First, let’s adjust Rajesh’s goal for #inflation. He needs a monthly pension with a purchasing power of ₹1 lakh, in today’s terms. With a 6% annual inflation, that would mean roughly ₹3.2 lakh, by the time he turns 60. (2/9)
Then, how much should Rajesh's #retirementfund be? A good target for him should be 25-30 times his #annualexpenses. In Rajesh's case, he needs a retirement fund of ₹9.6 Cr. (3/9)
However, if Rajesh opts for a balanced #portfolio with about 50%-60% in #equity funds, he could potentially earn 8% annually over the long term, with a monthly #SIP of ₹73,000. (5/9)
Then, would it make sense to go all-in on #equity? If that is the case, Rajesh would need an SIP of only ₹60,000. But as he nears retirement, it would be smart to gradually shift from equities to #fixedincome #investments. (6/9)
Of course, having existing investments helps. Let’s say Rajesh has already invested ₹50 lakh, which will grow to ₹3 Cr by retirement. That coupled with his #EPF which would reach ₹2 Cr by retirement, would leave his shortfall to be around ₹4.6 Cr. (7/9)
But do not ignore the cost of procrastination. Delaying your retirement investments might end up doubling the required SIP. (8/9)
The key #takeaway? If a 40-year-old wants to retire with a monthly #pension of ₹1 lakh, he should invest at least ₹60,000 in an equity-oriented SIP. For a deeper dive, read our blog: scripbox.com
(9/9)
(9/9)
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