Retirement Planning: Investment Rs 20 lakh, retirement corpus goal Rs 3.40 crore; know how you can achieve it
Retirement Corpus: Retirement planning is an important goal, where one can invest monthly or lump sum and create a corpus that can help meet various financial needs post retirement.
Retirement Strategy, Retirement Planning: When we talk about investments for retirement planning, there are two types of investments- lump sum and SIP. Salaried class persons who depend on a monthly paycheque may prefer to invest monthly through a systematic investment plan. On the other hand, investors who get income in large chunks can go for lump sum investment. Then there are investors who invest monthly, but if they have a large amount, they make lump sum investment too.
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Timing the market
If they are making this investment in market-linked schemes, the timing of the investment is very important. While there is no need to time market in a SIP investment, a lump sum investment is suitable when the share market has been going through a poor phase for some time. But equally tough is to know if the market will fall further?
Retirement planning through lump sum investment
Investors with a lump sum amount may opt for mutual fund investments, where they can invest one time, let their retirement corpus grow over the years, and withdraw corpus after the retirement goal is reached.
Is retirement planning through equity mutual fund investment safe?
Suppose you invest a lump sum amount and set a 25-year goal for a particular amount of corpus. After 25 years, when you are about to withdraw, the market crashes and your investments go 40 per cent down. Won't it derail your retirement planning?
What expert speaks?
Siddharth Alok, AVP Investments, Multi Ark Wealth, Epsilon Group, says, "Since maximising returns is the primary goal coupled with a long time frame, having a tilt towards equities will be optimal. However, given the market conditions, instead of parking money into debt/arbitrage funds, having a 50:50 allocation in hybrids and flexicap funds would be a better choice. This would not only give some cushion in case there is further correction but also help in generating long-term capital appreciation."
Retirement corpus calculation
For our calculation, we are taking Rs 20 lakh as the lump sum investment and 25 years as the investment duration. So, if a 30-year-old is starting this investment, they are seeking a Rs 3.40 crore retirement corpus by age 55.
Investment scheme
It can be a mix of flexi and hybrid mutual funds, where investors will invest once for 25 years.
Growth rate
The expected growth rate on this corpus is 12 per cent annualised.
What will be capital gains in 25 years?
Estimated capital gains on this investment will be Rs 3,20,00,128.81.
What will be the retirement corpus after 25 years?
The estimated retirement corpus will be Rs 3,40,00,128.81.
Calculation chart
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