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I am 40 years old and our monthly household income is about Rs 3.5 lakh. We have saved close to Rs 2.4 crore in equities and nearly Rs 50 lakh in the Provident Fund. How much should we save in the next 10 years to create a Rs 10 crore retirement corpus? We also need Rs 1 crore for our daughter’s higher education. We have an aggressive risk appetite.


Your investments and family income should allow you to comfortably achieve your target corpus within 10 years. Given your stated risk appetite, your equity corpus should grow to Rs 7.45 crore within 10 years assuming an annualised return of 12%. Similarly, assuming an average annual return of 7% with annual compounding, your PF corpus should grow to about Rs 98.35 lakh. The remaining portion of your target corpus can be achieved by investing Rs 1.20 lakh per month in equity funds through SIPs for 10 years. I am assuming a 12% annualised return from your equity fund SIPs. You can spread your equity investments and monthly SIPs equally among flexi-cap, large-cap index and large- & mid-cap funds. The direct plans of Parag Parikh Flexi Cap Fund and PGIM India Flexi Cap Fund can be considered among flexicaps; HDFC Index S&P BSE Sensex Fund or ICICI Prudential S&P BSE Sensex Fund for large-cap index; and Mirae Asset Large & Midcap Fund and Kotak Equity Opportunities Fund for the large- & mid-cap category. As your monthly SIPs constitute about 35% of your monthly income, any additional investible surpluses can be used for purchasing sovereign gold bonds (SGB) through secondary markets. Gold should constitute 5-10% of a portfolio as gold acts as a hedge against volatility and inflation. Apart from capital appreciation, SGB investments would generate annual interest income of 2.5% on the face value, a feature not offered by physical gold, Gold ETFs or gold funds. SGBs would also help in accumulating gold for your daughter’s wedding. Also, maintain an emergency fund equalling unavoidable expenses for at least 6 months. Park this fund in fixed deposits of scheduled banks offering yields of 8% and above.

Finally, maintain adequate term life covers and health insurances for your family. The total term life cover of your family should be at least 10-15 times of your combined family income whereas your family health insurance covers should be at least Rs 1 crore, with a base health cover of Rs 5 lakh and super top-up cover of Rs 95 lakh. You can choose your term insurance cover(s) from ICICI Prudential, Max Life, Tata AIA, PNB Metlife, HDFC Life and Bajaj Allianz Life. For family health cover, you can consider Aditya Birla or Niva Bupa, which offer health covers at very low premiums.

I am 64 years old. I get a monthly pension of Rs 40,000 and Rs 10,000 as rental income. I have a corpus of Rs 90 lakh in mutual funds (mid caps, small caps and flexi caps), giving an average annual return of over 15%. I have a moderate risk appetite and would like to withdraw Rs 50,000 per month for the next 20 years. Is my corpus sufficient?

Rushabh Desai, Founder, Rupee With Rushabh Investment Services:

If you have a moderate risk appetite, you should have 50-80% of your portfolio in fixed income products. To sustain a monthly systematic withdrawal (SWP) of Rs 50,000 for 20 years, with an annual step-up of 7% (for inflation), on an investment of Rs 90 lakh, your portfolio will need to generate a CAGR of 11-12%.

Considering your existing investments in equity mutual funds and return of 15% CAGR, your corpus should be sufficient. You have a decent monthly pension and rental income, and a long time horizon. Assuming you have been invested in equity mutual funds, especially mid- and small-cap funds, for 7-10 years, you can remain invested and start the monthly SWP process. If you have a high allocation towards midand small-cap funds and cannot stomach volatility, you may want to trim down the risk and venture in flexi-cap funds and/or large-cap index funds.

I am 56 years old and want to retire in the next three months. I have no loans and I own a house worth Rs 1.2 crore, which has been rented out in Bengaluru, while I live on rent in Pune. I have Rs 2.57 crore in FDs, Rs 3.25 crore in mutual funds, and Rs 1.85 crore in equities. I have Rs 50 lakh term plan each for myself and my spouse, and adequate health insurance. We expect around Rs 1.2 crore from our PF. How much can I spend per month with this corpus assuming a life expectancy of 80 years?

Dev Ashish, Founder, StableInvestor, and Sebi-registered investment adviser: To be on the safe side, you should consider a higher life expectancy of 90-95 years. Your Rs 8.8 crore asset base will need to support you for 35 years. If we assume 6% inflation and 7-8% average return (though the actual return of an equity-debt portfolio in 57:43 ratio is likely to be much higher), you can comfortably spend over Rs 1.5 lakh per month without the risk of running out of money. You also don’t need Rs 50 lakh life insurance, given the size of your asset base.

Your bank FDs of Rs 2.57 crore can generate an annual interest income of Rs 15-17 lakh and can be used for expenses. You can park your EPF funds in bonds, small savings schemes, and debt funds (or a mix of equity and debt funds) to further augment your interest income. For your Rs 3.25 crore mutual fund portfolio, it is advisable to avoid investing heavily in schemes/funds that don’t have a high allocation to the large-cap space.

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  • Published On Mar 5, 2024 at 06:45 PM IST

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