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Ramalingam Kalirajan |10881 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on May 09, 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

Asked by Anonymous - Feb 23, 2024Hindi

Iam 23.I want to invest in mutual funds for next 30 years. How much money would I need by retirement at that time.How much should I invest from now every month to achieve that goal?

Ans: Investing for retirement at a young age is a smart financial decision. Let's calculate how much money you would need by retirement and how much you should invest monthly to achieve that goal.

Determining Retirement Corpus:
Estimate your desired retirement corpus based on your expected expenses during retirement. Consider factors like inflation, lifestyle preferences, healthcare costs, and other financial obligations.
Assuming a moderate estimate of future expenses, let's say you aim for a retirement corpus of 5 Crores.
Calculating Monthly Investment:
Use a retirement calculator or financial planning software to determine the monthly investment required to reach your retirement corpus.
Assuming an annual return of 10% on your mutual fund investments (which is a reasonable long-term average for equity investments), we can calculate the monthly investment required.
With a 30-year investment horizon, the power of compounding will work in your favor. By starting early, you can invest smaller amounts monthly to achieve your goal.
For example, if you aim for a retirement corpus of 5 Crores and assuming a 10% annual return:
Using a financial calculator or formula, the monthly investment required would be approximately 22,000 INR.
Regular Review and Adjustments:
Periodically review your investment strategy and adjust your contributions based on changes in your financial situation, investment performance, and retirement goals.
As your income increases or expenses decrease over time, consider increasing your monthly investments to accelerate your progress towards your retirement goal.
By consistently investing in mutual funds over the next 30 years and staying committed to your long-term financial plan, you can work towards achieving a comfortable retirement.

Remember, while this calculation provides a rough estimate, individual circumstances may vary. Consulting with a Certified Financial Planner can provide personalized guidance tailored to your specific financial goals and help you create a comprehensive retirement plan.

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.