I am a central government employee earning Rs 5 lakh per year. Am I saving enough for my retirement?
I am a 33 year old central administration employee. My annual income is Rs 5 lakh. I started investing Rs 5,000 per month in blue chip funds in 2019 via SIP. I also have three RDs of Rs 2,000 each at the post office, started in 2018. My PPF account, opened in 2019, has around Rs 40,000 now and recently I started an endowment plan with an annual bonus of Rs 13,000 for 15 years in postal life insurance. Apart from this, 10% is deducted from the salary for NPS. Except for the investment above, I have no other savings. Is it enough for my retirement and my future expenses?
Adhil Shetty, CEO of BankBazaar responds, “Given that your annual salary is Rs 5 lakh, you are currently investing around 30-35% of it for your future goals. This is a good percentage and ideally you should not go beyond that. Your investments also seem Bluechip Equity Funds are a good long-term investment Your RDs would also give you good returns, but you may want to consider converting some of them to SIPs over time as this may bring in better returns I highly recommend a makeover If you have dependents, consider going for a vanilla term insurance product that gives you up to 20 times your annual salary, so your dependents are financially secure in case something goes wrong. Investing in the market is the only way to build an inflation-proof retirement corpus. There is no particular size the corpus should be, and it will You just have to decide what size you need. One way to calculate this would be to calculate your annual outlay taking into account an annual inflation of 8% and then multiply it by 25. This would come to around Rs 4 crore assuming annual outlay of Rs 2.5 lakh . Despite the size of the corpus, this objective is not impossible. All you need to do is be consistent with your investments, grow them regularly – typically by 5% each year, and invest in high-performing mutual funds from a strong long-term fund house. You should be able to build a corpus comfortably.”
I am a 47 year old employee. My PPF account will mature in May 2022 and the amount on maturity will be around Rs 2 lakh. Where should I invest this amount over the next 10 years to get better returns?
Prableen Bajpai, Founder of FinFix® Research & Analytics, responds, “PPF is a fixed income product with clear returns, the advantage of linear compounding and no risk. Equity instruments can offer you higher returns However, they will come with an element of risk, so if you are considering going into equities, remember that the process of capitalization is not linear and that there will also be downturns over the course of the year. of year 10. An ELSS may be elected to save tax under Section 80C.If you already have a portfolio of mutual funds, invest in an ELSS after checking for overlaps with your existing programs. For example, if you have a large-cap oriented portfolio, your ELSS may have more exposure to mid-caps.STP is a good way to invest, but the process can also result in average upward based on market movements. Just invest in one or two tranches because the investment horizon is long. In 10 years, an investment of Rs 2 lakh can reach Rs 5.92 lakh assuming a CAGR of 11%. If part of our tax planning is supported by the EPF, then you can opt for open equity FCPs. Since there is no mention of your existing investments, overall asset allocation, risk appetite, goals and other details, please make the last call after considering all of these aspects.”