Skip to main content

Build a corpus for Pension or Retirement

Invest Mutual Funds Online

Download Mutual Fund Application Forms

Can one create a superannuation plan? Financial planners say it is possible. And here's how:


Suppose at 30, you can afford to start saving about Rs 1 lakh each year for your retirement at 60. Also, here you can assume just a 5% escalation in annual savings. That is, if you save Rs 1 lakh in the first year, you have to save Rs 1.05 lakh the second year, Rs 1,10,250 the third year, and so on. If you save more, even better.
Now as you save, you go by the thumb rule of 100 minus your age as the percentage of your savings going into equity and the balance into debt. So when you are 30, Rs 70,000 (that is 70% of Rs 1 lakh) goes into equity schemes, and Rs 30,000 into debt. And so on.


Now we assume a 15% long term average return in equity and a conservative 6% from debt. Going by this method, when you are 40, your annual savings will be about Rs 1.63 lakh, of which nearly Rs 1 lakh would go into equity while about Rs 65,000 into debt. And so on.


They say making the first million is the toughest job. The same holds here: Going by the above example and rates, reaching the Rs 1-crore milestone in your superannuation will take you about 19 years. That is, when you are 48 years old, your corpus will be just a tad above the eight-figure mark. From then on, when you are 53, it would be Rs 2 crore, and it would be Rs 3 crore even before you are 56. Soon after you are 57, it would be Rs 4 crore, and when you retire at 60, you are estimated to have a comfortable retirement corpus of Rs 5.8 crore. Although the amount sounds too good to be true, the fact is there is no magic here. It's a combination of discipline and bit of luck.


Now when you retire, even if you put the whole corpus into a fund or an investment product that can give you a post-tax yearly return of a very conservative 6%, you will still have close to Rs 35 lakh per annum.


Now let us see if that takes care of your post-retirement expenses. Suppose your current monthly expenses are Rs 25,000. If the same increases every year at the rate of 8% per annum, just before you retire, the same would be about Rs 2.5 lakh, that is about Rs 30 lakh per annum (please note here that although debt is expected to give a slightly higher rate than that of inflation, to be conservative, we have taken it as lower than the rate of inflation). Now let us suppose that after retirement, your monthly expenses would be about 75% of what it was just before retirement. So your monthly expenses would be about Rs 23 lakh. Compared to your annual earnings of Rs 35 lakh, you will still have Rs 12 lakh extra in your hands.


If you feel comfortable, you can keep on investing even after retirement small portions of your savings in equities, keep growing your retirement corpus and always beat the inflation beast.


A few words of caution here: This is a very simple step-by-step plan to build a retirement corpus.


So please involve your financial advisor or planner to fine-tune this plan according to your own future goals and requirement. Also, you need to take care of your taxes relating to your corpus.

Start@30 - To Retire A Rich


Ø 
Save Rs 1 lakh per annum t100-minus-your-age is the proportion of your equity investment, balance is for debt

Ø  Increase your savings by 5% every year

Ø  Assume 15% average annual return in equity and 6% in debt

Ø  At 40, you will have an estimated superannuation corpus of Rs 29.2 lakh

Ø  At 50, your estimated corpus is Rs 1.42 crore

Ø  When you retire at 60, this would be about Rs 5.8 crore tIf your initial savings amount is Rs 75,000, you end up with about Rs 4.3 crore at 60
And if it's Rs 1.25 lakh, you end up with about Rs 7.2 crore

Ø  If you start at 40 with Rs 1 lakh per annum, your corpus would be just Rs 1.6 crore at 60

--------------------------------------------

Invest Mutual Funds Online

Transact Mutual Fund Online

 

Download Mutual Fund Application Forms from all AMCs

Download Mutual Fund Application Forms

 

Best Performing Mutual Funds

    1. Largecap Funds:
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    3. Mid and SmallCap Funds
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    4. Small and MicroCap Funds
      1. DSP BlackRock MicroCap Fund
    5. Sector Funds
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    6. Gold Mutual Funds
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

 

Popular posts from this blog

Franklin India High Growth Companies Fund

Franklin India High Growth Companies Fund Online One of the key developments that the Street is keenly waiting for is a cut in interest rates by Reserve Bank of India . With demand rising gradually, a rate cut is expected to boost earnings growth for companies. In such a situation, schemes which invest in high growth companies are best suited, especially when seen from a long-term perspective. One such scheme is Franklin India High Growth Companies Fund. Fund managers Anand Radhakrishnan, Roshi Jain and Srikesh Nair strictly follow valuation parameters when it comes to choosing stocks.Valuation parameters, such as enterprise value, price-to-earnings growth ratio, forward price-to-sales ratio and discounted earnings per share, play a critical role in selecting companies for investments. Taking into account these parameters, the fund managers invest in companies which are poised for high growth in their respective sectors. This approach has been in favour of the scheme and it has perform...
Read more

Atal Pension Yojana contribution Tax Benefit for spouse

Contributions to Atal Pension Yojana (APY) are eligible for the same tax benefits as the NPS. This means that the contributions can be claimed under Section 80CCD (1B). The current limit for Section 80CCD (1B) is   Rs   50,000, over and above the   Rs   1.5 lakh limit under Section 80C. Section 80 CCD (1) is a different one, meant to cover employers' contribution towards NPS . You cannot get tax benefit by investing in the name of your spouse under Section 80 CCD . ------------------------------ ----------------- Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds Top 10 Tax Saver Mutual Funds to invest in India for 2016 Best 10 ELSS Mutual Funds in India for 2016 1. BNP Paribas Long Term Equity Fund 2. Axis Tax Saver Fund 3. Religare Tax Plan 4. DSP BlackRock Tax Saver Fund 5. Franklin India TaxShield 6. ICICI Prudential Long Term Equity Fund 7. IDFC Tax Advantage (ELSS) Fund 8. Birla Sun Life Tax Relief 96 9. ...
Read more

Avoid NFOs

  Don't get taken in by the flurry of new fund offers. You will be better off sticking to the tried and tested schemes.   For the past one year, to cash in on the bull run in equities, mutual fund houses have gone on a new fund offer (NFO) overdrive. But experts are unanimous in their advice: avoid NFOs . While past performance is not an indicator of how a fund will fare in the future, it does tell the investor how skilful the fund manager is. This crucial information is missing in an NFO. Not only is there no track record to judge an NFO by, many NFOs are similar to funds that already exist. If the new fund is similar to existing funds, you are better off investing in the latter. Around 67% of the new launches in 2014 were closed-end products. Investing in the NFO of a closed-end fund is doubly risky. In case the fund's performance is lacklustre, a closed-end fund does not allow you to exit. Even though closed-end funds are listed on the stock...
Read more

Debt Mutual Fund Dividends are Taxable

DDT is deducted when a non-equity fund declares dividends. Equity and balanced fund dividends are tax-free The AMC is correct to deduct the dividend distribution tax (DDT) as it is mandated by tax laws. DDT in mutual funds is deducted every time a non-equity fund declares dividends. Equity fund and balanced fund dividends are tax-free . It is possible that you have invested in a non-equity fund for the first time or have received the dividend under a non-equity fund for the first time. That is why this is the first occasion when you have come across DDT.   The rate at which non-equity schemes deduct DDT has also gone up after the July 2014 budget. This is due to a change in calculation methodology. Earlier, if the fund has to declare a dividend of R 100, it used to make a provision for R 128.3, paying R 28.3 to the taxman and distributing the balance to the investor. This allowed the investor to bear less tax since the effective tax rate was 22.07 per ce...
Read more

Mutual Fund Exit Load Changes

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300 Mutual Fund Exit Load Changes AMCs don't communicate about any change in exit load directly with investors, but do update on their website   The exit load applicable to your investments is the load which existed at the time when you invested in the particular fund. Any subsequent changes in the exit load will not be applicable to your investments.   However, Asset Management Companies ( AMCs ) periodically publish addendums in the newspapers, which state any change in exit loads of specific schemes managed by them. Such changes are also posted on their websites. However, a direct communication to an investor is not made, considering the costs involved in doing so. In their own interests, investors should not only track the performance of the funds they i...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now