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Ramalingam Kalirajan |8332 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on May 29, 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 Mahesh on Dec 12, 2023Hindi

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Hello Mr. Ulhas, I am 46yrs old, and a new comer in share market. Need some advise to build stable income for my retirement. Please suggest some stocks or Mutual Funds which can help me in building at least an amount of ?80,000/- PM from age of 61yrd

Ans: At 46, planning for a stable retirement income shows foresight and wisdom. This proactive approach will ensure a secure future.

Understanding Retirement Needs
Analyzing Income Requirement:

You aim to generate Rs. 80,000 per month from the age of 61. This translates to Rs. 9.6 lakhs annually.

Estimating Corpus Needed:

To generate Rs. 80,000 per month, you will need a substantial retirement corpus. Typically, withdrawing 4-5% of your corpus annually is considered safe.

Investment Strategy
Balanced Approach:

For a stable retirement income, a balanced approach is essential. Diversify between equity and debt to reduce risk.

Equity Investments:

Equities offer higher returns but come with higher risk. Invest in well-performing mutual funds and a few stable stocks.

Debt Investments:

Debt instruments provide stability and regular income. Include debt mutual funds, fixed deposits, and bonds in your portfolio.

Mutual Fund Recommendations
Diversified Equity Funds:

Invest in diversified equity mutual funds for long-term growth. These funds spread investments across sectors, reducing risk.

Large-Cap Funds:

Large-cap funds invest in well-established companies. These funds are less volatile and provide stable returns.

Balanced Funds:

Balanced or hybrid funds invest in both equity and debt. They provide growth with reduced risk.

Stock Recommendations
Blue-Chip Stocks:

Blue-chip stocks are shares of large, reputable companies. They offer stable returns and are less risky.

Dividend Stocks:

Invest in stocks that consistently pay dividends. They provide regular income and are generally stable.

Sample Portfolio Allocation
Equity Mutual Funds:

Diversified Equity Fund: 30%
Large-Cap Fund: 20%
Balanced Fund: 20%
Debt Instruments:

Debt Mutual Funds: 20%
Fixed Deposits and Bonds: 10%
SIP and Lump Sum Investments
Systematic Investment Plan (SIP):

Start SIPs in mutual funds for disciplined investing. It averages out the purchase cost and reduces market timing risk.

Lump Sum Investments:

If you have a lump sum amount, invest it strategically. Consider current market conditions and distribute across funds.

Regular Review and Rebalancing
Quarterly Review:

Review your portfolio quarterly. Ensure it aligns with your goals and make necessary adjustments.

Annual Rebalancing:

Rebalance your portfolio annually. Maintain your desired asset allocation by adjusting equity and debt investments.

Risk Management
Diversification:

Diversify your investments to spread risk. Invest across different sectors and asset classes.

Emergency Fund:

Maintain an emergency fund for unexpected expenses. It should cover 6-12 months of expenses.

Tax Efficiency
Tax-Saving Investments:

Utilize tax-saving options under Section 80C. Invest in ELSS funds, PPF, and other tax-efficient instruments.

Capital Gains Tax:

Plan for long-term capital gains tax. Hold investments for over a year to benefit from lower tax rates.

Monitoring Market Trends
Stay Informed:

Keep updated with market trends and economic indicators. This helps in making informed investment decisions.

Seek Professional Advice:

Consult a Certified Financial Planner (CFP) for personalized advice. They can provide insights based on your specific needs.

Preparing for Retirement
Estimate Expenses:

Estimate your retirement expenses. Include inflation and unexpected costs to ensure you have enough funds.

Create a Withdrawal Strategy:

Plan a withdrawal strategy for your retirement corpus. Withdraw 4-5% annually to sustain your income and corpus.

Conclusion
You are on the right path by planning for your retirement. By diversifying your investments and regularly reviewing your portfolio, you can achieve a stable and secure retirement income.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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.