How to Make Rs. 5 Crore Retirement Corpus in 20 Years?
Retirement is the phase when you take off from work life to dedicate time towards living those moments which you earlier couldn’t. It is the second childhood that awaits everyone and to enjoy the same you need savings enough to finance your living costs. It was this understanding that led to the starting of PF and pension facilities. Although to assist the employees in this case, many companies provide these facilities, there are still people who don’t have access to the same or who opted out of it due to some reasons. Yet for the others, the pension or the savings are just not enough. This is where solution oriented mutual funds named retirement plans step in.
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Solution oriented fund is a category of mutual fund that has been brought to ease the financial load of investors. These funds currently include two types in the form of retirement funds and children’s funds. Investment through these plans is a beneficial deal as it provides a high scope of earning attractive returns compared to the traditional plans. Here in this blog we are discussing what retirement funds are and how you can earn 5 crores by investing in the same.
What Are Retirement Funds?
According to SEBI, retirement funds are the open-ended retirement solution oriented schemes that have a minimum lock-in period of five years or till the retirement age whichever is earlier. In general terms, these funds are those mutual funds in which a person may invest so as to enjoy their retirement life free from financial worries.
Why Should You Invest in Retirement Funds?
Investing in a retirement fund is important as it enhances your savings and helps you in earning the time value of your money in addition to the primary goal which is to accumulate enough money to finance your after retirement living costs. Full benefit of these funds can be enjoyed only if you invest in them early. Following are the benefits of long-term investment in them.
- Benefit of Compounding - If you invest in these funds via SIP mode, then you will receive high returns as a result of benefit of compounding over time.
- Tax Deduction - You get a tax deduction if you invest in certain retirement plans, thus generating opportunities to avail dual benefit.
- Tension-Free After Retirement Life - If you have a large corpus with you in your retirement days, there isn’t a reason to worry about financial expenses. This can be possible only if you start investing early.
- Independence and Freedom - Having your own money will help you remain independent in those days and enjoy life freely the way you should.
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How To Make 5 crore in 20 Years?
There would hardly a person who wouldn’t want to be crorepati some day. When it comes to retirement, there are many people who have a dream list which they want to fulfill such as traveling around the world or living life king size. To fulfill such goals, anyone would need a huge bundle of money. Below is the way to create Rs. 5 crores in 20 years.
SIP Investment: You can start 20 years before your retirement and become a crorepati. All you need to do is start investing in SIP plan with Rs. 35000 as monthly SIP and by the end of tenure, you will be eligible to avail a maturity amount of Rs. 5.24 crores. While all you did was an investment of Rs. 84 lacs.
Lumpsum Investment: If you wish to invest the whole amount once, then you can make a lumpsum investment of Rs. 32 lacs to receive a maturity amount of Rs. 5,23,72,919 in twenty years.
| SIP Investment | Growth Value | Absolute Returns | CAGR |
|---|---|---|---|
| 8400000 | 52400000 | 523.81% | 15.00% |
| LumpSum Investment | Growth Value | Absolute Returns | CAGR |
|---|---|---|---|
| 3200000 | 52372919 | 1536.65% | 15.00% |
Top Retirement Plans to Invest In
Below are the top schemes that have been selected after conducting research about them on the basis of different parameters by the experts of MySIPonline.
Tata Retirement Savings Fund - Progressive Plan
| Basic Information | |
|---|---|
| Parameters | Tata Retirement Savings Fund - Progressive Plan |
| Category | Multi Cap |
| Benchmark | S&P BSE Sensex TRI |
| Launch Date | 11/1/2011 |
| Asset Size | Rs. 548 crore(As on Aug 31, 2018) |
| Fund Managers | Murthy Nagarajan, Sonam Udasi, Ennette Fernandes |
| Expense Ratio | 2.68%(As on August 31, 2018) |
| Minimum Lumpsum | Rs 5,000 |
| Minimum SIP | Rs 500 |
| Exit Load | 1% for units redeemed/switched-out before completion of 60 years of age |
Launched on November 01st, 2011, the investment objective of this scheme by Tata Mutual Fund is to generate long-term capital appreciation by investing around 85% to 100% of the assets in equity and equity related instruments. It may invest a maximum of 15% of assets in debt and a maximum of 10% assets in other instruments. It is compulsory for any investor to remain invested in the scheme for at least five years or till retirement age which ever is earlier. The net asset value of Tata Retirement Savings Fund - Progressive Plan as on September 28th, 2018 is Rs. 26.8847. Investors should note that the principal amount invested by them in this scheme will be under moderately high risk.
| Tata Retirement Savings Fund - Progressive Plan | ||||||
|---|---|---|---|---|---|---|
| Company | Sector | Assets (%) | ||||
| ITC | FMCG | 5.16 | ||||
| HDFC Bank | Financial | 4.8 | ||||
| Kotak Mahindra Bank | Financial | 4.46 | ||||
| Larsen & Toubro | Construction | 4.06 | ||||
| Yes Bank | Financial | 3.98 | ||||
| HDFC | Financial | 3.71 | ||||
| Maruti Suzuki India | Automobile | 3.45 | ||||
| Hindustan Unilever | FMCG | 3.36 | ||||
| Reliance Industries | Energy | 2.99 | ||||
| Bata India | FMCG | 2.98 | ||||
| *As on August 31st, 2018 | ||||||
| Trailing Returns (%) | 1-Year | 3-Year | 5-Year | |||
|---|---|---|---|---|---|---|
| Tata Retirement Savings Fund - Progressive Plan | -1.35 | 12.71 | 19.31 | |||
| NIFTY 50 Total Return | 13.20 | 12.69 | 15.19 | |||
| Category | 2.78 | 10.56 | 18.79 | |||
| *As on September 28th, 2018 | ||||||
| Risk Measures (%) | SD | Beta | Sharpe | |||
|---|---|---|---|---|---|---|
| Tata Retirement Savings Fund - Progressive Plan | 15.53 | 1.05 | 0.73 | |||
| Category | 14.33 | 0.97 | 0.54 | |||
| *As on August 31st, 2018 | ||||||
HDFC Retirement Savings Fund - Equity Plan
| Basic Information | |
|---|---|
| Parameters | HDFC Retirement Savings Fund - Equity Plan |
| Category | Multi Cap |
| Benchmark | NIFTY 500 TRI |
| Launch Date | 2/25/2016 |
| Asset Size | Rs. 533 crore(As on Aug 31, 2018) |
| Fund Managers | Neelesh Surana |
| Expense Ratio | 2.69%(As on August 31, 2018) |
| Minimum Lumpsum | Rs 5,000 |
| Minimum SIP | Rs 1,000 |
| Exit Load | 1% for units redeemed/switched-out before completion of 60 years of age |
Launched on February 25th, 2016, this scheme invests a minimum of 80% of the total assets in equity and equity related instruments. It is a notified pension cum tax saving scheme that helps people become financially secure. Aggressive investors with high risk bearing appetite may invest in HDFC Retirement Savings Fund - Equity Plan by HDFC Mutual Fund. The net asset value at which the units are distributed was recorded as Rs. 16.069 as on September 28th, 2018. This scheme is for aggressive investors who are willing to earn high returns by taking high risks.
| HDFC Retirement Savings Fund - Equity Plan | ||||||
|---|---|---|---|---|---|---|
| Company | Sector | Assets (%) | ||||
| HDFC Bank | Financial | 8.73 | ||||
| Reliance Industries | Energy | 5.21 | ||||
| ICICI Bank | Financial | 4.01 | ||||
| HDFC | Financial | 3.63 | ||||
| Larsen & Toubro | Construction | 3.62 | ||||
| Infosys | Technology | 2.33 | ||||
| Carborundum Universal | Metals | 2.18 | ||||
| State Bank of India | Financial | 1.97 | ||||
| Mahindra Holidays & Resorts | Services | 1.93 | ||||
| Aurobindo Pharma | Healthcare | 1.74 | ||||
| *As on August 31st, 2018 | ||||||
| Trailing Returns (%) | 1-Year | |||||
|---|---|---|---|---|---|---|
| HDFC Retirement Savings Fund - Equity Plan | 2.49 | |||||
| NIFTY 500 TRI | 7.30 | |||||
| Category | 2.78 | |||||
| *As on September 28th, 2018 | ||||||
Reliance Retirement Fund - Wealth Creation Scheme
| Basic Information | |
|---|---|
| Parameters | Reliance Retirement Fund - Wealth Creation |
| Category | Multi Cap |
| Benchmark | S&P BSE 500 TRI |
| Launch Date | 2/11/2015 |
| Asset Size | Rs. 1405 crore(As on Aug 31, 2018) |
| Fund Managers | Anju Chhajer, Kinjal Desai, Sanjay Parekh |
| Expense Ratio | 2.53%(As on August 31, 2018) |
| Minimum Lumpsum | Rs 5,000 |
| Minimum SIP | Rs 1,000 |
| Exit Load | - |
This open-ended scheme by Reliance Mutual Fund was launched on February 11th, 2015 with an investment objective to help investors earn long-term capital appreciation along with consistent income by investing in equity, equity related instruments, and fixed income securities. As this is a retirement solution oriented scheme, it is necessary that the investors keep their money invested at least for a period of 5 years or till the age of retirement whichever is earlier. NAV of Reliance Retirement Fund - Wealth Creation Scheme as on September 28th, 2018 was Rs. 12.8897.
| Reliance Retirement Fund - Wealth Creation Scheme | ||||||
|---|---|---|---|---|---|---|
| Company | Sector | Assets (%) | ||||
| HDFC Bank | Financial | 9.05 | ||||
| Grasim Industries | Construction | 7.4 | ||||
| Infosys | Technology | 5.41 | ||||
| HDFC | Financial | 4.38 | ||||
| Bharat Financial Inclusion | Financial | 4.09 | ||||
| Reliance Industries | Energy | 3.84 | ||||
| State Bank of India | Financial | 3.57 | ||||
| Larsen & Toubro | Construction | 3.56 | ||||
| ITC | FMCG | 3.55 | ||||
| ICICI Bank | Financial | 3.46 | ||||
| *As on August 31st, 2018 | ||||||
| Trailing Returns (%) | 1-Year | 3-Year | ||||
|---|---|---|---|---|---|---|
| Reliance Retirement Fund - Wealth Creation Plan | 1.07 | 9.26 | ||||
| NIFTY 500 TRI | 7.30 | 12.51 | ||||
| Category | 2.78 | 10.56 | ||||
| *As on September 28th, 2018 | ||||||
| Risk Measures (%) | SD | Beta | Sharpe | |||
|---|---|---|---|---|---|---|
| Reliance Retirement Fund - Wealth Creation Plan | 14.10 | 1 | 0.44 | |||
| Category | 14.33 | 0.97 | 0.54 | |||
| *As on August 31st, 2018 | ||||||
Factors to Keep in Mind While Investing
- Fund Manager and the Strategies Followed - It is very important that the investors are well aware of the fund manager who is managing the allocation of money invested by you. It should be taken into consideration, that the strategies being followed are in sync with the portfolio requirement and in favor of the scheme’s objective.
- Performance - Although past performance cannot be a perfect base to select a scheme, it does provide an idea about how the scheme performs under different conditions. This indeed can be helpful in analyzing the functioning of the scheme.
- Risk Management - Risk is what the mutual fund market is always subject to. If the risk is not managed properly, it will slowly and gradually affect the returns of the scheme. A robust risk management system is one of the many keys behind a good performance.
- Asset Allocation - The stocks selected for allocation should be the right ones belonging to companies which have strong foundation and work strategies. Investing in stocks which are available at reasonable prices which have high growth scope can be helpful.
- Consistency in Returns - The consistency in returns is one of the factors that can be checked which showcases whether a company is able to yield consistent returns with time or not.
Invest in the Best Mutual Funds
- 100% Paperless
- No Transaction Charges
- Easy to Invest
- Safe & Secure
Conclusion
Investing is a necessity in today’s time, as saving is not just enough, keeping in mind the hike in living expenses. Investing for retirement is one of the many investments which is essential for every individual to make. You may invest in various retirement plans mentioned above so as to reach your retirement goal. All you need to do is stay focused and not get affected by the market fluctuations from time to time.
To calculate the retirement goal that you wish to accomplish, you may use the retirement calculator. Investment in the above mentioned retirement plans can be done both through online as well as offline mode. To invest online, log in today at https://www.mysiponline.com/login.php, which helps you invest in a simplified manner. In case you have any query, you can submit the same here or can consult our experts anytime.
Must Read:
Best Retirement Funds to Invest in India
Parameters to Consider while Selecting Top Funds for Retirement
