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Ramalingam

Ramalingam Kalirajan  |7545 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jan 06, 2025

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
niraj Question by niraj on Jan 06, 2025Hindi
Money

how much MF corpus ,which is giving 15% xirr ,is needed to have retirement monthly expanses of two lakhs.for rest of life. I am 63 now.

Ans: At age 63, planning for Rs. 2 lakhs in monthly expenses requires precision. Your financial strategy must ensure stability, longevity, and tax efficiency. Here's a comprehensive analysis:

 

Factors to Consider
1. Inflation Impact

Monthly expenses will grow with inflation over the years.
At 5% inflation, Rs. 2 lakhs today may double in 15 years.
Your corpus must cover these increasing costs.
 

2. Life Expectancy

Assume 85-90 years as life expectancy.
Plan for 25-30 years of sustained withdrawals.
 

3. Withdrawal Strategy

A 15% XIRR is achievable with the right mutual funds.
Systematic withdrawals allow funds to grow even during retirement.
 

4. Investment Mix

Balanced portfolios reduce risk while providing growth.
Focus on equity for growth and debt for stability.
 

Estimating the Corpus Needed
1. Corpus Estimation for Rs. 2 Lakhs/Month

Annual expenses are Rs. 24 lakhs in the first year.
At 15% XIRR, your corpus must sustain withdrawals and inflation.
You may need Rs. 3.5 crore to Rs. 4 crore for Rs. 2 lakhs monthly expenses.
 

2. Accounting for Inflation

Adjust for higher withdrawals every year.
An initial corpus closer to Rs. 4 crore provides a better safety margin.
 

Building and Maintaining the Corpus
1. Diversified Mutual Fund Portfolio

Invest in actively managed equity mutual funds for higher returns.
Avoid index funds due to their inability to outperform during market volatility.
Include hybrid funds for balance and debt funds for liquidity.
 

2. Regular Funds over Direct Funds

Investing through a Certified Financial Planner ensures guidance and regular monitoring.
Regular funds provide professional support and better portfolio adjustments.
Direct funds lack advisory support, which may hinder long-term goals.
 

3. Strategic Withdrawals

Use systematic withdrawal plans (SWPs) for predictable cash flows.
Withdraw from debt funds first during market downturns.
Let equity investments grow for the long term.
 

Tax Planning for Mutual Fund Withdrawals
1. Equity Fund Taxation

Long-term capital gains above Rs. 1.25 lakhs are taxed at 12.5%.
Short-term gains attract 20% tax. Plan withdrawals carefully.
 

2. Debt Fund Taxation

Capital gains are taxed as per your income slab.
Keep withdrawals within the lower tax bracket to optimise savings.
 

Risk Management and Emergency Corpus
1. Emergency Corpus

Keep Rs. 10-15 lakhs in fixed deposits or liquid funds.
This covers 6-9 months of expenses without impacting investments.
 

2. Health Insurance

Increase health insurance coverage to avoid medical emergencies impacting your corpus.
Consider policies with comprehensive benefits and high sum assured.
 

Final Insights
A well-structured corpus of Rs. 3.5 crore to Rs. 4 crore can sustain Rs. 2 lakh monthly expenses. A diversified mutual fund portfolio, strategic withdrawals, and tax-efficient planning are essential. Regular monitoring and professional advice ensure peace of mind during retirement.

 

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
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  |7545 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 24, 2024

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Hello Sir , I am 40 years of age with liabilities of 2 cr. . I have my own home and shop . I have invested 80lacs in PPF , 10 lacs in MFI have a monthly expenditure of 2.5 lacs approx . I can save around 2 lacs per month . I want to retire by 50 . How much corpus should I make ?
Ans: Determining the Required Retirement Corpus

1. Assess Current Financial Situation:

Liabilities: You have liabilities of Rs. 2 crores.
Current Investments: Rs. 80 lakhs in PPF, Rs. 10 lakhs in MFI.
Monthly Expenditure: Rs. 2.5 lakhs.
Monthly Savings: Rs. 2 lakhs.
2. Estimate Retirement Corpus:

Future Monthly Expenses:

You need to estimate future monthly expenses considering inflation. Given the current expenditure of Rs. 2.5 lakhs, this amount will likely increase over time.
Income Replacement:

To retire comfortably, you should aim to replace your current monthly expenses with investment income.
Investment Growth:

Factor in the expected growth of your investments. Consider a mix of equity, debt, and other assets for a balanced portfolio.
3. Consider Inflation Impact:

Inflation Adjustment:
Inflation will erode the purchasing power of your savings. Regularly review and adjust your savings and investments to counter inflation.
4. Investment Strategy:

Diversify Investments:

Continue investing in diversified mutual funds. Actively managed funds can offer better returns compared to index funds.
Increase Savings:

With Rs. 2 lakhs in monthly savings, continue to invest wisely. Increase your savings as your financial situation improves.
Regular Review:

Regularly review your investment portfolio. Make adjustments based on performance and changing financial needs.
5. Estimate Retirement Corpus:

Retirement Savings Goal:

Based on your monthly expenditure and inflation, estimate the required retirement corpus. A general rule is to have 15-20 times your annual expenses as the retirement corpus.
Emergency Fund:

Maintain an emergency fund to cover unforeseen expenses. This should be separate from your retirement corpus.
6. Seek Professional Advice:

Consult a Certified Financial Planner:
Consider consulting a Certified Financial Planner for a personalized retirement plan. They can provide detailed calculations and tailored advice.
Final Insights

To retire by 50 with your current lifestyle, aim for a substantial retirement corpus. With Rs. 2 lakhs in monthly savings and investments, focus on building a diversified portfolio. Regularly review and adjust your investments to meet your future needs. Consult a Certified Financial Planner to ensure your retirement plan is robust and achievable.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

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Radheshyam

Radheshyam Zanwar  |1144 Answers  |Ask -

MHT-CET, IIT-JEE, NEET-UG Expert - Answered on Jan 16, 2025

Asked by Anonymous - Jan 16, 2025Hindi
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I'm a bsc botany graduate and now got admission and doing msc. I'm in first year and just gave my 1st semester exam but somehow now i feel i can't do botany at all its not just in my interest. I can't continue further with it as i dont think there's much scope too. I have interest in fields like geography or law related subjects. I'll be attempting for upsc too this year and also had a second thought to go for Law. Should i drop the msc? ....I've cried a lot thinking about that and its affecting my mental health too.
Ans: Hello dear.
First I would like to suggest that, in any way, you first complete your M.Sc. (Botnay) either with interest or without interest. Who told you that there is less scope in Botany? There are a lot of career options after M.Sc. (Botany).It is good that you are interested in geography and are attempting UPSC this year. Dear, along with your M.Sc. you can easily appear for UPSC and do the study of Geography, after completing your M.Sc. you can take the admission to Law course. Many people do the law even after their retirement or in due course of their service. There is no need to cry about the things which happened to you.
Suggestions: (1) Completer M.Sc. (Botany) by any means (2) Space-time to read Geography and UPSC Syllabus (3) Develop your overall personality and try to engage in some extracurricular activities of your interest.
Best of luck for your upcoming bright future.

If satisfied, please like and follow me.
If dissatisfied with the reply, please ask again without hesitation.
Thanks.

Radheshyam

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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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