HOW TO FIND THE RIGHT RETIREMENT NUMBER AND CONSTRUCT PORTFOLIO?

Hi folks

Do not assume a unreasonably higher number as your retirement corpus and work hard till eternity.

Do your maths and get things in place.

Retirement Number is not difficult to achieve.

Important thing today is to work on increasing your skills and active income:-

1. Salary

2. Bonus

3. Stock options

"Then save and Invest."

Now let's see how to find a retirement number?

Lets say your annual expense after 15 years would be 60 lacs p.a.

So you need to have 10 crore corpus in Equity ,MF and Ulip after 15 years to withdraw 60 lacs per anum. .

Considering long term annual inflation 6%(60 lacs).

Annual withdrawal 6% (60 lacs).

And annual growth 12%.(1.2 crore).

Summary of steps to be taken:-

Step 1 :- over the period of 15 years generate 10 crore corpus.

Step 2 :- After 15 years withdraw 5-6% corpus.

Step 3 :- Invest your corpus where it grows @ 12%p.a.

Now this 10 crore will generate 1.2 crore p.a. and you will withdraw inflation adjusted 60 lacs p.a.

YOUR RS 10 CRORE WILL BE INTACT.

Now the question is:

How much to save?(Annual savings)

Where to invest? (Portfolio allocation)

Let me help you with 3 approaches.

1. AGGGRESSIVE APPROACH.

Invest in equity, mutual funds, ULIPs.

An investment of Rs 15 lacs p.a. for 15 years in any of the above products would help you create a corpus of around Rs 8 crore which will pretty much help you in achieving your goals.(considering 14% p.a. return)

Now the important questions are:-

Are you are willing to invest all your savings in equity market based products, considering market falls, uncertainty, geo politics, macro economic factors, wars and what not?

Do you have patience to invest for next 15 years?

Can you control your emotions on market Ups and down?

Remember Magic of compounding happens only in long term.

2. MODERATE APPROACH

Allocate your portfolio in equities and debt based upon your risk appetite.

Let say you invest 5 lacs in ulip and 10 lacs in debt.

So your cash flow after 15 years would be around Rs 40 lacs p.a. with corpus of Rs 2.5 crore.

Alternatively,

you can invest 10 lacs in ulip and 5 lacs in debt.

So your cash flow after 15 years would be  around Rs 

50 lacs p.a. with corpus of Rs 5 crore.

3. CONSERVATIVE APPROACH

This is only recommended for wealthy people who are not dependent on these cashflows for their sustenance.

They primafacie invest in debt and preserve their capital.

Construct your portfolio according to your risk appetite.

WHAT NEXT?

Choose the approach that best suits you and Plan your retirement.

Remember F.I.R.E is the new gold.

(Financially Independent Retire Early)

Once you decide to retire at say 50 you will end up saving 30-35% INCOME TAX and rental expense, if any.

This is a significant reduction in cash outflow, which most of us fail to acknowledge.

#Learnwithcaakshatmodi.

#F.I.R.E.

#Retirement Planning.