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[Money and Markets] The Smart Investor Quiz

investing, Retirement Planning / by / Leave a Comment

Light represents knowledge, awareness, wisdom. The festival of lights should be celebrated in the same spirit as well.

While knowledge has a deeper meaning, this blogs’s context is around investing. So, we will use a familiar RapidFIRE way to see that you lighten up your financial quotient.

So here you go.

Welcome to your moneyandmarkets-2024

1: Your wealth has doubled from Rs. 1 lakh to 2 lakh. What is the % fall when it drops back to 1 lakh?

2: Continuing with the above example, what's the rate of return so far on your investment.

3: Nifty price index has gone from approx. 12,000 points to 24,000 points in the last 4 years. What's the CAGR or compounded average rate of return?

4: With the same rate of return as above, how much time is Nifty likely to take to go from 24000 points to 48000 points?

5: Today, If I have Rs. 2 crore and I retire. I will have no more income and this portfolio will need to take care of my expenses. My expense is Rs. 10 lakhs a year. How long will the portfolio be able to fund my expenses?

Assume rate of return and inflation is same.

6: In the same case as above, let's say I am 45 age now and I want to plan my expenses till age 90. What approx. withdrawal rate should I use to let the portfolio last that long?

Assume rate of return and inflation is same. [Help: If you don’t know the answer, use the withdrawal rate assumption in RapidFIRE tool. Click here.]

7: What is the asset allocation indicator telling you – Buy, Sell or Invest More in Equities?

You can look for the indicator here: www.unovest.co/asset-allocation-indicator/

8: If your portfolio is worth Rs. 1.5 crores today and it returns 18% on an average every year, in how many years will it become 24 crores?

9: If the same portfolio returns only 12% on an average every year, how many years will it take to reach 24 crores?

10: If you are spending Rs. 1 lakh per month today and prices are rising at 12% average per year, in how many years will this 1 lakh worth of expense become Rs. 2 lakhs per month.

Set your own withdrawal rate to find out how your retirement portfolio will help you fund your expenses post retirement.

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So, you see, compounding works for both returns as well as expenses. You need to work on both.

Now, if you answer all these questions correctly and share them via email or comments, you will get extended premium access to RapidFIRE and get a never before view into your financial freedom journey.

However, if you can find any errors in the above questions, you will get a surprise gift.

As someone famously reminded us, Lakshmi follows Saraswati.

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