Rs50 lakh after 25 years is not enough for retirement. You will need Rs3 crore for that

When planning for long-term goals like retirement, always factor in inflation. What looks like a good amount of money today, could leave you wanting for more in the future


My net income per month, after expenses, is around Rs1.5 lakh. I invest Rs 25,000 every month in SIPs, all growth funds. I am 34, and expect to increase the investment at least 10% every year for another 10 years. After 16 years, I would need Rs 30-40 lakh for my daughter’s higher education, and another Rs 30-40 lakh for her marriage after 22 years. I would also need about Rs 50 lakh or more for my retirement. I also want to use Rs 4-5 lakh for a foreign trip every 5 years. Please advise how to achieve my goals.

Siddharth Mendiratta 

First, some observations on your systematic investment plans (SIP). Apart from a large-cap fund and a tax-saving fund, all others have a mid-cap bias. We see this in many portfolios these days due to the significant run-up in the mid-cap segment, resulting in high performance numbers for funds investing there. However, any portfolio should have balance and diversity to be able to deliver sustainably over the long term. I would advise you to move to large-cap and diversified funds and leave only about 20-30% of your portfolio in mid-cap funds. 

Coming to your goals, you would need to rethink your target figures. For example, having Rs50 lakh in 25 years will not allow you to retire comfortably. That number is likely to be close to Rs3 crore. Same goes for your daughter’s education and marriage goals. Given the rate of inflation, you are likely to need close to Rs70-80 lakh for each of those expenses. The good news is that your current income level and growth pattern are likely to comfortably support your investment initiatives to get there. You would likely need to invest about Rs10,000 a month for your retirement and a similar figure for each of your daughters’ goals. The periodic withdrawals for vacations would need to be managed as short-term portfolios with market-condition-specific investments. I would recommend that you visit a financial planner to get a real handle on your financial future.

I am a 31-year-old private sector employee. My post-tax monthly salary is Rs42,000 and expenses are Rs9,000. Every month, I also invest Rs9,000 in mutual funds through SIPs, pay life insurance premium of Rs7,000 and Rs600 towards a family floater plan. In 1 year I invest Rs4,12,500, including in Public Provident Fund (PPF). I get Rs75,000 a year as bonus and reimbursements, which go into bank fixed deposits, towards my emergency fund. I plan to buy a term plan on the birth of our first child and also reschedule investments from LIC to an equity-linked saving scheme (ELSS). I have a car and live in my parental house. How can I maximise my returns?

—Rajesh Chandrawat

You are doing a great job of managing your monthly budget by living frugally and saving a significant portion (more than 75%) of your income regularly. You have also done well to obtain protection for your family in the form of a mediclaim policy and a life insurance plan (and yes, please get that term plan as soon as possible). The fact that you are diverting a third of your savings to mutual fund SIPs every month is also heartening. But please note that in a couple of years, when you have a child, these calculations are likely to change significantly. Hopefully you will earn more by that time, and will be able to continue these investments.

In your mutual fund portfolio, a significant portion is in mid- and small-cap funds. If I have to guess, it is likely that you saw the very high returns that these funds were delivering through 2015, and chose them. I would counsel caution in this regard. It is important to have diversification in your portfolio so that the right level of risk and volatility is maintained. I would recommend that you move from the Franklin India Small Companies fund to Franklin India Bluechip fund, from UTI Midcap fund to UTI Equity fund (consolidate the latter to Rs2,000), and from HDFC Mid cap Opportunities fund to HDFC Top 200 fund. This way, you will have an aggressive portfolio but with a more diversified coverage of market segments. With these changes, your mid-cap allocation will reduce to a more manageable 30%.

I invested Rs1,000 in Axis Long Term Equity Fund and another Rs1,000 in Birla Tax Relief fund every month, both ELSS. I want to invest about Rs8,000 every month. Please suggest a good infrastructure fund?


You can invest up to Rs1.5 lakh a year in tax-deductible investments under section 80C of the income tax Act. These include home loan repayments, PPF contributions, and life insurance premiums apart from ELSS investments. First you need to figure out how much money you need to invest in ELSS funds to maximise your tax deductions. At present, with Rs2,000 every month, you are investing Rs24,000 a year. If that maximises your section 80C deduction limit, fine. Else, you can increase your SIP amounts. Once you do that, you can invest the remaining amount (from the Rs8,000 you want to invest monthly) in a combination of a diversified fund and a balanced fund. For example, if you need to invest Rs50,000 in ELSS funds, you can invest Rs2,000 in each of the tax saving funds and split the remaining Rs4,000 between two funds, say, Franklin India Prima Plus fund and HDFC Balanced fund.

Srikanth Meenakshi is co-founder and COO,

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