My name is Bhavaniprasad & I am an Engineer by profession and my age is 34 yrs as of now. I want to retire at 55 years by accumulating sufficient money. In today's terms it could be 1.50 Crores. What amount is required to retire after 21 years? Now I have Rs. 1.00L premium policy in LIC Of India and SIP Rs. 1000/- per Month in SBI Small Cap Fund. Please suggest a way out.

Ans: You have already decided on the target corpus in today's value at Rs 1.5 Crore. So now if the same figure provided by you is inflation-adjusted at 6% (assumed avg. inflation) for the next 21 years, the figure comes to Rs 5.1 Cr in future value. To reach this corpus, one needs to invest about Rs 51-52,000 per month (Rs 6.1+ lakh per year) at an average return of 9% per annum. This monthly/annual investment amount needs to increase ny at least 5% every year in line with the increase in your salary.

Currently, you are investing Rs 1 lakh in LIC traditional plans which can give returns of 5-6%. The equity funds can give 10-11% average returns in the long run. So to reach the target corpus, you need to increase the investments in lien with what the requirements have been suggested.

Note (Disclaimer) - As a SEBI RIA, I cannot comment on specific schemes/funds that are provided or asked for in the questions in the platform. And the views expressed above should not be considered professional investment advice or advertisement or otherwise. No specific product/service recommendations have been made and the answers here are for general educational purposes only. The readers are requested to take into consideration all the risk factors including their financial condition, suitability to risk-return profile and the like and take professional investment advice before investing.

Ans: You have already decided on the target corpus in today's value at Rs 1.5 Crore. So now if the same figure provided by you is inflation-adjusted at 6% (assumed avg. inflation) for the next 21 years, the figure comes to Rs 5.1 Cr in future value. To reach this corpus, one needs to invest about Rs 51-52,000 per month (Rs 6.1+ lakh per year) at an average return of 9% per annum. This monthly/annual investment amount needs to increase ny at least 5% every year in line with the increase in your salary.

Currently, you are investing Rs 1 lakh in LIC traditional plans which can give returns of 5-6%. The equity funds can give 10-11% average returns in the long run. So to reach the target corpus, you need to increase the investments in line with what the requirements have been suggested.

Note (Disclaimer) - As a SEBI RIA, I cannot comment on specific schemes/funds that are provided or asked for in the questions in the platform. And the views expressed above should not be considered professional investment advice or advertisement or otherwise. No specific product/service recommendations have been made and the answers here are for general educational purposes only. The readers are requested to take into consideration all the risk factors including their financial condition, suitability to risk-return profile and the like and take professional investment advice before investing.

Ans: About 2 crores

Ans: Current Situation
Age: 27 years
Monthly Salary: Rs. 32,000
SIP: Rs. 6,000 per month (started in January 2022)
Insurance: Rs. 25,000 per year for term and health insurance
Loans: None
Retirement Goal: Age 50
Estimating Retirement Corpus
Assessing Future Expenses
Current Monthly Expenses: Estimate your current monthly expenses. This will help project future needs.

Inflation Adjustment: Account for inflation. Assuming a 6% annual inflation rate, your expenses will increase significantly over time.

Retirement Duration: Estimate the number of years you will need your retirement corpus. If you retire at 50 and live until 80, you need 30 years of support.

Investment Strategy
Systematic Investment Plan (SIP)
Increase SIP Contributions: Gradually increase your SIP amount as your salary increases. This will boost your retirement corpus.

Diversified Funds: Invest in a mix of large-cap, mid-cap, and small-cap funds. This balances growth potential and risk.

Public Provident Fund (PPF)
Stable Returns: Consider opening a PPF account. It offers stable, tax-free returns and helps in building a secure retirement corpus.

Regular Contributions: Aim to contribute the maximum permissible amount each year (Rs. 1.5 lakhs).

National Pension System (NPS)
Additional Security: Invest in NPS for additional retirement savings. It provides a mix of equity and debt exposure with tax benefits.
Emergency Fund
Liquidity: Maintain an emergency fund covering at least 6 months of expenses. This ensures you don't dip into retirement savings for emergencies.
Insurance
Term Insurance
Adequate Coverage: Ensure your term insurance coverage is sufficient to support your family in case of unforeseen events.

Review Periodically: Review and adjust your coverage as your financial situation changes.

Health Insurance
Comprehensive Coverage: Ensure your health insurance policy provides comprehensive coverage for medical expenses.

Regular Payments: Continue paying the annual premium to keep your coverage active.

Calculating Required Corpus
Estimation Without Specific Calculations
Monthly Expenses Projection: Assume your current monthly expenses are Rs. 20,000. With 6% inflation, expenses will be higher at retirement.

Retirement Corpus: To sustain Rs. 20,000 monthly expenses adjusted for 6% inflation, you need a substantial retirement corpus.

Final Insights
Start Early: You have a good start with your SIP. Continue and increase contributions as your salary grows.

Diversify Investments: Balance between equity and debt for optimal growth and stability.

Regular Reviews: Periodically review your portfolio and adjust as needed.

By following these strategies, you can build a sufficient corpus to retire comfortably at 50.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in