Retirement is one of the most important stages of your life for which you work and should save for. With the break-up of the joint family system in India, increase in longevity (life expectancy) due to advanced medical innovations, shorter work-span and lower job security; ‘Retirement Planning’ assumes greater importance.
If you are creating an Investment Plan, your top most priority should be to save and invest for your retirement. Do not think that it’s too early to start planning for retirement. It is very important that you start early for your retirement.
In this post, let us understand – How to calculate the retirement corpus? How to do Retirement Planning? How much do you need to save for your retirement goal? How to calculate the required retirement fund in 3 simple steps using MS Excel?
First, let’s understand the stages of Retirement planning.
Stages / Phases of Retirement planning
- Accumulation phase – During this phase, you save and invest for your retirement. This is the stage where you invest to generate a decent corpus which is assumed to take care of you / your family during retirement. The earlier the accumulation period is in your life, the more advantages you will have (like the power of compounding).
- Transition to Retirement – This is an individual’s transition from work into retirement.
- Withdrawal phase / Wealth Consumption– In this phase, the retiree withdraws the income from the accumulated fund (Retirement fund / corpus) and enjoys the retired life.
Retirement Planning in 3 Simple Steps
Let’s now calculate the retirement corpus and the required amount of savings to achieve your retirement goal. You can do this in 3 simple steps as below. I have also provided a “Basic Retirement Planning Calculator.” Do try that.
Example : Mr Rahul G (35 years) wants to plan for his retirement. His current annual living expenses are around Rs 3.6 Lakh. He wants to retire at 60 years and expects his life expectancy to be 80 years. He would like to know the projected / required retirement corpus and what is the required savings to meet his retirement goal amount??
So, Rahul has 25 working years (65-35 years) and would like to enjoy 20 years (80-60 years) of retirement life.
Step 1 – Project your Expenses
We are all aware that the living expenses may not remain the same. They keep increasing. So, we need to first project the expenses by assuming a certain rate of Inflation (let’s assume it as 7%).
The current expenses of Rs 3.6 Lakh p.a. will be projected to be at Rs 19.53 Lakhs, in the first year of Rahul’s retirement (at 60 years of age). He needs Rs 19.63 Lakh to continue with the same spending pattern in the first year of his retirement.
However, he assumes that some of the current expenses may not be relevant when he retires. So, he assumes the projected expenses to be Rs 14.65 Lakh only (75% of 19.63 Lakh).
Rahul expects to earn 8% from his investments after the retirement. So, we now need to calculate the required retirement corpus. At 8% ROI and 7% inflation rate, the real rate of return (inflation adjusted) is 0.9346% (Real rate of return is generally used in ‘withdrawal phase’ of the investments).
To withdraw inflation adjusted expenses of Rs 14.65 Lakh for 20 years (retirement life) at 0.9346% real rate of return, the required Retirement Fund is Rs 2.66 crore.
Step 3 – Calculate required savings per year / month to accumulate your retirement corpus
In this step, let us calculate the required savings amount to achieve the retirement goal amount (Rs 2.66 cr).
Rahul wants to invest in safe fixed income securities only, and expects 9% rate of interest from his investments. To accumulate Rs 2.66 cr in 25 years (work-span), at 9% ROI, Rahul has to save and invest Rs 3.14 Lakh per year (or) Rs 23,743 per month.
You may try these calculations using the below Retirement corpus calculator.
Download Simple & Basic Retirement Goal Planning Calculator.
We often hear about the celebrities and famous personalities struggling to make ends meet during their retirement. Kindly go through the below links to understand the importance of having a realistic and good Retirement Plan;
So, to become wealthy and to stay wealthy, it is very important to MANAGE your money properly.
You can get a HOME LOAN to buy a property. You can get a PERSONAL LOAN to meet your short-term financial goals. You can get an EDUCATION LOAN to fund your higher education (or) to fund your Kid’s higher Education. But, you don’t get a loan to fund your RETIREMENT (hmmm..by any chance, are you now thinking about Reverse Mortgage?).
Make your retirement years more comfortable and secure. Plan your retirement now! Remember, retirement planning is not a one-time event, but a continuous process of making sure you are staying in line with the goal you set for yourself. Do share your views and comments. Cheers!
Continue reading :
- Lump sum Investment options for Retirees/Senior Citizens | Where to invest my Retiral benefits to get Regular Income?
- List of Best Investment Options in India
- Is NPS a good investment choice?
- My 6 Core Personal Financial Planning principles!
- How much Term Life Insurance Cover do I need? | Online Insurance coverage Calculator
- Top 15 Best Mutual Funds to invest in 2020 & beyond | Top Performing Equity Funds
(Image courtesy of mapichai at FreeDigitalPhotos.net)
Hey Srikanth
According to calculator, my retirement corpus will not sustain if my spouse is younger to me.
I do not understand why spouse age is not considered in the calculations. Retirement corpus should be for both to survive, not the single person.
Correct me if I am wrong.
Dear Ritz,
Kindly note that one can consider living expenses of his/her entire family and can project the required retirement corpus.
Hi,
What is your views on tata retirement savings fund? Do you have any article on it?
Dear Chandra,
It is a decent fund with two options – Moderate (Balanced) and Progressive options.
Unlike regular Equity funds, retirement oriented funds have certain certain & conditions for investments and redemptions. So, personally I prefer to invest in general equity funds.
You may kindly go through below articles related to similar retirement oriented funds;
* Reliance Retirement Fund – Equity Oriented Pension Scheme- Features & Review
* HDFC Retirement Savings Fund – Tax Saving cum Pension Scheme – Details & Review
Dear Sir,
I want your advice related to Pention. My age is 48 yrs. Kindly guide me. I am from Pune. Or suggest me a person, who can guide me. My Mobile Number is +9199220119**. I am badly need of your genuine advice. Please guide me. Waiting for your SMS. My email address is rajeshdalvi**@gmail.com.
Thanks & Warm Regards,
Rajesh Dalvi,
Pune.
+9199220119**.
Dear Rajesh,
In case, you are looking out for a financial planner, you may kindly go through this article @ My List of popular Fee-only Financial Planners | Based on my interactions & observations
Hi Srikanth,
Thanks for throwing light and emphasizing the need for retirement planning. I am 31 now and have decided to choose mid-cap funds to accumulate my retirement income. I arrived at this option since my investment horizon is 15+ years. Could you please suggest which fund-house to choose?
Also, due to recent changes in LTCG taxation, are the mid-cap funds still the best bet for long term investment horizon? I am slightly worried about amount I will be losing as part of taxation.
Dear Arun,
Kindly do not invest in a product based on just tax implications alone. They may not remain the same..
Kindly go ahead with your investment plan.
Related articles :
Why your Best Mutual Fund Schemes may not remain as ‘the best’? | Categorization & Rationalization of MFs
10% LTCG Tax on sale of Stocks/Equity Mutual Funds | Budget 2018-19 Proposal
Budget 2018 LTCG Tax on Equity Mutual Funds & Important Implications
Dear Sreekanth,
Srikanth Varma here again asking for little more details on another topic. 🙂
As always, very good write-up on the retirement planning. I really get motivated with your blog. Really appreciate your effort.
I’ve used “Retirement-Planning-calculator.xls” to estimate my per month saving for retirement planning.
Now question is “How do I take my EPF contribution into retirement planning?”
Ex: As per my inputs into the XLS, I’ve got the recommendation as 54K / per month with 9% yield, 44K /per month with 10% yield and 28.5K /per month with 12% yield. My question is how to input the EPF contribution of 15K/per month with 8% yield and get the final recommendations?
Thanks once again for your efforts to make everyone financially literate.
BR, Srikanth Varma
Dear Srikanth,
The calculator provided here is a very basic one 🙂
Your EPF corupus accumulation can be dependent on many factors, your current & future salary, hike, rate of interest, period of service, partial withdrawals if any etc.,
Suggest you to kindly visit this link to find comprehensive Retirement calculators..
Dear Sreekanth,
I chanced upon your website, when I was googling for financial advice. You have been doing yeoman service to people. May god bless you.
I am 49. Typical middle class family. Currently based out of Mumbai. Live in our own house.Not much in terms of liquid assets beyond PF, LIC policies etc. However, no other obligations. Fed up with city life and wish to relocate to our village. My wife and I configured that we can have a comfortable life if we had a monthly income of Rs.25000/- . So, we decided to start putting monies into debt funds with a target that we put in Rs. 25 Lakhs in the next 3 years.
Now, my questions are :
1. Are debt funds the optimal solutions?
2. Should I go with aggressive monthly income plans now and move to debt funds just before shifting?
3. Can you please suggest alternatives if I am all wrong?
4. Can you also recommend schemes which we should consider.
Thanks in advance.
Dear Krishnan,
Thank you for your appreciation & kind words 🙂
Kindly do account for INFLATION when you are calculating the projected monthly expenses.
1- Yes, reason : short investment horizon. If you would like to take a bit of risk, you may allocate a portion of your investible surplus to an MIP Fund.
2 & 3 – You may have a mix of Debt Funds + Arbitrage fund + MIP.
To accumulate Rs 25 Lakh in 3 years from now at expected rate of return of 9%, you have to invest around Rs 60k per month.
Hi Sreekanth
I invested around 15L in MF on lump sum basis in various funds. i dont want to touch it for next 15 years. majority invested is HDFC Prdudence grwoth around 5L and Frankin india Prima fund 5L , Birla sun life equity fund 1.5L and ICICI prudence 1L need your advise whether it is ok
Dear Raghu,
Good funds. You may kindly continue with your investment plan.
What is the Scheme name of ICICI?
Is it not possible for a retired person to invest in Equity based balanced fund and starting SWP after 1 year at a reasonable rate say 8% p.a. so that his income would be tax free and and fund corpus also grows steadily?
Dear Rupali,
Why not, it is possible! 🙂
It all depends on ones investment objective, profile & time-frame.
DEAR SREEKANDH,
I am 48 years old and planning for retirement.
running a consultancy of my own.
Can accumulate for next few years say upto 59 years.
expecting monthly return of Rs.40k ASSURED afterwards.
What should i do?
i am not well versed in market funds in that case should i go for conventional retirement plan
can you please suggest me the right plan.
Thank you in advance
Dear john Ji,
Do you have any existing corpus/investment or other sources of income?
Or, Do you need to start the retirement planning from scratch now onwards?
To get Rs 40k per month income, during projected retirement life between 59 to 80 years, at expected return of 9% and inflation of 8%, you need to have retirement corpus of around rs 90 Lakh.
So, you have 11 years from now to accumulate this corpus.
Hi Sreekanth,
I am 33 years old and planning for retirement.
For retirement i am looking into sbi smart elite, ICICI elite, sbi smart wealth builder.
or any other with better returns. This also has the insurance benefit.
My idea of this type of investment is to pay for 5 years and leave it for 15 years.
Is it good to go or any hidden risk, please Let me know your comments.
Thanks,
Srikanth.
Dear Srikanth,
May I know if you have dependents and/or financial obligations?
If yes, do you have adequate life insurance cover?
Dear Sreekanth,
I have no financial obligations. i have a kid age 1.10 years and 1.5 Lacs per year into SSY, also planning for adequate life cover for family.
Dear Srikanth,
To get life cover – Term insurance plan is a better option.
Read: Best Term insurance plans.
For wealth accumulation purposes – You may ignore life insurance plans and consider other investment options.
Dear Sreekanth,
I will definitly look into your suggestion. Thanks for the replay.
Still i have this question in my mind.
As per my financial adviser he said that i get an average of 15 % returns if i invest in this so called elite or smart wealth builder. they also say that you get better returns than MF.
Is it true? does it has any drawbacks which they hide to revel to me?
Thanks,
Srikanth.
Dear Srikanth,
It is based on assumptions & illustrations.
If possible, kindly ask your advisor or agent to give you in written about the above statement.
Both MFs & ULIPs are subject to market risks.
However, cost-wise, transparency, liquidity, choice wise etc MFs can outscore ULIPs or insurance based products (if your objective is to accumulate wealth over longer period).
Great post on retirement planning Shreekanth.
I am 36 years old working professional. And as my retirement planning I want to choose a small/mid cap mutual fund. I am planning to put about 1 lakh as lumpsum in the fund and do not want to touch it for another 25 years. I think with the 15% per annum return this can build a good money for me and my wife for our retirement.
I have also invested about 3 lakhs in ppf and want to accumulate hat amount for retirement.
Please let me know if this will be a good strategy for me or not.
Dear Sachin,
Investing in a small cap fund for a 25 year horizon, makes sense. But kindly do track the fund’s performance once in a year and take corrective steps, if required.
Kindly use the calculator available in the above article for the calculation of your projected retirement corpus.
Read:
Best Equity funds.
How to select the best mutual fund scheme?
Dear shreekanth,
I am 48 now and accumulated an overall corpus ( MF , ppf, EPF) of Rs. 75 lacs. I am planning to retire early in next 6 months.Is this fund adequate to meet my current monthly expenses of Rs. 30000/-. I have term cover of Rs 75 lacs and Family health insurance of Rs. 5 lacs. Total value of my MF exposure is Rs. 50 lacs ( large cap ,multicap and blanced funds and liquid funds). Kindly suggest if i need to rebalance the porfolio towards conservative one.Also should i discontinue term insuarnce policy.
Regards
Dear dushyant,
If you do not have any financial obligations / liabilities you may discontinue the life insurance policy.
In case if you believe that health cover can be enhanced, you may consider a Super Top up plan.
Read: Best Super top up health insurance plans.
Assuming life expectancy of 80 years, expected returns for the next 32 years as 9% and inflation rate @ 8%, you can get around Rs 2.7 Lakh per annum by investing Rs 75 Lakh.
If you have to receive more than Rs 2.7 Lakh then either returns should be more or corpus.
If you are totally dependent on this income, suggest you to switch major portion of your corpus to safe & highly liquid avenues Ex- Debt Funds, FDs, Post office Sr.C.S.S or PO MIS etc.,
Kindly read:
List of best investment options!
Best Debt funds.
Best MF MIP Funds.
Thanks shreekanth. Here my debt fund investment is already around 40 % of total corpus of 75 lacs.Is it practically safe to continue with balanced funds for remaining 60% of total amount.
Regards
Dear dushyant,
Mutual funds are subject to risks. The returns are not guaranteed. So, if you are dependent on this income and would like to receive fixed/regular income then you may have to invest a major portion of your corpus in debt products.
Thanks Dear Sreekanth,
I loved your blog. Great effort to make people financially smart. All the best……
Thank you dear Dushyant..Keep visiting and kindly share the articles with your friends 🙂
Great article! I agree that your top most priority should be to save and invest for your retirement. Do not think that it’s too early to start planning for retirement. It is very important that you start early for your retirement.
Hello Shreekanth,
I went through your blog and it well written, appreciate for that. I understood lot of things out of it. Also I went through your “Child Education” and “Retirement” calculator related blogs.
My age is 33
Let me tell you my investment and goals –
Investment-
1) PPF (Retirement) – 12500 per month from last 3 years (Maturity in 2029)
2) Sukannya Samruddhi Yojana (Girl Education) – 12500 per month from last 1.5 year (Maturity in 2037)
3) LICs – 65000 per annum from last 6 years (Maturity in 2031)
4) Below Mutual Funds (I am looking for atleast 5 years investment) –
a) HDFC Short Term Opportunities Fund(G) – 6000 per month from 1 year
b) Birla SL Dynamic Bond Fund-Ret(G) – 6000 per month from 1 year
c) Tata Balanced Fund(G) – 8000 per month from last 1 year
Goals-
1) Retirement at the age of 45/50, currently I am working in private IT sector and I may need atleast 75 lakh
2) I have doughter and she is 1 year old, for girl child education I may need 75 lakh
3) Also I may need 50 lakh for her marriage at her 21th age
Currently I don’t have any term plan or for my family member nor they have any LICs.
So it will be good if you can suggest your opinion, what you feel looking at my investment/goals and considering all retirement/child’s education and marriage and health related expenses. Also correct me if I am lacking doing wrong investment in any entity. Please let me know which are good fund from Sep 2016 onwards.
Waiting for your response.
Regards,
Pravin
Dear Pravin,
1 – You may kindly provide details of LIC policies (Plan name , commencement date & tenure).
2 – MFs : Do you need this money within 5 years?
Goals:
3 – Suggest you to kindly buy a Term insurance plan if you are under-insured. Also, a Personal Accident insurance cover.
4 – Do you/family have health insurance cover?
Kindly go through this article : List of articles on key aspects of Personal Financial Planning!
Hi Sreekanth,
Can you please advise on good options to make lump sum investments (a few lakhs) currently so as to plan for retirement in about 10 to 15 years?
I’ve started with PPF recently upon reading your blog and wanted to catch up with some lump sum investments (move from FD) in order to create a good retirement corpus for future (about 5 crore, from the calculator).
Looking forward to your guidance on the best possible options, Thanks
Dear RB,
Kindly go through this article, you may revert to me if you need more info :
List of best investment options.
Thanks Sreekanth, I went through this article and looking for your guidance in making lump sum investments in mutual funds – any particular scheme that you would recommend and timeline to invest in them?
Dear RB,
As you have a long investment horizon, you may consider investing in Balanced fund + Large Cap equity fund + Diversified equity fund.
You can also consider setting up STP (Systematic Transfer plan) from a Liquid fund to Equity fund for say next 12 months, in-case if you are not comfortable making lump sum investments in Equity funds.
Kindly note that STPs can not be set up across AMCs. Also, when Units are redeemed from debt fund, these are considered as normal redemptions hence subject to taxes.
Read:
Best Balanced funds.
Best Equity funds.
MF Taxation rules.
Hi Sreekanth,
Thanks for the nice article on retirement investment for people like me (46 yrs. planning to retire)
In one of your column you had suggested to invest in MIP & Balanced fund. Need your expert advice on following two options of investment for a horizon of 10 years or more, to park PF/Gratuity corpus:
Option 1:
HDFC Balanced Fund- DP Growth- 25%
Birla SL MIP II savings 5- DP- Growth-50%
Reliance MIP- DP-Growth-25%
Option 2:
Tata Balanced Fund-DP-Growth-25%
Birla SL MIP II wealth 25-DP- Growth 50%
ICICI Pru MIP Regular -DP-Growth 25% or Birla MIP II saving 5
I have taken care other aspects (insurance/medical cover) and do not want to take too much risk due to frequent volatility. But I understood that 10 years horizon is perfect and equity investment return of around 12-13% can be expected.
Regards
Dear mandar Ji,
If one is expecting returns of around 12% then we have to factor in the RISKS as well, to achieve that kind of returns.
Kindly note that MIPs’ returns are primarily dependent on ‘interest rate cycle’.
You may consider to increase the allocation to Balanced fund a bit more, atleast for next 3 to 5 years (if possible), if you are not dependent on this investment (source of income).
Kindly read:
Best MF MIPs
Best Balanced funds.
List of best investment options.
Hi Sreekanth,
Thanks for prompt advice. Based on your suggestion, I am now planning to allocate my portfolio as follows:
HDFC Balanced Fund or Tata Balanced fund- 40% ( Kindly choose one according to you)
Birla SL MIP II savings 5- DP- Growth-30%
Reliance MIP or Birla SL MIP II wealth 25-DP- Growth 30%(Kindly choose one according to you)
All 10 years horizon. your advice to achieve above 10% return is requested.
Dear mandar,
Both are good funds (balanced).
Read: How to select the right mutual fund scheme based on risk ratios?
Birla SL MIP II wealth 25- can be considered.
Dear Sreekanth,
I have a lump sum investment in UTI equity DP Growth for last 3 years. After going through your columns, it seems that UTI mid cap- Growth is better option for longer term ( 10 years). Need your advice whether I should switch to this or remain in my existing fund.
Dear mandar,
UTI equity is a multi-cap oriented fund. So ideally we should not compare the two funds.
Kindly note that the fund manager who manages both these funds have been changed.
So, if you would like to make fresh investments in a mid-cap fund you may consider HDFC Mid-cap fund.
Read: Best Equity funds 2016.
No Sreekanth, I have no plan for fresh investment.
Need your advice whether I should remain invested in UTI equity? or switch out to a better performing fund?
Dear mandar ..As of now, you can stay invested in uti equity fund.
Dear Sreekanth,
I am looking for a corpus of 10 Cr for my retirement. I am 32 year old and can invest monthly 7000 – 8000. Can you suggest some good portfolio of equity/mutual funds through which I can achieve my targets.
Dear Vivek ..Kindly go through below articles;
Best Mutual fund schemes.
How to select right mutual fund scheme?
List of best investment options!
Hi Sreekanth,
My father is going to retire this October 2016, and he is in central govt. and willbe getting around 3o lakhs of retirement money in pension and all. Can you please help in letting me know what will be the best way to invest this money.
And other health/money back plans post suited post retirement ?
Thanks
Dear Prashant,
He may kindly ignore buying any life insurance plans, especially traditional plans like Endowment or moneyback.
Read: Are traditional life insurance plans a terrible investment option?
Is he going to depend only on this corpus to lead his retirement life? Can he afford to take risk? Whether he has adequate health insurance cover? May I know what about your mother? Is she dependent on the income generated by this corpus? Are there any other sources of income (pension, rental income, FD interest etc.,)? Any financial liabilities/commitments?
Hi,
I am only the starting stage of financial planning. Firstly i fixed term policy for Insurance. Next I am planning for Retirement. I am thinking to plan for retirement along with tax savings. So i am planning for 2 options combined. ELSS and PPF.
But I am confused with NPS. I read and got the restrictions and tax but the discipline and extra tax saving amount. PPF is some less income but more flexible. So can you please suggest the best one for me along with ELSS and the best proportionate for each one
Dear Akhil,
My vote would be for PPF + ELSS combination.
NPS (with current rules) is not a great product as such.
MFs can be a better choice.
Read: List of best investment options.
yes. thanks. little confused when read npf
Hi,
My age is 35, and we are family of 4 persons.i am working in private sector and earning 30000/- p.m after deduction ,
My goals
House purchase: in next 10 years Rs 50 Lac
My child aged 2 years needs 50 lac in next 18 years
My retirement Rs 1 crore in next 25 yaers
Kindly guide where to invest , i can invest rs 10000 p.m
regards
nitin
Dear nitin,
Do you have sufficient life insurance cover? What about health cover for self & family?
Kindly read this article : List of articles on the Key aspects of Personal Financial Planning?
Your high priority goals are retirement and kid’s education. In case if you are unable to save sufficient money for these goals, you may kindly post pone buying a home.
Read:
The six most common personal finance mistakes..
List of best investment options.
Thanks for your quick response.
Yes i do have Life insurance cover of rs 40,00,000/- from SBI insurance and rs 200000/- from SBI health insurance cover.
Yes i can set aside my house priority but for kids education 2 kids -one of 2 years and second of 1 month both boys i have to decide which fund to invest
secondly i want for retirement which i will need after 25 years .but i want a little secured plan that would not only save my money but also save tax also
regards
Dear nitin,
1- Suggest you to buy a stand-alone Personal Accident cover.
Read: Why one should have a PA cover?
2- You can start investing in a Diversified equity fund + Balanced fund for Kid’s education goals.
Read:
Best Equity funds.
Best balanced funds.3 – You may consider investing in Equity diversified fund + Mid-cap fund.
In case if you would like to save taxes also, then you may consider ELSS fund for your retirement goal instead of Diversified equity fund.
Read: Best ELSS funds.
Hi Sreekanth,
I have been working aboard for quite a while and 45 yrs old now. The only assets I have is my own house due which I have some credits to clear.
I have a son who just entered his college and daughter who is in 9th.
To be frank there is no much savings as such. Planning to pick up some land to do organic farming for retirement.
Could you help me out as to what wise investment plans should I do to have a safe comfortable retirement with no financial crisis. As its already too late in saving for myself and secure families future. Where do I stand.
Which is the insurance policy you would suggest I invest in
Mutual funds in each of my kids name like the demat account would it help.
Does investing in gold helps
Chit funds
Dear Patrick,
You are in a tricky situation!
If you have not accumulated savings for important goals then either you have to invest more to accumulate goal corpuses in safe investment avenues or you may have to consider investing in risky investment avenues to achieve your goal target amounts. So, you may not have to decide which one you would like to opt for??
If you do not have adequate life insurance cover, suggest you to buy a Term plan cover at the earliest. Get yourself adequately covered with Personal insurance cover. Do buy a health plan which covers all your family members.
Suggest you to read this article and may revert to me :
List of articles on the Key components of Personal Financial Planning.
Dear Shree,
By chance I had visited your blog. Excellent and thoughtful advises. I wish I had to take your suggestions and opinions earlier. Better late than never.
I am a single parent aged 45yrs with 2 boys ( 16 yrs and 10yrs)
Below is my brief portfolio
Real estate – 3 cr
term insurance – 2 cr
health insurance – 10 lakhs family floater
5 lakhs by company
10 lakhs ( cancer care policy due to my family history)
various traditional policies from lic – 10 lakhs ( premium ending by next year and benefits after 3 yrs)
equities – 4lakhs
mutual fund ( through a financial advisor) – 25 lakhs
ppf – 5 lakhs
fixed deposit – 2 lakhs
sip in force for 20000/- per month
by annual income is 15lakhs
passive income is 3 lakhs ( through rent)
annual expenses are appx – 8 lakhs ( including premiums )
The current situation at my work place is not very promising.
if i’m planning to retire by 50 yrs ( in 5 yrs time) what are the necessary steps I have to take . Am I in the right direction of financial planning.
if there are any steps to be taken please guide.
Dear sheela,
1 – You can consider buying a Personal Accident Cover with permanent & temporary disability benefits. Read: Best Personal Accident Insurance plans.
2 – Do you have any loans which are outstanding?
3 – Your elder son will go for higher education in next 1 to 2 years, have you planned for his educational expenses? Have you ear-marked any investments for this? (High priority short term goal). You may use LIC maturity benefits for this purpose.
4 – How old is your PPF a/c?
5 – Kindly use the calculator available in the above article to arrive at approximate retirment corpus (based on early retirement) & approx required savings amount.
6 – Kindly read this article : Kid’s education goal calculator
. Use the calculator available in this article to estimate the approx amount required for younger son’s education goal.
7 – Kindly write a WILL. It is an important action item..
Read:
How to write a WILL?
Write your WILL online.
Leaving A Mark Before That Final Journey: The Last Will & Testament
You may revert to me with more queries..
Dear Shree,
sorry to get back to you so late as it took some time to track back my post.
Thanks very much for your suggestions and advise.
1.i tried to check with personal accident insurance, but I guess no one is interested to sell this as it doesn’t fetch
anything to the company. i’m still working on it, what would be your advise.
2.yes I have a 10lakh loan ongoing , another 15 lakh which is almost ending.
3.for my elder son’s eductation I have to redeem the mutual fund.
4,my ppf account is 15 yrs old extended for another 3 yrs
5.for my younger son’s education again I will use the remptions and their policies.
6.i’m almost done with the will , but since my kids are minors thinking of the right executors.
thanks again !!
Dear Shree,
could you please advise me on the above.
also I would like to know the following with regard to a will
1.can a person write any number of will?
2.should he/she declare all the assests ?
3.what happens if the executors are out of country , how does it work?
4.witnesses need to know all the asset details?
5. who should know that there is a will?
6.who should have the copy of the will?
thanks to enlighten me..
Good day ahead.
regards
sheela
Dear sheela,
1 – Yes. (but the latest WILL is considered at the time of execution).
2 – Optional (but advisable).
3 – That should be ok I guess as long as they are ready to execute the WILL. So, the testator has to plan for this accordingly.
4 – Generally the WILL has to be signed before witnesses, so they may know the WILL details.
5 – The beneficiaries, executor & witnesses.
6 – may be executor.
Read:
How to write WILL online..
Importance of WILL.
Dear sheela Ji,
1 – You may kindly try to buy from the insurance company directly.
dear Sir,
i am retirng in 6 months. retirement corpus exptected is Rs 1 Cr. i wish to get monthly return of Rs 40000. i hv no liabillities., own house. no medical expense. consider no other investment. kindly guide for mutual fund investments
Dear Satish,
Assumptions : Investment of Rs 1cr for next 20 years at the rate of 9% & at inflation rate of 8% can provide you around Rs 45k per month income.
If you can afford to take a little bit of risk, you can consider combination of below investment options,
* Senior Citizen Savings Scheme.
* Post office Monthly Income Plan (Maximum investment Rs 4.5 Lakh in single a/c).
* Mutual Fund MIP – Dividend Option.
* A small portion of your fund corpus in MF MIP – Growth option + Balanced fund – Growth option for say next 5 years.
Read:
Best MF MIP Plans.
Best Balanced funds.
List of Best Investment options.
dear sir,
i am 40 years of age. presently working in Malaysia. i adequate amount of medical and gnrl insurance and also child education funds. having wife( house keeping) and one child of 4 years old. but my employer is providing any pf and pension. age retirement is 60. so want to saving the of 19 years of my service and i want a monthly or qtly income after mty retirement. iam having house ( free from loan ) which around 7000 permonth rentally income. after 60 1 want to seettle in india.
so suggest me suitable plan FOR monthly income after retirement. at present i can save 10000 per month .
thanks in advance
Dear rajkiran,
Do you have adequate life insurance cover?
Suggest you to use the calculator to estimate the required amount savings to accumulate your required retirement corpus (if not used it).
You may consider investing in Equity oriented Funds for next say 10 to 15 years.
Kindly read:
Best Equity Mutual Funds 2016.
List of Best Investment Options.
Kid’s Education goal calculator.
sir, i having enough insurance coverage
thank you reply i having enough insurance coverage.as suggested by invest equity oriented scheme like hdfc balanced und icici baned fund and tata balaced fund for 15years. . after 15 years how do invest for monthly income plan ? plase advice .
thank you advanceraukiran
Dear rajkiran,
You can start investing in Equity funds to accumulate wealth and you can redeem these funds and invest in appropriate investment avenues (suitable to you at the time of retirement) to get monthly / periodic income.
THANK YOU VERY MUCH FOR YOUR VALUABLE SUGGESTION
I want to invest 3000/mnth for 18yrs/now I am 32 yrs old..I would like to buy a investment plan/pension plan..
Suggest me…a plan or which shares or mutual funds to buy… ??
Dear Unnikrishnan,
Do you have sufficient life & health insurance coverage?
Suggest you to invest in 2 to 3 good equity mutual funds instead of a pension plan.
Kindly read below articles:
Financial planning pyramid..
Best Equity mutual funds
Best investment options list.
Hi, I am 39 years and very poor in financial planning. I have 3 lic policies which will yield 5 – 7 lakhs on maturity. 3 mutual funds, very minimal returns, no health policies, no term policies, only saving grace is PF which has accumulated to aaround 13 lakhs. Have a 50 lakhs home loan taken 2 years back and probably 5 lakhs in bank. As mentioned am very poor in financial planning and need to do something from this year so that the future is secured for my family. Any guidance where I need to start?
Dear Bidds,
Kindly read this article : Financial planing pyramid and revert to me.
Please let me know if any of the following which I am looking to invest in are good for retirement goal.
Birla Sun Life Frontline Equity Fund (G)
Birla Sun Life MNC Fund (G)
Franklin India Bluechip Fund (G)
Franklin India Prima Plus Fund (G)
HDFC Equity Fund (G)
ICICI Prudential Value Discovery Fund (G)
Mirae Asset India Opportunities Fund – Regular Plan (G)
UTI Opportunities Fund (G)
Thank you,
Anand. E
Dear Srikanth,
I do have Emergency fund, Term Insurance Cover , Personal Accident Cover etc., and my wife is taking care of our Child’s education goals. The above options are solely for Retirement investments which I am planning to in 15-20 years from now basing on how much I accumulate. Will invest with 10% increase in value of investment.
Thank you,
Anand. E
Dear Anand,
Considering your profile & investment objectives, suggest you to invest aggressively in Diversified fund + Small&mid-cap funds for next 7 to 10 years.
Invest as much as possible and as frequently as possible.
Franklin Primaplus/ICICI Valuediscovery. Mirae opp / Franklin Smaller cos fund.
Read : Best equity mutual funds 2016.
Thanks
you Mr. Sreekanth
Hello Sree,
I am always being inspired by your articles and response. This is a long term investment.
My portfolio is as follows..please review and provide your inputs.
SBI Magnum MidCap Fund – Gr – 2000 rs
Mirae Asset Emerging Bluechip Fund – Gr – rs. 2000
Birla Sun Life Frontline Equity Fund – Gr – rs.2000
Birla Sun Life Monthly Income Plan II – Wealth 25 – Gr – rs.2000
Tata Balanced Fund – Regular Plan – Gr – rs 2000
ICICI Prudential Value Discovery Fund Gr – rs.1000
UTI MNC Fund – Gr – rs500
Axis MidCap Fund – Gr- rs5500
Axis Long Term Equity Fund – Gr – rs.1000
Kotak Emerging Equity Scheme – Gr -rs.4000
Motilal Oswal Most Focused Midcap 30 Fund – Gr – rs.2000
Motilal Oswal MOSt Focused Multicap 35 Fund – Gr – rs.3000
Reliance Pharma Fund – Gr – rs.3000
Reliance Small Cap Fund – Gr- rs3000
Sundaram Select MidCap – Gr – rs5000
Canara Robeco Emerging Equities – Growth – rs1000
HDFC Mid Cap Opportunities Fund Growth – rs1000
UTI-Transportation and Logistics Fund- Growth – rs500
UTI-Transportation and Logistics Fund- Growth – rs500
DSP BlackRock Micro Cap Fund – Gr – rs1000
rgds,
rakesh
Dear rakesh,
Kindly find my reply at ‘best mutual funds to invest in 2016.’ (as you have posted same query there..)
I would like to invest lumpsum in Mutual Funds and Stocks. I am not going for SIP since i am currently jobless. I already have Emergency Funds & Debt Funds such as SB, FD, PPF, NPS.
Goal : Retirement Corpus
Investment Horizon : 20 yrs (I am 41 yrs old)
Investment Value : 10 lacs
Expect returns / maturity value : Rs.1 Cr.
I already have invested in the following Mutual Funds with Equity Option :
ELSS Fund : Axis Long Term Equity Fund and Franklin (I) Tax Shield
Sector Fund : IPru Exports & Other Services Fund, IPru Indo Asia Equity Fund, Reliance Gold Savings Fund, Reliance Pharma Fund
Small Cap : DSP Blackrock Micro Cap Fund, Franklin India Smaller Companies Fund
MidCap / Balanced : HDFC Mid-Cap Opportunities Fund, HDFC Balanced Fund
Large Cap : IPru Focused Bluechip Equity Fund, HDFC Equity Fund, DSP BR Opportunities
Diversified / FlexiCap : HDFC Flexicap Fund, ICICI Prudential Value Discovery Fund
Keeping all MFs for long time horizon (for retirement), I have invested in 2/3 funds for each category to get better returns and buffer losses(even if 1 fund doesnt perform well in a particular year, the other might).
1. Which funds can i invest the lumpsum amount, heavily, to get the desired retirement corpus ? Any of the funds above (or) any new fund like Index Fund / ETF ?
2. Which stocks would you recommend buying – i am looking for Regularly yielding high dividend stocks for last few years. The Dividends arising from the stock – after my expenses, i will invest the surplus in MF.
3. The funds that i have already invested — am i on the right track? If i have to prune down, what are the stocks i can close, in say, one/two year’s time ?
Hi Sreekanth,
I earn 33k, and i am 27,
How much should i save from now on and in what should i invest?
thanks
Dear Ravi..Let me know your financial goals. Are you married? Do you have dependents?
Hi Sir,
I am 35 and just marriad and working in private sector.
1) I have Medical insurence from New India for both of us with Rs 5 L. Later I will take super top up.
2) No term insurence.
I want to invest cominng yrs into MF.
A) 10 yrs plan
B ) 15 yrs plan (may be for child education)
C) 15 yrs plan for retirements.
I read your related links for retirements and child education.
I am able to invest 15 thousand PM.
My plans are
Retirements (10+)
—————-
1) UTI midcap fund -5000
2) Tata balance fund Plan A (Balance) -3000
should I invest in both or choose one for Rs 8000/~
Child education (10+)
——————-
2) Franklin India Prima Plus Fund (Diversified/Multicap/Large & Mid) – 3000
Mid term ( 10 yrs) – 5000
———————-
HDFC’ s Prudence fund
or
HDFC’s Children Gift Fund (Inv plan)
Please help whether it ok or not for my current capacity.
Thank you,
bubai
Dear bubai,
Do not postpone buying a Term plan. Also, go through this article – Best Personal Accidental plans.
Shortlisted funds are good ones.
For ‘Child education’ goal, you may add one Mid-cap fund, invest in it for next 8 years or so.
Hi,
Thank you for your reply.
should I invest in 2 Mid cap as mentioned below or invest in one Midcap as 8000?
1) UTI midcap fund -5000
2) Tata balance fund Plan A (Balance) -3000
Thank you,
/bubai
Dear bubai,
You can invest in both the funds.
Hi Shreekanth,
I like your articles. I am 32 yrs old s/w professional and looking forward to retire when I turn 58 with the retirement kitty of 2.2. cr .
Recently I came across NSC (version IX, 10 yrs locking) illustration where one need to invest 1 lac/annum for 10 yrs and then keep on reinvesting matured amount till the retirement and you are done. But when I found that interest is taxable, returns looks unattractive. Is there any point in going ahead with NSC?
Bought HDFC life regular pension plus policy last month with 6000/month for 24 yrs which gives me 14 lacs sum assured. Every year it will add some reversionary bonus and terminal bonus on last year of the policy. Data shows rev bonus is declared last year is 2.5% of SA and terminal bonus 10% of SA. Now I am bit skeptical about this policy after paying just 2 installments. Is it worth going ahead with this policy ?
How much should one expose in PPF ? I’ve started investing in PPF since last 3 yrs and have 3 lacs there by now. At max I can hold PPF account 17 more yrs. What should be done after that as I have 9 more yrs to retire after PPF maturity.
I come in 30% tax bracket and my 80C bucket of 1.5 lacs is already full with PF, home loan principal, PPF, term insurance etc. Currently I invest in SIP around 32000 per month with 50% mid/small cap and 50% large cap.
Thanks
Kshitij
Dear Kshitij,
For long-term wealth accumulation, Fixed income (FD/RD/NSC etc) should be avoided.
Suggest you to discontinue the HDFC Policy. Do not compound your mistake by continuing with it.
Kindly read my article on – How to get rid off bad insurance?.
PPF can be part of your Debt portfolio towards your Retirement goal.
Do you have health insurance cover?
Thanks Sreekanth for the quick reply and for the advice.
I do investments in stock market and MF since last 7-8 years. Through SIP in MF since last 3- 4 yrs I built around 9.4 lacs so far from the actual investment of 7 lacs, which is not really of 12-15% annual return of usual MF claims I hear though I invested in mixture of all funds right from balanced/small-mid cap/large cap. After experiencing many gains and losses in stock market, now I am more keen in investing in small/mid caps for long term. Is it risky?
How should be my portfolio for building retirement corpus. How much need to be invested monthly ? I have 2.5 yrs old daughter. How should be the split in MF, PPF and sukanya samruddhi ?
Thanks
Kshitij
Dear Kshitij,
Kindly list out the mutual fund scheme names.
For long-term wealth accumulation – Small/Midcap or Equity diversified (multicap) can be the best bets.
Kindly go through the below articles;
kindly use the calculator in the article and calculate the approx amount of savings per month.
Also, read this article – Kid’s education goal.
Do you have health insurance cover?
Hi Sreekanth,
Below are my MF SIPs.
SBI bluechip fund Dividend 7000
Birla MNC Fund – Growth 8000
CANARA ROBECO EMERGING EQUITIES – GROWTH 8000
Franklin India High Growth Companies Fund – Dividend 8000
Is Sukanya Samruddhi worth of being part of the investments ?
Yes, I have Company family floater health cover of 2.5 lacs, and also got a super topup upto 10 lacs for this year. I also have also got term insurance from Max India of (70 lacs + 28000 for 120 months) as a death benefit.
Thanks
Kshitij
Dear Kshitij,
For long-term horizon, suggest you to opt for ‘Growth’ option instead of ‘Dividend’ option.
Kindly read my review on Sukanya Scheme.
Pls let me know if
1- TDS will be deducted from returns at time of redeem MF
Dear Manoj,
TDS is not applicable on MF redemption. You need to file capital gains/losses (if any) in your Income Tax Returns.
Dear Sreekanth Reddy,
Thanks for your reply.
If I am not tax payer nor filing income return. in that case what is income tax implications.
Pls advice.
Dear Manoj, if you are not a tax assessee, then what exactly do you want to know regarding tax implications?
Dear Sreekanth,
I am interested to invest in below two MF for 5 yrs term
1- Tata Balanced Fund-Rs 5K p.m
2- HDFC Prudence Fund or Franklin India High Growth Fund- Rs 5K p.m
Pls advice how much I will get after 5 yrs from each funds.
Dear Manoj,
The selected funds are good ones. It is not possible to say the maturity amount.
But you can expect decent returns over and above the bank fixed deposit rates. Kindly remain invested for long-term.
Hi Sreekanth,
I am following your blog regularly. I need clarifications whether to stay with this LIC plan or with draw from this plan.
I have a LIC Plan 148 Retire& Enjoy Plan. I have copied the below from the plan.
“Under this insurance proposal you will need to make premium payments of Rs.186033/- p.a. from your own
funds till your age of 54 years. This proposal provides for a high riskcover of Rs.5674920/- starting at age 33
and growing to Rs.11853090/- at age 55
In the year 2035 when you will be 55 years of age, you will start receiving annual tax free income every year till
75 years of your age. Income starts at Rs. 837751 per annum and increases by approximately 0.00 % every
year to take care of inflating costs of living. There is a provision of risk cover during this period too. In case of
death during this period lump sum amount corresponding to the prevailing risk cover will be paid to your nominee. ”
I have paid EMIs (16,123/-) for 10 months, and due to some financial crunches i was not able to pay the EMIs.
My financial condition is better now and I am in a position to pay the EMIs.
I need your views on whether to continue with this Plan or invest the same in the SIPs.
I have a term insurance of 55L, Since I have taken this LIC policy i did not take other Term Plan.
Kind Regards
Prasanna
Dear Prasanna,
Just ignore this plan and switch to mutual funds.
Is it 0.00% rate of increase of income?
The present value of Rs 8,37,751 pa is equal to Rs 1,79,737 pa in today’s value @ 8% rate of inflation. Kindly analyze if this is sufficient for you?
Thanks Sreekanth for the reply.
I need few more clarifications.
I am 35yrs now and would like to retire at 60 (as usual as others, noting new 🙂 ) . I would like to invest on low risk MFs. Please suggest which one is better for low risk . Mid cap / small cap / Large cap MFs.
I need money for retirement/kids education/marriage.
I am planning for long term (15 ~20 ) years.
Kind Regards
Prasanna
Dear Prasanna,
Why do you want to invest in low risk Mutual funds only?
Hi Sreekanth,
Article is really simple and powerful. Thanks for great information.
My age is 32 and same as every people would like to retire at 60 and lead a normal life. I’m working in abroad now and Till this month i’ve been paying my fathers debt, hope it will be completed this year.
Until i read your post i’d interest to start investing for retirement life but no clear picture as you’ve shown in phases.
Also without any idea at the age 29, started the life insurances and paid premium on LIC & BSLI Vision as mentioned below.
In LIC, (Jeevan anand 149) for 25 years half yearly mode (20, 939) for the sum 10,00,000.00.
In BSLI Vision for 21 years half yearly mode (20, 932) for the sum assured 400,000.00.
Just started to invest in stocks on my own knowledge & experience. Holding demat account in ICICI direct.
I’m planning to start saving or invest in mutual fund through SIP and would like to have your great advice on the same.
As far now expenses approximately including insurance (42, 000.00) will be 1 Lac.
Basic queries only, which MF to select and how much amount per month & also for how many years need to be invested. Is it good to invest through ICICIdirect as i’m not sure whethere there is any difference if i’m going to change the broker.
Should i’ve to reallocate those investment later. Also there are more options to invest or save (Stocks, bonds, FD) and Please suggest me also to invest on any of these options (how much amount and no of years).
I would be very happy to know from you and eagerly looking forward for your reply.
Dear Balamurugan,
I will surely guide you. Lets start with Life insurance.
Do you have only these two Life insurance policies? Both these plans are traditional ones (moneyback/endowment/wholelife). These kind of plans may utmost give your
5% returns. Kindly read my article : How to get rid off unwanted life insurance policies?. Suggest you to take Term insurance plan and then discontinue these kind of plans. Read my article : Top 7 best online term insurance plans. Are you an NRI?
Investing through ICICIDirect is safe and secure, but the brokerage charges are a bit on higher side. I too invest through them only.
Dear Sreekanth,
Thanks for your kind reply!
Yes i’ve only two insurance which i’d mentioned. I read your said article on getting rid of unwanted insurance policies and also term insurance plans, which i should have read few years ago, but its not too late now. Thanks for providing awareness on the same.
When i read the documents required for online term insurance plans, You’ve mentioned that need to provide income tax returns of 3 years etc., but as i’ve not filed income tax in India since June 2011 as i left to work in abroad and on this scenario how to provide income proof.
——————————————————————————————-
FAQ 8 – What are the required documents to purchase an online term insurance plan?
Generally you will be asked to submit; Identity proof, Address proof, Age proof and Income proof (Income Tax returns of 3 years / Form16s / Profit & Loss statements). You have to undergo medical tests too.
—————————————————————————————————-
As i’m planning to come to India in 1 or 2 months, is it okay to take term insurance from India when i’m there or apply online from abroad now. Please advise me on the same.
Yes I’m NRI, i’ve been working here for 1 year and will be working for another 6 months more.
Would like to know more and i wish not to make you tired reading my post alone. So stopping it here for today with these queries. Thanks.
Dear Balamurugan,
If you are employed outside of India, you may submit your income proofs, Life insurance company may also ask for bank statements.
You may take term pan when you are in India. But disclose that you are currently employed in foreign country in the proposal form.
Dear Sreekanth,
Thanks for the reply. Hope you’re well!
Could you please share me your mail id for further to communicate . Thanks.
Dear Sreekanth,
Just to let you know that after i subcribe i got your email id. I’ll contact you on mail. Thanks.
Sure dear Balamurugan..
Hi
Shreekanth,
Somebody is asking me to invest 18 lakhs in MF’s for 5 yrs, Now he wants me to take this amount from bank at 10.15 % interest for 20 yrs, but he says that I can earn well after the interest component payment after 5 yrs. Is doing this module of taking loan of 18 lakhs and investing in MF advisable , kindly guide , need your advice ASAP.
Dear Samrat,
Kindly don’t do this. May I know who is this ‘somebody’??
Hi shrikant ,
thanks for the reply , the somebody is a vp in icici bank prudential system, he told me to take loan of 18 lakhs, and invest it in 5 yrs term in sip’s , and told me that I can earn good amount in 5 yrs. But meanwhile by god’s grace I got to know about your site , and asked you . So I guess It wont be suggestible to take loan and invest ?
Dear Samrat,
If you invest in MF SIPs for long term, you can accumulate wealth. But, not by taking loan and investing in mutual funds, that would be too risky.
Suggest you to start with monthly MF SIPs without taking any loan. It can be as little as Rs 1k.
Hi Shree,
Thanks for your reply , You are more prompt in answering questions than I am to ask . Actually I didn’t knew how to find your answers, then I searched for retirement planning and got to know the way to reach you on your site .. I know now. I was actually a short term player always , but after reading your many articles I now agree on long term planning for accumulation of wealth.
I have been doing SIPs from 2013, but always broke them after every 12 months , getting a little profit on the invested amount, never thought of carrying it forward. now again I have started SIP s in 2015 on a monthly basis of 16k rs with four funds of 4000 each. They are as follows :-
ICICI Prudential Top 100 Fund – Regular Plan – Growth
ICICI Prudential Focused Bluechip Equity Fund – Regular Plan – Growth
ICICI Prudential Value Discovery Fund – Regular Plan – Growth
ICICI Prudential Exports and Other Services – Regular Plan – Growth
Now the question … are these funds good to continue ?
or plz suggest some good money earning funds ..
I had done it thru an ICICI bank friend who suggested me these , I don’t have any knowledge on investing , I just asked him where should I invest 16 k every month and he suggested this.
Am I doing this right ?
My goal is to make a corpus of 2 cr in a period of 10 yrs starting from 2015 to 2025. Is it possible ? and how do I do it ? I can increase the 16k figure to 25 k from coming jan.
Plz Advice on the above ….
Rgds
Samrat Hore
Dear samrat,
Start investing as much as possible for long-term wealth accumulation. Increase the SIPs amount whenever you can do so.
I believe it is better to diversify across fund houses instead of investing with only one fund house (ICICI), though the selected funds are good (except ‘Exports’ fund)
Regarding corpus calculation, read this article : Calculate Future value of your investments.
Dear Shree ,
Thanks for your suggestion.
So should I close the exports fund ? though it is giving high than any funds currently in my portfolio. And which fund house should I choose ? can you plz suggest ? and how to go forward. and how do I contact you personally ?
Dear Samrat,
If you understand the risks associated with a Sector/thematic fund like ICICI Exports fund, You may stay invested.
Regarding best Equity funds, suggest you to read my article :Top 15 best Equity funds. Kindly go through it and consider selecting one fund from each fund category.
Also read : Top balanced funds.
Hi Sreekanth,
Wonderful advice on various topics. Could you please give your comments the recently launched Sukanya Yojna also ?
Regards,
Jitesh
Dear Jitesh,
Thanks for your appreciation.
I have written around 5 articles on Sukanya Samriddhi Yojana. Click here to read the review.
Hi Sir,
I check your Retirement Calculator and I adjusted some of your inputs, ret age 55 yr.
Monthly investment required – 34 Thousand as per your calculator
My Planned Portfolio
Invest 70% in Equity/Balanced FD and rest 30 % in FD,RD,PPF etc
Now I my Investments are
PPF – Last 8 years – full amount Now Bal 9L
One LIC jeevan saral – 24 thousand yearly for SA 5L
RD – 10 thousand Per month (For maintaining some Liquid cash in case JOB Lay off etc) for last 15 months (Target 3.5 L)
I have invested SIP in UTI Opp G fund for Last 3 years Rs 1000/~ .
Recently it is matured and amount is good. So gained exp in MF.
My Plan –
======
My Home Loan EMI will be completed with in 4 months Hence I can HAVE 12 Thousand to invest in MF to reach the GOAL.
Now How Can I invest or optimize my Investment 12 thousand ?
70% of 12 thousand in Large CAP Equity Fund Like UTI opp G or Franklin India Prima Plus
30 % of 12 thousand in Mid + Small Cap Like – HDFC Mid Cap or Franklin India smaller Companies Fund
OR
30 % in balanced Fund Like HDFC prudence / HDFC Balanced/ Tata Balanced Fund
Note-
1) Is it a good choice to invest 20-30% of My PPF investment (12500/~) to a Balanced MF
2) RD 10 thousand will be invested in MF
Please guide
Thank you,
shankha
Dear Shankha,
So, you have around 21 years to go for your retirement.
Suggest you to invest aggressively in Mutual funds for the next 10 years or so.
Consider investing 40% of your planned amount in a Large cap, 40% in Midcap oriented Fund & 20% in a Balanced fund.
Yes, you can also consider allocating some part of your PPF contribution to a balanced fund for next 10 years.
I can not plan for invest 34 Thousand ( as per your calculator) in this moment.
12-15 thousand Max.
Question – 1
As per your guide line when I invest .. should I devide my money to ( 40% + 40% +20%) ?
In the curent case for Rs 12000 = 4800 (Large)+ 4800 (Mid) + 2400 (balance)
OR
Question 2
As per your 2 other post , I found balanced fund return over Large Cap in long term ( >5 yrs) is more or less same or even Better in case of HDFC prudence / HDFC Balanced/ Tata Balanced Fund –
How this can be justified
Question -3
Can I invest (SIP) in any time irrespective of the Market ?
Dear Shankha,
I personally prefer investing in Balanced funds and I am satisfied with the Returns ( as per my goals)..
If your goal year is > 10 years from now, suggest you to invest in same proportion in Large / balanced / mid-cap. Yes, anytime is good time to book SIPs. Go ahead!
I am Shivkumar Kurnawal (age 34 year) working in a BSNL, Public sector Undertaking as a Jr. Telecom Officer at Pune.
My son omkar Kurnawal (age 4 years) now taking admission for L.K.G., My wife is homemaker. We are family of three.
Sir, i want suggestion/guidance for investing money for the education of my son & want plan for retirement.
Now he his of 4 year old. At his age of 17/18, i.e. after 13/14 year his higher education will start may be medical/engg/Management as pr his choice, so i want certain lump sum about minimum of 40 lakhs.
My Salary & current investment details are as given below
After deductions of home loan EMI take home pay is=30,000/-
My home expenses=17,000/-
Personal/Home Loan=12, 00,000/-
of which Rs.2,00,000/- is paid, Monthly EMI of Rs.15,000/- deducted from my account.
My PPF account- investing —-Rs.12000/Annum……..currently hold Rs. 50,000/-
My Son, Omkars PPF account— Rs. 6000/annum………currently hold Rs. 6000/- opened in dec-14
Towards Employees providant fund my salary deduction is
7000/- which is 12 % of basic salary+DA
My Current Investment detail are as follows:—
1. HDFC Children Gifts – Investment Plan – Direct Plan – Growth ——–Rs.25000/- lumpsum invested in month of oct-2014
SIP:
HDFC Mid-Cap Opportunities Fund – Growth – Equity – Diversified—- Rs.1000—monthly
2. Reliance Growth Fund – Direct Plan – Growth – Equity – Diversified—Rs.1000-monthly
3. SBI Blue Chip Fund – Growth – Equity – Diversified—-Rs. 5000—–one time investment
4. Reliance ELSS fund: ———Rs.500—monthly.
Insurance:
SBI E-SHIELD POLICY FOR Rs. 30 lakhs for year of 30 year—– yearly premium is —Rs.7500.
KINDLY SUGGEST suitable investment strategy to meet my goals.
Pl. intimate me if any other details are required.
Thanking You.
PL GIVE YOUR CONTACT NUMBER SO THAT I WILL CALL YOU..
9422831050
Dear SHIVKUMAR,
Suggest you to re-look at your total life insurance coverage. Consider taking an additional life insurance coverage of around Rs 30 Lakhs.
Do you have health insurance cover?
You may re-allocate some percentage of your PPF contributions to HDFC Children’s Gift fund, this can be for your kid’s education goal.
Nice article.
When a person doing a job he may have some deduction as PF from employer. The PF amount can be in the range of 50 – 60 Lakh. Can this be factored in the above calculation.
Dear Kalpesh,
Yes, you can deduct the EPF fund value from the ‘Required Retirement Corpus’ (Cell no B20), and the ‘required savings per month/year’ values are auto-calculated.
Wonderful Sree..!
following below are few inputs
1) Pls add tax components also on your calculator ? to know take home returns.
2)I need NON-Taxable returns from the retirement corpus. (My theory is -> once retired there will be no income from Job or any business. would have paid lot income tax by that time through job. Enough paying tax :))! )
Please recommend BEST investment options which will give NON-taxable returns.
Imp note: suggestion to your blog website
If someone respond to this blog, i should get email triggered to my personal email id (which you have collected here). its difficult to check your each blogs where i left comments . Last time i left few comments on your blog website on different blogs, but now i forgot. I need to search for the topics.
Thanks for your efforts.
With regards
Muthu
Dear Muthu,
I remember that you had suggested me to write an article on “Retirement Planning calculations” 🙂
Thank you again for sharing your views.
I wanted to keep this post as simple as possible. The challenge with taxes is, they change every year. Also, the applicable taxes on various investment products keep changing.
So, the best thing is to keep working on your retirement plan every year.
Suggest you to invest in Equity related products, they give you Tax free income, considering today’s tax laws 🙂
Regarding your suggestion on Blog Comments;
Initially I had kept the option to follow the blog comments and also an email alert facility as soon as a reply (from my side) is posted. But these features were utilizing lot of database resources and there were some loading issues (technical challenges), so had to remove these options.
I may go for server upgrade in future, I will surely try to implement your suggestions then. Thank you!
Hi I am Rajesh from Bengaluru, I like your articles very much as they are simple to follow for people who have non-finance/commerce background. I have a question:
I would like to get a monthly income of 50,000 per month after retirement (55 years). Therefore, which options I may choose to invest on monthly basis to ensure the above monthly income after my retirement?
My current age: 29
Annual income: 4,80,000 INR
Approx. Annual expenses: 3,00,000 INR
Investment in PPF (Annual): 60,000INR (starting from August 2012. until August 2027- 15yrs)
Total LIC Premium payment (Annual): 12,000 INR (2 policies, terms 15 years each started from 2009 and 2014 respectively; sum assured 3,00,000 each)
Please suggest what are the best investment options I could go for with the surplus amount after all expenses and existing investments to achieve my above goal of earning 50,000 INR per month after retirement.
Thanks and Regards,
Rajesh
Dear Rajesh,
Thank you for your appreciation.
Kindly let me know on what basis have you arrived at Rs 50k? Are you sure it is a reasonable figure after 26 years?
Kindly use the calculator that is available in the article. Let me know the projected value as per the calculation. Kindly try it out. (I will definitely guide you, trying to make you understand the concept).
Kindly let me know the LIC Plan names..
Dear Sreekanth,
Thanks for the response. I have calculated the following as suggested:
Required Retirement Fund: INR 2,21,52,990
Future value of current investments at retirement : INR 676,739 (need a little clarification here in the formula. Subtracting this amount from the retirement fund I get a value greater than the ‘required retirement fund)
LIC Policy details
1.Jeevan Jyoti (4400 HLY premium for 25 years; enrolled in 2014; sum assured – 2,00,000INR)
2. Don’t know the name (1766 HLy premium for 20 years; enrolled in 2006; sum assured:1,00,000INR)
Hope the above details would help you to guide me on the best investment options I could go for starting now with the surplus amount after all expenses and existing investments to achieve my above goal.
Regards,
Rajesh
Dear Rajesh,
Kindly subtract Rs 6.76 Lakh from Rs 2.21 crore. Enter the balance amount Rs 2.147 cr in cell B20, and you will get the required amount of savings per month/per year.
Revert to me if you still need any assistance.
LIC polices:
1 – are you sure it is Jeevan Jyoti?
2 – Suggest you to know and understand the policy features that you have invested in.
Kindly read my articles : “Top 7 best online term insurance plans” & “How to get rid off bad insurance plans?“
sir,
i want 15000/- rs per month as pension after 60 years kindly tell me how much i have to invest till 60 years
Hi Rajesh, What is your current age? and What is your currently monthly expense?