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Ans: Hi,

At age of 37 years, and planning to retire after 10 years is an ambitious goal. So lets see how your financials stack up to meet this challenge.

Investments
FD - 13 lacs, SIP - 25000 pm, NPS contribution 4200 pm, RD 7500 pm
After 10 years the above investments if continued can help you accumulate approx. 1 crore.

I feel the 7 lacs should be invested over 6-9 months into MFs instead of monthly sip of 5000. This way you can accumulate approx. 20 lacs in 10 years instead of reaching 12 lacs with the small SIP.

Thus you can accumulate approx. 1.2 crores in 10 years.

Assuming you can service your child's education and household expenses (inflation adjusted) from your salary for the next 10 years.
After 10 years, for the next 30 years your monthly expenses inflation adjusted will require at least a corpus of 1.60 crores invested with 12% returns.
This does not include the education expenses after 10 years for her graduation/post graduation.

I will recommend 2 points below
1. Reduce FD from 13 lacs to 3 lacs and invest the remaining 10 lacs in equity MFs.
2. Extend your retirement from 10 years to 15 years.

With the above 2 points, you can achieve the below
1. Retire with accumulated corpus of approx. 2.60 crores.
2. After 15 years, for the next 25 years your monthly expenses inflation adjusted will require approx. corpus of 2 crores invested with 12% returns with a good possibility of leaving an inheritance.
3. Excess of 60 lacs can be used for child's education requirement.

Consult a CFP for a detailed plan with options and alternatives to achieve your goals.

Thanks & Regards
Janak Patel
Certified Financial Planner.

Ans: Hi,

In 5 years accumulating a corpus of 2 Crores is possible. I have listed 2 such options that can work as examples.

1. If you are willing to take risk and invest in equity Mutual funds with expectation of 12% return, then an SIP of 2.42 lakhs each month can achieve the target.

2. If you take lesser risk and invest in conservative hybrid Mutual funds with expectation of 8% return, then an SIP of 2.70 lakhs each month can achieve the target.

The period being just 5 years, you should have realistic expectations that market can fluctuate and hence target may at time seems a little far away. Staying invested a bit longer can give good returns.

Suggest you consult an advisor who can analyze your profile and provide comprehensive guidance.

Thanks & Regards
Janak Patel.

Ans: Hi,

You are currently invested in Stocks and Mutual funds and you also have your PF. Assuming your MF investment is also more equity based, you have 80L invested towards Equity.
Your PF balance is not mentioned but as maximum limit of withdrawal is 90% for house purchase, I assume you have 50 lakhs or more in PF.
Your Equity to Debt allocation is approx. 60:40 favoring Equity. Even in this allocation, direct stock market investment which is 40% has the maximum risk exposure. MF are managed by professionals and they are risky but relatively less.

For a 1 Cr property, home loan would be 60 lakhs, which amounts to approx. 57K of EMI (depends on interest rate and tenure, assumed 15 years for now). So it may impact your monthly saving capacity to start with.
With 40% withdrawn from PF, your Equity Debt ration would change to 90:10. Thus increasing your risk exposure.
Your PF balance is considerably reduced.

So the first question you should ask yourself is - How much RISK am I willing to take at this time ?
With time, as you approach retirement age, will this RISK level be the same, chances are - no. At that time would you feel more secure with safer investment options. If yes, then PF balance needs to be much higher than what you would probably accumulate over 15 years.

Typically, for your profile (based on age alone), I would recommend you use the direct investments in Stock market to supplement the house purchase plan. You can of course keep some stock investments in good quality companies as a long term investment.
Also evaluate your Mutual Funds to see if they are providing you good returns of above 12%. If you find any scheme that is underperforming, it would be prudent to exit it and use those funds also towards the house purchase.

Beyond the above if you still fall short for the 40% part of house purchase, then you can consider PF withdrawal.
Note PF has a purpose its primarily to provide for retirement. Hence it is prudent to withdraw at the right time and get the benefit of not paying any tax on it. So even at 8% assured returns, its quite attractive considering most other investments will attract tax on withdrawal.

Equity on the other hand has risks associated but also reward those who can stay disciplined with their investments. But it will attract taxes.

So - The question you need to ask is how much Risk to take and what would be preferred asset allocation you can keep without losing sleep for the next 15 years until retirement.

Thanks & Regards
Janak Patel
Certified Financial Planner.

Ans: Hi Priya,

Current Investments -
Your current investments are more (over 90%) in Debt than Equity e.g. PF (PPF+PF) = 39 lacs out total 44.4 lacs.
Debt investments like PPF/PF provide safely and security to the invested capital. But the interest rates just about help meet inflation. Growth is not achieved with these investments in the true sense.
Equity based investments like Equity Mutual Funds will provide growth in the long term (at least 5 years, and you have a good 16 years). Your current allocation is just over 6 lacs even assuming NPS as equity (check and update allocation to equity to max possible).

Loans-
Personal loans will typically have very high interest rates. This should be the first one you should try to close as early as possible. There is no point allocating any savings to investment giving less returns and paying high interest in this loan.
Car loan can continue as per schedule as its interest rate will be much less compared to Personal Loan. Unless you can prepay and close it also early, depending on your saving potential.


To retire early at age 50, you have the next 16 years to grow your corpus to a respectable amount.
I assume you are employed and contributing to PF and NPS. Hopefully you are contributing regularly to Mutual Funds also.
As income, expense and saving/investing details are unavailable I can provide some guidelines only.
Do try to maximize your monthly investment towards Equity Mutual Funds to accumulate a decent corpus for retirement.
Unless you are claiming tax benefits for PPF, consider lesser contribution to it now.
By the time you retire your Equity and Debt should be near 50% each, there by providing you safety and growth. In fact you can try to achieve higher Equity % if possible.
Overall your corpus should fetch average of over 10% returns (currently its under 8%).

Action items
1. Pay off personal loan ASAP
2. Invest maximum savings into equity mutual funds
3. Once you have done above 2, consult a CFP to help with retirement corpus - this depends on various factors, monthly expenses, life expectancy, etc.
4. Ensure you have adequate health cover. Take a topup plan with a higher coverage and lower premiums.

If you have other goals/requirements, then do discuss with CFP and arrive at a holistic plan.

Thanks & Regards
Janak Patel
Certified Financial Planner.

Ans: Hi,

Retirement corpus amount of 2.5 Cr may seem good enough to start for a monthly 2.5 lacs expectation.

Simply put, it can last approx. 17 years if you invest where returns is 10%.

You need to consider inflation and that will increase your monthly expectations each year. Depending on your lifestyle, inflation can be in the range of 6%~12% or even higher.
The corpus investment is another important factor - we assumed above a return of 10%. Depending on your risk profile, this investment can make a difference to the growth potential of the corpus.

A generic recommendation would be to invest in a conservative or a balanced advantage mutual fund and start an SWP.

Recommend you consult an advisor for a detailed plan based on your profile.

Thanks & Regards
Janak Patel
Certified Financial Planner.

Ans: Hi,

Based on the information provided, its difficult to provide specific responses. Even then, let me try to guide you with some pointers.

Savings -
As I understand your income and expenses do not leave any saving at this time. With 1 lakh income and 25K rent, you have 75k for other expenses. So first start by looking at these, create a budget for various expenses and see if there is any potential to make adjustments and arrive at saving a few thousands. Even a saving of 2k every month has a potential to build 10 lakhs in 15 years. So no amount is too small. Start small and keep looking for ways to save more with time.
Rent is also something to think about. Is there anyways to reduce it, a smaller house or another area or something that can work for you. When you consider new place keep in mind the over all expense you will incur not just rent, e.g. travel expenses. Overall there should be a benefit in terms of real savings in hand every month.

Loan -
Going for a loan to support your parents house will put additional burden on your budget. Do they live in the same city, if so is there an option to live with them. This can help service EMI with the rent saved.

Empower your spouse -
Another option to consider is your spouse's potential to contribute to the household income. You can encourage her towards something that she can start either a job or something on her own, may be tuitions or any other interests, anything that can generate a little more income to support/increase your savings.

Career -
As for your own future in IT, I can understand it may look challenging. Look for additional skills you can develop on the job. Many organizations have career growth options with trainings and new areas of focus where they would prefer an existing employee they can train and utilize. So look within your organization and even outside. Developing new skills can be 1 way to stay relevant in IT. Keep yourself updated with new tools and techniques to get an edge over others.
Also consider any other areas of interest/expertise you have or can develop for an alternate career. I have been in the IT industry too for a long time. Somewhere in the middle of my IT career I developed interest towards finance and specifically personal finance area and pursued it with passion and eventually I started it as a profession/business.
So look for your areas of interest.

Thanks & Regards
Janak Patel
Certified Financial Planner.

Ans: Hi,

You have about 15-20 years before retirement and that's a good time period to accumulate a good retirement corpus.

Your son's education will remain your priority during this period also. Assuming you can fund his education from your monthly income at least till his 10th/12 grade. You can decide on an amount for his graduation/post graduation that you want to provide to him. For example if you want to provide 10 lakhs when he is 18 years old, you will need to start investing a monthly SIP amount of 2000 in mutual funds assuming returns of 12%. So based on the amount required you can calculate the SIP amount required.

You have EPF of 2 lakhs which is not sufficient today but assuming you continue contributions and after 15 years this can be a considerable amount. But still may not be sufficient for retirement, so you can consider it as part of/contribution to your retirement.

So lets look at your FDs - you have 50 lakhs in FDs. Even at 7% interest on them you are not going to beat inflation as you will need to pay tax on the interest income.
This money has a potential to earn better returns and not just beat inflation, but also create a retirement corpus which can be sufficient for 20 years (this depends on your expenses also).

If you split this 50 lakhs and keep 5 lakhs in FDs for emergencies, you can invest the remaining 45 lakhs to create a good corpus.
If you invest 45 lakhs in Mutual funds and assuming a return of 12% over 15 years, you will have a corpus of approx. 2.70 crores.
With 15-20 years for retirement, you have an advantage to achieve your goals.

Though these numbers may look good now, they have to be evaluated with all other parameters like your monthly expenses, other goals in life, Son's education needs etc.

I recommend you consult a CFP or a fee based advisor and discuss all aspects towards a financial plan that will cover Retirement and all other goals. The Plan will help you better prepare for the future and provide alternatives and options and a clear roadmap towards achieving them. It will also cover aspects of health and life insurance.

Thanks & Regards
Janak Patel
Certified Financial Planner.

Ans: Hi,

You have a good diversified portfolio across market caps and the funds are also good for long term investing.

Please continue and increase SIP amount when your income rises. If you stay invested for a long term, the portfolio has potential for a good wealth creation.

Thanks & Regards
Janak Patel
Certified Financial Planner.

Ans: Hi,

Your Financials look reasonably good even with some liabilities. Your liabilities stand at about 28% of your assets and 12.5 times your income, which is a healthy ratio by itself.

Your PF amount should not be considered for the purpose you have mentioned and let it remain for retirement. This amount may be earning about 8%, but its completely tax exempt and you should only think to withdraw post retirement.

You have mentioned 5 lakhs in other investments, you will need to evaluate these for liquidity and returns to support the below recommendations. If they are earning better returns than loan rates mentioned then do continue, else you can consider to liquidate and service the loan.

Car Loan -
Your car loan of 6 lakhs is at 9.2%, which I am sure is higher than the returns on your FDs. Returns from FDs are also taxable and clubbed into your income. Even at 7% interest you are effectively getting lower returns (under 5%) post tax. You will be in the highest tax backet based on income. So the car loan should be immediately closed with amounts from the FDs.

Home Loan -
You must be claiming some tax benefits for the home loan in your taxes. You can similarly decide if the benefits is better than the FD returns. Without EMI details, I can only assume and in a lot of cases they are better and hence claiming tax benefits continues. Also with your financial standing you can continue and build wealth now as the returns from Mutual fund investments will out weigh the pre-payment on the loan.
In numbers, lets consider you pay off the home loan amount of 29 lakhs in 5 years, your monthly contribution will be 57K and you would have paid approx. 34.25 lakhs to the bank. If you invest the same 57k monthly in Mutual funds, you would accumulate 47 lakhs in 5 years at 12% returns.

So yes continue with your SIPs and top them up with additional amounts you can and build a good corpus for the future.
Also the remaining FDs amount of 14 lakhs after paying the car loan can be better deployed. Keep about 3 months expenses in FDs and the rest can be moved to a Hybrid Mutual fund (e.g. HDFC balanced advantage fund) to earn better returns.
With 2 daughters, you will be looking to provide them education and better life until they are independent, so every rupee towards that big corpus is going be beneficial in the long run.

Do ensure you have sufficient term life cover and health cover for the family.
You can consult a CFP or a fee based advisor to get a comprehensive financial plan personalized for yourself. It will be worth the effort and money for a secured and bright future for the family.

Thanks & Regards
Janak Patel
Certified Financial Planner.

Ans: Hi,

If you have contributed to EPF then you will be eligible to receive EPF and pension from EPFO.

Thanks & Regards
Janak Patel

Ans: Hi P,

Please provide all details and your complete query.

Thanks
Janak Patel.

Ans: Hi,

As your expenses are managed by the rent you are receiving, your total corpus of 69 lacs can be invested to meet your retirement goals keeping safety and capital (value) protection in mind.

Retirement will mean that some benefits you may have got during your working status, mainly the health cover from employer will not be available. So I hope you have already got a health cover for self and spouse, if not, then do consider it asap.

The corpus you have accumulated needs protection and also a bit of growth to meet inflation at least.

The rent typically may not increase each year to cover inflation, and then you will feel the need to reach into the corpus you have.

Considering the post-retirement life expectancy of 20 years, its a long enough period to invest the corpus wisely to ensure you are well supported by it.

I recommend 3 bucket strategy -
1st bucket - funds to meet expenses for the next 2-3 years, this can also be your emergency fund if required. Amount of 5-7.5 lacs to be kept in a Nationalized bank as FD (make multiple 1 lac FDs). FDs can earn close to inflation returns.
2nd bucket - funds to earn a little above inflation and still be relatively safe, so expect to earn 1-2% above inflation. There are multiple options for this in - conservative hybrid mutual funds / equity savings mutual fund. Consider 20~25 lacs in this.
3rd bucket - funds to provide growth to your corpus. You can consider to take a little extra risk for a long term view (7+ years) and invest remaining amount in Balanced advantage mutual funds. Here you may be able to get double digit returns and over long term, the compounding can potentially grow this amount to meet and support your needs.

If you are not very comfortable with any type of risk then stick to the first 2 buckets, to at least counter the inflation.
Invest in the products you understand and with access to your money anytime.

Remember whatever option you select, keep your risk capacity in mind and invest. Do not invest where you money is locked/blocked for a long period as that will not serve any purpose for you (I have come across retirees investing/purchasing products from agents, they do not understand them and then getting their money blocked for 5-8 years with promise of regular income later, but this generates below inflation returns, beware of such agents/products).
The above mentioned options will provide access to your money whenever you require without blocking it. Mutual funds have emerged as one of the most regulated and transparent industry.

You can also consult an advisor to understand the products before proceeding with your investments.
Stay healthy and invest wisely.

Thanks & Regards
Janak Patel
Certified Financial Planner.

Ans: Hi,

With a take home salary of 1.4 lakh and EMI of 75k, you have 65k to manage expenses and saving if any.

Your current assets are - 2 houses and a Villa plot. Do you receive rent on at least 1 of the house, that can help supplement your savings. I doubt Villa plot can generate any income. So do consider any rental income possible.

You have a Gold Loan of 25 lakhs, do reduce it using some part (50%) of the 10 lakhs in savings. Consider rest as Emergency fund.

Once you have optimized your income and reduced your outstanding loans, see how much you can really save for a long term.

Some math for the 1 Cr target you have in mind.
Assuming your investment will get return of 12%, you will need 43k per month to achieve 1Cr in 10 years. If you extend the time period to achieve it, to 15 years, then you will need 20k per month.

So be realistic and plan for a long period to contribute to your goal of 1 Cr. As I don't know the loan duration, I cannot include the EMI amount toward savings post loan completion.

As I see it, many advisors can recommend a portfolio to achieve 1Cr, but most importantly, you need to be smart with accumulating assets and loans, manage income and expenses and plan your savings. You have at least 10 years to be aggressive investor before your move closer towards retirement, so think Equity.

Thanks & Regards
Janak Patel
Certified Financial Planner.

Ans: Hi Lakkara,

Retirement is a long period of time of approx. 20 years. During this period as you may not have any income, the corpus you have needs to fulfill your monthly expenses.

The plan of utilizing your 1 crore corpus for retirement plan depends on multiple factors - monthly expenses, risk profile and other requirements.
For now I will assume, your risk as moderate and there are no other requirements.

So here's what you need to do (assuming monthly expenses of 60K).
1. Calculate your expenses (monthly/annually) e.g. @50k per month expenses, annual expenses = 6 lacs.
2. Calculate you annual expenses for the next 4 years (you can use inflation e.g. 6% increase each year). e.g. Year 2 exp is 6*1.06=6.36L, Yr3=6.74L, Y4=7.15L, Y5=7.57L
3. Calculate annual expenses for the remaining years also in same manner e.g. Y6 = 8.03L, etc.
Divide your Corpus into 3 buckets.
Bucket 1 - your savings account - keep 1 year expenses in it and withdraw for monthly expenses.

Bucket 2 - Fixed Deposits - Keep next 4 years expenses in FDs that will earn same as rate of inflation i.e. 6%. Ensure you have FD's maturing each year for the annual expenses calculated above. Match maturity amount with calculated expenses above. So a total of 24L will be invested FDs, 6L for every year's expenses.

Bucket 3 - Hybrid Mutual funds - Keep the remaining amount e.g. 1Cr - 30L = 70 Lacs in a Hybrid Mutual fund like HDFC Balance Advantage fund. These funds have a combination of Debt and Equity investments. They provide some growth to the amount you invest and also cushion the down times in the market. After 2 years, from this fund, you can plan to withdraw your annual expenses for that year e.g. Y3 (Y3 = 6.74L), and invest it in an FD with maturity of 3 years (giving you Y6 exp = 8.03L).
Repeat this withdrawal from MF (for amount that same as that years expenses and Investment into FD for maturity of 3 years.

In this way if the MF gives a return of 10% (or above), you will have covered your annual expenses and still have a corpus of over 45L with you at the end of 20 years.

So what's important for you to do it calculate your monthly expenses and if it matches the numbers I have assumed above, you will be fine for a comfortable retirement life. So it all depends on your monthly expenses and other factors for the plan.

You can consult a CFP for a more comprehensive retirement plan based on your requirements.

Thanks & Regards
Janak Patel
Certified Financial Planner.

Ans: Hi,

Financial stability needs to be defined for each individual based on their own preferences and perceptions.

You are a teacher and I assume you will continue your profession until retirement, this gives you opportunity to earn and save for future.

Your current investments are in a fixed income instruments which have the potential to only meet inflation needs for that amount. That means your money though increased over time will be having same purchasing power as it is today.
The property value in the future is a bit of difficult to estimate as it depends on many uncontrollable factors.
Hence we cannot determine if these amounts in the future are going to be able to meet your requirements without understanding your goals.

The approach you should follow is to look at what are your goals/requirements in life - during your working life and after retirement. This will require analysis of your current expenses and future goals to arrive at a corpus number.

A CFP can help you understand, plan and achieve this with a holistic financial plan. You will be provided with options and alternatives that are available and based on your profile/preferences, you will know what and how it can be achieved.
I recommend you take guidance form a CFP towards a holistic financial plan.

Thanks & Regards
Janak Patel
Certified Financial Planner.

Ans: Hi,

Buying a house is one of the big decisions of life as it provides you with security and ownership of an asset but when you take a loan it demands your commitment towards EMI payments.

In your case, for a loan of 44 lakhs for a duration of 24 years if I assume interest rate of 8%, the EMI is approx. 35000.
This works out to under 20% of your monthly income.
This is a good ratio for EMI payment compared to your monthly income.

Typically we advise to have monthly expenses not more than 40% of your monthly income with EMIs of not more than 40% of monthly income. This will ensure you have a saving/investment potential of at least 20% of monthly income.

You are well placed towards EMI payments and if your monthly expenses are well managed, your saving/investment should help build a good corpus for other/future goals.

Thanks & Regards
Janak Patel
Certified Financial Planner.

Ans: Hi Besra,

With so much loan it is difficult to save till you finish paying back the loans.
So pay off the loans and as you finish one loan save that EMI amount every month.

You can talk to your bank (where you have account receiving salary) and see if they can help you consolidate these loans at a better interest rate. That way you can reduce some burden and save on interest.
Do not spend more than you can repay, so if you repay the loans on time and finish them, that will be best thing for now.

Once Loan EMIs are paid, then start saving same amount every month. You can do SIP into Mutual funds.

Thanks & Regards
Janak Patel
Certified Financial Planner.

Ans: Hi,

Your biggest goal that I understand is your kids education which cannot be compromised.
You have started an SIP of 10000 and over the next 10 years this will accumulate into an amount of approx. 23 lakhs at 12% returns.
Please note all schools typically increase fees each year between 8%-12% (same may be even more). So depending on your choices, this amount may or may not be sufficient for their education. If you look at graduation and post graduation, the amount required are much higher.

So I would recommend that you increase your SIP towards this goal and provide the best education you can.

As for the plot you wish to buy-
As you already have a home loan EMI, it indicates you already have a house. So the new plot/house is an additional asset that you wish to build. But is it prudent to use all your savings ? My opinion is this will jeopardize your financial equation.
Buying the plot and taking home loan and staying with no saving - a huge risk. Any situation where you need money for an emergency or kids education you have no asset to liquidate. A plot is not an asset that will generate income, cannot be liquidated quickly and its value (increase) will depend on many factors not in your control.
You are bound by EMIs for the next 15-20 years and you will be so closer to retirement and other goals for family/kids that you will feel a lot of strain financially.

You need to not only secure your kids future but also think of accumulating wealth for other goals in the future and most importantly Retirement.
It is prudent to save now and accumulate for the future, let the eighth wonder - "compounding" work the miracle for you.
Lets see some numbers for the next 10 years.
30 lakhs in FD - at 7% this can become approx. 59 lakhs
65000 in SIP (instead of new EMI) at 12% can become approx. 1.5 crores.
Total corpus of over 2 crores.

The above amounts are only for 10years, and if kept for another 10 years can grow to over 7crores.

You can revisit the option to buy a plot in the future once a few goals are achieved and you have accumulated good corpus.
You can consult a CFP to guide you towards a plan to achieve all your goals and provide you with options and alternatives and help you make the right decisions.

Thanks & Regards
Janak Patel
Certified Financial Planner.

Ans: Hi,

A corpus of 3.40 crores is a large enough amount for planning a retirement. If you invest wisely and keep your expenses within a limit then you can comfortably live till age of 80 years.

Assuming an inflation of 6% on your expenses and a 12% return for the corpus investment, you can withdraw 1.5 lakh per month for expenses and still have some corpus at the end. If expenses are much higher then you may be short, if they are much less, then you will have a good corpus at the end.

So it will depend on your expenses each month.

Thanks & Regards
Janak Patel
Certified Financial Planner.

Ans: Hi,

Your current savings/investment of 22L will support your expenses for only a few years at this time.

Today if you wish to retire, you will need over 2 crores in FD earning 7% returns to last for your life expectancy of 70 years.

I recommend you focus on saving and investing across different asset classes to maximize your corpus over time. Different asset classes like equity, debt, gold etc can provide you well diversified option to generate wealth and provide stability and liquidity.

FDs are a safe option but its safety net if not going to cover your whole corpus if the bank fails.

Understand the potential, risk and returns of different asset classes and considering the long time period you have, you can save over the next 10-15 years and then plan retirement once your retirement corpus is accumulated.
Mutual funds are a good option to consider as they cover few asset classes and are easy to manage and track.

The retirement corpus depends on the time period post retirement and the expense you plan to cover from it. Accumulating that corpus also needs a plan and commitment to save/invest on a regular basis.

Thanks & Regards
Janak Patel
Certified Financial Planner.

Ans: Hi Sivaramakrishnan,

Congratulations on having an active working life at the age of 80.

For your monthly expenses of Rs 50000 and assuming an inflation of 7% over the next 15 years, you require approx. Rs 85 lakhs (today).

You already have Rs 182 lakhs (not including any further savings over the next 6 months) invested across MF/ FD/ and STOCKS.

I recommend you have a systematic withdrawal plan from your investments for your annual expenses.
Depending on how you have spread your investments, you can decide on the approach.
For MFs - its simple to do a SWP for an amount each month.
For FDs - you may need to liquidate them, so instead of breaking them, plan to use them at their maturity if its within six months of your requirement. if the maturity is long term, and you have a need then you may need to liquidate. Also check if there is an option to make them Sweep-in type FD, which means that when your account has less balance, it will move money from FD to account. Discuss with your bank on options available to you.
For Stocks - You can decide when to liquidate them. If you wish to move away from stocks, then you can consider investing in so hybrid Mutual fund schemes considering your time horizon.

Overall you will be looking to grow approx. Rs 1 crore over the next 15 years and this can grow to an amount of Rs 3 crores at 8% returns.

So your current corpus is more than sufficient and even if you increase your monthly expenses, you will have a surplus after 15 years.
Happy retirement and a healthy life ahead.

Thanks & Regards
Janak Patel
Certified Financial Planner.

Ans: Hi,

Total Income = 1.2 lakhs
FD = 50 Lakhs
OD loan on FD = 30 lakhs with EMI of 18500

I think the main point of analysis is the FDs and the EMI payments for the OD loan on FDs.
Outside of this the money in hand can be utilized for long term investment (note at the end).

I am not sure what is the period for this EMI. Please check what rate is applied to this OD loan. I am sure you had a good reason to withdraw the 30 lakhs.
Basically its your 30 lakhs in FD and you have borrowed it and you are trying to put it back using the EMI way.
Typically FDs provide lets say 7% interest, so you need to decide if your EMI to fulfill the 30 lakhs is worth the future value of your FDs. So ask this question, after X years of paying EMI what amount are you getting in hand ?
Usually in such situation, the bank may make money or net effect is you will get less than 7% interest on your own money.

Now lets see FD value of 50 lakhs at 7%
over the next 10 years = 98 lakhs,
over the next 15 years = 1.37 crore
and over the next 20 years = 1.93 crore
And you need to reduce the amounts with the EMIs you are paying against the OD loan on FDs. Thus your returns will be much less in hand.

Alternate scenario -
I would suggest you close the OD loan using your own FD amount of 30 lakhs.
You would have 20 lakhs remaining - of this keep 7 lakhs in FD as Emergency fund for any situation you do not anticipate.
Invest the remaining 13 lakhs in Mutual funds - this will have a potential of earning returns of 12% annually over the long term.
Add to this the 18500 as MF SIP amount (same as you planned for EMI). Hence nothing changes in hand for you (outgoing EMI or SIP).
The wealth accumulated (approx.)
over the next 10 years = 86 lakhs,
over the next 15 years = 1.71 crore
and over the next 20 years = 3.26 crore

Now you can compare if this with your FD of 50 lakhs at 7% less the EMI payments and clearly the alternate scenario will work out better.

And additional money in hand from your income less expenses, you can utilize that too and invest in MFs and increase the wealth you will create in the long term.
An addition of 10000 to your SIP will generate approx. 1 crore, 2.22 crore and 4.26 crore respectively.

As your EMI for car/2wheelers close, invest same into MF and over the long term, your wealth creation will only increase.

Important is to stay committed over the long period of time and take wise decisions. Review the MF portfolio every year to check if the performance is as expected.
You can consult a fee based CFP/Advisor who can guide you towards this and also add value to holistic planning for insurance, tax and retirement. Better pay a fee and get unbiased advice, instead of individuals selling you products not in your best interest.

Thanks & Regards
Janak Patel
Certified Financial Planner.

Ans: Hi,

Please continue the Home loan EMI payments without any default.

As your monthly expenses are managed by the rent received, you should focus on saving maximum from your salary to pay off the personal overdraft. If you can pay 1 lakh per month towards this, then in approx. 2 year or so, you can close this.
Also if your Mutual Fund investment is not giving you over 12.5% returns then use it to pay off the personal overdraft.
SIP reduced to 1k - again this you can use towards personal overdraft.

Having health and term life insurance is a good decision.

Once you close the personal overdraft, then focus on investment for the future. Mutual funds is a very good option to create wealth over a long period of time.

Thanks & Regards
Janak Patel
Certified Financial Planner.

Ans: Hi,

To pay your personal loan faster, you need to save and pay all amount left after EMI and your expenses towards repayment of personal loan.
Do not stop paying the home loan EMIs
.
If personal loan interest rate is higher than the returns you are getting on Mutual funds, then you can consider withdrawing from MF and paying up the personal loan.

Thanks & Regards
Janak Patel
Certified Financial Planner.

Ans: Hi,

Lets look at your investments and see what you will be able to achieve at the age of 60.

ULIP - This is a insurance + investment product and as you have completed your premium term of 7 years you should be able to access this amount (now or 3 years later). It may seem to be a good product but I believe on both Insurance and Investments there are better products. First the insurance cover is not substantial and the charges are quite high. They will manage to invest the amount just like a Mutual fund. Its better to split insurance and investment. If you are looking at this amount like an investment, then the amount of 22 lakhs is available as a starting point, over the next 24 years if invested at 12% rate (typical returns in Mutual Funds), you will be able to accumulate 3.33 crores. You can buy a term life cover of a high value (much higher than the ULIP cover), for a very low premium and you should definitely get that and com out of the ULIP.

Savings of 20 lakhs - I suggest you keep about 10 lakhs aside in some FDs as your emergency fund - to be used only for any unexpected/emergency situation. This will grow to 40 lakhs at 6% over the next 24 years.
The remaining 10 lakhs should be invested in Mutual funds and at a 12% returns after 24 years this will accumulate into an amount of 1.51 crores.

Thus you can accumulate approx. 5.25 crores with these 2 amounts invested as above for the next 24 years.

To achieve 8 crores, you need to accumulate another 2.75 crores. If you invest 16500 monthly into similar investment (Mutual fund SIP) and assuming same return of 12%, you can accumulate this amount.

In this process we have not considered the land property you have, as its difficult to calculate its value without knowing its location and usage/type. So you can get some estimate for it in future then you can accordingly reduce the monthly SIP requirement.

Mutual Funds are a good investment option when you consider its long term benefits - as its managed by professionals. Its important to construct a good MF portfolio and with time of your side, you should be able to achieve your goal comfortably.

Consult a fee based Certified Financial Planner/Financial advisor who can help and guide you for this.

Thanks & Regards
Janak Patel
Certified Financial Planner.

Ans: Hi Harija,

I believe the banking relationship with SBI has led you to invest in various schemes of SBI Mutual Fund.

For the child's education, you have already committed to a plan and invested in various schemes to supplement it. That's fine.

As for the other schemes you have invested 25 lakhs - they are all also SBI schemes. When you invest across various schemes of one Mutual Fund house, you end up not optimizing your investments and thus add risk towards your investment's potential.
Not all schemes from a fund house perform above expectations and hence it's good to diversify across fund houses too.
Especially when you are looking to create wealth over a long time period.

For example the SBI Multicap is not above it category average over last 3 years period (its only 3 years old). I would suggest to change this investment to either Nippon Multicap or Mahindra Manulife Multicap schemes.

Currently you are heavy on Large cap and though its stable and good option, you should decide your long term investment goal.
Accordingly going forward for new investments do consider funds that will complement your investment requirement. If you have long term plan in mind, say more than 10 years, you can consider a mid-cap or even a small cap scheme to diversify and aim for higher growth (with a little added risk) towards wealth creation.
On your next visit to India, or if comfortable online/on call, you can consult a CFP/Financial advisor to discuss and prepare a plan towards achieving your goals. A fee based service with them, which aims to optimize your interests/goals will add a lot more value for you rather then someone who wants to sell their products to you.

Thanks & Regards
Janak Patel
Certified Financial Planner.

Ans: Hi Tina,

I am glad to see you have already started your investment journey and you are asking the right questions.

Good so far -
You are saving almost 50% of your income for investment and that is a very good start.
You have a Term Plan of 1Cr.
You have Health insurance from employer to cover your mother and your self.
You have investments in Equity - stocks 1L and Mutual funds - 3L.

Next steps -
1. Create an emergency fund - this is typically 6 months of expenses (no investments). So save approx. 3L towards this and hold them in a no/low risk investment like FD. FDs can be accessed as and when required and funds are available almost instantly thru online mode. Each month keep aside 25k towards this and so in a year you will be set. Create an FD each month and keep on auto renewal and enable swipe-in feature. This will make breaking/withdrawal easy. Use these FD only for emergency situations.
2. Buy a health insurance super top-up policy for a large amount e.g. 50 lakhs for mother and self. The premiums will be very less and it will provide good cover. Keep deductible equal to the health insurance cover from employer e.g. cover from company is 5 lacs, then buy super top-up with deductible of 5lacs for a cover of 50lacs.
3. Assuming you do the above, you will have approx. 20k per month for investments in the 1st year and 45K from 2nd year onwards. List your goals for future and approx. amounts you will require for them with the timeframe e.g. Goal 1 in 5 years requires X amount. Once you have them listed or you decide simply to create wealth without goals that's also fine to start with. I would suggest you invest the amounts into a well diversified Mutual Fund portfolio. You already have investment in stocks and if you feel comfortable in that then you allocate some amount towards it, it depends on your comfort level and experience so far with stocks.
Mutual Fund portfolio (indicating some schemes to consider)
For creating wealth in the long term (over 7 years), you can consider allocations as below
Large Cap - 20% (alternative is Flexi cap fund or Nifty Index funds) (ICICI Bluechip, UTI Nifty 50)
Flexi cap - 20% (Parag Parikh, HDFC)
Multicap - 40% (Nippon, Mahindra Manulife)
Hybrid fund - 20% (Balance advantage funds) (HDFC)

If your goals are within 3 years, put money in FDs, 3-5 years consider Hybrid funds and beyond 5 years consider equity mutual funds.
As you have MF investment, try to align your portfolio accordingly. A good MF portfolio can be between 4-7 funds. Too many funds will not provide anything much except increase the overhead of managing them, so try to keep you portfolio simple.
Wealth creation in not so much about timing the market and picking funds (assuming you do a reasonable job with it), its more about patience and time "in" the market. So staying invested and reviewing your investment every year to see that they are on track with your expectations is more important.

You can connect with a Certified Financial Planner / Financial Advisors that are fee based to get the right advice and guidance.

Thanks & Regards
Janak Patel
Certified Financial Planner.

Ans: Hi,

Financial freedom has different meaning for different individuals and in your case I am not sure what you would consider it.

You have a home loan which is for a long term and that is fine, so continue paying your EMIs.
Income - EMI = 1.40 lakhs per month. From this amount after monthly expenses, what ever amount remains should be utilized well towards your goals.
Top priority should be 2 things, so split your surplus amount after monthly expenses into 2 parts -
1. An emergency fund - this is an amount which can be utilized for any unforeseen events and you can start with 3 months and increase it to 6 months of your total outflows (EMIs + monthly expenses), do not consider any investments as part of this. So if 1.25 lakhs is your EMI + monthly expenses, then your emergency fund should be between 3.75 lakhs to 7.5 lakhs. Aim to create this over the next 6-12 months.
2. Payment towards the Personal loan - PL is typically very high interest loan and should be paid off ASAP. Check Prepayment terms and try to clear out this at the earliest. Even if you can keep aside 25k each month, you can pay off the PL in the next 2 years.

Once your PL is paid up, and you have accumulated your Emergency fund, then all surplus amount each month should be invested towards creating a corpus. This can be utilized for all future goals including retirement.

I would recommend continue contributing towards PPF and NPS but increase/maximize your contribution towards Mutual funds. Also PPF and NPS have lock-in periods and hence the contributions will not be accessible for all goals, they can be considered for Retirement.
MFs, especially equity MF schemes have the potential of creating wealth over a long period of time.
Typically 100-your age = % allocation in Equity Mutual funds will help create a good corpus in the long term. So if you age is 30 years, plan to contribute 70% towards Equity Mutual funds.

A well diversified portfolio of MF schemes will help you achieve this goal. Portfolio should be kept simple and not get into too many schemes. A well diversified portfolio can have schemes like a Flexi-cap, Multi-cap and Hybrid funds that will create a balance and provide growth. Consult an advisor to help you create this portfolio and review it every year to see that it stays aligned to your goals.

Thanks & Regards
Janak Patel
Certified Financial Planner.

Ans: Hi,

As the loan tenure is only 3.5 years, I suggest you continue with your EMI's.
The Investments you have are well diversified but you are invested more towards Debt (FS, PPF, part of NPS and EPF). I assume your Mutual fund investment will include Equity based schemes. So review the % allocation to Equity part of the overall portfolio.

I would suggest you increase the Equity based investments and achieve a ratio that is more appropriate for you. Typically a thumb rule to follow is 100-your age = equity % of your portfolio.

This will help you grow your corpus to a respectable amount without taking too much risk and also help to beat inflation over time.

Thanks & Regards
Janak Patel
Certified Financial Planner.

Ans: Hi Saras,

Firstly sorry to hear about your son's health. I can only hope and pray that the situation improves.

As you have retired and your monthly expenses of 35000 is well within the income you are receiving and at the same time you have ongoing investments of 45000 monthly, your accumulations are growing.

So as far as you are concerned it seems like you will be adding to the corpus you already have. But with inflation your monthly expenses will increase and also more importantly your medical expenses will rise. So this becomes important to be managed with your corpus.

It is important to assess the portfolio from 3 perspectives - liquidity, stability and growth.
Liquidity is important to cover any unexpected or unplanned event requiring money immediately or with a short span of time.
Stability is important to weather market conditions and provide security for continuous and steady cashflow.
Growth is also important as you are looking at a long time to live on the money you have accumulated/invested and overcome inflation value.

As you have a mix of FD, Post office schemes, Insurance plans and Mutual funds, it is important to evaluate the portfolio from the above perspectives and realign it for your requirement for future.

Insurance plans (assuming they are insurance + investment product) can be good option when you are working/earning, but once you have retired, they may not be ideal option for investments. So the Insurance plans need to be reviewed and then decided on. If you have taken them many years ago and they are nearing maturity then, wait and collect maturity benefits. If they are more recently purchased and their maturity will be after a very long period, then they won't be ideal for you.

FD's, PO schemes and Mutual funds are a good combination. Overall the corpus with investments and incomes seen seem to be fine but a detailed analysis is required.

I would suggest you contact a CFP/Financial advisor who will guide you. Choose a fee based advisor who is not pushing any products.

Thanks & Regards
Janak Patel
Certified Financial Planner.

Ans: Hi,

With an EMI of 1.6 lakhs and monthly expense of 70k, you have about 1.7 lakhs every month in hand to plan for financial future.

First and foremost, lets consider the 6 lakhs in saving as emergency fund that you can use for any unforeseen situation.

The personal loan of 20 lakhs that you have would be at a higher interest rate and so repaying that early should be prioritized.
The home loan is a long term commitment and the amount is quite big so continue the home loan EMI as it is.

So from the 1.7 lakhs that you have in excess each month, use about half (80K) towards accumulation/prepayment of personal loan. Check the terms of prepayment of this loan - how many times and what amount can be prepaid so as to minimize your outstanding loan amount. This way your personal loan can be closed within 1.5-2 years max.

The remaining 90k should be invested for the future. As no other goals are listed, lets just assume its wealth creation. With the long term view and investment timeline, you should look to invest this money in Mutual Funds. Unless you have other investment option you want to consider and you have knowledge and understand the risks involved, I would suggest to stay with Mutual Funds. Mutual Funds offer a lot of diversification in equity, debt and even gold funds with some exposure to overseas equity if so desired.

So constructing a good diversified Mutual fund portfolio can help generate wealth in the long term. With an amount of 90k and assuming it will increase to over 1 lakh in 2 years after personal loan is paid off, and a timeline of 20 years you can expect to accumulate a corpus of approx. 10Cr (at 12% returns).

I recommend you take guidance from a financial advisor/CFP who can help you plan towards this and also guide you on other important aspects of Life & Health Insurance, tax and Retirement. I think with the right advisor (fee based), you will be able to get to achieving your goals comfortably.

Thanks & Regards
Janak Patel
Certified Financial Planner.

Ans: Hi,

To repay loan in 5-6 years time, you will need the outstanding balance of your loan at that time.

Based on calculations of EMI amount of 50K, loan amount of 60 lacs and tenure of 25 years, the outstanding balance amount comes to about 55 lacs (after 5 years).

You currently have LIC and Gold which you cannot use, so lets not consider them.
Your Mutual fund - currently 1.4 lacs will grow to 2.5 lacs (assuming 12% returns).

This means you need to have 52.5 lacs accumulated from other sources.
Lets assume you start investing with a return of 12% for 5 years, you will need to invest 64K to accumulate 52.5 lacs.

I have shown some calculations to give you an idea of what will be required to achieve your goal. But please understand, numbers are numbers and in life everything is not linear and go as we expect. I am not sure if you can even put up with monthly investment of 64K as you are left with 1 lac (after paying EMI) and there are other regular expenses for home and family.

So unless you have other options, which can help towards early payment of loan, I would recommend that you start with the maximum possible investment after your expenses and accumulate as much as possible over the 5-6 years.
There after, you can see if you have reached a respectable amount to reduce your loan burden and take appropriate decision.
I have advised many individuals to continue saving/investing and accumulate a corpus for the future keeping the home loan ongoing. You continue to get some tax benefit on home loan repayment and your interest payment is at a lower rate compared to your investments when you consider over 5 years of investment.

I suggest you connect with a CFP for a closer look at your situation and take guidance on a more realistic timeline to achieve your objectives keeping in mind the risks. A CFP can provide alternatives based on your individual circumstances.

Thanks & Regards
Janak Patel
Certified Financial Planner.

Ans: Hi,

I like the simplicity in your query. You have stated very clearly what you have accumulated so far and what your ongoing investment is.

Having said that I feel there is some information missing - your contribution to NPS every year as it will have a bearing on the NPS corpus you will accumulate. But as its not mentioned I will consider only the current amount of 16 lakhs. This amount has a potential to grow between 50 lakhs to over 1.25 crores in the next 20 years, depending on the option of risk and investment composition you have opted for.

The accumulated 17 lakhs in Mutual funds if we consider a rate of 12% return for 20 years, then this will grow to 1.6 crores in 20 years.

Your current SIP of Rs.30000 per month in MFs with assumed returns of 12% for 20years, can grow into a corpus of 2.99 crores.

So yes, you seem to be on your way to a corpus of over 5 crores in 20 years.

Your more important part of the query is what tweaks should you apply to your portfolio.
Remember, the portfolio of investments you have should be taken into consideration as a whole to analyze the risk, return and synergy (complimentary nature) of investments. we always suggest a good diversification and this can be achieved in many ways. For some investors, it can a couple of funds, while for some it may be a portfolio of more funds (recommended to keep under 10). But its important to not over diversify as it will dilute the returns of the portfolio.

As you have not mentioned the MF portfolio details of 17 lakhs, it becomes difficult to decide if the other funds are a good synergy / overdiversification for your combined portfolio.

But I can give you some pointers to help you review and make some updates.
I see the funds you have mentioned have overall - 3 small cap funds, a microcap fund - these funds will tap into the same universe of stocks classified as small cap. Having just 1 is enough.
When picking a thematic/sectorial fund, you need to again look at the fund portfolio as it may have a good amount of overlap with your remaining funds - the Infra fund.
Note - do not keep adding new funds into the portfolio as it not just dilutes your returns, but it also becomes difficult to manage them. With time, their less than desired performance will compel you to make changes more often or give you sleepless nights. So weigh your decision against your own personal behavior and try to keep the overall portfolio simple and manageable. In such a long period as 20 years, a lot of things get equated and hence small portfolio is also good.

Most important is to review the portfolio on yearly basis to see if the funds are performing as per your portfolio expectation. They need not be the best/no.1 funds in their category (as that changes each year), but they need to show consistency and stay above the benchmark and category average in performance. This will ensure that you are on track with your overall objective of the portfolio.
If you are comfortable to do this review by yourself then its great, but if you need help, I suggest you reach out and get a good adviser. For the portfolio you want to create, even a fee based adviser can be a worth the time and money you will eventually save and stay assured of reaching your goal.
I recommend a CFP who can help with this and also do a holistic planning for your retirement as it encompasses many aspects which you may or may not have covered.

Thanks & Regards
Janak Patel
Certified Financial Planner.

Ans: Please share your queries.

Ans: Hi Jignesh,

A good question which I get asked by many parents for a similar requirement.
Both options as you have pointed out have their out pros and cons. The Risk/Return equation is always going to weigh on the decision making.

At 6~7% return on an FD, we are considering approx. 10 lakhs amount for investment and its not a small amount by any means.

The Balanced Advantage Fund (BAF) has a debt component and that provides a certain level of stability/downside protection to the investment.

Usually we always associate short term requirements with safety and liquidity requirements and longer term investments with growth. Having said that, this cannot and should not be taken as just 1 and only individual investment for a person.
Because if we do that then, logic suggests a conservative approach with FDs as its the child school fees and we cannot default in its payment.

I will give you the options I think will help you make the decision.
1. Are you of a very conservative person when it comes to taking risk with your money ?
If you think you can sleep peacefully knowing that the school fees will be paid no matter what as its kept in a safe and liquid investment like FD then please stay with FD.
This is also a scenario for individuals who do not have a steady stream of income and many factors influence their income source or individual who have very limited investments.

2. Do you have other investments which can supplement any market volatility on this investment ?
If you think that you have other investments which can supplement the school fees if the market becomes volatile and you understand that in the long term the equity portion of the investment is what you want to provide that extra return. This understanding and acceptance of risk provides you with assurance that you can stay committed to your approach, then and only then proceed with equity linked investment.
This scenario doesn't reflect you as being risky with your money, but rather an approach where you embrace the volatility and have confidence to manage your money for the long term. So a BAF is a good approach.

So in summary your own risk taking ability and your investment portfolio should help you plan the right approach. At the end of the day its what will give you assurance for the future that matters the most.

Thanks & Regards
Janak Patel
Certified Financial Planner.

Ans: Hi Dr.

As you can't keep track of stocks, lets rule out direct stock/equity investment.

NPS - its a good tool for people who want regular income during retirement as pension. So thru your earning life you contribute to NPS and save for the future - contributions are until retirement age. There are prescribed allocation to Equity and Debt funds (similar to mutual fund schemes) that are managed by Fund managers. On retirement age you can withdraw 60% of the funds without any tax liability (its an option) and the remaining funs in the NPS will provide you with pension income. The pension income is considered a source of income in your hand and hence taxable as per prevailing tax laws.

Mutual fund - this investment option doesn't have a time limit for you to contribute. The allocation to different type of Mutual fund schemes are also at the discretion of the investor. Some schemes like ELSS do provide tax benefit under old tax regime. The withdrawal from Mutual funds do have tax implications but they are consider more tax efficient as they are not considered as income. Tax is on the gains (capital gains) only. Regular income can be derived from Mutual funds at the time of retirement using SWP (Systematic withdrawal plan) option or withdrawing a lumpsum amount - its flexible and again at the discretion of the investor.

I would recommend you consult a CFP, who can help prepare a personalized Financial plan for your requirements. A CFP will do a detailed study of your requirements, preferences and also do a risk assessment. This will include all your requirements and provide you with options and alternatives and recommend the right product mix to achieve them. You will need to have a plan of investment that meets your goals (retirement and child specific), plan risk covers for securing future of your family (Life and health) and consider tax implications of investing and subsequent utilization of the corpus for goals. So its an elaborate plan that will be personalized for you which will help you understand the right time for retirement and what to expect pre and post retirement.

Thanks & Regards
Janak Patel
Certified Financial Planner.

Ans: Hi,

At age of 40, you have already accumulated 5 Cr with no liabilities and your own house, that is a tremendous achievement.

The monthly income of 3 lakhs (inflation adjusted) for 40 years - as mentioned will cover your requirements of son's education, medical insurance and vacation. If we assume inflation of 6% and average return on your corpus of 12% over the next 40 years, you will require approximately 6 Cr (not considering tax implications).

Please understand this amount will be exhausted over the next 40 years, so if you plan to leave behind any legacy for your son/grand children then you will need more.

Also your corpus amount needs to be well diversified into aggressive and conservative investments to support your monthly requirements over the next 40 years. Please consult a CFP for guidance in this matter as along with your monthly income expectation, you will need to plan for tax implications. The overall strategy for investment and subsequent withdrawal needs to be planned taking all these factors into consideration. A CFP will be able to craft your personalized plan to meet your requirements and provide options and alternatives to achieve them.

Thanks & Regards
Janak Patel
Certified Financial Planner.

Ans: Hi,

Current state of your finances
Liquid Corpus - 3 Cr
Savings FD - 45 lakhs
Rent income - 37000

Monthly expenses - 1.5 lakhs

If we consider the above, then the monthly expenses will be covered for about 35 years (assuming inflation of 5-6% and average returns of 8%). This doesn't include the education expenses for your 2 children.

Retirement is now typically planned for up to age of 85 years (i.e. 43 years for you). Hence in your situation you have a challenge to support monthly expenses for retirement and children education.

You have 2 more houses and without knowing your intent for their usage/sale and their value it becomes difficult to indicate if they would be sufficient to support the 2 major goals you have listed.
Also with current lifestyle and medical expenses, the health insurance of 20 lakhs may need to be ramped up to a much higher amount.
Also you have not shared much details of your Insurance policies to understand if they are the appropriate ones and if the risk cover is sufficient.

Another important aspect to consider for early retirement is - how will you keep yourself occupied. You will have a lot of time on hand and do you plan to monetize your time by engaging in some financially rewarding activities. This will also have an impact on the overall state of your well-being - financially and psychologically.

I would highly recommend that you consult with a CFP who can guide you with a well defined Financial plan, this will include all your requirements and provide you with options and alternatives. You will need to have a plan of investment that meets your goals, plan risk covers for securing future of your family (Life and health) and consider tax implications of investing and subsequent utilization of the corpus for goals. So its an elaborate plan that will be personalized for you which will help you understand the right time for retirement and what to expect pre and post retirement.

Thanks & Regards
Janak Patel
Certified Financial Planner.

Ans: Hi Sammer,

An adviser/company to be categories as good or not is a bit subjective. I say this because you may find people who have had a good experience with them and those who did not have a good one.

But let me try to help you with some pointers that can help you decide
1. Before asking what they can offer you, ask them - "What do you gain by becoming my advisor?" Their response will give you insight into their objectives. If its not clearly stated, then consider it a RED flag.
2. Are they going to advise based on your preferences or they have a selected list that you need to choose from. I have heard of adviser pushing different products without considering your preferences e.g. You prefer MF and they push ULIP, Regular MF vs Direct MF etc. This can include cross selling other products that they are servicing like insurance and pension products.
3. Inquire about their process of engagement before advising you. Will they consider your requirements and evaluate them and present options to choose or start by putting the options on table and recommending MFs without understanding your goals/requirements. Simple ask, so which is the best MF scheme to invest today. If they start listing them - RED flag.
4. How will they construct a portfolio for you, structure and number of schemes in it, will it have a strategy and objective to it. Or will they keep building it over time by adding new schemes as and when. A person once came to me with a portfolio of approx. 30 lakhs with over 30 MF schemes in it - RED flag. Going beyond 5-6 schemes needs to be reviewed thoroughly.
5. What are their processes for reviewing the performance of the portfolio/schemes and how do they provide recommendation for changes in the portfolio. Will they take into account tax impacts when recommending exits.
6. Will they aim to educate you in this whole process about various aspects so as to establish and enhance their engagement, trust and your own confidence in them.
7. Most important - Will it be a fee based engagement or a commission based. Typically fee based engagements should encourage customer's preferences e.g Direct MF, using client's Demat account etc and provide recommendations for customers requirement with alternatives and options. Even when you change a recommendation, they should educate you on its impact and recommend alternative to mitigate the impact. Commission based engagements are based on their earnings from your investment. Some times their approach is to add schemes based on commissions. But there are good advisors who will stay the course of a well constructed portfolio even in this model, having the customers interest at heart.

So do your own assessment of any advisor you engage with based on the above. You can add more points of evaluation based on your own experience and knowledge.
Remember Simple strategies are more often successful.

Thanks & Regards
Janak Patel
Certified Financial Planner.

Ans: Hi,

As you have already mentioned you have a aggressive approach and time frame for investment in 3-4 years, I would recommend you to consider either a Balance Advantage MF scheme or an Aggressive Hybrid MF scheme. These schemes have proved to generate good alpha and with a portion in Debt it can protect downside to a certain extent.
As you are young and can take risk, you can also consider equity MF schemes. Consider Large cap or Mid cap equity MF schemes. They can provide growth over the time frame mentioned but understand the risks involved too. Return and risk are both on higher side. So if you can manage a downside risk and can extend your time frame - if the market has taken a downturn around 3-4 years, then extend your time in the market with this option.

Also considering the current market turmoil that we are witnessing - Trump's tariff war (today China has got 104% tariff), the world economies are going to be volatile and at such times Gold becomes a good option/hedge. But consider Gold as part of overall portfolio and allocate up to 10% to it.

Asset allocation has proved to be a great tool to overcome volatility and manage risks.

Please note any option you consider will come with its own risk and volatility. So proceed with a mindset to extend your time in the investment if its required.

Thanks & Regards
Janak Patel
Certified Financial Planner.

Ans: Hi,

As you are free hand worker and also at age 50, it is important to consider safety, liquidity along with growth of your investment.

I would recommend you evaluate your requirements and proceed to invest as mentioned
1. Requirements up to 3 years - Money required for this duration should be completed protected and kept available as and when required. I would suggest you consider keeping such amount in a fixed income source e.g. Fixed Deposits. Even when you setup the FDs, setup FDs for 6 months, 1 year, 2 year etc. so that you can access the matured amounts of the FD and don't need to break them. Of course if required you can access when needed. But optimize the returns by not breaking the FDs but by letting them mature at the time of your requirement. Risk - Low. Expected Returns - just about equal to or below inflation.

2. Requirements beyond 3 years and up to 7 years - Such money can be kept in funds that can give you a little better returns than the FDs, as you have some more time for it. I suggest you can consider Conservative Hybrid/Balanced Advantage Mutual Fund Schemes for this as they can provide better returns over the period of time. These schemes will invest in Debt (fixed income) and Equity (Market linked) opportunities and have the potential to generate better returns than FDs. So pick Conservative Hybrid schemes if you require it under 5 years and Balanced Advantage schemes for over 5 years requirements. Risk - Moderate. Expected Returns - equal to or above inflation.

3. Requirement beyond 7 years - With time on your side you can look for a slightly higher returns and consider Equity Mutual Fund schemes for such money. A diversified portfolio of schemes (3-6 schemes) depending on the amount can be considered for achieving slightly higher returns to beat inflation and growing the corpus amount. Risk - High. Expected Returns - can provide double digit growth.

Please note , you have to decide your own risk taking ability along with the prospects of income in the future as you decide on any approach/option. The lesser the risk, the safer options you should consider.
Considering your age and income you will need to prepare an approach. Soon your retirement requirement may come into consideration.
I recommend you approach a certified adviser who can guide you through these aspects over time.

Thanks & Regards
Janak Patel
Certified Financial Planner.

Ans: Hi,

You have not clarified the duration of your requirement, how long do you need monthly return?
But lets assume this is as long as possible.
There are many solutions to this and that involves knowing a lot more about you and your life state but will anyways will provide you a couple of options.
1. Fixed income investment - Invest in FD's at 7%, this will earn you 3.5 lakhs a year and should be covering your requirement. But the savings will remain at 50 lakhs. If the rate on FD falls down, then you will end up using your savings to cover your requirements. So this option may not be feasible for a long period. The risk being low, it may not grow your saving and it can erode your saving too.
2. Invest in Equity (mutual funds) - You mentioned Index funds, they can be considered along with other equity mutual funds too. But understand, there is a higher level of risk involved. Markets are and will be volatile and the returns will not be the same each year. If you have the temperament/patience to stay invested in market fluctuations then venture in this direction. When you are looking to fulfill your requirement each month, your investment will always stay on your mind and this will trigger behavioral traits and hence I mention temperament. Many people get unsettled seeing their investments erode in a short period of time and take decisions which are not rationale. Hence enter knowing the risk and yourself.
3. Middle ground - Invest in balanced option - something like a hybrid fund. If you are conservative (low risk), then go for conservative hybrid mutual fund schemes (more Debt and less equity) and expect returns slightly above your FD in the range of 8-9% which will serve your requirement and can add a bit to your savings. If you are not conservative and understand that market linked investment can provide a little extra boost to your investment then balance your risk with Balanced advantage Mutual Fund schemes (balanced approach to equity and debt). These schemes can provide you better returns up to double digits 10-12% and hence after meeting your requirements, your investment can grow too.

Please understand, Equity brings in market risks and hence have expectations but also understand the risks involved. Make your decision based on the appetite you have for loss bearing and safety and accordingly go ahead. Consult a good advisor or a financial planner who can guide you after knowing more about you and your requirement and also help understand tax implications.

Thanks and Regards
Janak Patel
Certified Financial Planner.

Ans: Hi,

You have decided to retire early and you have already accumulated 2.46 Cr + assets without any outstanding liabilities. Congratulations on your achievements.
Retiring early is on many peoples wish-list and you too have the same desire. So lets see how you are placed for early retirement.
Expecting to have a corpus of 3 Cr in the next couple of years and you have planned a rebalancing of the portfolio too. So with the inflation rate of 7% and return rate of 8% as acceptable, lets see what to expect in the future after 40 years.

Short answer - After 40 years you will have a corpus of over 10 Cr remaining after expenses are taken care of.
This is primarily because your withdrawal/expenses are much below the growth/returns on the portfolio and hence each year the value of your portfolio in increasing.

Lets me clarify that this is not considering any tax liabilities you will need to service on the withdrawals each year. The tax liabilities will depend on the composition of your portfolio and your strategy of withdrawal amounts from Equity and debt/fixed income buckets.
But I am sure even after considering tax liabilities, your corpus will be sufficient and at the end of 40 years you will still have a considerable amount to pass on as inheritance to your loved ones/charity (though you mentioned no dependents).

I would like to recommend you have good Health cover (outside of your employer) and buy it asap. Also retirement of 40 years is a long time and hence do give some thought on how you plan to occupy your time. I hope you have a plan of what you will do once retired. Engage yourself in meaningful and fulfilling activities and keep minimum idle time - exercises, sports, reading, cooking, meeting/catching up with friends and family etc. This will help you stay healthy in mind and body. As money is not your concern, you don't need to think of earning any income from these activities/engagements, so it should be about giving you pleasant experiences. Best time to travel is in early retirement, so go and enjoy.

I also recommend, that you engage/consult with a Certified Financial Planner who will guide you with your retirement corpus planning and other requirements including taxation. Any wrong decision at an early stage can prove very costly and the impact can be felt for long too. Hence it will prudent to get the right advice and guidance at appropriate time.

All the best for long and enjoyable future.

Thanks & Regards
Janak Patel
Certified Financial Planner.

Ans: Hi,

Lets understand the value of your current Investments at the time of retirement. Below is the list with its current value and (expected rate of return).
Emergency Fund - 25 lakhs (3.5%)
Fixed Deposits - 65 lakhs (7%)
PF/PPF/NPS - 25 lakhs (8%)
MF/Stocks - 25 lakhs (10%)
LIC Policies - 25 lakhs (no change)
Your current investments listed above will achieve a value of 3.5 crore at the time of retirement 4 years from now.

Apart from this you have mentioned properties worth 7.25 Cr. Assuming you will only use/liquidate them if required, so excluding them from consideration for now.

You total income is 2.30 lakhs per month (includes rent) and expenses are 75k per month. So there is potential to add to the above investments for the next 4 years.

I will assume your current expenses are sufficient for the lifestyle you want to continue post retirement.
You will require a corpus on retirement after 4 years to sustain your expenses adjusted with inflation of 6% which will be close to 1 lakh per month (at the time of retirement).
With this starting point, and adjusting for inflation of 6% each year, and life expectancy of 30 years post retirement you need a corpus of approx. 2.5 crore - again assumed this will earn a return of 8% for the 30 years.
If you can invest wisely and generate a slightly higher return of say 10%, the corpus requirement will be 2 crore.

Your current investments at the time of retirement with value of 3.5 crore is sufficient to cover your expenses for the next 30 years inflation adjusted at 6%.
And this is excluding the properties you own and additional investments you can make for the next 4 years.

Summary - You are more than stable as far as your financial state is concerned. You have a strong base to meet your retirement needs and also a potential to create wealth for the generations ahead.

I want to highlight/recommend few points -
1. Increase the medical Insurance for yourself and family to 1Crore as medical expenses will only increase in future.
2. Stop the Term Life Insurance and save the premium for investment. As you have no liabilities and net-worth is high enough to cover any outcomes in life ahead, this premium is a lost cause considering your strong financial state.
3. Revisit the LIC Policies you have and consider surrendering/stopping them if they are not nearing their maturity. They are not giving you enough cover and providing below par returns. So do discuss with a trusted licensed advisor and evaluate them. If they will mature in the next 4 years, ignore this point.
4. Post retirement period is a long duration of 30 years, so do consider getting a good advisor - a Certified Financial Planner who can guide you to plan your retirement well and help you design a portfolio for additional wealth creation as a legacy for your children/dependents.


Thanks & Regards
Janak Patel
Certified Financial Planner.

Ans: Hi Shaks,

Your query will resonate with many working professionals.

First and foremost, please check/calculate if you have capital gains arising out of the sale of your current flat. This is important for tax implication and will also help make your decision for utilizing the funds.

Lets assume you have some capital gains from this sale, then you can again have to confirm if the capital gains can be utilized without paying tax on it - this is possible if you have purchased the new flat within the last 1 year. If so, then you can utilize/adjust the capital gains towards payments made for the new flat and save tax on it. If you have purchased the new flat earlier than the last 1 year, then you have 2 options - pay tax on the capital gains and then use the funds as you wish OR invest the capital gains amount in NHAI bonds (locked) for the next 5 years (pay tax only on the interest earned).

Once you have sorted the above, you will know what is the amount in hand to make your decision, so lets dive into it.
You have a loan of 60 Lacs and you can manage the EMI from your salaries. Over the next 6-7 years, your salary will also see an increment of approx 7-8% annually, so I suggest you utilize this excess amount each year to prepay/topup your EMI payments. This will help reduce the loan burden over time. At the time of retirement, your loan outstanding can be paid with available options at that time.
You mentioned PPF as an option - I would suggest you do not utilize PPF amount towards this loan closure. The reason is PPF is a completely tax exempt asset and can be utilized well towards retirement income. Of course depends on how much you have accumulated in PPF.

So lets now consider paying the loan amount with the sale proceeds of the current flat. You have a loan today (assuming interest rate applicable is 8-8.5%), which you can manage and you are keen to continue it till retirement, so also recommend you do so. Keep the sale proceed amount available for investment and wealth creation as there are opportunities that can generate returns at a same rate (conservative options) and higher returns (with a slightly higher risk associated).

As you do not have any major liability which is outstanding or cannot be managed, and also you are investing 90k per month in Mutual funds, you can consider wealth creation options for the sale amount available.
PMS is an option but I feel its risks will out weigh the returns in the time frame you have, unless you have a known and trust-worthy option you want to consider.
As you are looking to retire early, at age 50, you should target to create a corpus that will sustain your retirement life (consider at least 30 years post retirement) and your child's education requirements.
Hence my recommendation would be to invest in Mutual Funds and continue with your PPF until retirement. A well constructed portfolio to create a retirement corpus and your child's education requirements would be required.

You can consult a Certified Financial Planner to help you with this plan. They can guide you with your Investments and Retirement planning and provide options to consider and provide advise on risk management (Insurance requirements).

Thanks & Regards
Janak Patel
Certified Financial Planner.

Ans: Hi BK,

The queries you have raised are simple but the the solutions to them can be many. I will cover the important ones - your main objectives of regular monthly income and also have a corpus that you can leave behind.

So before my response I will make a few assumptions along with your inputs
1. You want to have 3 Lakh per month income to be adjusted by inflation each year.
2. You expect to receive above income for the next 30 years.
3. Return on the corpus invested will be an average of 10% pa.
4. Corpus to last beyond 30 years for your children.
5. No other dependencies to be serviced through your corpus.

Response a) Yes it is very much possible.

Response b) 3 lakh per month has to take into account your lifestyle expenses. It may seem too high for someone or too low for another, so its more relevant for you to measure it against your own expenses today. Do note that with time, and also as you indicated you want to take it easy, this number if its valid today may change once you take it easy.

Response c)
One of the simple solution to achieve your goals/objectives can be to split your 10 crore corpus into 2 amounts and invest them separately.
1. Invest 5.5 crore in Mutual fund schemes - you can further split this into 2~3 schemes for diversification and risk management. Consider between Conservative hybrid, Balanced advantage and Aggressive hybrid funds which can provide an annual average return of 10% (consolidated).
After a year of staying invested, start a SWP (systematic withdrawal plan) from these MF schemes to withdraw 3 lakhs per month and there after increase this by 5% every year.
This corpus will last you between 25 to 30 years.
2. Invest the remaining 4.5 crore separately in Mutual fund schemes - again this can be put into a portfolio of different schemes. This needs to be well balanced for investment for the next 30 years. This is where the long time duration of investment can permit you to take a bit of risk and generate good wealth.
At an average of 10% to 12% returns on the portfolio, expect the portfolio value to be between 78 crore and 125 crore after 30 years.

Response d) Projections provided above with assumed rate of returns.

Please note in the above, tax implications have not been taken into account. Also some important and crucial aspects need to be considered - health insurance being the primary one. You should get yourself a good health cover for the remainder of your life, if you have one, check if it needs to be enhanced or if its sufficient.
Hence I would recommend, you to hire/consult a Certified Financial Planner who can help you build your portfolio with recommended products and schemes that will meet your objectives. A CFP can provide a customized plan to achieve your goals and will also provide you alternatives/options and highlight the pros/cons for each.

Thanks & Regards
Janak Patel
Certified Financial Planner.

Ans: Hi Sandeep,

You have mentioned a total of 8 MF schemes for your investment of 28000 per month.
As details regarding your goal and requirement is not available, it is difficult to judge the overall portfolio from that point of view.
The schemes mentioned though are different names but will have a lot of overlap especially when you consider large cap stocks in their portfolio - HDFC Large & Mid / HDFC Large / HFDC Focused 30 and even the 3 Infra funds.

I believe the idea was to diversify your portfolio thru multiple schemes and if so, that is not really achieved.

Assuming you want to invest for over 10 year period, I suggest you keep your portfolio relatively simple with 4-5 schemes - 1 large cap (6000 in HDFC Large is ok), 1 Mid cap (6000 in HDFC Mid-cap or Motilal Oswal Midcap), 1 Small Cap (6000 in Nippon Small cap is ok) and 1 Infra (as you have shown inclination to Infra, 4000 in ICICI Pru Infra is ok) and add 1 Flexicap (6000 in Parag Parikh Flexicap which also has some overseas exposure). This will provide good diversification and less overlap.

This will provide good diversification and asset allocation across market caps.

Thanks & Regards
Janak Patel
Certified Financial Planner.

Ans: Hi Karunakar,

You have an House property (independent house) valued at 1.6Cr which you intend to sell and use the amount to purchase another House property (flat) with value of 1.4Cr.
You have raise multiple queries and before responding to them, I will try to explain the capital gains on house property.
Capital Gains = Sale value - cost of acquisition - cost of improvement - expenses incurred for sale (e.g. brokerage).
So first calculate the Capital gains on selling the property, as you mentioned you are selling it for 1.6Cr, so reduce it by the acquisition cost, etc.
Once you have the Capital gains amount, that is the amount you need to re-invest in another property to save tax on it, in your case the Flat (value more than the CG) can be purchase within the next 2 years and no tax will be payable.
So lets assume out of 1.6 Cr, you have CG of 1Cr, then 1Cr reinvested in another property i.e. for your flat cost of 1.4Cr, you will have no tax payable.
So its not the full value of sale, its only on the Capital gains that you need to worry for paying taxes.
The remaining amount of 60lakhs in above example can be utilized as per your requirement.
Responses
1. & 2. You can use any amount above the capital gains for any purpose you see fit - like parking, registration, loan or any other form of investment.
3. If the sale will conclude in April 2025, and your payment of the capital gains towards new flat will be April 2026, then you need to invest the capital gains amount as per below -
- if you are sure of purchase of flat, then within 6 months of sale date invest the amount in "Capital Gains Account Scheme CGAS)" in authorized banks. Amount will be kept in a special FD for 2 years and you can withdraw anytime to pay for your new property.

Within 6 months from sale of property or before tax filing for FY of sale date, i.e. FY25-26 filing date 31 July 2026, whichever is earlier, you need to make a decision.
If you are not planning to purchase another house property, then reinvest in specific long term capital gain bonds from NHAI, REC, some others, these bonds have lock-in of 5 years
If you decide to purchase another property, deposit CG in CGAS as mentioned above.

Interest earned on these deposits in taxable (under head of Other income).

Thanks & Regards
Janak Patel
Certified Financial Planner.

Ans: HI Jitu,

In summary, you have 15 lakhs loans at 1% per day interest (= 365% per annum). No options to borrow from any other organized sources like Bank/NBFC. So monthly Interest is 4.5 lakhs.
Monthly Income is 2 lakhs.

This is called a Debt Trap, where your income is less than your outflow (debt), so you are in a negative balance always and keep borrowing to fill the gap. No point in going into the history of the situation but I hope this has been a big life lesson for you.

Borrowing against you Pension policy can be considered but depends on the company and note that this will be at a high interest rate.
Borrowing from PF funds is only under certain situations (e.g. illness, education, marriage) and so even that is ruled out.
I assume you have already considered all/any asset you may own to repay.

The solution cannot be a very simple one. But I can recommend a couple of options which you can see if they help. You plan should simple -
1. Find a source of funds to repay your current loans
2. Stay with bare minimum requirement for next few years and repay maximum amount towards new loan
3. Do not take any new loans and stay on track for next few years, no matter what.

With a salary of 2 Lakhs, you should take a hard look at your living expenses and cut out all except the basic necessities. At least on paper come up with a number that you can discuss with prospective lenders mentioned below. Give them confidence of your ability to pay back every month with a realistic number e.g. over 1 lakh per month. Make this as high as you can make it. Make compromises everywhere possible and evaluate each expense to see what you can eliminate for the next couple of years, except food and absolutely basic needs, compromise on everything else. And ensure you make this work no matter what. You will have to be strong willed to achieve this and make it work.

Check with any close friends/family members/relatives who will trust you and provide you with some loan and provide you with time to repay. Offer to pay them interest which is higher than FD but reasonable for you and you can go as high as 20% per annum. At 20% you can pay back 55~60K per month for 3 years and payback the loan with interest.

Assuming you have a bank account for direct salary deposit, approach the bank and explain your situation truthfully to them and request an overdraft/loan and offer them to recover an agreed amount at an agreed interest rate from your account directly as soon as your salary is deposited. Again the interest rate will be high but if this works, you will be on your way to recovery. Even if they offer an interest rate of 30%~40% per annum and recover in 3 years, your EMI will be around 62K~70K per month.

Approach your employer and discuss if a loan can be provided to you at a reasonable rate of interest and recovered from your salary each month. If you have been employed with them for over a year or longer, and if they consider to extend a loan this may be the best solution you can get. You can offer to sign a contract for this (stay with employer for a period or until loan is paid up).

Is there any other source of funds you can approach with a similar proposal then do so, as long as you can get a chance to payoff your current set of loans and have a manageable EMI amount to pay back over the next few years, just take the best option and keep every desire aside and stay focused on getting back on track.

Please note that borrowing from an alternate source is not going to work if you take a loan and relax after that. You have already impacted your CIBIL score which makes lenders stay away. Now your top priority will be to find a source of funds at reasonably high interest rate between 20% to 40% resulting in an EMI of 55K to 70K for 3 years, and ensure you do not default the payments and clear this ASAP. If you can pay higher amount each month, then do that and get out of these loans as quickly as possible.

With honesty and sincerity if you continue to stay on track, you can eventually start coming back to normal life where you can plan your expenses and save and invest too. But do remember to live within your means and save as much as possible. Over time build back your CIBIL score for future requirements.

Hope this is helpful in some way.

Thanks & Regards
Janak Patel
Certified Financial Planner.

Ans: Hi Niranjan,

As the name suggests, these funds allocate funds across asset classes, Equity, Debt and others (Treasury bonds, InvITs etc).

ICICI Prudential Multi-Asset Fund is the largest fund by AUM in this category. It also has a a more stable returns history and inexpensive primarily due to low turnover ratio.
Quant Multi Asset Fund is relatively quite small but a challenging contender (if last 1 year returns are not considered). Its expensive as its Turnover ratio is higher.

If you have high risk profile then you can consider the Quant fund, otherwise go for ICICI fund.

Thanks & Regards
Janak Patel
Certified Financial Planner.