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If you need Rs 1.5 lakh every month after retirement, you will have to plan like this

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Today’s youth start planning for retirement as soon as they start a job. For that, it may be investing money in mutual funds or investing in pension schemes. They try to do everything that can help them achieve their retirement goals, but many times their financial goals are not fulfilled by their investment strategy. At the same time, when it comes to creating a fund at the rate of Rs 1.5 lakh per month, many youth get worried thinking that this will not be possible. Let us understand how this can be realized.

This is how the fund will be created

Anupam Guha, head of private wealth management at ICICI Securities, tells Economics Times that your current monthly expenditure of Rs 1.5 lakh will become Rs 5.1 lakh in 25 years at 5% inflation. Keeping in mind a life expectancy of 85 years, you should create a conservative portfolio that reduces equity exposure by 20% as you age. For predictable income, you can invest your gratuity and EPF amount in long-term debt mutual funds like HDFC Long Duration Debt Fund and Nippon India Lakshya Investment. To reduce risk and volatility in equities, consider shifting a large portion of direct equities to a hybrid fund. Balanced Advantage Fund (BAF) and Multi-Asset Fund (MAF) are a good category to earn 8-12% annually at a risk level that is higher than debt, but lower than equity.

ICICI Prudential Multi Asset Fund and ICICI Balanced Advantage Fund are good options. You can continue to maintain your equity MFs and reduce them later. Use your PF balance in the first 18 months to keep track of your expenses. Then register for SWP from Long Term Loan Fund for 6% payout and proper management of any shortfall with BAF and MAF. Rebalance your portfolio once in 4-5 years. With returns of 9-10%, you should be able to sustain your retired life.

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