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Ramalingam

Ramalingam Kalirajan  |6958 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 30, 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
Rajesh Question by Rajesh on Dec 18, 2023Hindi
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Sir, Myself Rajesh, salaried person, 37 years old. having MF SIP Rs. 36500 per month, current invested amount is about Rs. 14,00,000/- + in Equity stocks- Rs.3,00,000/- have about Rs. 5,00,000/- in hand to invest either in stocks or MF . Have family of 3 people and Monthly expenses are around Rs.25k. Planning to take retirement in another 10 years, looking at the current investment can you help me identify approx. corpus required to invest and take retirement. Thank you.

Ans: Hello Rajesh! It's great to see your commitment to investing for your future, especially with retirement on the horizon. Let's dive into planning for your retirement corpus.

Given your current investments in MF SIPs and equity stocks, you're already on a solid path. However, to estimate the corpus needed for retirement, we need to consider factors such as your desired post-retirement lifestyle, inflation, and expected expenses.

With your monthly expenses at Rs. 25,000 and a family of three, projecting your future expenses accounting for inflation is essential. Additionally, factoring in potential healthcare costs and other unforeseen expenses is prudent.

As a Certified Financial Planner, I recommend conducting a comprehensive financial review to determine your retirement goals and risk tolerance. This will help in estimating the corpus required to sustain your lifestyle post-retirement comfortably.

With your additional Rs. 5,00,000 in hand, you have an opportunity to further diversify your investments. Whether you choose to invest in stocks or MFs, consider your risk appetite and the need for diversification to mitigate risks.

I suggest consulting with a financial advisor who can create a personalized retirement plan tailored to your specific circumstances and goals. By taking proactive steps now, you're setting yourself up for a financially secure retirement in 10 years. Keep up the good work, and remember, investing is a journey, so stay focused on your long-term objectives.
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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Sanjeev

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Asked by Anonymous - Sep 22, 2023Hindi
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Hi sir, I am 32 year old earning 42 LPA. I have 20 lakhs invested in stocks, 17 lakhs in mutual funds, 13 lakhs in PF, 3 lakhs in PPF, 2 lakhs in govt. bonds and 12 lakhs in FD. I want to retire by 45 with monthly pension of 2 lakhs post tax growing 7% annually. What should be my corpus amount and how should I invest per month in above instruments to reach it.
Ans: To achieve your retirement goal of a monthly pension of Rs 2 lakhs post-tax, growing at 7% annually, you'll need to calculate the required corpus. For this, I’m unable to let you know your exact corpus amount since I have no information about your current expenses, risk tolerance, life expectancy and other financial goals.

With assumptions like an 85-year life expectancy and an aggressive risk profile, you might need around Rs 7.75 crore at retirement (age 45). This considers a 7% inflation rate and 13% pre-retirement returns.

Right now, you have Rs 67 lakhs saved, split between equity and debt. However, solely relying on these might only sustain your desired lifestyle till age 60 only. To make sure you have enough until 85, you need to invest an additional monthly investment (SIP) of around Rs 1 Lakh along with your existing investments of Rs. 67 Lakhs. Also, slowly build up an emergency fund equal to 6 months of your expenses.

The response to your query is based on limited information and consulting a financial advisor is highly recommended. He/she can create a personalized plan considering your expenses, risk tolerance, and other goals. There are some free financial calculators (for retirement planning) available on google, you can also refer to the same for the calculation.

..Read more

Ramalingam

Ramalingam Kalirajan  |6958 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 30, 2024

Asked by Anonymous - Sep 24, 2023Hindi
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Hi sir, I am 32 year old earning 42 LPA. I have 20 lakhs invested in stocks (expecting 15% return), 17 lakhs in mutual funds (expecting 12% return), 13 lakhs in PF (expecting 8% return), 3 lakhs in PPF (expecting 7.1% return), 2 lakhs in govt. bonds (avg. YTM 7.5%), 2 lakhs in NPS (expecting 12% return) and 10 lakhs in Savings as emergency fund. I want to retire by 45 with monthly pension of 2 lakhs post tax increasing 7% annually. What should be my corpus amount and how should I invest per month in above instruments to reach it.
Ans: To retire at 45 with a monthly pension of 2 lakhs post-tax, increasing at 7% annually, you need to estimate your post-retirement expenses and calculate the corpus required to generate this income. Assuming a conservative withdrawal rate of 4% annually to sustain the pension without depleting the corpus, you'll need a corpus of approximately 6 crores at the time of retirement.

Here's how you can plan your investments to reach this goal:

Equities: Since you have a long investment horizon and a higher risk tolerance, allocate a significant portion of your investments to equities. Continue investing in stocks and mutual funds with an expected return of 12-15% annually. Increase your SIP in mutual funds to expedite wealth accumulation.
Fixed Income: Maintain a balanced portfolio by diversifying into fixed-income instruments like PF, PPF, govt. bonds, and NPS. Although these instruments offer lower returns, they provide stability and reduce overall portfolio risk. Maximize contributions to NPS, which offers tax benefits and potentially higher returns.
Emergency Fund: Keep your emergency fund intact to cover unexpected expenses and avoid liquidating long-term investments prematurely.
Regular Review: Periodically review your investment portfolio and make adjustments based on changing financial goals, market conditions, and risk appetite. Consider consulting with a financial advisor or planner to optimize your investment strategy and ensure alignment with your retirement objectives.
By consistently investing in a diversified portfolio of equities and fixed-income instruments, you can work towards building a sufficient corpus to achieve your retirement goals. Remember to stay disciplined, stay invested for the long term, and periodically reassess your financial plan to stay on track.

..Read more

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Asked by Anonymous - Nov 05, 2024
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Sir I am 47 years old and want to retire in next 2-3 years. My portfolio is as under FD-22 L MF-22 L. ( SIP of 33000 running) Gold--10 L EPF--24 L and App Gratuity -10 L Equity--10 L Rental Income -25000 per month from 80 Lacs flat. ( No loan pending now) 1 cr term plan and 10 l mediclaim running Parental House -2.5 cr and Land -2.5 cr. My son is studying in second year of engineering. And my monthly hone expense is not more than 30000-35000 per month. Can I afford to retire ?
Ans: It’s commendable that you've accumulated a diverse portfolio with a clear retirement goal. Let's evaluate if your current portfolio aligns with a secure retirement.

Portfolio Review and Income Assessment
Based on your retirement aspirations, let’s consider each component of your portfolio and its potential to generate sustainable income:

Fixed Deposits (FD): Rs 22 lakh
FD interest can serve as a steady income source, though it typically yields lower returns, which may not keep up with inflation over the long term.

Mutual Funds (MF): Rs 22 lakh, with a SIP of Rs 33,000
MFs offer potential growth and help combat inflation. Continuing your SIPs could grow this corpus further, providing higher returns than fixed-income sources.

Gold: Rs 10 lakh
Gold adds stability and can be liquidated if needed. However, it might not be the best primary income source.

Employee Provident Fund (EPF): Rs 24 lakh and Gratuity Approx Rs 10 lakh
EPF and gratuity offer safe post-retirement funds. When you withdraw, they can be used as a source of regular income or reinvested for returns.

Equity Investments: Rs 10 lakh
Your equity investments add growth potential. Over time, this can be a crucial source to combat inflation.

Rental Income: Rs 25,000 per month
Rental income provides a consistent cash flow, covering a large portion of your monthly expenses. This income will be valuable post-retirement to meet regular needs.

Expense and Income Projection
With monthly expenses at Rs 30,000–35,000, and rental income already covering most of these costs, your current lifestyle is well supported. However, to retire comfortably, a buffer for healthcare, travel, and inflation is necessary.

Strategy for Retirement Readiness
Based on your assets and expected needs, here’s a recommended approach to secure a steady retirement income:

Mutual Fund Strategy
Continuing your SIPs for the next 2-3 years will help grow your corpus further. Consider moving part of the equity-based mutual funds into debt funds close to retirement to reduce risk while generating returns.

Systematic Withdrawal Plan (SWP)
At retirement, you can initiate an SWP from your mutual fund corpus, providing a steady income. This strategy allows capital appreciation with controlled withdrawals, reducing the risk of prematurely depleting your funds.

Fixed Deposit Laddering
To maximise interest rates and ensure liquidity, consider a laddering strategy with your FDs. This will help meet emergency needs and take advantage of better rates.

Rental Income
Your rental income of Rs 25,000 is a reliable source. To protect it, ensure the property remains well-maintained and consider lease renewals with trusted tenants to maintain stability.

Contingency for Healthcare and Son’s Education
Health Insurance: Rs 10 lakh
Assess your current health cover, especially considering rising medical costs. A top-up or super top-up plan could add an extra layer of protection.

Son’s Education
Your son’s education may require additional funding. Any shortfall could be met by partial liquidation of non-core assets, like gold or FDs, if needed.

Estate and Legacy Planning
Your parental house and land provide substantial long-term security. Though not income-generating immediately, they offer future flexibility if liquidated or rented.

Final Insights
Your assets, income sources, and low monthly expenses indicate a strong readiness for retirement. With minor adjustments for healthcare and education, you can comfortably meet your goals. Continuing your current SIPs for the next few years and optimising your FD and MF corpus will help sustain your income post-retirement.

Best Regards,

K. Ramalingam, MBA, CFP,
Chief Financial Planner
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

...Read more

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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