Hello Sir , I am 32 years of age with no liabilities . I have my own home and office . I have invested 20 lacs in NSC , 19 lacs in share market , 20lacs in PPF , 25 in FDR , 1 lacs in MFI have a monthly expenditure of 1 lacs approx . I can save around 1 lacs per month . I want to retire by 50 . How much corpus should I make ?

Ans: At 32, you have a solid foundation with no liabilities, a home, and an office. With Rs. 20 lakhs in NSC, Rs. 19 lakhs in the share market, Rs. 20 lakhs in PPF, Rs. 25 lakhs in FDR, and Rs. 1 lakh in MFI, you’re on the right track. Your monthly expenditure is Rs. 1 lakh, and you can save Rs. 1 lakh monthly. Now, let's create a plan to help you retire by 50 with a comfortable corpus.

Understanding Your Financial Situation
Current Investments:

NSC: Rs. 20 lakhs
Share Market: Rs. 19 lakhs
PPF: Rs. 20 lakhs
FDR: Rs. 25 lakhs
MFI: Rs. 1 lakh
Monthly Savings:

Expenditure: Rs. 1 lakh
Savings: Rs. 1 lakh
Setting Retirement Goals
To retire by 50, you need a significant corpus to sustain your lifestyle. Here's how to determine your target corpus:

1. Estimate Retirement Expenses:

Your current monthly expenditure is Rs. 1 lakh. Considering inflation, expenses will rise over time. Let's assume an inflation rate of 6% per annum.

2. Duration of Retirement:

If you retire at 50 and live till 80, you need funds for 30 years.

3. Calculate Retirement Corpus:

We need to account for inflation-adjusted expenses and potential investment returns. A rough estimate suggests you might need around Rs. 10-12 crores.

Building Your Retirement Corpus
1. Maximize Existing Investments:

NSC: National Savings Certificate (NSC) offers fixed returns and is a safe investment. However, it lacks the potential for high growth.

Share Market: Your Rs. 19 lakhs in the share market can grow significantly if well-managed. Diversify your portfolio to balance risk and return.

PPF: Public Provident Fund (PPF) is excellent for tax-free, safe returns. Continue investing here for stable growth.

FDR: Fixed Deposit Receipts (FDR) provide security but lower returns. Consider shifting some funds to higher-yield investments.

MFI: Microfinance Institution (MFI) investments can be risky. Monitor closely and consider reallocating if needed.

2. Start SIPs in Mutual Funds:

Systematic Investment Plans (SIPs) in mutual funds are ideal for long-term wealth creation. Here’s why:

Disciplined Investing: SIPs ensure regular investments.
Rupee Cost Averaging: Invests across market cycles, reducing risk.
Compounding: Reinvested returns generate more returns.
Diversification: Spreads risk across various sectors.
Choosing the Right Mutual Funds:

Equity Funds: High returns, suitable for long-term goals. Invest 60-70% in diversified equity funds.
Debt Funds: Lower risk, stable returns. Invest 20-30% for stability.
Hybrid Funds: Mix of equity and debt. Invest 10-20% for balanced growth.
3. Regularly Review and Rebalance:

Monitor your investments to ensure they align with your goals. Review annually and rebalance if necessary to maintain your desired risk level.

Tax Planning
1. ELSS Funds: Equity-Linked Savings Scheme (ELSS) offers tax benefits under Section 80C. Continue or start investing for dual benefits of tax saving and equity growth.

2. PPF: Continue your PPF investments for tax-free, stable returns.

3. Other Instruments: Explore NPS and other tax-saving instruments to optimize your tax liability.

Insurance Planning
1. Life Insurance: Ensure adequate life insurance to cover liabilities and provide for dependents.

2. Health Insurance: Comprehensive health insurance is crucial to cover medical expenses and safeguard savings.

Education and Contingency Planning
1. Education Fund: If you plan to have children, start an education fund early. Consider child-specific mutual funds or a mix of equity and debt funds.

2. Emergency Fund: Maintain an emergency fund covering 6-12 months of expenses. Keep it in liquid funds or savings accounts for easy access.

Final Insights
Achieving a secure retirement requires disciplined planning and smart investing. Here’s a summary of your action plan:

Action Plan Summary:
1. Evaluate Current Investments: Review NSC, share market, PPF, FDR, and MFI investments.

2. Start SIPs: Invest Rs. 1 lakh monthly in a mix of equity, debt, and hybrid funds.

3. Maximize Tax Benefits: Utilize ELSS, PPF, and other tax-saving instruments.

4. Ensure Insurance Coverage: Adequate life and health insurance.

5. Build Education and Emergency Funds: Separate funds for children’s education and emergencies.

6. Regular Review: Annually review and rebalance your portfolio.

By following this comprehensive plan, you can build a robust retirement corpus and ensure a secure financial future.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in