Mutual fund investment: Life can often resemble a rollercoaster, characterised by numerous ups and downs. It is important to start saving early for your retirement and a stable financial foundation. Effective financial planning serves as an invaluable tool to mitigate these fluctuations. Last year, a study showed that 90% of individuals in India regretted for not starting savings sooner, highlighting the importance of proactive financial planning.
Regardless of whether you are just beginning your career, or are in your 30s or 40s, financial uncertainties can arise from various sources; thus, it is crucial to have a robust financial plan in place to safeguard your future. Engaging in comprehensive financial planning enables you to construct a clear roadmap for your financial journey, thereby facilitating the achievement of your monetary objectives.
How to set your savings goal
In a recent podcast, Deepak Shenoy, Founder & CEO of Capitalmind, said one should save 30 times of their annual income taking inflation in consideration.
“In general, 30 times your annual expenses should be your goal before your age of 50. This savings can take you to the age of 90. This should not include the child’s expenses. For example, if you are spending Rs 10 lakhs a year, the Rs 3 crore is enough for you,” Shenoy said.
Shweta Rajani, Head – Mutual Funds, Anand Rathi Wealth Limited, said: “The key factors in achieving the Rs 5-crore goal are understanding your starting corpus, expected return, risk tolerance, and investment tenure. For instance, a 30-year-old with no initial corpus would need to invest Rs 1,00,000 monthly for 15 years at an expected annual return of 12% to accumulate Rs 5 crore. In contrast, someone starting with a corpus of Rs 50,00,000 would only need to invest Rs 45,000 monthly to reach the same target.”
She added stepping investments every is an important clause and investors should make efforts to add it every year.
“In this goal planning stepping up investments play a significant role, if one starts with Rs 25,00,000 and invests Rs 40,000 monthly with a 10% step-up, they would be on track to amass Rs 5 crore,” Rajani said.
How the investment plans would vary
Explaining the planning strategy, Rajani said for a younger investor, say 25 years old, aiming to retire at 45 with no initial corpus, the required monthly investment is significantly lower.
“By investing Rs 25,000 per month for 20 years with a 10% annual step-up, they can achieve the Rs 5 crore goal. These scenarios highlight the importance of starting early and the impact of the step-up strategy on the investment journey,” Rajani said.
Behavioral changes and prudent financial practices are crucial to reaching this financial milestone.
“Visualising your future lifestyle and setting clear financial goals can provide motivation and direction. It’s important not to delay investments while waiting to time the market; instead, consistent and regular investing can yield better results. Regular portfolio reviews and understanding asset allocation are essential to ensure your investments align with your goals and risk tolerance,” Rajani said.
Seeking professional advice from wealth advisors can help tailor your investment strategy to your needs and optimise your portfolio.
“Effective tax planning, along with health and term insurance, ensures that you are not forced to dip into your investments during emergencies. Additionally, considering estate planning can help avoid transmission loss and ensure your wealth is passed on efficiently. These steps, combined with disciplined investing, can significantly enhance your chances of building a Rs 5 crore corpus by the age of 45,” said Rajani.
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Here are a few mutual fund schemes that can help you build a multicrore corpus.
| Scheme Name | Category | 1 Yr | 3 Yr | 5 Yr |
| Quant Large Cap Fund-Reg(G) | Large Cap Fund | 45.8% | ||
| Canara Rob Flexi Cap Fund-Reg(G) | Flexi Cap Fund | 26.2% | 15.7% | 17.3% |
| Quant Active Fund(G) | Multi Cap Fund | 44.8% | 22.7% | 29.5% |
| ICICI Pru Focused Equity Fund(G) | Focused Fund | 40.9% | 22.4% | 20.2% |
| HDFC Small Cap Fund-Reg(G) | Small cap Fund | 41.6% | 28.5% | 23.6% |
