Building a retirement corpus: Strategies for a secure future

  • How to optimize your investment portfolio to meet your children's education goals, and plan for your sunset years

Nehal Mota
First Published19 Jun 2024, 04:32 PM IST
A nest egg, or retirement savings, needs to be inflation-adjusted to maintain its purchasing power over time.
A nest egg, or retirement savings, needs to be inflation-adjusted to maintain its purchasing power over time.(Illustration: Unnikrishnan AV)

I am 40 years old, with two kids and a diverse investment portfolio. My assets include 52 lakh in EPF, 18 lakh in PPF, 2.85 crore in mutual funds, 80 lakh in equities, and 20 lakh in NPS. My monthly income is 3 lakh, with expenses of 1.5 lakh, and I invest 1 lakh monthly in small-, mid-, and large-cap index funds. My spouse owns a house worth 3 crore. In 8-10 years, I plan to spend 3 crore on my children's international schooling. How can I optimize my investment portfolio and plan for a comfortable retirement? What corpus should I aim for to ensure a secure future

—Name withheld on request

Your asset allocation, with an 85:15 equity-to-debt ratio, is commendable for long-term growth, particularly given your systematic investment plans (SIPs) in diversified mutual funds. To optimize your portfolio for your children's education and your retirement, consider the following strategies. 

For education goal planning, your estimated requirement of 3 crore today is projected to increase to approximately 5.92 crore in 8 years, assuming a 7% inflation rate. To mitigate risks, shift the required corpus for education ( 5.17 crore, the discounted value of 5.92 crore in the sixth year) to debt investments two years before the goal. This conservative strategy aims to grow the corpus steadily by 7% annually, ensuring that by the beginning of the eighth year, you will have 5.92 crore for your international education goal. 

Read more: Why retail investors want to see a change in the capital gains tax regime

For retirement planning, to earn 1.5 lakh per month inflation-adjusted post-retirement, target a corpus of 15-16 crore, assuming retirement at 60, a life expectancy of 85 years, and post-retirement inflation of 6%. Continue your current investments and, at the age of 58, transition 70% of your equity corpus to debt investments, utilizing a systematic transfer plan (STP) strategy for withdrawals. Incorporate your EPF, PPF, and NPS contributions effectively to supplement your retirement corpus. Maintain your monthly SIPs in large, mid, and small-cap index funds to ensure diversification and growth. 

Additionally, consider increasing investments in PPF, NPS, and other debt instruments, which will add the required balance to your overall portfolio and create liquidity closer to retirement when these investments mature. Ensure adequate life and health insurance to protect your family's financial future and maintain an emergency fund covering at least 6-12 months of expenses to manage unforeseen financial setbacks. 

Read more: How the stock market boom has made investor dreams a reality

By following these strategies, you can align your investments with your financial goals, ensuring sufficient funds for your children’s education and a secure retirement. Regularly reviewing and adjusting your portfolio with a financial advisor will help keep your financial plan on track amid changing market conditions and personal circumstances.

Nehal Mota, co-founder, Finnovate.



Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.MoreLess
First Published:19 Jun 2024, 04:32 PM IST
HomeMoneyPersonal FinanceBuilding a retirement corpus: Strategies for a secure future

Most Active Stocks

Bharat Electronics

10:37 AM | 9 JUL 2024
-2.35 (-0.7%)

GAIL India

10:37 AM | 9 JUL 2024
-0.8 (-0.35%)

Indian Oil Corporation

10:37 AM | 9 JUL 2024
1.7 (1%)

Oil & Natural Gas Corporation

10:37 AM | 9 JUL 2024
-3.55 (-1.19%)
More Active Stocks

Market Snapshot

  • Top Gainers
  • Top Losers
  • 52 Week High

Bombay Burmah Trading Corporation

10:25 AM | 9 JUL 2024
186.5 (9.27%)


10:25 AM | 9 JUL 2024
25.05 (8.11%)

Mangalore Refinery & Petrochemicals

10:25 AM | 9 JUL 2024
17.45 (7.97%)


10:25 AM | 9 JUL 2024
11.7 (6.8%)
More from Top Gainers

Recommended For You

    More Recommendations

    Gold Prices

    • 24K
    • 22K

    Fuel Price

    • Petrol
    • Diesel
    New Delhi
    HomeMarketsCibilPremiumMint Shorts