How to reach my child education and retirement goals

We are glad to see that you have very clearly defined your two long term goals - Children education and your retirement, along with the targeted amount needed for each of these goals.

You have also selected good funds and the portfolio is quite aggressive. However, since your investment horizon is quite long term and if your risk appetite is also very high then continue with this portfolio with maybe one or two changes.

There is no need to change Canara Robeco Emerging equities fund as it is one of the top performing fund in the mid & small cap category. However, UTI Transportation & Logistics Fund can be replaced with either UTI Equity Fund or SBI Bluechip Fund.

Your total monthly SIP investment is Rs 45,000 only and if we assume a return of around 13% per annum over 13 years, then you are set to meet the first goal - Your child's education fund of 2 Crores after 13 years.

However, it would be difficult to meet your retirement goal of Rs 3 Crores after 20 years, that is 7 years post achieving the child education goal. We are afraid, you will be able to accumulate only approx Rs 65 lakhs after 20 years.

The question is how to reach the retirement goal? Start additional monthly SIPs worth Rs 27,000 for this purpose. we have assumed annual return of 13%.

In summary, your monthly SIP amount should be total Rs 72,000 per month for the first 13 years. Withdraw the desired amount of 2 Crores after 13 years, and reduce the SIP amount to only Rs 27,000 and continue for another 7 years and you will be able to reach your retirement goal.

However, if you are unable to increase the monthly SIP amount from the current Rs 45,000 to Rs 72,000 per month, there is another alternative to reach both the goals.

You can still achieve this goal by increasing the SIP amount by only 10% per annum. For example - you need to save only Rs. 51,400 per month in the 1st year and then increase the contribution by 10% every year till the 13th year and draw Rs 2 Crores from the corpus at the end of the 13th year.

After 13 years reset/ reduce the SIP amount to only Rs 16,800 per month and keep increasing by 10% again for next 7 years and you will be able to achieve your retirement goal of Rs 3 Crores tool! All the return assumptions have been made at 13% per annum.

Hope we could answer your query to your fullest satisfaction. Do write back to us in case you have some more queries.

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