Hello Sir , I am 40 years of age with liabilities of 2 cr. . I have my own home and shop . I have invested 80lacs in PPF , 10 lacs in MFI have a monthly expenditure of 2.5 lacs approx . I can save around 2 lacs per month . I want to retire by 50 . How much corpus should I make ?
Ans: Determining the Required Retirement Corpus
1. Assess Current Financial Situation:
Liabilities: You have liabilities of Rs. 2 crores.
Current Investments: Rs. 80 lakhs in PPF, Rs. 10 lakhs in MFI.
Monthly Expenditure: Rs. 2.5 lakhs.
Monthly Savings: Rs. 2 lakhs.
2. Estimate Retirement Corpus:
Future Monthly Expenses:
You need to estimate future monthly expenses considering inflation. Given the current expenditure of Rs. 2.5 lakhs, this amount will likely increase over time.
Income Replacement:
To retire comfortably, you should aim to replace your current monthly expenses with investment income.
Investment Growth:
Factor in the expected growth of your investments. Consider a mix of equity, debt, and other assets for a balanced portfolio.
3. Consider Inflation Impact:
Inflation Adjustment:
Inflation will erode the purchasing power of your savings. Regularly review and adjust your savings and investments to counter inflation.
4. Investment Strategy:
Diversify Investments:
Continue investing in diversified mutual funds. Actively managed funds can offer better returns compared to index funds.
Increase Savings:
With Rs. 2 lakhs in monthly savings, continue to invest wisely. Increase your savings as your financial situation improves.
Regular Review:
Regularly review your investment portfolio. Make adjustments based on performance and changing financial needs.
5. Estimate Retirement Corpus:
Retirement Savings Goal:
Based on your monthly expenditure and inflation, estimate the required retirement corpus. A general rule is to have 15-20 times your annual expenses as the retirement corpus.
Emergency Fund:
Maintain an emergency fund to cover unforeseen expenses. This should be separate from your retirement corpus.
6. Seek Professional Advice:
Consult a Certified Financial Planner:
Consider consulting a Certified Financial Planner for a personalized retirement plan. They can provide detailed calculations and tailored advice.
Final Insights
To retire by 50 with your current lifestyle, aim for a substantial retirement corpus. With Rs. 2 lakhs in monthly savings and investments, focus on building a diversified portfolio. Regularly review and adjust your investments to meet your future needs. Consult a Certified Financial Planner to ensure your retirement plan is robust and achievable.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
