Monthly SIP of ₹24,000 will generate ₹6 crore: Investment will have to be made for 22 years; SIP amount will have to be increased by 10% annually

If there is proper planning and discipline in investment for retirement, then creating a fund worth crores is not difficult. If you are 34 years old and you start a SIP (Systematic Investment Plan) of Rs 24,000 every month for the next 22 years, then you can create a corpus of up to Rs 6 crore.

Experts say that just investing is not enough, but it is also important to increase the investment amount every year (step-up) and include gold along with equities in the portfolio.

A fund of Rs 6 crore can be created with an annual step-up of 10%.

According to Pankaj Mathpal, MD, Optima Money Managers, if you assume 12% annual return on a monthly SIP of Rs 24,000, then around Rs 3 crore will be accumulated in 22 years.

But if you do a ‘step-up’ of 10% every year (i.e. increase your SIP amount by 10% every year), then this fund will increase to approximately Rs 6 crore. Since income increases over time, increasing your investment amount is the most effective way to fight inflation.

Include flexicap to smallcap in your portfolio

The investor’s current portfolio consists of 6 different funds, including Parag Parikh Flexicap, Kotak Multicap, ICICI Prudential Retirement Pure Equity, Invesco India Large & Midcap, Motilal Oswal Midcap and Bandhan Smallcap. SIP of Rs 4,001 is being done in each fund.

Experts believe that this portfolio covers every market cap (large, mid and small), thereby maintaining a balance between risk and return.

5 years lock-in in retirement fund, beneficial in long term

Solution-oriented funds like ICICI Prudential Retirement Fund have a lock-in period of 5 years. Experts say that this is not a bad thing for long term goals like retirement.

However, investors should keep in mind that what is more important than the name of the portfolio being ‘retirement fund’ is its asset allocation and discipline. This fund also works like a flexicap fund, which helps in diversification.

Entry of gold in portfolio, gold will protect from fluctuations

To avoid volatility in the equity market, adding gold to your portfolio can be a better strategy. Experts suggest that a small part of the total investment should be invested in gold mutual funds or gold ETFs.

Gold traditionally acts as a hedge during times of inflation and market decline. A separate gold SIP of Rs 2,000 to 4,000 can strengthen the portfolio.

What is the expert’s advice? Review is necessary from time to time

According to Mathpal, the biggest challenge in long-term investing is discipline. 22 years is a very long time, so the portfolio should be reviewed from time to time.

If a fund continues to perform poorly, it may need to be changed. But if you diversify your portfolio and stick to the step-up formula, a sizeable corpus can easily be built by retirement.

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