Hi, I am presently earning a net salary of 85000 after my all deductions( HL EMI of 40000 and other statutory deductions like PF/NPA etc).
My age is 40 years any my dependents are my wife and 2 children of 9 and 3 years. My monthly SIP contribution is 29000 spread across Large, Small, Flexi funds any I try to increase it by 5- 10% every year for the last 8 years. My present MF portfolio is of of 60 lacs with XIRR of 15%. My NPS balance as on date is 43 lacs and PF balance is 20 lacs. Monthly NPS is at 23000( including mine and employer contribution) and monthly PF 20000 ( mine and employer). I also have shares of approx 5 lacs and liquid funds of 10 lacs in FD for emergency. I have term plan of 1.50 crores. I will continue with my SIP for next 20 years till my retirement. I want to have a corpus of 30 lacs each for my both child for their higher education when they attain 18 years. I also want to have my retirement corpus of about 3 crs by 2046 so that my post retirement expenses are taken care by SWP. We have health policy for the family for 20 lacs. Will I be able to achieve my desired financial goals with my present investments. Or any rebalancing is required.
Ans: » Your Overall Financial Position
– You have built a strong financial foundation.
– Eight years of disciplined SIP investing is a major strength.
– Regular SIP increases every year have worked well for you.
– Your retirement assets are growing from multiple sources.
– You have a good emergency fund.
– Health insurance and term insurance are already in place.
– Overall, your financial journey appears well-structured.
» Assessment Of Children's Education Goal
– Your elder child is 9 years old.
– The higher education goal is roughly 9 years away.
– Your younger child has a longer investment horizon.
– A target of Rs.30 lakh per child may look sufficient today.
– However, education inflation is usually much higher than normal inflation.
– By the time your children reach college age, actual costs may be significantly higher.
– I would suggest reviewing this target every 2-3 years.
– If income permits, gradually increase allocations towards this goal.
– The longer horizon for your younger child works in your favour.
» Assessment Of Retirement Goal
– Your current retirement assets include mutual funds, NPS, PF and equity investments.
– The biggest positive is that contributions are continuing every month.
– You also intend to continue SIPs for another 20 years.
– Based on your current savings discipline, the retirement goal appears achievable.
– However, a retirement corpus target of Rs.3 crore by 2046 may be on the lower side.
– Inflation over the next two decades will significantly reduce purchasing power.
– Your actual requirement may be much higher.
– I would encourage you to periodically reassess the retirement target.
– It is better to build a larger retirement corpus than discover a shortfall later.
» Review Of Asset Allocation
– Your portfolio already has exposure across different equity categories.
– NPS provides additional diversification.
– PF acts as a stable debt component.
– Emergency reserves are adequate.
– There is no immediate need for major restructuring.
– Avoid frequent portfolio changes based on short-term market movements.
– Consistency is more important than chasing the latest performing category.
» Emergency Fund Review
– Maintaining around Rs.10 lakh in emergency reserves is a sensible decision.
– With home loan responsibilities and two dependent children, liquidity is important.
– Continue keeping emergency money separate from long-term investments.
» Insurance Review
– Family health cover of Rs.20 lakh is good.
– Review whether a super top-up can further strengthen protection at a reasonable cost.
– Your term insurance cover of Rs.1.50 crore is useful.
– However, with two young children and a home loan, it may be worthwhile to review whether the cover remains adequate based on current liabilities and future goals.
» Home Loan Consideration
– Continue paying the home loan as scheduled.
– Avoid diverting long-term retirement assets towards prepayment.
– If future bonuses or surplus cash become available, you can evaluate partial prepayments.
– Balance loan reduction with wealth creation.
» Areas To Focus On
– Continue annual SIP increases.
– Increase investments whenever salary increases.
– Review education goals every few years.
– Reassess retirement corpus targets periodically.
– Maintain adequate insurance protection.
– Stay invested through market cycles.
» Finally
– You are doing many things right already.
– Your disciplined SIP history, NPS contributions, PF accumulation and emergency planning place you in a strong position.
– The main area needing attention is not portfolio rebalancing.
– It is ensuring that your education and retirement targets keep pace with future inflation.
– Continue your current investment discipline.
– With regular investment increases and periodic reviews, you are well-positioned to achieve your financial goals.
Best Regards,
K. Ramalingam, MBA, CFP,
AMFI-Registered MFD – ARN 4188
www.holisticinvestment.in
https://www.linkedin.com/in/ramalingamcfp/
Question by R on Jan 23, 2024English
