Our MD Rajiv Bajaj gives his tips on what to do while making financial plans for the future

To make sure that your future is financially secure, you need to plan in advance. How much to invest, where to invest, and when to invest are the most common questions that come to mind. Rajiv Bajaj, our MD, and a financial expert gives his suggestions on it.

Question:

I am a 64-year old doctor with savings of around Rs 1.5 crore. My monthly income is Rs 2-2.5 lakh, I want to work for another five years. What kind of mutual fund investments should I make to ensure a comfortable retirement?

Rajiv Bajaj, Chairman & MD, Bajaj Capital says, 

Assuming a monthly income of Rs 1 lakh and inflation at 3% per annum thereafter, you may need a corpus of around Rs 3 crore.

If this is invested in debt instruments yielding 6%, it shall be sufficient to generate monthly cash flows of Rs 1 lakh, growing at 3% for the next 30 years, along with relative safety of capital. Your existing savings of Rs 1.50 crore can grow to Rs 2.2 crore in five years at a return of 8% annually. To provide for the remaining Rs 80 lakh, an SIP of Rs 1.10 lakh per month in hybrid funds for five years can grow to Rs 80 lakh at a return of 8%.

At the time of retirement, in order to get regular cash flows you can invest the Rs 3 crore corpus in a mix of high-quality debt funds (with SWP facility) and other instruments like corporate deposits, annuity plans, SCSS, etc. The present savings of Rs 1.5 crore and SIP of Rs 1.1 lakh should be invested in dynamic asset allocation or balanced advantage funds like DSP Dynamic Asset Allocation, ICICI Prudential Asset Allocator, Motilal Oswal Dynamic, SBI Dynamic Asset Allocation, and Kotak Balanced Advantage.

Published on: Economics Times, 5 August 2020