Financial Independence, Retiring Early? Reassess Covid Impact On Portfolio.

Those who have put into place a strategy for ‘financial independence, retiring early’ (FIRE) may be worried about how the current pandemic will impact their portfolios and returns and those who want to get on to the bandwagon may be wondering how to go about it. The following articles provides an in-depth perspective and course of action

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Ranbir Singh and Alia Shah in their early 40s and late 30s had always had a dream of exploring the world. Hence, way back in 2016 they decided to retire early and sold their homes in Mumbai to set offon a world tour. At that time the equity market was recovering from demonetisation and was on the verge of a major upswing. Their plan to retire early and travel was unfolding as per their script. Although there were some hiccups in 2018 and 2019, these were manageable and did not perturb them much about their decision. But the world shook up with the corona virus-driven pandemic that led to a sharp downturn in the equity markets, thereby wiping offalmost a quarter of their portfolio.

Singh and Shah are like many of the early adopters of ‘financial independence, retire early’ (FIRE) who have now got jittery and are questioning their decision about early retirement. It’s because the ongoing crisis has turned out to be a challenging time for many FIRE adopters and we may see some of the devotees of this strategy going back to job hunting. The pandemic has impacted people and businesses around the world like nothing has ever done before. There’s news everyday about layoffs and furloughs. India is no different. And the stock markets have reflected this unpredictable situation. In March 2020, S & P BSE Sensex tumbled to register a low of 25,639 from its all-time high of 42,274. This fall of 39 per cent was followed by a recovery of 46 per cent from the lows till date.