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Ramalingam

Ramalingam Kalirajan  |8013 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

my monthly income post taxes is 2.5 lakh.my MF corpus is 1.25 cr .i am 38 and want to create a corpus which could give me monthly withdwal of 2 lakhs monthly in 7 years time.my xirr is sofar 15 %. how much should i save for this calculation.??

Ans: At age 38, your goal to create a sustainable monthly withdrawal of Rs. 2 lakhs is achievable. With a disciplined savings approach, optimal mutual fund strategy, and proper inflation adjustments, you can achieve financial independence.

 

Understanding Your Goal
1. Corpus Requirement

A monthly withdrawal of Rs. 2 lakhs means Rs. 24 lakhs annually.
A 15% XIRR can help sustain withdrawals for the long term.
You’ll need a corpus of around Rs. 3.5 to Rs. 4 crore in 7 years.
 

2. Inflation Consideration

Rs. 2 lakhs today will be around Rs. 2.8 lakhs in 7 years at 5% inflation.
Your target corpus must grow to accommodate this rise in expenses.
 

Current Financial Snapshot
1. Existing MF Corpus

Your existing mutual fund corpus is Rs. 1.25 crore.
At 15% XIRR, this corpus will grow significantly over 7 years.
 

2. Monthly Income and Savings Potential

Post-tax income is Rs. 2.5 lakhs.
With disciplined savings, you can channel a significant portion into investments.
 

Estimating Additional Savings
1. Calculating Savings Requirement

Assuming your current corpus grows at 15% annually:
It will contribute a substantial portion towards your target.
Additional savings will bridge the gap to reach Rs. 3.5 crore or more.
 

2. Suggested Monthly Savings

Save Rs. 60,000 to Rs. 70,000 monthly into mutual funds.
This amount, combined with your current corpus, will help meet the target.
 

3. Adjusting Over Time

As your income grows, increase your savings gradually.
This ensures that inflation-adjusted expenses are well covered.
 

Investment Strategy
1. Actively Managed Mutual Funds

Invest in actively managed equity mutual funds for long-term growth.
These funds often outperform index funds, especially in volatile markets.
 

2. Regular Plans over Direct Plans

Regular plans through a Certified Financial Planner ensure professional guidance.
Direct plans lack advisory support, leading to missed rebalancing opportunities.
 

3. Balanced Portfolio

Maintain 70-80% in equity funds for growth and 20-30% in debt funds for stability.
This diversification reduces risk and supports consistent growth.
 

4. Systematic Investment Plan (SIP)

Start a monthly SIP for disciplined savings and rupee cost averaging.
SIPs also align with your cash flow, ensuring regular investments.
 

Withdrawal Strategy
1. Systematic Withdrawal Plan (SWP)

SWPs ensure regular cash flows during retirement without liquidating the corpus.
Withdraw from debt funds during equity market corrections.
 

2. Tax-Efficient Withdrawals

Plan withdrawals to minimise long-term capital gains tax.
Withdraw in tranches to stay below taxable thresholds when possible.
 

Risk Management
1. Emergency Fund

Set aside 6-12 months of expenses in a liquid fund.
This protects your investments during unforeseen circumstances.
 

2. Health Insurance

Ensure comprehensive health insurance for you and your family.
High coverage avoids unexpected medical costs eroding your corpus.
 

Final Insights
Your goal of Rs. 2 lakh monthly withdrawal in 7 years is achievable. With Rs. 1.25 crore already invested, disciplined monthly savings of Rs. 60,000 to Rs. 70,000 will bridge the gap. Focus on actively managed mutual funds and follow a well-diversified portfolio for long-term growth. Regular reviews with a Certified Financial Planner will help you stay on track.

 

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 Kalirajan  |8013 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 21, 2024

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I am 53 years old working woman having SIP of 50000 per month. My retirement age is 60 years. My total corpus is 1 crore 30 lacs. How much I should save to have a corpus of around 2.25 crores at my retirement?
Ans: Assessing Your Current Financial Situation
You have done an admirable job, accumulating a corpus of ?1.30 crores and saving ?50,000 per month through SIPs. At 53 years old, you are well on your way to securing a comfortable retirement by 60.

Setting a Retirement Goal
Your goal is to have a corpus of ?2.25 crores by the time you retire at 60. To achieve this, you need to evaluate your current savings strategy and make necessary adjustments.

Calculating the Required Savings
Your existing corpus and ongoing SIPs are already substantial. However, to bridge the gap and reach ?2.25 crores, you may need to increase your monthly savings or invest in higher-yielding instruments.

Benefits of Actively Managed Funds
Consider investing in actively managed funds. These funds have professional managers who actively make investment decisions to outperform the market. This approach can potentially yield higher returns compared to index funds, which merely track the market.

Evaluating Your SIP Strategy
Your current SIPs of ?50,000 per month are a great way to build wealth systematically. Review the performance of these SIPs periodically. Ensure they are aligned with your financial goals and risk tolerance. Adjusting your SIP amount upward, if feasible, can help you reach your target faster.

Diversifying Your Investments
Diversification reduces risk and enhances potential returns. Ensure your portfolio includes a balanced mix of equity and debt funds. Equity funds offer growth, while debt funds provide stability.

Importance of Regular Reviews
Regularly reviewing your investment portfolio is essential. Financial markets and personal circumstances change over time. Annual reviews with a Certified Financial Planner can help you stay on track towards your retirement goal.

Risk Management
Assess your risk tolerance. As you approach retirement, consider gradually shifting from high-risk investments to more stable ones. This strategy protects your corpus from market volatility as you near your retirement age.

Professional Guidance
A Certified Financial Planner can provide personalized advice tailored to your situation. They can help optimize your investment strategy, ensuring it aligns with your retirement goals. Their expertise ensures your financial plan is robust and adaptable to changes.

Inflation Considerations
Inflation erodes purchasing power over time. Ensure your retirement corpus grows at a rate that outpaces inflation. Investing in growth-oriented funds can help counteract the effects of inflation.

Health and Emergency Funds
Maintain an emergency fund separate from your retirement savings. This fund should cover unexpected expenses and be easily accessible. Additionally, ensure you have adequate health insurance to cover medical costs during retirement.

Appreciating Your Progress
Your dedication to saving and planning for retirement is commendable. By staying disciplined and proactive, you are well on your way to achieving your retirement goals. Continue your efforts with confidence and regular guidance from a Certified Financial Planner.

Conclusion
To achieve a retirement corpus of ?2.25 crores by age 60, consider increasing your SIPs, diversifying your investments, and regularly reviewing your portfolio. With professional guidance and careful planning, you can secure a comfortable and fulfilling retirement.

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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