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    Mutual funds to build a retirement corpus

    Synopsis

    If you have any mutual fund queries, message on ET Mutual Funds on Facebook. We will get it answered by our panel of experts.

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    I am 38 years old and I want to start investing for retirement. I am planning to invest 10-15,000 per month in mutual funds. I have started SIP's in Parag Parikh Long Term Equity Fund (Rs 2,000), Canara Robeco Emerging Equities Fund (Rs 1,000), Bharat Bond FOF - April 2030 (Rs 1,000). Please suggest more funds to build a wealth for my retirement by 2035. I have moderate risk appetite, but I am ready to make aggressive investments to create wealth.

    -Srinivas Reddy


    Assuming an annual return of 12%, you would be able to create a corpus of Rs 75.69 lakh by investing RS 15,000 every month for the next 15 years. However, this is will not be enough to take care of your retired life. You should find out your current cost of living – calculate how much money you need to live comfortably today. Find out the annual cost and provide for an annual inflation of 6-7% for 15 years. This will help you to find out the annual living expense needed after 15 years. For example, if your annual living expense is Rs 5 lakh, you will need Rs 10.39 lakh after 15 years. This is the impact of an annual inflation of 6% on your living expenses. If you assume that you are going to live for another 20 years, you need around Rs 2.08 crore (Rs 10.39x20). To create that corpus, you need to invest around Rs 1 lakh every month for the next 15 years. We are assuming an annual return of 12% on your investments.

    Note, this is a rough calculation. You need to seek the help of an investment advisor or use a good online retirement calculator to find a personalised solution.

    Things You should consider
    • Annualized Return
      for 6 month: 5.14%
    • Suggested Investment
      Horizon: >3 years
    • Time taken to double
      money: N.A
    Things You should consider
    • Annualized Return
      for 3 year: 13.76%
    • Suggested Investment
      Horizon: >3 years
    • Time taken to double
      money: 4.9 Years
    If you have a moderate risk profile, you should stick to multi cap schemes like Parag Parikh Long Term Equity. Do not invest in risky avenues to make extra returns. If you cannot tolerate the extra risk, you are unlikely to continue with your investments. Unless you continue with your investments, you are unlikely to create wealth.

    (If you have any mutual fund queries, message us on ET Mutual Funds on Facebook. We will get it answered by our panel of experts.)
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