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36-Year-Old with 32 Lakh Salary & 96 Lakh Savings: How to Reach 5 Crore by 50?

Milind

Milind Vadjikar  |757 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Nov 09, 2024

Milind Vadjikar is an independent MF distributor registered with Association of Mutual Funds in India (AMFI) and a retirement financial planning advisor registered with Pension Fund Regulatory and Development Authority (PFRDA).
He has a mechanical engineering degree from Government Engineering College, Sambhajinagar, and an MBA in international business from the Symbiosis Institute of Business Management, Pune.
With over 16 years of experience in stock investments, and over six year experience in investment guidance and support, he believes that balanced asset allocation and goal-focused disciplined investing is the key to achieving investor goals.... more
Asked by Anonymous - Nov 09, 2024Hindi
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Hello All . Looking for some advice I am 36 yr old and working class with Sal of 32 lakhs per annum Current savings are 33 lakhs in PPF / PF and Gratuity 3 lakhs in Shares and Mutual Fund 10 lakhs in Physical Gold 20 lakhs in Cash Liabilities Home loan outstanding 30 lakhs I wish to retire with corpus of 5cr and at age of 50 What do you think should change in my current portfolio

Ans: Hello;

You may begin a monthly sip of 80 K into a combination of pure equity mutual funds and continue for 14 years.

At 50, your sip may yield you a corpus of around 3.5 Cr.

The PF corpus will grow over 14 years into a sum of around 1 Cr. No additional contributions are assumed, which may be deemed as surplus.

The gold holding if liquidated and invested in equity mutual funds as lumpsum will yield a corpus of around 0.5 Cr after 14 years.

If you do not wish to liquidate gold holdings then the monthly sip may be hiked to 90 K.

The gold holding will grow in value to around 0.25 Cr over 14 years and 90 K sip will yield corpus of 3.75 Cr+.

Considering both scenarios you achieve your target of 5 Cr in 14 years:

80 K sip-3.5 Cr in 14 years
Pf value-1.0 Cr in 14 years
Gold holdings converted to equity MF holdings: 0.5 Cr in 14 years
Grand Total -5.00 Cr

90 K sip- 3.75 Cr+ in 14 years
Pf Value- 1.00 Cr in 14 years
Gold Value- 0.25 Cr in 14 years
Grand Total -5.00 Cr+

Pure equity MF returns assumed at 12%, PF at 8% and Gold return at 7%.

Happy Investing;
Asked on - Nov 10, 2024 | Answered on Nov 10, 2024
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Thank you for detailed analysis Does my current investment show some stable corpus ? Forgot to mention the Home that I own the current is 1.60 Cr with outstanding loan of 30 lakhs
Ans: Hello;

Your investment is quite stable since it comprises mostly of debt(PF), gold and liquid cash. (Self occupied property is reckoned as nil value investment in financial planning).

But you need exposure to equity through some way (NPS, MFs, not direct stocks) for growth.

However if you are a risk averse investor then you may do corpus building through the assets other then equity but you may have to put large sums since returns from these asset classes are relatively lesser compared to equity.

Equity asset class is volatile in the short to medium term but over long-term (7 year+) it is comparatively less volatile and yields relatively better returns.

Prepay the home loan as early as possible.

Happy Investing;
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  |7246 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 13, 2024

Asked by Anonymous - May 09, 2024Hindi
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Hi, I am 42 yrs old with 50 lac CTC , living in my own apartment(worth 80L). I have another flat(worth 60L) which I have not rented yet. I have no loan running on my name. Below are my investments: 1. Fixed Deposit - 2 Cr. 2. Shares - 2 cr. 3. SGB - 35L 4. Mutual Funds - 25 lacs + 15K SIP 5. 3 PPF A/C plus 1 Sukanya Samriddhi - 23Lacs invested 4. PF - 75Lacs 5. Term Insurance Personal -1.5cr 6. Cash credit to family friends - 40Lacs@12% 7. 1 credit card - 50000 limit 8. Family pension - 40K PM My expenses are max. 50-60 K per month. I am looking 5 Lacs PM income after retirement. What changes would you suggest in my current portfolio?? Regards
Ans: With your impressive financial portfolio and clear retirement goals, let's assess how we can optimize your investments to align with your retirement income target of 5 lakhs per month.

Reviewing Your Current Portfolio:

Real Estate:
You own two properties, one self-occupied and the other vacant. Consider renting out the second property to generate additional rental income.

Fixed Deposits and Shares:
Your significant investments in Fixed Deposits and Shares provide stability and growth potential. However, consider diversifying your portfolio further to spread risk.

Sovereign Gold Bonds (SGBs) and Mutual Funds:
Your investments in SGBs and Mutual Funds are well-diversified. Review your fund selection periodically to ensure they align with your risk tolerance and financial goals.

Public Provident Fund (PPF) and Sukanya Samriddhi:
These instruments offer tax benefits and long-term savings. Continue contributing to them regularly, but consider exploring other investment avenues for potential higher returns.

Provident Fund (PF):
Your PF balance is substantial and provides a secure retirement corpus. Ensure you're maximizing contributions to your PF account and periodically review investment options offered by your employer.

Term Insurance:
Your term insurance coverage is adequate, providing financial security for your family in case of unfortunate events.

Cash Credit to Family Friends:
While it's noble to help family and friends, consider the risks associated with such lending arrangements. Ensure proper documentation and a clear repayment plan to safeguard your interests.

Suggestions for Portfolio Optimization:

Asset Allocation:
Review your asset allocation to ensure it aligns with your retirement goals and risk tolerance. Consider rebalancing your portfolio to achieve optimal diversification across asset classes.

Equity Investments:
Given your long investment horizon and retirement income target, consider increasing exposure to equity investments. Invest in a mix of large-cap, mid-cap, and diversified equity mutual funds to capture market growth potential.

Debt Instruments:
Explore debt instruments like corporate bonds or debt mutual funds for stable returns and income generation. This can provide a hedge against market volatility and ensure steady cash flow during retirement.

Real Estate:
Consider leveraging your existing property investments for rental income or explore real estate investment trusts (REITs) for exposure to the real estate sector without the hassles of property management.

Regular Portfolio Review:
Periodically review your portfolio's performance and make necessary adjustments based on changing market conditions and financial goals. Consult with a Certified Financial Planner to ensure your investments are on track to meet your retirement income target.

Conclusion:

With a well-diversified portfolio and prudent financial planning, you're well-positioned to achieve your retirement income goal of 5 lakhs per month. By optimizing your investments and regularly reviewing your portfolio, you can secure a comfortable retirement and financial independence.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |7246 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Aug 08, 2024

Asked by Anonymous - Aug 04, 2024Hindi
Money
Hi Experts I am a 37 year old with a wife and two kids(7&1 years). I have a monthly take home of 6L. I have SIPs of 1.5L per month. I have an outstanding MF portfolio of 1Cr and stock portfolio worth 1.25Cr. I have an outstanding home loan of 1.5Cr(1.45L EMI) and property worth 3Cr. I would want to retire by 50 years of age with a corpus of 25 Cr. Please help me with what changes I need to do now.
Ans: Review of Current Financial Situation
Your financial situation is strong. You have a high monthly income and significant investments. Your SIPs of Rs 1.5 lakh per month, along with an MF portfolio of Rs 1 crore and a stock portfolio of Rs 1.25 crore, show disciplined saving. You also own a property worth Rs 3 crore, though there is a significant home loan attached to it. You have a clear goal of retiring at 50 with a corpus of Rs 25 crore, which is both ambitious and achievable with careful planning.

Assessing Your Retirement Goal
Retiring at 50 with Rs 25 crore is a significant goal. This means you have around 13 years to build your corpus. Considering inflation and future needs, this target will require you to maximize your savings and investments. Your current investments are strong, but we need to evaluate if they will be enough to meet your goal.

Home Loan Considerations
Your home loan EMI of Rs 1.45 lakh is a substantial monthly commitment. While you are comfortably managing it now, you should consider the long-term impact. Paying off the loan sooner could free up cash flow for additional investments. However, this decision should be balanced with the returns you expect from your investments. If your investments are yielding more than the interest on your home loan, it might be better to continue the loan.

Review of SIPs and Investment Strategy
Your monthly SIPs of Rs 1.5 lakh are commendable. However, it's essential to ensure that these investments align with your retirement goals. Diversify your portfolio to balance between equity and debt funds. Consider the risk associated with your current investments and how they fit with your retirement timeline. Active management of your funds might yield better returns as compared to passive index funds. Actively managed funds, handled by experienced professionals, can adapt to market changes and aim for higher returns.

Evaluation of Stock Portfolio
Your stock portfolio is a substantial Rs 1.25 crore. While direct equity investments can provide high returns, they also come with high risks. It is essential to evaluate the companies you have invested in, considering their long-term growth potential. Regularly reviewing and rebalancing your stock portfolio can help you avoid significant losses. You may also consider shifting a portion of your stock investments to more stable options as you approach retirement.

Emergency Fund and Insurance
An emergency fund is crucial, especially with a family. Ensure that you have at least 6-12 months' worth of expenses saved in a liquid and safe investment. Additionally, review your insurance coverage. Adequate life insurance and health insurance are vital to protect your family from unforeseen circumstances. Since you already have a home loan, ensure that your life insurance coverage is sufficient to cover this liability along with your family’s future needs.

Planning for Children's Education
Your children are young, and their education will require significant funds in the future. Start planning and investing specifically for this goal. Education costs are rising, and early investments in a dedicated fund can ease the burden later. Consider starting a separate SIP or investment plan focused on building this education corpus.

Reviewing and Optimizing Expenses
Review your monthly expenses to identify areas where you can save more. Cutting unnecessary expenses can free up more funds for investments. As your retirement goal is ambitious, every bit of extra savings will help you reach your target faster.

Tax Planning
With a high income, tax planning becomes crucial. Ensure you are taking full advantage of available tax-saving investments. Optimizing your tax outgo can help you increase your savings and investment potential. Consider consulting with a certified financial planner to ensure that your tax planning aligns with your overall financial strategy.

Estate Planning
It is essential to have a will and a clear estate plan in place. This ensures that your assets are distributed according to your wishes and provides security for your family. Estate planning is often overlooked but is a crucial part of comprehensive financial planning.

Monitoring and Adjusting the Plan
Financial planning is not a one-time task. It requires regular monitoring and adjustments. As you move closer to your retirement age, your risk tolerance will change. Regularly review your investment portfolio and financial goals to ensure they remain aligned. Adjust your strategies as needed, based on market conditions and changes in your life circumstances.

Final Insights
You are on a strong financial path. However, achieving your retirement goal of Rs 25 crore by age 50 requires disciplined saving, smart investing, and regular review of your financial plan. Consider paying off your home loan early if it makes sense with your investment returns. Regularly review and rebalance your investment portfolio to ensure it aligns with your goals. Secure your family's future with an adequate emergency fund and insurance coverage. Don’t forget to plan for your children’s education and review your tax planning strategies. Finally, remember to create and update your estate plan regularly.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |7246 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Aug 07, 2024

Asked by Anonymous - Aug 07, 2024Hindi
Listen
Money
Hello Sir I am 37 year old male, sole earner of the family and have wife and two kids(7 & 2). I have a MF portfolio of 1.1 Cr with 1.5L SIPs per month. I also have a stock portfolio of 1.3Cr. My monthly take home salary is 5L. I have around 30L in PF. I have properties worth 3 Cr and a home loan EMI of 1.5L pm. Can you suggest what changes I need to do to retire at 50 years with a net corpus of 25Cr.
Ans: Current Financial Situation

You're 37 years old with a family of four.
Your take-home salary is Rs. 5 lakhs per month.
You have a strong investment portfolio already.

Investment Portfolio

Mutual Funds: Rs. 1.1 Crore with Rs. 1.5 lakh monthly SIP.
Stocks: Rs. 1.3 Crore
PF: Rs. 30 lakhs
Properties: Worth Rs. 3 Crore

Liabilities

Home loan EMI: Rs. 1.5 lakhs per month
This is a significant part of your monthly income.

Retirement Goal

You want to retire at 50 with Rs. 25 Crore corpus.
That's 13 years from now.
It's an ambitious but achievable goal with your income.

Increasing Investments

Consider increasing your monthly SIP amount.
You can potentially invest more from your salary.
Try to increase investments by 10% each year.

Diversification

Your portfolio seems tilted towards equity and property.
Consider adding some debt funds for balance.
This can help manage risk as you near retirement.

Emergency Fund

Ensure you have 6-12 months of expenses saved.
This protects your investments during emergencies.
Keep this in easily accessible, low-risk options.

Insurance Coverage

Review your life and health insurance.
Ensure adequate coverage for your family's security.
Consider disability insurance too.

Property Investment

Your property investment is significant.
Consider if it's giving good returns.
Think about selling some if returns are low.

Loan Repayment

Try to repay your home loan faster.
This will free up more money for investments.
Consider using bonuses or stock gains for prepayment.

Tax Planning

Maximize your tax-saving investments.
Use Section 80C, 80D, and other benefits fully.
This can help you invest more towards your goal.

Regular Portfolio Review

Review your investment mix every year.
Rebalance to maintain the right risk level.
Shift to safer options as you near 50.

Children's Education Planning

Factor in future education costs for your kids.
Start separate investments for this if not done already.
This ensures your retirement corpus isn't affected.

Finally

Your goal is challenging but possible with discipline.
Increase your investments steadily over the years.
Consider talking to a Certified Financial Planner for a detailed 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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