An investment solution for early retirement.
I am 38 and working in the Philippines. My wife is a homemaker. My son is seven and my daughter five. They all live in Rajasthan. My mother is dependent on me. I am planning to quit my job in two years. With my current savings can I manage for the rest of my life?
Raj
It is not often that people save enough to hang up their boots early. Although your asset allocation is not ideal still you can comfortably retire by 40. For a peaceful retired life, you can follow this investment strategy.
Monthly expenses: Separate your life into two parts — till 60 and after 60.
To meet expenses in the first phase of your retired life, invest the monthly surplus of ?1.5 lakh in a portfolio that delivers a return of 8 per cent. It will grow to ?38.9 lakh in two years. Allocate an additional sum of ?5 lakh from fixed deposits to this corpus to meet the monthly expense from the age of 40.
If you invest the corpus of ?43.9 lakh and earn a return of 8 per cent, your monthly interest will be ?29,300. To meet the shortfall utilise the rental income.
In the second phase of life, your monthly needs will be ?97,000. To meet this target, you need a corpus of ?2.55 crore.
If you earmark the existing mutual fund towards this and the portfolio earns a return of 12 per cent, it will be ?1.25 crore. If one of your plot delivers a return of 9 per cent it will account for ?1.12 crore. The shortfall in the corpus could be adjusted with your rental income. If you are not able to meet the targeted return, sell another plot to meet monthly needs.
For children’s education, earmark the fixed deposit of ?30 lakh to meet the target.
The writer is financial planner and founder, myassetsconsolidation.com. Send your queries to blinefp@gmail.com