Retirement planning: Where to invest to create retirement corpus of Rs 6 crore in 20 years (2024)

I am 29 and earn a monthly salary of Rs 75,000. I don’t have any investments. I aspire to retire within 20 years. How can I retire with a corpus of Rs 6 crore?

Naveen Kukreja, CO-FOUNDER AND CEO, PAISABAZAAR.COM:

Consider allocating 50% of your current salary towards retirement savings and increase it 10% annually. For a comfortable retirement, aim for a corpus of Rs 3.14 crore, requiring a monthly equity investment of Rs 31,000, or Rs 60,000 for a corpus of Rs 6 crore in 20 years. Maintain an 80:20 equity-debt mix in your post-retirement portfolio to balance risk. Start with monthly SIPs of Rs 28,000 in equity funds and Rs 7,000 in debt instruments. With an annualised return of 12% in equities, and a 10% annual hike in SIP amount, you could amass a corpus of Rs 5.56 crore in 20 years. A 7% return in fixed income, with 10% annual hike in contribution, will create Rs 84 lakh in 20 years. Diversify equity SIPs across large-cap, flexi-cap, and multi-asset funds. For fixed income, consider PPF for tax benefits and safety, and long duration debt funds, with a transition to ultrashort-duration funds as interest rates fall. Maintain an emergency fund equal to six months’ expenses. Secure your family’s future with a term plan that is 20 times your annual expenses. Also buy a health cover of at least Rs 50 lakh, with a base cover of Rs 5 lakh and a super top-up of Rs 45 lakh.

I am a 66-year-old retiree and my wife will soon retire with a pension of Rs 70,000. We have a medical cover of Rs 30 lakh. We live in our own house and our monthly expenses are less than Rs 70,000. We own two other properties worth Rs 3 crore, generating a monthly rent of Rs 70,000. We have FDs of Rs 1 crore, mutual funds of Rs 1 crore and blue-chip stocks worth Rs 4 crore. We aim to utilise our corpus over the next 15 years and donate the remaining to charitable causes. Is this plan sustainable?

Rushabh Desai, Founder, Rupee With Rushabh Investment Services:

Your finances are well diversified, providing stability for the next 15 years, with monthly expenses comfortably covered by rental income. With an annual inflation adjustment of 7-10%, your `6 crore portfolio can sustain you for over 15 years, covering even emergencies. Consolidating your physical assets is advisable. Given the low rental yields, you should sell additional properties and opt for fixed income investments like debt mutual funds, fixed deposits and Senior Citizens’ Savings Scheme. Considering your age, reducing equity exposure by 10-20% is prudent. Consider consolidating or liquidating shares if not managed expertly and reinvesting in largecap index funds or dynamic asset allocation funds for better management and reduced risk. Dynamic asset allocation funds automatically adjust risk levels, ensuring portfolio stability.

I am a 45-year-old working mother of an 11-year-old daughter. My monthly salary is Rs 85,000. I pay an annual premium of Rs 4,500 for a health cover of Rs 12 lakh provided by my employer. My monthly expenses are Rs 45,000. Every month I invest Rs 16,000 in mutual funds and Rs 5,000 in recurring deposits. I pay an annual premium of Rs 26,600 for an LIC plan, to be paid till 60, for an assured sum of Rs 13 lakh. I have an EPF corpus of Rs 12.2 lakh (Rs 6,694 monthly contribution), equity corpus of Rs 6 lakh, mutual funds worth Rs 21 lakh, PPF worth Rs 4.78 lakh (Rs 40,000 yearly), Rs 2.43 lakh in Sukanya Samriddhi Yojana (Rs 50,000 yearly), and Rs 1.7 lakh in the NPS (Rs 12,000 yearly). Will it be enough for my retirement? How can I reach a corpus of Rs 5 crore?

Adhil Shetty, CEO, BankBazaar:

You will need to save 25 times your annual expenses at the time of retirement for an annual withdrawal rate of 4%. If your withdrawal rate is lower than the growth rate of your corpus, you’ll not run out of money in retirement. Given your current expense of Rs 45,000, your expenses would grow to roughly Rs 1 lakh per month by the time you retire, assuming an annual inflation of 6% and no change in lifestyle or any other additional expenses. With the 25x calculation, you’ll need to save Rs 3 crore by 60 years. You are currently putting in nearly Rs 33,000 a month across all investments. Cumulatively, over the next 15 years, this, along with your existing investments, should be sufficient to build a corpus of Rs 2.5 crore at 8% return. A 2% increase in net annual return from 8% to 10% would comfortably take your retirement fund to over Rs 3 crore. To achieve this, increase your allocation to mutual funds by moving from other investments such as RDs or even LIC, so that the average rate of return on your investments is higher at 10-12%. Continue to maintain a net return of 10% after retirement so that you have enough leeway for additional expenses. To build a corpus of Rs 5 crore, you would need an average return of 14%, which can be very risky and is best avoided. If you need to increase your corpus, go for a combination of mutual funds and an overall increase in monthly investment. Note that this plan does not account for any additional expenses, such as your child’s education or medical expenses, other than your current outgo. So if you wish to save for other goals, you would have to plan separately.

I’m 23 years old. My salary is Rs 65,000 and expenses are Rs 30,000 a month. I invest Rs 15,000 every month in mutual funds, focusing on large and mid caps. I’ve made a lump-sum investment of Rs 1.25 lakh in stocks. I have Rs 50,000 each in the PPF and NPS, and Rs 15,000 in ELSS. How should I plan for retirement, higher education, a luxury car and an annual vacation?

Dev Ashish, Founder, StableInvestor, and Sebi-registered investment adviser:

Considering your monthly investible surplus of Rs 25,000-35,000 and the ongoing SIPs in equity funds of Rs 15,000 a month, there’s room to optimise your unallocated surplus effectively. As a first step, ensure you have an emergency fund equivalent to six months’ expenses, which is about Rs 1.5-2 lakh. Invest it in a recurring deposit. Additionally, consider setting aside any annual bonus or incentive for contingencies. Prioritising higher education can significantly boost your earning potential. While goals like a luxury car can be deferred, annual vacation remains important. Retirement can be low priority for now. As you’re committed to pursuing higher education, allocate your remaining surplus towards this goal. Consider allocating a significant portion to debt investments if the goal is within the next few years. For long-term goals, a balanced approach with 40-60% in aggressive hybrid funds and the rest in debt/arbitrage/conservative hybrid funds is prudent. As your income grows, increase your monthly investments annually. Utilise any annual bonuses or incentives for goal-based savings, if not needed for other expenses or family obligations. If you are relying solely on your employer’s health insurance, consider purchasing your own medical cover at least 1-2 years before quitting your job.

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