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Home / Money / Personal Finance /  I am a 22-year-old woman from Bengaluru. I want to be financially free by 2032. How do I achieve this?

I am a 22-year-old woman from Bengaluru. I want to be financially free by 2032. How do I achieve this?

To achieve the target of Rs.4.75 Cr you will have to invest in SIPs of Rs.2.02 Lakh per month assuming 10% p.a. return (Photo: istock)Premium
To achieve the target of Rs.4.75 Cr you will have to invest in SIPs of Rs.2.02 Lakh per month assuming 10% p.a. return (Photo: istock)

  • If we consider monthly expenses of 60,000 as of today to take care of your mandatory expenses, lifestyle and travel,  you will need 4.75 Cr at the age of 33 to become financially independent 

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I am a 22-year-old woman living alone in Bengaluru. I have started earning this year. I came to know about FIRE (Financial Independence and Retire Early) movement and want to be financially free by 2032. Can you suggest how many SIPs I must do to archive my financial freedom?

--Avisikta Majumdar

Financial Independence and Retire Early (FIRE) is something that continues to encourage many people to start working on their investment strategy at an early age. There is no doubt that the definition of retirement may change over the years. Many of us will not completely retire and may take up some kind of part-time activity, but at that stage, the monthly income can reduce drastically. Hence, you need to build a reasonable corpus if you want to be financially independent and retire early. As you plan to become financially independent at the age of 33, you will have to invest a reasonable amount for the coming 11 years to build the corpus. If we consider monthly expenses of 60,000 as of today to take care of your mandatory expenses, lifestyle and travel, then you will need Rs.4.75 Cr at the age of 33 to become financially independent and take care of monthly expenses up to the age of 80 with annual inflation of 7%. To achieve the target of Rs.4.75 Cr you will have to invest in SIPs of Rs.2.02 Lakh per month assuming 10% p.a. return or Rs.1.80 Lakh if the return is 12% p.a. Ideally you should invest in equity funds as you have a time horizon of more than 10 years in your hand, at the same time you can hold your accumulated corpus in equities even after your early retirement. The funds that you can consider investing in to build your financial independence :

• Any Nifty Index Fund (15%)

• Mirae Asset Large Cap Fund (13%)

• Parag Parikh Flexi Cap Fund (13%)

• UTI Flexi Cap Fund (13%)

• Canara Robeco Emerging Equities (12%)

• SBI Focused Equity Fund (12%)

• Kotak Emerging Equity Fund (12%)

• Motilal Oswal S&P 500 Index Fund / ICICI Prudential US Bluechip Fund (10%)

Answer by Harshad Chetanwala, founder, MyWealthGrowth.com

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