Crorepati goals: SIPs in small caps, flexi caps can help you reach Rs 2 crore at retirement. Here's how
Crorepati goals: SIPs in small caps, flexi caps can help you reach Rs 2 crore at retirement. Here’s how
Financial stability in retirement is a common financial goal, and well-planned investments are crucial for achieving financial freedom. As we live longer, more and more people are settling in nuclear families, and the cost of living and healthcare is increasing, it’s important to prepare for a secure retirement. After retirement, regular income stops, and the only income is from savings that were accumulated over the years. That is why everyone needs a well-planned retirement strategy tailored to their vision and goals for life after retirement.
Some of the common schemes and plans to save for retirement are National Pension Scheme (NPS), Public Provident Fund (PPF), Mutual Funds, Bank Deposits, Tax-Free Bonds, and others.
Mutual funds are one of the best ways for cautious investors to invest in equity instruments without being directly affected by market volatility. If you’re interested in building a corpus fund through regular, small investments, you can consider opting for mutual fund SIPs (Systematic Investment Plans).
SIPs are one of the safest modes of investment. They are a disciplined and convenient way to gradually build wealth by investing in mutual funds. They offer the benefits of rupee cost averaging and harnessing the potential of compounding over the long term.
Sharing his advice on buidling a crore+ kitty for the retirement, Anand Dalmia, Co-Founder & CBO of Fisdom, said the SIP investments and other savings instruments can help build a retirement corpus of Rs 2 crore.
Speaking to CNBC TV18, Dalmia shared a few tips to build the robust corpus for golden years.
> To build a corpus for retirement, it is important to increase the amount invested in the SIP as per growth in income, Dalmia suggested.
> It is important to allocate 60–70% of the amount invested in the SIP to mid- and small-cap funds.
> Around 30% of the funds can be allocated to FlexiCap funds that invest money in Large Caps.
“We generally like for someone who is looking at retirement to 20 year tenure to look at a big quantity of around 60% to 70% in mid and small cap and the remaining 30% can mean flexicap which is largely large cap and large cap funds. So then you don’t miss out. But at the same time you are able to generate the alpha. Try and do it in direct mutual funds so that your compounding is even better. And the third is to try and diversify,” Dalmia added.
Anand Rathi Wealth’s Deputy CEO Feroze Azeez told Business Today the ratio of investment in different type of mutual funds in the current market scenario can be: Large cap 50 per cent, midcap 20 per cent, small cap 30 per cent.
When planning for retirement, experts recommend allocating 50% of your current salary towards savings and increasing it by 10% every year. To ensure a comfortable retirement, aiming for a corpus of Rs 3.14 crore is advisable. For a larger corpus of Rs 6 crore in 20 years, the monthly investment would need to be increased to Rs 60,000.
A mix of equity-debt, 80:20 equity-debt combindation, can manage risk effectively. Monthly SIPs (Systematic Investment Plans) of Rs 28,000 in equity funds and Rs 7,000 in debt instruments can be a good strategy.
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