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27-year-old aiming for Rs.10 lakh by 31 and Rs.3-4 crore by 50: How much to invest per month?

Ramalingam

Ramalingam Kalirajan  |8365 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Aug 03, 2024

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more
Debankur Question by Debankur on Jul 19, 2024Hindi
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I am 27 years old. I want around 10 lac rupees in 31 years as well as 3 to 4 cr as retirement plan when I will be 50 years.How much should I invest per month? My current income is 70k per month. Expense is 20k. I want to also enjoy my life not want to invest all my money. Can you please suggest

Ans: Great that you're planning for your future at 27! Let's look at your goals.
Your Financial Picture

Age: 27 years
Monthly income: Rs. 70,000
Monthly expenses: Rs. 20,000
Short-term goal: Rs. 10 lakhs in 31 years
Long-term goal: Rs. 3-4 crores by age 50

Appreciating Your Foresight

Planning for retirement at 27 is very smart
You're giving yourself time to grow your money
Balancing saving and enjoying life is important

Investment Strategy for Short-term Goal

Rs. 10 lakhs in 31 years is a modest goal
You can achieve this with small, regular investments
Consider a mix of equity and debt mutual funds

Long-term Retirement Planning

Rs. 3-4 crores by 50 needs more aggressive saving
Start with 20-25% of your income for this goal
Increase this amount as your income grows

Power of Compounding

Starting early gives your money time to grow
Even small amounts can become large over time
Stay invested for the long term

Balanced Approach to Saving

Aim to save about 30-35% of your income initially
This leaves room for current expenses and enjoyment
Adjust this as your income and expenses change

Investment Options

Mutual funds can be good for long-term growth
Choose a mix of equity and debt funds
Review and rebalance your portfolio regularly

Increasing Your Investments

Try to increase your investment amount yearly
Even a small increase can make a big difference
Use salary hikes to boost your investments

Regular Review

Check your progress every 6 months
Adjust your plan if your goals or situation change
Stay committed to your long-term objectives

Enjoying Life While Saving

Set aside some money for fun and travel
This prevents feeling deprived and helps stick to your plan
Balance is key to long-term financial success

Finally
Start with investing about Rs. 20,000-25,000 per month. Increase this as your income grows. Regular review and adjustments will help you reach your goals while enjoying life.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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Ramalingam

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Mutual Funds, Financial Planning Expert - Answered on Apr 30, 2024

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My age is 47 years and retirement will be at 58th age. I have 2 daughters one at college and second is school level studying. My current monthly minimum required expenses is Rs.30000/-. Currently my investment in EPF is Rs.25 L, Mutual fund Rs.10 L, Leave encashment balance is Rs.6 L, Gratuity Rs.5 L approx., FDs Rs.3 L, life Insurance saving Rs.2 L. My question is apart from above additionally how much should I invest per month to keep my current lifestyle aftery retirement. I am residing at my own home but though building is strong age has reached 30 years old.
Ans: Considering your current expenses, age, and retirement goals, it's essential to plan your investments carefully to maintain your lifestyle post-retirement. Here's a rough estimate to help you determine how much you should invest monthly:

Calculate your post-retirement expenses: Estimate your expenses after retirement, factoring in inflation, healthcare costs, and any additional expenses you may incur.
Determine your retirement corpus: Based on your post-retirement expenses and expected lifespan, calculate the corpus you'll need to support yourself and your family during retirement.
Assess your existing investments: Take stock of your current investments and determine how much they are likely to grow by the time you retire. Consider consulting a financial planner for a detailed analysis.
Calculate the shortfall: After considering your existing investments, calculate how much additional corpus you need to accumulate by the time you retire.
Determine monthly investment required: Based on the shortfall and the number of years until your retirement, calculate the monthly investment required to bridge the gap and achieve your retirement corpus goal.

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Ramalingam

Ramalingam Kalirajan  |8365 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 26, 2024

Asked by Anonymous - Oct 30, 2023Hindi
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Hi sir, Now I am 24 and I need a fix monthly income of 3+ lakhs by the age of 50 yrs. How much did I need to invest on monthly basis?
Ans: Achieving a fixed monthly income of Rs 3 lakhs by the age of 50 is a commendable goal. Given your current age of 24, you have a 26-year investment horizon. This long-term horizon allows for strategic planning and disciplined investing to reach your target.

Understanding Your Financial Goal
To generate a fixed monthly income of Rs 3 lakhs, you need a substantial retirement corpus. The exact amount will depend on the assumed rate of return and inflation. Generally, a well-planned investment strategy can help achieve this target.

Importance of Starting Early
Starting your investments early is beneficial. Compounding plays a crucial role in wealth accumulation. The longer your money is invested, the more it grows, making it easier to achieve your financial goals.

Estimating the Required Corpus
A fixed monthly income of Rs 3 lakhs translates to Rs 36 lakhs annually. Assuming a conservative withdrawal rate of 4%, you would need a retirement corpus of approximately Rs 9 crores. This corpus can sustain withdrawals while preserving capital.

Monthly Investment Requirement
To reach a corpus of Rs 9 crores in 26 years, regular and disciplined investments are essential. Based on historical returns of diversified equity mutual funds, you can estimate the required monthly investment. Assuming an annual return of around 12%, you need to invest a significant amount monthly.

Choosing the Right Investment Avenues
Diversification is key to managing risk and achieving stable returns. Here are some recommended investment options:

Equity Mutual Funds: These funds offer high returns over the long term. Diversify across large-cap, mid-cap, and small-cap funds to balance risk and return.

Hybrid Funds: These funds invest in both equity and debt. They provide stability and moderate returns, making them suitable for long-term goals.

Debt Funds: While offering lower returns, debt funds provide stability. They should form a smaller portion of your portfolio to reduce overall risk.

The Benefits of SIPs
Systematic Investment Plans (SIPs) are an effective way to invest regularly. SIPs help in rupee cost averaging and reduce the impact of market volatility. Investing a fixed amount monthly ensures disciplined savings and wealth accumulation.

The Role of Actively Managed Funds
Actively managed funds are preferable over index funds for long-term goals. Fund managers actively select securities to outperform the market. This active management can potentially provide higher returns, aiding in faster accumulation of the required corpus.

Disadvantages of Direct Funds
Direct funds require self-management and in-depth market knowledge. Without professional guidance, it can be challenging to make informed investment decisions. Investing through regular funds with the assistance of a Mutual Fund Distributor (MFD) and a Certified Financial Planner (CFP) offers professional advice and personalized strategies.

Regular Review and Rebalancing
Regularly review your investment portfolio to track performance. Rebalance your portfolio periodically to maintain the desired asset allocation. This involves shifting investments from overperforming to underperforming assets to stay aligned with your financial goals.

Professional Guidance
Engage with a Certified Financial Planner (CFP) for personalized advice. A CFP can help in selecting the right funds, managing risks, and ensuring that your investment strategy aligns with your long-term financial goals.

Inflation and Its Impact
Inflation erodes purchasing power over time. Your investment strategy should aim for returns that outpace inflation. Equity investments generally offer inflation-beating returns, making them essential for long-term wealth creation.

The Importance of Financial Discipline
Consistency is crucial in achieving financial goals. Stay committed to your investment plan, even during market downturns. Financial discipline ensures steady progress towards your target corpus.

Building a Contingency Fund
Maintain a contingency fund to handle unexpected expenses. This ensures that your primary investments remain intact, and you don’t have to liquidate assets prematurely.

Tax Planning
Consider the tax implications of your investments. Opt for tax-efficient investment options to maximize returns. Long-term capital gains from equity funds are tax-advantaged, making them a suitable choice for long-term goals.

Conclusion
Achieving a fixed monthly income of Rs 3 lakhs by the age of 50 is attainable with disciplined investing and strategic planning. Start early, diversify your investments, and seek professional guidance. Regular review and rebalancing of your portfolio will ensure you stay on track and maximize your returns.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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Dear Sir, My age is 33 year now. I was working in financial sector for 5year as a recovery agent. I have done intermediate in Arts and Diploma in mechanical engineering. Passed out in 2012. Now i want to change my job sector to technical line. I have no experience before in technical line. Please guide me which technical job will be best suitable for me And What Salary Range Should i expect?.
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The AMIE (Associate Member of the Institution of Engineers) exam is a professional qualification in engineering, equivalent to a B.E./B.Tech. degree. It's conducted by the Institution of Engineers (India) (IEI) and is offered as a distance learning program. The exam is held twice a year, in June and December.
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Stage I (Section A): Focuses on fundamental engineering subjects.
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Indian citizens or foreign nationals with at least two years of residence in India.
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The exam is based on multiple-choice questions (MCQs).
It can be taken online (CBT) or offline (PBT).
Benefits:
Becoming a graduate engineer with the same qualification as a B.E./B.Tech. degree.
Recognized by government and private sectors.
Least expensive compared to traditional degree programs.
Application Process:
Download the application form from the IEI website.
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Pay the application fee.
Submit the application form along with the fee.

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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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