Hello, I am 45 and I earn 1.5 lacs per month after Tax and Mandatory PF deduction. I have no Loan EMI and never took any loan in my life. I have 68 lacs in provident Fund, 8.5 lacs in PPF, 17 lacs in Bank FD, 55 lacs of a home, 50 lacs of land, 90 lacs in Equity and MF investments (with 1.20 Cr current value), 10 lacs investments in LIC/other insurances, and 10 lacs of cash. I am planning to retire at 50. Kindly guide me how to reach 3 Crore Corpus Savings/liquid fund or 1 lac earnings every month after age 50 in the best possible way?
Ans: Evaluating Your Current Financial Situation
You have a well-diversified portfolio and good income. Planning for retirement at 50 is a great goal. Let's analyze your assets and create a strategy.
Current Assets Overview
Provident Fund (PF): Rs. 68 lakh
Public Provident Fund (PPF): Rs. 8.5 lakh
Bank Fixed Deposit (FD): Rs. 17 lakh
Home: Rs. 55 lakh
Land: Rs. 50 lakh
Equity and Mutual Funds: Rs. 1.2 crore
LIC and Other Insurances: Rs. 10 lakh
Cash: Rs. 10 lakh
Monthly Income and Expenses
Monthly Income: Rs. 1.5 lakh
Expenses: Not specified, assume moderate living expenses.
Retirement Goals
Corpus of Rs. 3 crore by age 50
Monthly Income of Rs. 1 lakh post-retirement
Step 1: Analyzing Current Investments
Your current investments are strong. Here’s how to optimize them:
Provident Fund and PPF: Stable and safe, continue as they are.
Bank FD: Consider moving part to higher-yield investments.
Equity and Mutual Funds: Good growth, continue SIPs and increase contributions.
Step 2: Targeting Rs. 3 Crore Corpus
Increase Equity Investments
Higher Returns: Equity investments yield higher returns over time.
Diversify: Continue SIPs in diversified and sectoral funds.
Regular Review: Adjust based on market performance.
Move Some FD to Mutual Funds
Better Returns: Mutual funds offer higher returns than FDs.
Balanced Approach: Consider hybrid funds for a mix of equity and debt.
Step 3: Ensuring Monthly Income of Rs. 1 Lakh
Invest in Annuity Plans and SWPs
Systematic Withdrawal Plans (SWPs): From mutual funds for regular income.
Annuity Plans: For guaranteed income, though not recommended as primary.
Build a Dividend Portfolio
Dividend Yield Stocks: Invest in companies with a good dividend record.
Regular Income: Provides a steady cash flow.
Step 4: Emergency Fund and Insurance
Maintain Liquidity
Emergency Fund: Keep Rs. 10 lakh or more as a buffer.
Insurance: Adequate life and health coverage.
Step 5: Review and Adjust Annually
Annual Review: Check performance and adjust as needed.
Rebalance Portfolio: Ensure the right mix of equity and debt.
Final Insights
To reach a Rs. 3 crore corpus by 50 and ensure Rs. 1 lakh monthly income:
Increase equity investments.
Move some FD to mutual funds.
Invest in dividend stocks and SWPs.
Maintain a strong emergency fund and insurance.
Review and adjust your portfolio annually.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
