Hello Team,
I am 39 yrs old and currently have 40 lakhs in mutual fund and doing a SIP of 1lakh 10 k monthly, i have shares around 15 lakhs and around 22 lakhs in crypto and 14 lakhs in PF. Currently i have 13 lakhs home loan, 4.5 lakhs car loan and also bought a new house where 1.9 cr loan will be taken. My plan is to sell the current house which will fetch me 1 cr so ideally 90 lakhs loan will remain in future. Please advise me how can i retire at 45 with corpus of 5 to 6 cr.
Ans: Frst, congratulations on building a substantial investment portfolio and planning for your financial future. Managing diverse investments and loans can be challenging, but with strategic planning, your goals are achievable.
Current Assets and Liabilities
Let's summarise your financial standing:
Mutual Funds: ?40 lakhs
SIPs: ?1.10 lakhs monthly
Shares: ?15 lakhs
Cryptocurrency: ?22 lakhs
Provident Fund (PF): ?14 lakhs
Home Loan (Existing): ?13 lakhs
Car Loan: ?4.5 lakhs
New Home Loan: ?1.9 crores (expected to reduce to ?90 lakhs after selling the current house)
Evaluating Your Retirement Goal
You aim to retire at 45 with a corpus of ?5 to ?6 crores. Given your current age of 39, you have six years to build this corpus.
Managing Existing Loans
Current Home Loan
You plan to sell your current house for ?1 crore, which will help reduce your new home loan to ?90 lakhs. This is a sound strategy to lower your debt.
Car Loan
The car loan of ?4.5 lakhs is relatively small. Consider paying it off early if possible, as this will reduce your monthly outflows and save on interest.
Investment Strategy
Mutual Funds and SIPs
You have ?40 lakhs in mutual funds and a monthly SIP of ?1.10 lakhs. This disciplined approach will significantly contribute to your retirement corpus.
Continue Your SIPs: Maintaining your SIPs is crucial. Consider increasing the SIP amount if your income allows, as this will accelerate your corpus growth.
Actively Managed Funds: Focus on actively managed funds with a consistent performance record. These funds aim to outperform the market and can help achieve your target returns.
Equity Investments
You have ?15 lakhs in shares. Equities can provide high returns over the long term, but they are volatile.
Diversification: Ensure your equity portfolio is diversified across sectors to manage risk.
Regular Review: Monitor your equity investments and rebalance your portfolio as needed to align with market conditions.
Cryptocurrency
Cryptocurrency investments worth ?22 lakhs are high-risk. While they can offer substantial returns, the volatility is significant.
Limit Exposure: Consider limiting your exposure to cryptocurrencies to avoid excessive risk.
Reallocate Gains: If there are substantial gains, consider reallocating some of these funds to more stable investments.
Retirement Corpus Calculation
Estimating Required Returns
To achieve a corpus of ?5 to ?6 crores in six years, you need to focus on high-growth investments while managing risks.
Compound Growth
Your existing investments and monthly SIPs will grow significantly due to compounding. Here’s a simplified approach:
Mutual Funds and SIPs: With aggressive and balanced mutual funds, aim for an annualised return of 12-15%.
Equities and Crypto: While high-risk, these can offer returns above 15%, but exposure should be managed carefully.
Debt Management
Reducing Loan Burden
Pay Off Small Loans: Clear the car loan and any other small debts to reduce financial stress.
New Home Loan: Focus on prepaying the new home loan. Reducing this loan early will significantly lower your interest burden and increase disposable income for investments.
Professional Guidance
Consulting a Certified Financial Planner (CFP) can help tailor your investment strategy. A CFP can provide personalised advice, monitor your portfolio, and make necessary adjustments.
Regular Monitoring and Rebalancing
Review Portfolio: Regularly review your investment portfolio to ensure alignment with your retirement goals.
Rebalance Investments: Periodically rebalance your investments to manage risk and optimise returns.
Conclusion
With disciplined investing, strategic debt management, and professional guidance, retiring at 45 with a corpus of ?5 to ?6 crores is achievable. Focus on high-growth investments, manage risks, and regularly review your portfolio to stay on track.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in