Ask Us: About Investments – The Hindu


Q. I am 28 years old, I work in the private sector and I want to start planning for my retirement. Assuming I want to retire at the age of 60 and want to have a corpus of ₹ 2 crore, what is the amount I should have after 32 that will equal cro2 crore considering all the factors like inflation, etc. In addition to that, I would also like to have a fixed monthly income equivalent to 1 lakh in value today. What are the best suited options / financial instruments that I should start investing in to make sure? Are NPS and PPF better since they come with a sovereign guarantee? Moreover, which instrument is wise given the tax implications, both today and at the time of withdrawal.

A. It is not clear whether you want ₹ 1 lakh per month after retirement or right away. We’ll assume if it’s after retirement. When planning for retirement, it is better that you decide how much monthly income you want then, rather than setting a lump sum amount that you want to collect, without knowing whether that lump sum will last. If ₹ 2 crore is the amount you want after 32 years, then ₹ 10,000 per month if it earns 9% on average for the next 32 years, should take you there comfortably.

However, if you want to have 1 lakh per month of income from retirement (in today’s value) then it will be ₹ 3.5 lakh per month in 32 years, assuming inflation at just 4%. This means that your corpus requirement will increase to 6.9 crore to be built over those 32 years. It also means you’ll need around 31,000 savings per month, generating at least 9% per year for the next 32 years. You can use a combination of NPS, PPF, and equity index funds to invest for your retirement. You might consider using more NS for your debt allocation and using equity index funds for equity exposure. Of course, the NPS is not fully tax exempt in retirement because the pension is taxable. You will rarely get tax-free options at all stages. So instead of focusing on tax efficiency, focus on what will get you where you want to go.

(Vidya Bala is co-founder, primeinvestor.in)

Q. Can you suggest some good mutual fund companies because nowadays it is hard to distinguish between fake and real company. Please suggest the procedure for investing through mutual funds, the minimum investment, the average rate of return and the risks involved. I can search the internet or YouTube for these things, but I can’t trust everything I read or see there, that’s why I’m asking you.

Aarati Krishnan responds: It’s good that you want to identify regulated investment options and invest in them after researching detailed information, instead of just relying on what you read online. All mutual funds are required to register with SEBI before launching any products for investors. You can view the list of registered mutual funds on the SEBI website here: https://www.sebi.gov.in/sebiweb/other/OtherAction.do?doRecognisedFpi=yes&intmId=23

There are four main ways to invest in mutual funds. You can invest through mutual fund distributors registered with the Association of Mutual Funds of India, which will facilitate your transaction. To check if the distributor is registered, you can request its ARN (AMFI registration number). You can invest through brokerage firms and platforms offered by banks and brokers, in “regular” mutual fund plans. When you use these routes, you incur a commission to remunerate these intermediaries, which is included in your fund charges. You can also invest in mutual funds through their “direct” plans where you save on this commission. This can be done either by registering directly on each fund’s website and investing online, or through platforms offering direct investment such as Kuvera, Groww and Zerodha Coin. While saving on costs through direct investments, you will need to select your asset classes and funds yourself. You can also retain the services of a registered investment advisor who can advise you on which funds to purchase for a fixed amount. Mutual funds allow minimum investments as low as 500. You usually have a choice of lump sum investments (investing a sum at once) and systematic investment plans (SIPs), where you can set up direct debits to invest a regular amount each month in selected mutual funds. . This allows you to build up a substantial corpus over time. Mutual funds are market-related products and there are many types of mutual funds. There are mutual funds that invest in corporate stocks, corporate bonds, government bonds, money market instruments, and even gold. There are also funds that combine one or two of these assets. So it’s hard to tell you what the average rate of return would be for all of these types. As a general rule, you should choose a mutual fund category based on your investment horizon, your ability to manage risk (volatility of your capital value and your returns) and your return expectations. It would be a good idea to hire the services of a qualified investment advisor or financial planner who can help you define your financial goals and get you started on your investment journey. You can get a list of RIAs in your area here

https://www.sebi.gov.in/sebiweb/other/OtherAction.do?doRecognisedFpi=yes&intmId=13



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