Dhirendra Kumar sheds light on parameters to consider while planning to invest for retirement
Where should a 72-year-old invest to earn enough for surviving without depending on his children?
- Kamal Thacker
I don't have the best answer because it all depends on how much capital you have and your expenses. Assuming you have Rs 1 crore and are likely to need Rs 50,000 a month, you will likely be able to achieve it by allocating 70 per cent in fixed income and 30 per cent in equity. So here, the withdrawal is at 6 per cent annually. If your investments are generating 10 per cent return, that 4 per cent of higher return will translate into higher capital savings for you. So, you will be able to increase your income every year, thereby supporting the need for rising income, starting from 6 per cent.
If you have larger capital, you can even do with less fixed income allocation and more equity. If you have smaller capital and your need for income is higher, you will have to take greater chances, making you more vulnerable. So, try and figure out these aspects - do you have to assume greater risk or reduce your income.
Only you will have to do this calculation. Finally, all calculations will translate into what percentage of your capital you will consume every year and whether your investment will generate little more than that.