I am an assistant professor in an engineering college. I am 29. I have been investing in mutual funds since the last three years. I began with an SIP of ₹2000 in Birla Frontline Equity (Dividend Plan). Then I started a ₹1,000 SIP in Religare Invesco Tax Plan. Recently, I started an SIP in Franklin India Prima Fund. Total value of my investment is 2.75 lakh. My goal is to retire at 55. I can invest up to 8,000 per month. I need ₹3 crore on retirement. Do I need to do something extra?
- Hiren Bhatt
To begin with, we don't know how you reached the ₹3 crore figure. Hope you have accounted for inflation while calculating your retirement corpus. This is because inflation erodes the value of money of money over a period of time.
Now, let's move on to your investment plan. If you invest ₹8,000 every month for 25 years, you would accumulate a corpus of ₹1.52 crore at an assumed rate of 12% per year. Your current investment of ₹2.75 lakh may also grow to ₹46.75 lakh by that time. That means you would have only around ₹1.99 crore at the time of your retirement at 55. At a slightly higher rate of 15 per cent, your total corpus would grow to ₹3.53 crore in 25 years.
As you can see, if your investment grows at a conservative rate, you won't be able to accumulate your target corpus. So it is better to invest a little more every month. Draw up a monthly budget and see how you can cut down on your expenses. Try to save and invest at least 30-40 per cent of your salary.
This article was originally published on August 03, 2015.
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