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I am a 53-year-old self-employed person with no major savings in hand. I want to set aside 15 lakh after selling a property for my retirement. Where should I invest the money? I will retire in another four-five years. Please advise.

—Ashok

The key to investment is financial discipline from an early age. Ensure that for the remaining working years, you start investing in a disciplined manner. The amount of investment can be subject to your cash flows and any amount can be a good starting amount. You should not think that a certain minimum amount is required as this is one of the primary causes why many investors do not even start investing.

As for the reinvestment of property proceeds, equity through mutual funds can be considered as your retirement is still a few years away. However, the equity exposure should be subject to your risk profile and in the current environment it should be done in a staggered manner via a systematic transfer plan spread over the next one year. Also, create allocation in debt to create an emergency corpus through a bank deposit or short-term debt funds.

I’m 40 years old, have three children and plan to retire in about 15 years. I recently got 1 crore after selling some properties. I have my emergency funds, insurance, Sukanya Samriddhi Yojana, Employees’ Provident Fund and National Pension System. I would like to take medium to high risk. My goal is to have about 40 lakh for each of my children and 3 crore for my retirement. How should I go about my investments? Should I buy another property and sell it when the price increases? That will also help me avoid capital gains tax.

—Senthil R.

An investible corpus of 1 crore if invested for 15 years and assuming an average return of 10% will accumulate to 4.17 crore at the end of the 15th year. This means that your goal of having 40 lakh each for your three children and a retirement corpus of 3 crore will be met by the reinvestment of property subject to the time horizon and the targeted return. To achieve the targeted earnings rate, the portfolio needs to be equity biased. You can consider equity and debt mutual funds to create the portfolio.

Reinvesting in a property to reduce capital gains is surely an option, provided you believe that property prices will have an upside as real estate is also an asset class which needs to be considered on its own merit as you have to achieve a targeted return.

Surya Bhatia is managing partner of Asset Managers. Queries and views at mintmoney@livemint.com

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