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Ramalingam Kalirajan |8077 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on May 13, 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

Question by Kumar on May 08, 2024Hindi

Dear Sir, I am 42yrs old and a regular investor of MF SIP plan. As of now I am investing 1 lakh per month in various MF SIP schemes and am willing to continue this for next 18 years till i retire. Apart from this I have below corpus available with myself FD - 2.83 cr MF - Fund value as of now - 70 lakh PPF + EPF - 45 lakh Loans - Nil House - 2 houses already (1 i stay and from another i get 23k rent per month) Medical Insurance - 10 lakh for family floater + corporate insurance from my company Life Insurance - Please advise will it be sufficient enough to accumulate a corpus of INR 10 cr by the next 18 years when i am retiring so that I can use the SWP method and live my life peacefully.

Ans: Financial Assessment and Recommendations

Current Financial Snapshot:

At 42 years old, you're making substantial investments in Mutual Fund SIPs, totaling 1 lakh per month. Additionally, you have a significant corpus from Fixed Deposits (FD), Mutual Funds (MF), Public Provident Fund (PPF), and Employees' Provident Fund (EPF). You also benefit from rental income and have adequate insurance coverage.

Goal Analysis:

Your primary goal is to accumulate a corpus of INR 10 crores by the time you retire in 18 years. This corpus will be used for a Systematic Withdrawal Plan (SWP) to maintain your lifestyle post-retirement.

Assessment and Recommendations:

SIP Investments:

Your consistent investment of 1 lakh per month in MF SIPs is commendable. Continue this disciplined approach as it will significantly contribute to your retirement corpus.
Corpus Analysis:

Your current corpus, including FDs, MFs, PPF, and EPF, is substantial and will continue to grow over the next 18 years.
Review the performance of your MF investments periodically and consider rebalancing if necessary to optimize returns.
Rental Income:

The rental income from your second house adds to your cash flow and can be reinvested to boost your retirement corpus further.
Insurance Coverage:

Your medical and life insurance coverage appears adequate for your family's needs. However, periodically review your policies to ensure they keep pace with inflation and changing life circumstances.
SWP Strategy:

When you retire, consider implementing a Systematic Withdrawal Plan (SWP) from your accumulated corpus to generate regular income.
Calculate the SWP amount based on your estimated expenses and projected returns from your investment portfolio.
Regular Review:

Continuously monitor the performance of your investments and adjust your strategy as needed to stay on track towards your retirement goal.
Consider consulting with a Certified Financial Planner (CFP) periodically to fine-tune your financial plan and ensure you're on the right path.
Emergency Fund:

Maintain an emergency fund equivalent to 6-12 months of living expenses in a liquid instrument to cover any unforeseen expenses.
Final Thoughts:

Given your disciplined savings, diversified investment portfolio, and rental income, you're well-positioned to achieve your retirement goal of accumulating a corpus of INR 10 crores. Stay focused on your long-term objectives, regularly review your financial plan, and seek professional guidance when needed to navigate any challenges along the way.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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