How to build a ₹5 crore retirement corpus with ₹1.5 lakh monthly salary

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My 35-year-old cousin earns ₹1.5 lakh per month and recently paid off their home loan. They invest ₹45,000 in mutual funds (Nippon Indian small cap, Mirae bluechip and PPFAS flexi-cap) monthly and ₹50,000 in the National Pension System yearly. What additional investments can help them build a ₹5 crore retirement corpus?

-Name withheld on request

Firstly, it is great to hear that your cousin has successfully paid off their home loan at the age of 35 and has begun investing 30% ( ₹45,000 of ₹1,50,000) of his income towards their retirement goal. They are also utilizing the additional tax exemption under Section 80CCD by investing ₹50,000 in the NPS.

It is good to know that they are following a goal-based investing strategy, aiming to accumulate ₹5 crore for retirement. If we consider 60 years as their retirement age, they have 25 more years to build this corpus, assuming 12% returns from equity mutual funds and 10% from the NPS. 

With a systematic investment plan (SIP) amount of ₹45,000, a tenure of 25 years, and a rate of return (RoR) of 12%, the retirement corpus from mutual funds is estimated to be ₹8,53,93,579. Similarly, with an NPS amount of ₹50,000 annually, a tenure of 25 years, and an RoR of 10%, the retirement corpus from the NPS is estimated to be ₹54,09,088.

Please note that only 60% of the NPS corpus can be withdrawn as a lump sum, and a minimum of 40% must be invested in an annuity.

If your cousin wishes to retire early, they can aim to create a corpus of ₹5 crore. With an SIP amount of ₹45,000, an RoR of 12%, and a retirement corpus target of ₹5 crore, the required tenure would be 21 years. For the NPS, with an annual contribution of ₹50,000, an RoR of 10%, and a tenure of 21 years, the corpus would be