Will these mutual funds help my wife to create Rs 1.5 crore?

If you have any mutual fund queries, message on ET Mutual Funds on Facebook. We will get it answered by our panel of experts.

Getty Images
I am writing about my wife's portfolio. She has a moderate-high risk profile. Here are the mutual funds she has been investing:
Mirae Asset Tax Saver Fund: Rs 5,000 per month (Started last financial year)
Axis Bluechip Fund: Rs 1,000 per month (Started this financial year)
Mirae Asset Emerging Bluechip Fund: Rs 1,000 pm (Started in Nov'19)
Motilal Oswal Large and Midcap Fund: Rs 500 pm (Started in Nov'19)
SBI Small Cap Fund: Rs 500 per month (Started Jul'19)

This is for her retirement fund. We have a target of Rs 1.5 crore in the next 28 years. Also, we would like to start investing in the below fund Motilal Oswal Nasdaq 100 FOF: Rs 500 per month.

Please review whether the portfolio is on track to meet the target.
--Nanjunda Ambekar


Assuming an annual return of 12%, you wife needs to invest Rs 5,500 every month to create Rs 1.5 crore at the end of 28 years. However, a word of caution: you have to include annual inflation to reach a realistic target. With the impact of annual inflation, your targets could become very large after a long period. For example, a goal of Rs 1 lakh today would be worth around Rs 5.11 lakh, after accounting for annual inflation of 6%, after 28 years. If you include the capital gains tax on equity mutual funds, it will climb even further. For more, view:
Why Rs 1 crore will not ensure a rich retired life?
1/6

Rs 1 crore, Rs 2 crore, or Rs 5 crore will not guarantee a cushy retired life to you. Why? The basic idea behind creating a target corpus is to ensure that returns or interest from it would be enough to take care of your expenses after retirement. Have you done the math to find out whether the big round figure would do that?

Rs 1 crore, Rs 2 crore, or Rs 5 crore will not guarantee a cushy retired life to you. Why? The basic idea behind creating a target corpus is to ensure that returns or interest from it would be enough..
Read More

Sure, Rs 1 crore is a large sum today. But do you believe it will have the same value after 20 years? Do you know how inflation impacts the value of money over a long period? For example, the value of a house is Rs 1 crore today. Do you know how much you need to shell out to buy it after 20 years? Hold your breath: you need Rs 3.21 crore to buy the same house after 20 years, accounting for an annual inflation of 6 per cent. In other words, Rs 1 crore would be worth 1/3rd of its value (around Rs 31 lakh) today after 20 years.

Sure, Rs 1 crore is a large sum today. But do you believe it will have the same value after 20 years? Do you know how inflation impacts the value of money over a long period? For example, the value o..
Read More

Everyone knows about inflation, but many people fail to include it in their financial planning. Be it retirement or child's higher education, inflation would add a few zeros to your target corpus over a long period. Failing to account for it would be disastrous.

Everyone knows about inflation, but many people fail to include it in their financial planning. Be it retirement or child's higher education, inflation would add a few zeros to your target corpus ove..
Read More

The best way to tame the villain is to work with actual numbers. Always find out the current cost of your financial goal. Once you have it, inflate it with a realistic inflation number for every year. This will help you to arrive at a realistic corpus. You can use the FV formula in Mircosoft Excel or compounding interest formula to do this calculation.

The best way to tame the villain is to work with actual numbers. Always find out the current cost of your financial goal. Once you have it, inflate it with a realistic inflation number for every year..
Read More

Once you know the target corpus, you need to identify an ideal investment vehicle to achieve the goal. Sure, since it is a long-term goal, you should naturally opt for equity mutual fund schemes. However, make sure you chose an equity mutual fund category that is in line with your risk profile. You may use the PMT formula in Microsoft Excel to find how to much you need to invest every month to create your target corpus.

Once you know the target corpus, you need to identify an ideal investment vehicle to achieve the goal. Sure, since it is a long-term goal, you should naturally opt for equity mutual fund schemes. How..
Read More

You can check our special page ‘Retire rich with mutual funds’ to know everything about planning your retirement with mutual funds.

You can check our special page ‘Retire rich with mutual funds’ to know everything about planning your retirement with mutual funds.

You need to sharply define your risk profile. We are a bit apprehensive about such conservative to moderate, moderate to high definitions. Try to take an online quiz to define your risk profile and then realign your portfolio with it.
  • 18.79%Annualized Return for 3 year
  • >3 years Suggested Investment Horizon
  • 4.10 YearsTime taken to double money
  • 13.18%Annualized Return for 3 year
  • >3 years Suggested Investment Horizon
  • 2.7 YearsTime taken to double money
Download
The Economic Times Business News App
for the Latest News in Business, Sensex, Stock Market Updates & More.
Download
The Economic Times News App
for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
READ MORE
ADVERTISEMENT

Top Mutual Funds

3 M(%)
6 M(%)
1 YR(%)
3 YRS(%)

READ MORE:

LOGIN & CLAIM

50 TIMESPOINTS

Save with Tax planning SIP's

More from our Partners

Loading next story
Text Size:AAA
Success
This article has been saved

*

+