How to build a corpus of ₹2 crore with monthly investments
Summary
Increasing the SIP investments with a rise in income and putting 60-70% of the money in mid and small cap funds can help to build a corpus of ₹2 crore, according to expert advice.
Retirement planning is essential for enjoying the golden years of your life without any stress. Saving money is not enough and investing it responsibly is extremely crucial for creating a sizeable corpus. With the advent of new-age investing philosophies many people plan to retire in their fifties.
Mutual funds help conservative investors to put their money in equity instruments without directly getting exposed to the market volatility. If you are looking forward to building a corpus fund with regular investment of small amounts, you can choose mutual fund SIPs (Systematic Investment Plans).
It may sound unrealistic to achieve the target of ₹1 crore or ₹2 crore with SIP investments. But, it’s doable with meticulous planning.
In a recent conversation with CNBC-TV18’s Sonal Bhutra, Anand Dalmia, Co-Founder & CBO of Fisdom, and a personal finance expert shared advice on how one can retire at 55 with the right investments. The expert suggested that the SIP investments and other savings instruments can help build a retirement corpus of ₹2 crore.
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Responding to a query from a 35-year-old viewer to achieve the target of ₹2 crore before her retirement at 55, Dalmia suggested a few tips to build the intended corpus.
The viewer added that she has invested ₹26,000 in a monthly SIP for the last two years and her portfolio is now worth ₹4 lakh.
The investment expert said that to build a corpus for retirement, it is important to increase the amount invested in the SIP as per growth in income.
“So the easiest thing as a rule of thumb is to keep increasing your SIP with the growth of your income,” Dalmia said.
He advised that for anyone looking to retire within 20 years, it is important to allocate 60–70% of the amount invested in the SIP in mid- and small-cap funds. The investment expert added that the remaining 30% of the funds can be allocated to FlexiCap funds which invest money in LargeCaps. The expert also said that the investment should be made in Direct Mutual Funds for better compounding. The expert concluded by saying that it is important to diversify your investment.
“We generally like for someone who is looking at retirement to 20 year tenure to look at a big quantity of around 60% to 70% in mid and small cap and the remaining 30% can mean flexicap which is largely large cap and large cap funds. So then you don’t miss out. But at the same time you are able to generate the alpha. Try and do it in direct mutual funds so that your compounding is even better. And the third is to try and diversify,” Dalmia added.
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