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NRIs Earning 6L/Month: Can I Retire at 65 with a 7cr Corpus, If My Current Savings Are 4.5cr?

Ramalingam Kalirajan |7758 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Aug 16, 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 - Aug 15, 2024Hindi

Im NRI, 55yrs! My salary is around 6 Lakhs/month. Working in Gulf since past 26yrs. My present Company since 20yrs. Will end up with End of Service Benefits around 1.25-1.5Cr by the time Im 60. Have MF around 1.3cr which can improve to 2cr by the time Im 60. Have invested into SIPs of 6 lakhs/yr (just started), which is likely to give me around 0.5cr by the time Im 60. Additional investments in SIPs at ICICI & Bajaj Allianz set to give another 1cr by the time Im 60. So, total liquidity Im expecting by the time Im 60 is 1.25+2+1+0.5= around 4.5cr. Kindly advise how to increase the same to around 7cr by the time Im 60. I can work till 65. Plan to retire and return back around that time. By which time I want my Liquidity to be around 15cr. Kindly advise.

Ans: You have done well in building a substantial portfolio, considering your investments in mutual funds and SIPs. Your plan to accumulate Rs. 4.5 crore by the age of 60 is achievable. However, the goal to increase this to Rs. 7 crore by 60 and Rs. 15 crore by 65 will require a focused strategy.

Evaluating Your End-of-Service Benefits
Your End-of-Service Benefits of Rs. 1.25-1.5 crore is a solid foundation. This can be reinvested to generate additional returns. It’s essential to plan how to utilize this amount wisely.

You can consider placing this amount in a combination of growth-oriented funds and debt instruments. This will ensure capital preservation while providing growth potential.

Given the long investment horizon, you can afford to take moderate risks. This will help in maximizing returns.

Analyzing Mutual Fund Investments
Your current mutual fund corpus of Rs. 1.3 crore is expected to grow to Rs. 2 crore by 60. This is a good projection, but you need to focus on the types of funds you are investing in.

Actively managed funds can offer better returns compared to index funds, especially in a market like India. Actively managed funds are known for their potential to outperform the market.

Avoid direct funds. Instead, consider regular funds through a Certified Financial Planner. Regular funds provide professional management and better alignment with your financial goals.

Review your portfolio periodically. Ensure it aligns with your risk appetite and retirement goals.

SIP Strategy Enhancement
Your SIPs of Rs. 6 lakhs per year are a good start. However, you need to increase the contribution as your income grows. This will help in reaching the Rs. 7 crore mark by 60.

Consider adding a mix of large-cap, mid-cap, and multi-cap funds to your SIPs. This will provide a balance between risk and return.

You should also avoid overlapping of funds from different fund houses. Focus on funds that complement each other.

SIPs in ICICI & Bajaj Allianz are expected to provide Rs. 1 crore by 60. Make sure these SIPs are diversified and not concentrated in a single sector or theme.

Strategies to Increase Corpus to Rs. 7 Crore by 60
To achieve the Rs. 7 crore target, you need to invest an additional amount or increase your SIPs annually. Start with a small increase and gradually raise the amount each year.

Look into growth-oriented funds that have consistently outperformed the market. These funds can give higher returns in the long run.

Allocate a portion of your investments into equity mutual funds. Equities have the potential for high returns, especially over a 5-10 year period.

Avoid investing in annuities or low-return instruments. These might not help you reach your target.

Planning for Retirement at 65
You plan to retire at 65 with a liquidity target of Rs. 15 crore. This requires a well-thought-out plan, considering both accumulation and withdrawal strategies.

Consider extending your investment horizon by working till 65. This will give your investments more time to grow.

As you near retirement, gradually shift some of your portfolio into safer, income-generating instruments like debt funds or bonds. This will ensure capital protection while still providing returns.

It’s crucial to monitor your portfolio regularly. Adjust the investment strategy based on market conditions and your personal financial situation.

Final Insights
Your goal of accumulating Rs. 7 crore by 60 and Rs. 15 crore by 65 is challenging but attainable. Focus on enhancing your SIPs, investing in actively managed funds, and regularly reviewing your portfolio. Avoid low-return investments and consider moderate-risk options to maximize growth. Your financial journey so far is impressive, and with the right strategy, you can achieve your retirement goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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