Hi Sir, I am 38 Yrs old , I am earning 1.3 L Per Month , if I wants to make corpus of Rs. 2 Cr on my retirement - how much should I invest and give me different suggestions along with MF

Ans: Sir, the corpus required will be around Rs. 1.6 crore, to be invested in mix of debt and hybrid balanced advantage funds.

Objective will be to generate at least 8% post tax returns so that the corpus will not only be perpetual but also grow over time.

Ans: Based on your cash flows and assets, we have the following observations and recommendations:

Emergency Fund: It is generally recommended to maintain a cash reserve of 3-6 months of living expenses to cover unexpected financial needs.

Investments: Any excess funds beyond your emergency fund should be invested in financial instruments that are appropriate for your risk tolerance and financial goals. Your financial advisor can help you develop a diversified investment portfolio that meets your individual needs.

Investment Amount: As per the objective, you will require an amount of Rs. 2.46 crores at the age of 50 to meet both of your requirements. You can invest with a combination of both bulk & SIP. You can go ahead with putting Rs. 7 lakhs as bulk (keeping aside Rs. 3 lakhs as a contingency) and the rest amount can be catered to with a SIP of Rs. 51,000 p.m. Through this, you can have a corpus of Rs. 1 crore as bulk and a monthly income of Rs. 75,000 till the age of 75.

Reaching your financial goals can be a complex and challenging process, but a financial advisor can help you stay on track and make informed decisions along the way.

Ans: You are 56 years old and plan to retire by 65. You aim for a retirement corpus of Rs. 5 crores. Your monthly earnings from your job are Rs. 1 lakh. You have investments in real estate but no exposure to mutual funds or SIPs. Let’s create a strategy to achieve your goal.

Building Your Retirement Corpus
Assessing Your Current Situation
Age: 56 years
Retirement Age: 65 years
Current Monthly Earnings: Rs. 1 lakh
Goal: Rs. 5 crores by 65 years
Creating an Investment Plan
Emergency Fund
Set Aside Funds: Keep an emergency fund for unexpected expenses.
Recommended Amount: At least 6 months of expenses in a savings account or liquid fund.
Purpose: Provides financial stability in case of emergencies.
Systematic Investment Plan (SIP)
Start SIPs: Invest monthly in diversified mutual funds.
Monthly Contribution: Allocate a portion of your monthly income towards SIPs.
Benefit: Helps in disciplined investing and rupee cost averaging.
Diversified Portfolio
Mix of Funds: Invest in a mix of equity and debt funds.
Actively Managed Funds: Choose funds managed by experienced professionals.
Growth Potential: Equities offer higher returns over the long term, while debt funds provide stability.
Lump Sum Investments
Initial Investment: Use part of your savings for a lump sum investment.
Diversification: Split the lump sum across various funds to reduce risk.
Insurance Coverage
Health Insurance
Ensure Adequate Coverage: Have a health insurance policy covering major medical expenses.
Premium Allocation: Budget a portion of your income for health insurance premiums.
Life Insurance
Term Insurance: Secure a term plan to cover your family's financial needs.
Premium Budget: Set aside funds for life insurance premiums.
Regular Review and Adjustment
Quarterly Reviews
Performance Monitoring: Review the performance of your investments quarterly.
Necessary Adjustments: Make changes to stay aligned with your financial goals.
Annual Rebalancing
Portfolio Rebalancing: Adjust the allocation between equity and debt to maintain the desired risk level.
Goal Alignment: Ensure your investments align with your financial objectives.
Avoiding Real Estate Investments
Limited Liquidity
Issue: Real estate investments can be illiquid and hard to convert into cash quickly.
Solution: Focus on more liquid investments like mutual funds and SIPs.
Benefits of Regular Funds through a CFP
Expert Guidance
Tailored Strategies: Get investment strategies customized to your needs.
Continuous Monitoring: Regular assessment and adjustment of your portfolio.
Disadvantages of Index Funds
Lower Flexibility
Lack of Active Management: Index funds are passively managed and may not outperform the market.
Benefit of Active Funds: Actively managed funds have the potential for higher returns due to professional management.
Final Insights
To achieve your retirement goal of Rs. 5 crores by age 65:

Start SIPs: Invest a portion of your monthly income in diversified mutual funds.
Maintain Insurance: Ensure you have adequate health and life insurance.
Review Regularly: Monitor and adjust your investments periodically.
Seek Expert Advice: Consult a Certified Financial Planner for tailored guidance.
By following this strategy, you can build a substantial retirement corpus.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

Ans: Hello;

You will need a corpus of 8 Cr.

You may buy an immediate annuity from a life insurance company for your corpus which may yield you a monthly payout of 2.8 L(post tax).
A 6% annuity rate is considered. Some companies may offer higher annuity rates.

You may select option of joint annuity for life for yourself and your spouse with return of purchase price to your nominee.

Select a big life insurer with good solvency ratio and better credibility.

Best wishes;

Ans: You are 45 years old with a monthly income of Rs 1.5 lakh.

You own two houses, and one of them still has an ongoing loan.

You aim for a retirement corpus of Rs 3 to 4 crore.

Your remaining working years will determine how much you can invest.

Your current savings and investments (other than real estate) will impact your strategy.

Your loan repayment is a key factor in cash flow management.

Key Considerations Before Investing

The number of years left until retirement affects your investment choices.

Your monthly expenses will determine how much you can save.

The existing loan reduces your free cash flow.

If your properties are for self-use, they won’t contribute to retirement income.

Rental income, if applicable, can be factored into your plan.

You need to balance investments with loan repayment.

Loan Repayment Strategy

If the home loan has a high interest rate, consider prepaying it.

If the interest rate is low, investing instead may yield better returns.

Ensure that EMIs do not exceed 40% of your income.

A longer loan tenure means more interest paid.

A shorter tenure increases EMI but saves on interest.

How Much to Invest Monthly?

The required investment depends on your retirement age and expected returns.

If you have 15 years left, you need a higher monthly investment.

If you have existing savings, the required investment reduces.

Inflation will increase your future expenses.

A structured investment plan ensures you reach your goal.

Types of Investments to Consider

A mix of equity and debt ensures balanced growth.

Equity mutual funds offer potential for higher returns.

Debt funds provide stability and safety.

Fixed deposits can be used for emergency funds.

Gold and sovereign bonds add diversification.

A portion can be allocated to liquid funds for short-term needs.

Why Equity Mutual Funds?

They have historically given higher returns than other assets.

Long-term investments help beat inflation.

Professional fund managers handle investments efficiently.

You can start with SIPs to invest consistently.

Diversification reduces risk compared to direct stock investment.

Avoiding Common Mistakes

Avoid locking too much money in real estate.

Insurance is not an investment; avoid ULIPs or endowment plans.

Do not delay investing, as starting late requires more funds.

Keep emergency funds separate before investing.

Review your investments yearly to ensure they stay on track.

Managing Risk and Market Volatility

Markets fluctuate, but long-term investments tend to grow.

A staggered investment approach reduces risk.

Asset allocation should match your risk tolerance.

Rebalancing investments periodically ensures the right mix.

Avoid emotional decisions based on short-term market trends.

Ensuring Liquidity for Retirement

Build a liquid corpus alongside long-term investments.

Ensure part of your corpus is easily accessible post-retirement.

Plan withdrawals systematically to avoid financial stress.

Avoid over-exposure to illiquid assets like property.

A mix of short-term and long-term funds ensures cash flow.

Final Insights

Your financial plan must balance investments, loan repayment, and savings.

A disciplined approach with regular investments will help you achieve Rs 3-4 crore.

Equity mutual funds can be the primary growth driver.

Debt and fixed-income investments add stability.

Periodic review and adjustments will ensure success.

Start investing immediately to maximize your retirement corpus.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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