This article guides retirees and FIRE aspirants on using the Arthgyaan goal-based investing tool to incorporate diverse income sources like rent, pension, royalties, and commissions into your portfolio.
Having multiple income streams, once standard only with professionals (doctors, lawyers, CA etc), authors and commission-based agents, is now common and necessary for most individuals retiring at their normal retirement age or earlier.
In this article, we will understand how to use the Arthgyaan goal-based investing tool to add incomes from rent, interest, pension, royalty, commission, or any other source, with or without an inflation adjustment, to your portfolio.
Having multiple income sources in retirement will reduce the amount of retirement corpus you need.
FIRE = Financial Independence Retire Early
In fact, the definition of Financial Independence (FI or FIRE) means that income from your assets can meet your current expenses. You can then optionally Retire Early (RE in FIRE) if this income grows with inflation for the rest of your life.
This tool will help you enter the income from sources which you already know today. For example, if you have a book from which you get ₹1 lakh royalty per year, you can include that. The same should be true for real estate (rental income) that you already own should be captured here.
However, if you wish to invest in real estate for rental income after you retire, then do not enter that here. The same logic applies to the income from your cash bucket in retirement which will be filled by income from the debt bucket.
The only exception to this rule is if you are planning to start a low-stress job or consulting gig post-retirement and you can enter the projected income from that here. Professionals like doctors, lawyers and CAs should also do the same.
Here’s a list of income sources that you can enter in the sheet:
The tool also lets you enter the tax rate, at an aggregate level, on this entire income.
The sheet allows you to enter each income stream in columns. For each, you need to enter four numbers:
To add more income streams beyond the 20+ examples already in the sheet, you need to add more columns between and fill in the formulas from left to right.
Note: It does not matter what the income stream is called since each income stream is entered in the same way with the same set of four numbers as described above.
The sheet is a part of the Arthgyaan goal-based investing tool in the “income-sources” tab.
By default, the sheet is disabled which means that the income numbers are not enabled. You need to set the “Enable sheet” toggle to “Enable” to enable the numbers. A few income numbers have been entered for your convenience. To remove the sample values, you can set the “Starting amount” values to zero.
We will use Google sheets to create a simple calculator for this calculation. There is a link to download a pre-filled copy of the Google sheet via the button below.
Important: You must be logged into your Google Account on a laptop/desktop (and not on a phone) to access the sheet.
Multiple income sources will help you
To see these income sources in action, please review these worked-out case studies.
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This post titled How can you add multiple income streams to your portfolio for retirement? first appeared on 30 Oct 2024 at https://arthgyaan.com
