Hi, my age 24 and salary is 30k. I am investing one hybrid fund as 2k, one ELSS 1K, one index fund 1k, one debt fund 1k. Totally 5k i am investing. I would like to retire at 40 or 45 with 2 L as monthly income. So how can I achieve that and what are all the possibility?
Ans: Assessing Your Current Investment Portfolio
Let's start by analyzing your current investments:
Rs 2,000 in a hybrid fund
Rs 1,000 in an ELSS fund
Rs 1,000 in an index fund
Rs 1,000 in a debt fund
You are investing Rs 5,000 monthly, which is commendable at your age of 24. However, achieving a monthly income of Rs 2 lakhs by the age of 40 or 45 will require a strategic approach.
Goals and Investment Strategy
Retirement Corpus Goal
To retire with Rs 2 lakhs as a monthly income, you need a substantial retirement corpus. This will require disciplined and strategic investing.
Disadvantages of Index Funds
While index funds have lower fees, they are passively managed. This means they cannot outperform the market. Actively managed funds, on the other hand, are handled by professional fund managers aiming to outperform the market. They offer better potential returns, especially for aggressive goals.
Importance of Actively Managed Funds
Actively managed funds have the potential to deliver higher returns. The expertise of fund managers can help in selecting high-performing stocks. This can help you achieve your goal more efficiently.
Suggested Investment Allocation
Increase Equity Exposure
Given your young age and long investment horizon, increasing your equity exposure can be beneficial. Equity funds generally provide higher returns over the long term compared to debt funds.
Balanced Hybrid Funds
Balanced hybrid funds offer a mix of equity and debt. This can provide stability and growth. You can consider increasing your investment in such funds.
ELSS for Tax Benefits
ELSS funds not only offer tax benefits under Section 80C but also provide good returns. Continuing with your ELSS investment is a good strategy.
Regularly Review and Adjust
It is essential to review your portfolio regularly. Adjust your investments based on market conditions and your financial goals.
Steps to Achieve Your Retirement Goal
Increase Monthly Investments
If possible, increase your monthly investments. Even a small increase can have a significant impact over time due to compounding.
Automate Investments
Setting up a systematic investment plan (SIP) will ensure regular investments. This will also reduce the risk of market timing.
Diversify Portfolio
Diversification reduces risk. Ensure your portfolio has a good mix of equity, debt, and hybrid funds.
Seek Professional Guidance
A Certified Financial Planner can provide personalized advice. They can help in selecting the right funds and strategies based on your goals.
Final Insights
Achieving a monthly income of Rs 2 lakhs by the age of 40 or 45 is ambitious but possible.
It requires disciplined saving and smart investing. Increase your equity exposure and review your investments regularly. Seek professional guidance to ensure you are on the right track.
Best Regards,
K. Ramalingam, MBA, CFP
Chief Financial Planner
www.holisticinvestment.in
