I am 55 and currently an NRI. I am due to retire in 2021. I have a son aged 11 years. I have no pension. Please give suggestions on how I can reach my goals before retirement. After retirement I need ₹50,000 to meet monthly expenses. I can invest up to ₹50,000.
Subecha
If you wish to meet all your goals, it is advisable you hang up your boots in 2021. You need to invest ₹1.47 lakh a month for the next 60 months. Retirement being a medium-term goal, you need to build a portfolio that can earn 9.5 per cent. Since the rest of the goals are long-term in nature, you can try to earn 12 per cent return. But since your earning life is five years, you should build a corpus during that period.
For meeting the needs of your son, you need ₹50 lakh. If a sum of ₹25.3 lakh is invested for six years and it earns 12 per cent per annum, this amount can be earned. If you invest a sum of ₹31,000 for the next 60 months and if the portfolio earns 12 per cent return you will be able to reach the target of ₹25.3 lakh. For his marriage the present value of ₹10 lakh will be ₹29.5 lakh if inflated at 7 per cent for 16 years. If you invest a sum of ₹10,400 a month for the next five years it will account for ₹8.5 lakh. Afterwards if you continue to hold it for the next 11 years you can reach the target.
Retirement: To receive inflation adjusted monthly income of ₹50,000 at retirement, you need to have a corpus of ₹1.41 crore at 60. If you earmark your fixed deposits and if it earns post-tax returns of 7 per cent after 5 years it will account for ₹60.3 lakh.
To meet the shortfall you need to save a sum of ₹1,06,000 a month for the next five years and it should earn a return of 9.5 per cent. Invest 50 per cent in equity mutual funds and the rest in debt instruments.
The writer is a financial planner and founder, myassetsconsolidation.com
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