I'm a 36 year old man having monthly salary of rs. 80000/-. I don't currently have any debts or loans on me and I'm living in my own house with family. I just wanted to ask that how much money should one ideally save from their monthly take home income to have good financial health while planning retirement? Is there a rule to follow for saving from monthly income? Kindly advise.

Ans: Planning for your Retirement Income
You're taking a great step by planning for your retirement income at 51. Here's how we can estimate how much you might need to save to reach your goal of Rs. 1.5 lakh per month after retirement at 58.

Factors to Consider:

Current Savings: Your current monthly savings of Rs. 1,17,500 is a significant starting point.
Time Horizon: You have 7 years (58 - 51) till retirement.
Desired Retirement Income: Your target monthly income is Rs. 1,50,000.
Inflation: Inflation erodes the purchasing power of money over time. Consider a conservative estimate of 5-7% inflation.
Rate of Return: The expected return on your investments will determine how much you need to save.
Here's a simplified calculation (assuming a fixed rate of return):

Total Corpus Required:

Let's assume an 8% annual return and 7% inflation (adjusted return of 1%).
We can use the formula for perpetuity present value (PV) to calculate the corpus needed: PV = Desired monthly income (adjusted for inflation) / Adjusted annual return PV = (Rs. 1,50,000 * 12) / (1 + 0.01) = Rs. 1,80,00,000
Shortfall in Corpus:

You already have Rs. 30 lakh corpus.
The shortfall would be Rs. 1,80,00,000 - Rs. 30,00,000 = Rs. 1,50,00,000
Additional Monthly Savings:

To calculate the additional monthly savings required, we can use a savings goal calculator available online.
These factors will be considered: time horizon, desired corpus, and expected return.
Important Points to Remember:

This is a simplified calculation. Real-world returns may fluctuate.
Consider consulting a financial advisor for a personalized plan considering your risk tolerance and investment portfolio.
You've mentioned various investments (MF, PPF, EPF, etc.). An advisor can help assess the asset allocation and suggest adjustments if needed.
Positive Aspects of your Current Savings:

Your current savings of Rs. 1,17,500 per month is commendable.
You're invested in a variety of instruments (equity, debt, government schemes).
Next Steps:

Estimate Shortfall: Use a retirement calculator to get a more accurate estimate of the additional monthly savings required.
Review Investments: Consult a financial advisor to assess your current asset allocation and suggest adjustments if necessary to align with your retirement goals.
Increase Savings: If there's a shortfall, consider ways to increase your monthly savings by reviewing expenses or increasing income.
By planning and potentially making some adjustments, you can be well on your way to achieving your desired retirement income.

Ans: Start SIP after completing your EMI, I don't know what is the meaning of peaceful retirement for you and what is your goal for marriage and education of your children

Ans: Great to see your enthusiasm for planning your future. Planning for retirement early is a smart move. I'll guide you on how much you should save and invest to reach your goal of Rs. 8 crores by age 45.

Assessing Your Current Financial Situation
At 24 years old with a monthly salary of Rs. 15,000, you are at the start of your financial journey. Your dedication to planning for retirement shows maturity and foresight. Let's break down how you can achieve your financial goals.

Setting Clear Financial Goals
You aim to retire at 45 with Rs. 8 crores in savings. This is a significant amount, and achieving it requires disciplined saving and smart investing.

Importance of Increasing Your Income
Currently, your salary is Rs. 15,000 per month. To reach your retirement goal, you'll need to increase your income over time. Consider pursuing additional qualifications or skills to enhance your career prospects. Look for opportunities to advance in your current job or explore higher-paying positions.

Savings and Investment Strategy
To accumulate Rs. 8 crores, you'll need to save and invest consistently. Here's a step-by-step guide:

Step 1: Build an Emergency Fund
Before investing, create an emergency fund. This fund should cover 6-12 months of your expenses. It provides a safety net for unexpected expenses or job loss. Keep this fund in a savings account or liquid mutual funds for easy access.

Step 2: Start with SIPs in Mutual Funds
Systematic Investment Plans (SIPs) in mutual funds are a great way to start investing. SIPs allow you to invest a fixed amount regularly, providing the benefits of rupee cost averaging and compounding. Start with a small amount and gradually increase it as your income grows.

Step 3: Diversify Your Investments
Diversification reduces risk and enhances returns. Spread your investments across different asset classes. Consider investing in a mix of large-cap, mid-cap, and small-cap mutual funds. Diversifying ensures you benefit from different sectors and market conditions.

Benefits of Actively Managed Funds
Actively managed funds can outperform index funds by leveraging the expertise of fund managers. These managers make investment decisions based on market analysis and trends, potentially yielding higher returns. While index funds passively track a market index, actively managed funds aim to beat the market.

Avoid Direct Funds
Direct funds require a good understanding of the market and regular monitoring. They can be time-consuming and risky for inexperienced investors. Instead, invest in regular funds through a Certified Financial Planner (CFP). A CFP can provide personalized advice and manage your investments, ensuring optimal returns.

Importance of Regular Investments
Consistent investing is key to reaching your goal. Set up automatic transfers to your SIPs and other investments. Treat your investments like any other monthly expense. This discipline will ensure you stay on track.

Review and Adjust Your Portfolio
Regularly review your investment portfolio. Market conditions and personal circumstances change over time. Adjust your investments based on these changes. A CFP can help you with this, providing expert advice and keeping your portfolio aligned with your goals.

Tax Efficiency
Consider the tax implications of your investments. Tax-efficient investing can significantly enhance your returns. Invest in instruments that offer tax benefits under Section 80C, like Equity-Linked Savings Schemes (ELSS). ELSS funds have a lock-in period of three years and offer potential for high returns.

Avoid High-Risk Investments
While high-risk investments can offer high returns, they also come with the risk of significant losses. Avoid speculative investments and focus on long-term, stable growth. A diversified portfolio of mutual funds provides a balanced approach to risk and return.

The Power of Compounding
Compounding is your best friend when it comes to building wealth. The earlier you start investing, the more time your money has to grow. Reinvest your returns to benefit from compounding. Over time, even small investments can grow significantly.

Balancing Current Needs and Future Goals
It's important to balance your current financial needs with your future goals. Create a budget to manage your expenses and savings effectively. Ensure you live within your means while setting aside money for investments.

Building Financial Discipline
Financial discipline is crucial. Avoid unnecessary expenses and debt. Live frugally and save diligently. Track your spending to identify areas where you can cut costs. This discipline will help you save more and invest consistently.

Seek Professional Advice
A Certified Financial Planner (CFP) can provide valuable guidance. They can help you create a personalized financial plan, recommend suitable investments, and monitor your portfolio. Their expertise ensures you make informed decisions and stay on track to reach your goal.

Investing in Your Education
Investing in your education and skills can significantly increase your earning potential. Higher income allows you to save and invest more. Consider part-time courses, certifications, or degrees that can enhance your career prospects.

Staying Informed
Stay informed about financial markets and investment opportunities. Read financial news, attend seminars, and join investment forums. Knowledge empowers you to make better investment decisions.

Emotional Resilience
The market will have ups and downs. Stay emotionally resilient and avoid making impulsive decisions based on short-term market fluctuations. Stick to your long-term investment plan and consult your CFP for guidance during volatile times.

Avoiding Common Pitfalls
Avoid common investment mistakes like chasing high returns, timing the market, or following the crowd. Stay focused on your goals and follow a disciplined investment strategy.

Final Insights
Reaching your goal of Rs. 8 crores by age 45 requires a strategic and disciplined approach. Increase your income, save diligently, and invest wisely. Diversify your investments, avoid high-risk and direct funds, and leverage the expertise of a Certified Financial Planner. Stay informed, resilient, and committed to your financial plan.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

www.holisticinvestment.in

Ans: Hello;
You may invest 25K per month into NPS. It's an E-E-E type investment product.(Exempt)

Select active choice and allocate 75% to Equity, 15% to corporate bonds and 10% to Govt securities.

Select UTI as pension fund manager for Equity and HDFC for bonds & G-Secs. (Recommended based on past performance).

Assuming modest growth of 9% you may expect a corpus of 4.61 Cr at 60 years of age.(As per current rules 40% of the corpus should be utilised to buy annuity and 60% you can withdraw lumpsum and invest elsewhere)

This can generate fixed income more then enough to cover your expenses indexed to inflation.

PPF is another instrument for retirement planning but their is an investment limit(1.5 L per year) and returns are also lesser.

Mutual funds are another avenue which can yield superior returns for example if you invest 25 K per month in pure equity scheme for 30 years you may expect a corpus of 11 Cr but typically people utilise their mutual fund gains over 7-8 years for some other purpose. NPS has limited withdrawal allowed because it is meant for your retirement pension.

Happy Investing!!

Ans: You are showing honesty and courage by sharing your financial situation. That is the first and most important step. Many people ignore reality, but you have started asking the right question. That deserves appreciation.

Let us build your retirement plan with a simple and clear 360-degree view.

» Current financial standing

– Age 42 with retirement target at 55 gives you 13 years.
– Current income is Rs. 74,000 monthly.
– Outstanding loan of Rs. 1.5 lakh is small and manageable.
– Surplus savings at present is only Rs. 5,000 monthly.
– No significant savings built so far.

Your present situation looks challenging. But with consistent efforts, you can still create a respectable retirement corpus.

» Loan management

– First step is to clear your Rs. 1.5 lakh loan quickly.
– Prioritise this before heavy investments.
– Redirect your Rs. 5,000 monthly surplus fully to this loan.
– Try to reduce lifestyle expenses or generate extra side income.
– Closing this loan in the next 2 to 3 years is possible.

Becoming debt-free will give mental freedom and more surplus to invest for retirement.

» Expense restructuring

– Your income is good, but your savings rate is low.
– Retirement planning needs higher savings than Rs. 5,000.
– Review household expenses and cut avoidable spending.
– Keep monthly budget discipline and track cash outflow.
– Target minimum Rs. 15,000 to Rs. 20,000 monthly savings.

Increasing savings is the only way to achieve your retirement goal in 13 years.

» Building emergency fund

– Once the loan is closed, start building emergency savings.
– Keep 3 to 6 months’ expenses in a bank account or liquid mutual fund.
– This will protect you from unexpected medical or job-related shocks.
– Without emergency fund, you may break retirement investments early.

An emergency fund is a shield that will save your long-term plan.

» Retirement corpus assessment

– You are 42 and want to retire at 55.
– You will need at least 25 years of retirement income post 55.
– Considering inflation and rising medical costs, the corpus target should be big.
– Based on your lifestyle, a ballpark figure of Rs. 2 crore will be safe.
– The exact number depends on your future expenses and inflation.

This is not a small figure, but you have time if savings increase.

» Investment approach

– Avoid keeping money idle in bank or fixed deposits.
– Returns will be too low for retirement wealth creation.
– Invest mainly through mutual funds with Certified Financial Planner support.
– Use actively managed diversified funds, not index funds.
– Index funds look cheap but lack research-driven active management.
– Actively managed funds give professional judgement, better downside control and long-term growth.
– Always use regular funds through a CFP and MFD.
– Direct funds look cheaper but give no professional handholding.
– Regular funds ensure guidance, asset allocation, discipline and timely reviews.

This approach creates better risk-adjusted returns for long-term goals.

» Asset allocation

– Keep higher allocation to equity mutual funds for wealth growth.
– A mix of large-cap, flexi-cap and multi-cap funds works well.
– Add some balanced advantage funds for stability.
– Use debt mutual funds for short-term needs and rebalancing.
– Avoid real estate as it blocks liquidity.
– Avoid annuity products, they give poor returns and no inflation hedge.

Diversification across categories will help manage market ups and downs.

» Phased action plan

Step 1: Close loan of Rs. 1.5 lakh in next 2 years.
Step 2: Build emergency fund of 3-6 months’ expenses in liquid fund.
Step 3: Start SIPs in equity mutual funds after loan is cleared.
Step 4: Gradually increase SIP from Rs. 10,000 to Rs. 20,000 or more monthly.
Step 5: Review portfolio once a year with a CFP.

This sequence will create discipline and stability in your financial life.

» Importance of increasing income

– With only Rs. 5,000 savings now, goal looks difficult.
– Explore side income opportunities, freelancing, consulting, or skill upgrades.
– Even Rs. 10,000 extra monthly income can change the future picture.
– Use all increments and bonuses for investments, not lifestyle.
– The higher the savings rate, the higher the chance of early retirement success.

Income growth is as important as investment returns in your case.

» Insurance protection

– Retirement planning is not just investing. Protection is equally vital.
– Take adequate term insurance to cover family till retirement.
– Health insurance should be in place for you and dependents.
– Without insurance, one medical or life risk can destroy savings.

Insurance secures the foundation for wealth creation.

» Tax planning

– Use ELSS mutual funds for both wealth growth and tax saving.
– Avoid depending only on PPF, as returns are lower.
– Debt mutual funds can be used for short-term needs, but taxation is as per slab.
– For equity mutual funds, LTCG above Rs. 1.25 lakh is taxed at 12.5%.
– STCG is taxed at 20%.
– Plan redemption in a tax-efficient way during retirement.

Tax-efficient investing increases net returns and retirement wealth.

» Lifestyle choices

– Retirement planning is not only about money.
– Your lifestyle choices also matter.
– Control unnecessary spending on gadgets, vacations and luxuries.
– Maintain healthy habits to reduce medical costs post-retirement.
– Live below income level to create bigger savings.

Discipline today brings freedom tomorrow.

» Risk and patience

– Stock market investments move up and down.
– Short-term volatility should not scare you.
– Long-term patience is key to wealth creation.
– Review performance annually, not monthly.
– Stick to the plan even during market falls.

Retirement corpus is built on patience and consistency, not chasing returns.

» Role of Certified Financial Planner

– You should not do trial-and-error investing.
– A Certified Financial Planner will design a suitable plan for you.
– Asset allocation, fund selection, tax planning and risk control all need expertise.
– A CFP will also review and rebalance yearly.
– Regular funds via CFP ensure professional monitoring.

Professional guidance avoids costly mistakes and keeps you on track.

» Finally

Your starting point is late, but not impossible.
You must first clear the Rs. 1.5 lakh loan.
You must increase savings from Rs. 5,000 to Rs. 15,000–20,000 monthly.
You must invest through actively managed mutual funds in regular mode with CFP guidance.
You must secure yourself with term and health insurance.
You must build an emergency fund before retirement investing.
You must stay consistent and patient for the next 13 years.

If you follow these steps, you can still create a strong retirement plan and live with dignity after 55.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

https://www.youtube.com/@HolisticInvestment