there's this 6% inflation also. So if I add that then that 50,000 is actually 66,911 with this is annual expense at retirement is 8 lakh 2,000 multiplied by 12 right and let's apply the 4% withdrawal rule. Another thing I'd like to do is assume a post tax return of 8%.

[00:10:41]See people say 12 13% the market will give but we should be conservative and we should also do post tax. So on the lower side we'll take 8%.

[00:10:51]And then we'll have the 6% inflation effect. The final number is risk.

[00:10:58]Risk. Yeah risk. We've not spoken about the risk and frankly I think we need a expert to do this.

[00:11:08]The second largest risk here is sequence of returns. Let's say if you have a 1 crus and you decide to withdraw 6,000 rupees per month from this corus and the day you start let's say the market crashes it takes a year or two from that level for the market to record but because in the initial years of your corpus at all itself you withdraw like a chunk out of it when the markets your entire corpus is not in the first place.

[00:11:29]What this leads to is the risk of that initially you would have thought that my corpus will last 10 years but it might get depleted in 7 years itself. The second is the competition of the withdrawal rate itself in the first place. Most of the people they computed in a fashion where let's say if I have one crus in the market I need one lakh rupees per month and because the market gives 12% peranom like corus will never when you're computing the withdraw rate keep it as an inflation adjusted rate.

[00:11:51]So let's say the market gives 12% inflation is 5 to 7% consider your withdraw rate as around anywhere between 4 to 6% because that will take care the real growth rate and not the nominal growth of the uh funds.

[00:12:03]>> Cool. So if we go to the Excel the final number is AR Raman.

[00:12:10]I want to ask you to ask yourself this question. To me Arman is one of the greatest composers India has seen. I absolutely love his music especially in guru. Now I want us all to guess does Arman have enough money in his account to last his entire life? I think the answer is yes. Yet he still works every day and produces all of this and I'm sure he got to financial freedom many many years ago. I think the same is true for Shah Rukh Khan and Girat Kohli maybe Sachinand Dulkar anyone you mention all these people who are at the top of the game even today are still working.

[00:13:00]I've had the privilege of meeting some really wealthy people in my life. And let me tell you, nobody wants to retire.

[00:13:07]It's the biggest curse you can have. You know what you want to do? You don't want to be free. You want to have the option of being free. To be fearless, you need a money safety net. The safety net will come from the emergency fund, from the SIP, from the SWP plan. And let me tell you a little secret. You will earn probably more money than you ever have at the age of 45 55 than you are earning right now. If you're improving every single year, this is bound to happen.

[00:13:42]And you must believe that the universe will conspire to do something in your favor. So what 01 is trying to do is trying to figure it out on an Excel sheet so you can become fearless here.

[00:13:56]So you can actually do the best work because the best asset is not your portfolio is actually your skill. No one respects a bank account. They respect whether you're a good human being and whether the skill is good. So now I'm going to show you the number here. I want you to look at this number.

[00:14:13]Understand it. Calculate it for yourself. But understand that the number does not matter as much as how much you do. Fear safety net. So I open this up over here. That final number is actually you know what I let it be on the screen and you tell me if you introspected what did you think about retiring now? Tell me your entire story in the comments below.