Prableen Bajpai Founder FinFix® Research & Analytics replies, Assuming a compounded annual growth rate (CAGR) of 11% on your investment of Rs 25,000 per month, you will be able to generate a corpus of Rs 2.7 crore. While this is a decent figure, it doesn’t mean much in isolation. It is crucial to check the adequacy of this amount. You must factor in your current expenses (along with any other goals), inflation, pre- and postretirement returns and life expectancy to arrive at a realistic figure which you need to accumulate for living a comfortable retired life.
If we assume current monthly expenses of Rs 40,000, retirement phase of 25 years, inflation of 6%, pre- and post-retirement returns at 11% and 5% respectively, then roughly Rs 6 crore will be needed. The monthly investment for building a retirement corpus should be a mix of fixed income products, such as employee provident fund (EPF) and mutual funds. EPF will offer linear compounding which will complement the non-linear growth of mutual funds.
Within mutual funds, set up a portfolio with a mix of large-cap, flexi-cap, mid-cap, and one fund providing international exposure. Given the time horizon, choose an index fund for the large-cap and global representation while the other two categories can be invested via active mutual fund schemes. Do start moving from equity to debt products as you get closer to your goals.
I am 20. My portfolio is worth Rs 50,000 and includes shares of Jindal Steel, JSW Ispat, Sun Pharma, Tata Motors and Kalyan Jewellers. I want to invest the entire money in electric vehicle stocks. Should I sell all my current holdings and purchase EV stocks or wait for some profit and then sell all holdings? Is it the right time to invest in EV stocks?
Raj Khosla Founder and Managing Director, MyMoneyMantra.com, replies At 20, it is reasonable to have a high risk appetite and choose aggressive investment routes. Yet, selling all current holdings to purchase electronic vehicle stocks is not recommended. One, it will make your portfolio biased towards one sector. The investment portfolio will be highly risky and dependent on market outlook for a specific industry. Two, investments should also be based on your goals and time horizon, besides the risk capacity.
EV is a promising sector and offers a great opportunity in the long run. You should consider investing through direct equity route in 2-3 EV automobile and ancillary companies with a horizon of 4-5 years and also pick a couple of diversified equity funds through MF SIP route for the long term. This will offer stability and growth to your portfolio.
