i am investing 18k monthly in sip and 17k in nps how much corpus should i get by 58 years
Ans: To achieve your retirement goals, let’s take a detailed approach. You are currently investing Rs. 18,000 monthly in SIPs and Rs. 17,000 in NPS. I will break this down into steps for clarity and provide an assessment of your potential corpus by age 58.
Evaluating Your SIP Investments
Your current SIP investment of Rs. 18,000 monthly is a solid step toward wealth accumulation. Assuming you are 32 years old now, you have 26 years left until age 58. SIPs, particularly in equity mutual funds, have the potential to generate returns of around 10% to 12% per annum over the long term.
It’s essential to regularly review and assess your portfolio's performance. A well-balanced portfolio in diversified funds, small-cap, mid-cap, and large-cap categories can help you optimise returns. Actively managed funds can give you better opportunities compared to passive funds like index funds.
Tips for Enhancing Your SIP Portfolio:
Diversification: Ensure your investments are spread across different sectors and asset classes. This reduces risk and maximises growth potential.
Step-Up SIPs: Consider increasing your SIP investment by 10% annually. This will allow your investments to grow with your income and inflation. For example, increasing from Rs. 18,000 to Rs. 19,800 after a year can make a significant impact over time.
Market Review: Periodically, you should review your fund’s performance and make adjustments if required. A Certified Financial Planner can help guide you in the right direction.
If you continue investing Rs. 18,000 per month for the next 26 years, the compounded returns will accumulate to a significant amount, provided market conditions remain favourable.
Assessing Your NPS Contributions
Your Rs. 17,000 monthly NPS investment is another smart move. The National Pension System (NPS) offers tax benefits and helps create a retirement corpus. Over time, NPS can deliver returns between 9% and 11% per annum, primarily if your portfolio has a healthy mix of equity and debt.
The unique feature of NPS is the compounding over time, which enhances your retirement corpus significantly. The mix of equity and debt in NPS allows for a balance of growth and safety. When you reach the age of 60, up to 60% of the NPS corpus can be withdrawn as a lump sum, while the remaining 40% needs to be annuitised to provide you with regular income post-retirement.
Suggestions for Maximising NPS:
Asset Allocation: Review your NPS asset allocation regularly. Allocating more towards equity early in your career can yield better returns. As you approach retirement, you can shift towards safer debt instruments.
Tax Benefits: NPS offers tax benefits under section 80C, and an additional Rs. 50,000 under section 80CCD(1B). This reduces your taxable income and increases your effective returns.
Regular Review: Like SIPs, review your NPS investments regularly. A well-balanced equity-debt mix can help you achieve steady growth.
Growth of Your Combined Corpus by Age 58
By continuing to invest Rs. 18,000 in SIPs and Rs. 17,000 in NPS monthly, your corpus can potentially grow significantly. Based on a conservative assumption of a 10% annual return for SIPs and 9% for NPS, let’s see how the investments could shape up by age 58.
Your SIP contributions could grow exponentially over 26 years. On the other hand, NPS, with its structured approach to wealth accumulation, also provides a strong foundation for your retirement.
Final Insights:
Stay Committed: The key to building a strong corpus is consistency. Continue with your current investments and step them up when possible.
Review and Adjust: Keep an eye on market trends, and don’t hesitate to make necessary adjustments to your portfolio. Seek professional advice when required.
Diversify: Ensure you are not too concentrated in one type of asset. A well-diversified portfolio is crucial for long-term success.
Your disciplined investment approach through SIPs and NPS is setting you on the right track toward financial security in retirement.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
