03-07-2025
I am 52. How can I build a retirement corpus of Rs 5 crore in 10 years?
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If you are comfortable about taking risk and investing in equity, you can amass around Rs 8.13 crore (pre-tax) by investing Rs 3.5 lakh per month, assuming 12% CAGR in equity for 10 years. You will be able to comfortably accumulate Rs 5 crore for your child's education. Over and above this, you would be saving additional amounts, which could be used to repay the loan. Keep in mind that equity markets can be volatile. Thus, keeping a buffer period and redeeming during good market conditions at the end of your time horizon is vital to maintain optimum returns. I also assume you have factored in inflation to arrive at the `5 crore figure for your child's education. If not, factoring in inflation is important as today's value will not be the same after 10 years. Education inflation rate will be around 10% per annum in India, and if you want your child to study abroad, you will need to consider the currency and inflation of that particular region as well. Keep your portfolio simple by in vesting in flexi-cap mutual funds . You could consider investing in two growth-oriented and two value-oriented flexi-cap funds from a diversification point of priority should be to ensure your portfolio lasts as long as you do. It's crucial to identify instruments that can generate regular income while also allowing your portfolio to grow. Income can come from a combination of Senior Citizens' Savings Scheme and RBI Floating Rate Bond (FRB) interest payouts, FD interest, or systematic withdrawal plans (SWPs) from debt or debt-oriented hybrid mutual funds. Portfolio growth can be driven by your equity fund allocation. Equity allocation can be diversified across 2-3 schemes, such as large-cap index funds , flexi-cap funds, and aggressive hybrid funds . A suggested mix could be 30% in large-cap index, 30% in flexi cap, and 40% in aggressive hybrid funds. This can be deployed gradually over 1-2 years to average out entry points, especially if you're new to equities. Ideally, equity investments should be held for at least 5–7 years to our expertsHave a question for the experts? etwealth@
