How to make Rs 5 crore retirement corpus in 20 years?

My wife and I are investing Rs 30,000 per month in mutual funds through SIPs since last one year. I have also made some lumpsum investments. We have a moderate risk profile. We aim to create Rs 1 cr in 10 years for our child’s higher education and Rs 5 crore in 20 years for our retirement. I am also investing about Rs 70,000 every year in LIC, Rs 24,500 per year for Rs 1 crore term insurance and about Rs 40,000 per year in your wife’s PPF account (since last 2 years). We are planning to increase our SIP by 10 per cent every year. Please advise if we are going in the right direction. Should we add or remove any schemes to achieve our target?
My SIPs:
DSP Equity Opportunities Fund - Rs 2,000
SBI Blue Chip - Rs 3,000
Axis Blue Chip - Rs 2,000
DSP Tax Saver Fund - Rs 2,000
Invesco India Tax Plan - Rs 2,000
Axis Multicap Fund - Rs 2,000
Invesco India Contra Fund - Rs 3,500
DSP Midcap Fund - Rs 2,500
Franklin India Equity Fund - Rs 1,000
SBI Large and Mid Cap Fund - Rs 2,500
Lumpsum:
L&T Emerging Businesses Fund - Rs 85,000
Reliance Small Cap - Rs 50,000
Wife’s SIP :
HDFC Mid-Cap Opportunities Fund - Rs 2,500
SBI Magnum Tax Gain Fund - Rs 2,500
DSP Tax Saver Fund – Rs 1,500
Invesco India Tax Plan - Rs 1,000
--Abhinav Rastogi


To begin with, do not choose round figures like Rs 1 core and 5 crore as target corpus for your long-term financial goals. Always work with real numbers. For example, work with your current living expense and inflate it by a reasonable number to reach at a realistic number for your future living expense. This will help you to put together a financial plan to achieve your future target.


For more, read: Will Rs 1 crore be enough to take care of all your needs after 15 years?

Assuming an annual return of 12 per cent, you should invest around Rs 43,000 every month to create a corpus of Rs 1 crore at the end of 10 years. To create Rs 5 crore at the end of 20 years, you need to invest around Rs 50,000 every month.

You are investing in too many schemes. If you find it difficult to keep track of your investments, you should try to cut down on the number of schemes.

Also, if your investment profile is moderate, you should invest mostly in multicap schemes. If you want to reduce risk by diversifying your mutual fund portfolio, you may invest a part of your corpus in largecap schemes. However, we do not recommend midcap and smallcap schemes to investors with moderate risk appetite. These schemes are risky and volatile and they are suitable to aggressive investors with an appetite for higher risk.

You and your wife should consult a financial planner to draw up a financial plan and start investing accordingly.