I am 34 years old and I want to build a retirement corpus of Rs 1.25 crore by the time I reach 60. I also want to build a corpus of Rs 50 lakh for my son when he attains the age of 27, which is 20 years away. Could you please suggest a portfolio to meet these goals?
-Pradeep Patel
Goals
- Build a retirement corpus Amount: Rs 1.25 crore
Time frame: 26 years
- Build a corpus for his son Amount: Rs 50 lakh
Time frame: 20 years
Current Portfolio Overview
- Too much clutter (29 funds)
- High exposure to one sector: Financial Services (22.22%)
- A high tilt towards mid- and small-cap stocks (49.38%)
- Too many sector/ theme-based funds (44%)
- High allocation to tax saving funds (20%)
Steps to achieving goals
- Opt for less clutter, there is no need to have too many funds
- Avoid over dependence on thematic and sector funds
- Have clear goals with a time frame and a targeted amount
- Have separate portfolios for different goals
- Stick with a systematic investment strategy
Corpus for Child
Investment: Rs 6,000 every month via a SIP
Time frame: 20 years
- The portfolio should have around 2-3 funds
- All the holdings can be diversified equity funds
- Since the Principal Child Benefit SS Career Builder is a hybrid scheme that has maintained an average 23 per cent allocation to debt since launch, there is no need to include a separate debt scheme
At the end of the period, you can expect a corpus of Rs 48 lakh if we consider a compounded return of 10 per cent, per annum.
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Retirement Corpus
Investment: Rs 11,500 every month via a SIP
Time frame: 26 years
- The portfolio should have a maximum of 5 funds
- Core holdings should be in large-cap diversified equity funds
- The top holding can be a large-cap oriented tax saving fund
- Ensure that you have a debt allocation too to protect the downside in a fall
- Maintain the equity:debt allocation by rebalancing your portfolio once a year
At the end of the period, you can expect a corpus of Rs 1.76 crore if we consider a compounded return of 10 per cent, per annum.
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This article was originally published on February 18, 2009.
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