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Sanjeev

Sanjeev Govila  |458 Answers  |Ask -

Financial Planner - Answered on Nov 15, 2023

Colonel Sanjeev Govila (retd) is the founder of Hum Fauji Initiatives, a financial planning company dedicated to the armed forces personnel and their families.
He has over 12 years of experience in financial planning and is a SEBI certified registered investment advisor; he is also accredited with AMFI and IRDA.... more
Abhishek Question by Abhishek on Nov 09, 2023Hindi
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Sir I am going to retire in next 3yrs. How much amount I need so that I can get monthly income of Rs70000. And where I should invest those money. Please advice

Ans: To calculate how much money you need to retire with a monthly income of Rs. 70,000, we need to know the following:

Your current age
Your desired retirement age
Your expected rate of return on your investments
Your desired lifestyle in retirement

Assuming that you are currently 51 years old, plan to retire at age 54, have a life expectancy of 20 years after retirement, and expect a 6% rate of return on your investments, you would need to have a retirement corpus of Rs. 75 lacs approx as of now which become approx. 1 Cr. after the 3 years at the time of your retirement to generate a monthly income of Rs. 70,000 for 20 years after retirement upto the age of 74 years.

As for where to invest your money, there are a number of options available, depending on your risk tolerance and investment goals. Some popular options include:

• Senior citizen savings scheme (SCSS): This is a government-sponsored savings scheme that offers a guaranteed interest rate of 8.2% per annum.
• Post office monthly income scheme (POMIS): This is another government-sponsored savings scheme that offers a monthly income to investors. The current interest rate is 7.40% per annum.
•Annuity plans: Annuity plans provide investors with a guaranteed income stream for a set period of time or for life.
• Debt mutual funds: Debt mutual funds invest in a variety of fixed-income securities, such as government bonds and corporate bonds. They offer relatively low risk and stable returns.
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

Ramalingam Kalirajan  |5092 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

..Read more

Ramalingam

Ramalingam Kalirajan  |5092 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 01, 2024

Asked by Anonymous - Feb 16, 2024Hindi
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I m 44 years. Net salary 96K per month. Considering inflation . How much money should I invest..pls suggest different options MF is one of them, to get at least Rs. 1.25L per month income post retirement ?
Ans: To achieve a post-retirement income of Rs. 1.25 lakhs per month, it's essential to plan your investments strategically, considering factors such as your age, current salary, inflation, and risk tolerance. Here's a general approach you can consider:

1. **Calculate Retirement Corpus**: Determine the retirement corpus required to generate a monthly income of Rs. 1.25 lakhs. This will depend on various factors such as your expected lifespan, inflation rate, and expected rate of return on investments during retirement.

2. **Estimate Monthly Investment**: Based on your current age, desired retirement age, and expected rate of return on investments, calculate the monthly investment required to accumulate the retirement corpus. You can use online retirement calculators or consult with a financial advisor to determine this amount.

3. **Diversified Investment Portfolio**: Build a diversified investment portfolio that aligns with your risk tolerance and investment objectives. Consider allocating your investments across different asset classes such as equities, mutual funds, fixed deposits, real estate, and other suitable investment options.

4. **Systematic Investment Plan (SIP)**: Start a SIP in mutual funds that offer the potential for long-term growth while managing risk. Choose funds that invest in a mix of equity and debt instruments to balance risk and return. Regularly review and adjust your SIP contributions based on changes in your financial situation and investment goals.

5. **Tax Planning**: Optimize your tax planning to maximize your savings and investment returns. Utilize tax-saving investment options such as Equity Linked Savings Schemes (ELSS), Public Provident Fund (PPF), National Pension System (NPS), and tax-saving fixed deposits to reduce your tax liability and increase your investible surplus.

6. **Regular Review and Adjustments**: Periodically review your investment portfolio and make necessary adjustments to ensure that you're on track to achieve your retirement income goal. Consider factors such as changes in income, expenses, market conditions, and life events when revising your investment strategy.

7. **Consider Professional Advice**: If you're unsure about the optimal investment strategy to achieve your retirement income target, consider seeking guidance from a qualified financial advisor. An advisor can help assess your financial situation, recommend suitable investment options, and develop a customized retirement plan tailored to your needs and objectives.

Remember that achieving a post-retirement income of Rs. 1.25 lakhs per month requires diligent planning, disciplined savings, and prudent investment decisions. Start early, stay focused on your goals, and regularly monitor your progress to ensure a financially secure retirement.

Best regards.

..Read more

Ramalingam

Ramalingam Kalirajan  |5092 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jun 04, 2024

Asked by Anonymous - Jun 03, 2024Hindi
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Sir. I am 45 currently with gross income of Rs 2.5 lakhs and take home.salary of rs 1.70 lakhs. I want to retire at 60 with monthly income of rs 2.5 lakhs. Kindly advice how much and where to invest to achieve my goals
Ans: Evaluating Your Retirement Goal
Your goal to retire at 60 with a monthly income of Rs 2.5 lakhs is ambitious and achievable with proper planning. Let's break down the steps to achieve this goal.

Current Financial Position
Gross Income: Rs 2.5 lakhs per month.

Take Home Salary: Rs 1.70 lakhs per month.

You have 15 years until retirement. Time is your biggest asset in building a substantial retirement corpus.

Estimating Retirement Corpus
Desired Monthly Income Post-Retirement: Rs 2.5 lakhs.

Annual Requirement: Rs 2.5 lakhs * 12 = Rs 30 lakhs.

Inflation Adjustment: Assuming an average inflation rate of 6%, the future value of Rs 30 lakhs in 15 years would be approximately Rs 72 lakhs annually.

Retirement Corpus Calculation: To generate Rs 72 lakhs annually, assuming a safe withdrawal rate of 4%, you will need a corpus of approximately Rs 18 crores.

Investment Strategy
1. Determine Monthly Savings:

Based on your current income and expenses, determine how much you can save and invest each month. Ideally, aim to save and invest at least 30-40% of your take-home salary.

2. Diversified Portfolio:

Invest in a diversified portfolio of mutual funds, stocks, and fixed income instruments. This balances risk and growth.

Investment Options and Allocation
Equity Mutual Funds:

Growth Potential: High returns over the long term.
Risk: High volatility, but suitable for a 15-year horizon.
Allocation: Allocate around 60-70% of your savings here.
Debt Mutual Funds:

Stability: Lower risk and stable returns.
Purpose: Balances the portfolio and provides safety.
Allocation: Allocate around 20-30% here.
Public Provident Fund (PPF):

Safety: Government-backed and risk-free.
Tax Benefits: Offers tax-free returns.
Allocation: Consider contributing up to the maximum limit.
Systematic Investment Plan (SIP):

Regular Investment: Invest a fixed amount monthly in mutual funds.
Rupee Cost Averaging: Reduces the impact of market volatility.
Calculating Monthly Investment
Future Value Calculation:

To reach Rs 18 crores in 15 years, calculate the monthly investment required. Assuming an average annual return of 12% from your investments:
FV = Future Value (Rs 18 crores)
PV = Present Value (monthly investment)
r = monthly return (1% for 12% annual)
n = number of months (180 months for 15 years)
Using financial formulas or a retirement calculator can provide precise figures. However, a rough estimate suggests investing approximately Rs 1 lakh per month.

Steps to Implement the Plan
1. Automate Savings:

Set up automatic transfers to your investment accounts. This ensures disciplined saving and investing.

2. Regular Review:

Review and adjust your investment portfolio annually. Ensure it aligns with your goals and risk tolerance.

3. Emergency Fund:

Maintain an emergency fund covering at least 6-12 months of expenses. This ensures you don't dip into your retirement savings for emergencies.

4. Health Insurance:

Ensure adequate health insurance coverage. Medical expenses can be a significant burden in retirement.

Benefits of Investing through MFD
Professional Guidance:

Certified financial planners and MFDs provide expert advice on fund selection and investment strategies.

Regular Monitoring:

MFDs regularly monitor and review your portfolio, ensuring it remains aligned with your goals.

Tax Efficiency:

Professionals help in structuring your investments to maximize tax benefits.

Conclusion
With a disciplined investment strategy and regular review, achieving your retirement goal is feasible.

Invest in a diversified portfolio, automate savings, and consult with a certified financial planner for personalized advice.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |5092 Answers  |Ask -

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

Money
Hi, i am 24 years old and currently my salary is 15k, and i wanted to retire at the age of 45 and at that time i wanted to have at least saving of 8cr. So could ypu please suggest that how much should i have to earn monthly and where to invest money and how much money should i have to invest so that i can get the desired result.
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

..Read more

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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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