I want to invest monthly Rs 50,000 in the mutual fund for my retirement. I want a corpus of Rs 8 crore. I can invest another 19 years. Suggest me how I can prepare my portfolio and advice accordingly on which I can invest.
Shivansh Dandona: Head – Investment Management, FinEdge says a rough calculation suggests that by investing Rs 50,000 monthly through a SIP for 19 years, you could accumulate a corpus close to Rs 5 crore during this period. There is a shortfall of about Rs 3 crore, however, there are ways to cover it to meet your retirement goal. A step up of 8 percent on your SIP every year is recommended and would be sufficient to get to your targeted retirement corpus. Since the step up would happen gradually every year, your monthly cash flows will also not get affected.
Portfolio Strategy
Contrary to the widespread belief that the ability to take risks should be based on an individual’s behaviour, investing success is more likely determined by the ability to take risks based on investment horizon. Given that your goal is 19 years away, an aggressive equity portfolio would be most suitable to achieve it. To construct such a portfolio it is important to have a diversified equity allocation which could be as under:
Large Cap funds – Allocation percentage: 50%
Allocation to large cap funds would be primarily to achieve stability and growth in the portfolio.
Mid Cap funds – Allocation percentage: 25%
These funds could have the potential for higher growth compared to large-cap funds.
Small Cap Funds – Allocation percentage: 25%
These funds focus on smaller companies with high growth potential, though they carry more risk and could be very volatile.
Your investment journey is long, and regular monitoring of your mutual fund portfolio to stay updated with your goal achievement is critical. Adjust your portfolio based on significant changes in your financial goals or life stage. Importantly, take help from an investment expert who would help you in construction of your portfolio and would ensure that you stay focused on your path to achieving your goal of retirement.
(Views expressed by the investment expert are his/her own. E-mail us your investment queries at askmoneytoday@intoday.com. We will get your queries answered by our panel of experts.)