I am 49 years old working in private sector. Currently, drawing Rs. 1.50 lakhs per month, my investment details.
- Lumpsum investment – canara robeco midcap regular – Rs.2 lakhs, union multicap fund –Rs.1 lakh, mahindra Manulife small cap rs.2 lakh; canara robeco multi cap Rs.2.20 lakhs; mahindra Manulife business cycle fund – Rs. 50,000; white oak capital large & mid cap fund – Rs. 100,000; ICICI prudential energy opportunities fund – rs. 100,000
- SIP – HDFC Defence fund – Rs. 10,000; mahindra manulife manufacturing fund – Rs.10000; white oak special opportunities fund 10,000
- FD with HDFC bank – rs. 12,00,000
- LIC – Rs. 10 lakhs
My future expenditure, daughters marriage in 3 to 4 years and to purchase house in chennai and to save money for retirement.
Please give me advice on how to invest so that I can meet my future demands and have a self-sufficient retirement.
Ans: Assessment of Current Investments
Mutual Funds
Your portfolio has a good mix of midcap, multicap, small-cap, and sectoral funds.
Diversification across different fund categories is appreciable.
However, the allocation to thematic and sectoral funds like defence, manufacturing, and energy is high.
Sectoral funds can be volatile and risky, especially for near-term goals.
Fixed Deposit (FD)
Rs. 12 lakh in FD provides stability and liquidity.
FDs are suitable for short-term needs but offer limited growth potential.
LIC Policy
The LIC policy provides Rs. 10 lakh, likely covering insurance and investment.
Such policies usually yield lower returns than mutual funds.
Future Financial Goals
Daughter’s Marriage (3–4 years)
Allocate funds with a low-risk profile for this goal.
Avoid high exposure to equity for this purpose.
House Purchase in Chennai
Save in instruments that offer both safety and moderate returns.
Flexibility and liquidity are important for this goal.
Retirement Corpus
Focus on long-term equity investments for growth.
Diversify to balance returns and risk.
Proposed Investment Strategy
Short-Term Goals (Daughter’s Marriage and House Purchase)
Utilise Fixed Deposits Wisely
Allocate a portion of your FD for your daughter’s marriage.
Retain some FD for emergency purposes only.
Invest in Debt Mutual Funds
Choose high-quality short-duration or dynamic bond funds.
Debt funds can provide better post-tax returns than FDs.
Keep the money safe and accessible for short-term use.
Avoid Sectoral and Thematic Funds
Shift sectoral fund investments to safer debt-oriented funds.
Sectoral funds are not suitable for short-term goals.
Medium- to Long-Term Goal (Retirement Planning)
Increase SIP in Diversified Equity Funds
Diversify into flexicap, multicap, or large-cap funds.
These funds balance risk and growth for long-term wealth creation.
Reduce Thematic Fund Allocation
Limit exposure to thematic funds to less than 10% of the portfolio.
Reallocate to well-diversified equity funds.
Invest in Hybrid Funds
Include balanced advantage or hybrid equity funds.
These funds reduce volatility while offering equity-like returns.
Consider Equity-Linked Savings Scheme (ELSS)
Invest in ELSS for tax-saving benefits under Section 80C.
ELSS funds also offer long-term growth.
General Recommendations
Review Insurance Policy
Assess if the LIC policy offers adequate life coverage.
If it is a traditional endowment or ULIP, consider surrendering.
Reallocate proceeds to mutual funds for better returns.
Maintain Emergency Fund
Keep 6–12 months’ expenses in a savings account or liquid funds.
This ensures you have liquidity for unforeseen expenses.
Monitor and Rebalance Portfolio
Review your portfolio quarterly or semi-annually.
Rebalance to maintain alignment with your goals.
Focus on Tax Efficiency
Use tax-efficient instruments like ELSS, debt funds, and retirement-focused funds.
Plan withdrawals strategically to reduce tax impact on capital gains.
Retirement Planning Recommendations
Systematic Withdrawal Plan (SWP)
In the future, use SWP from mutual funds for retirement income.
It provides tax efficiency compared to traditional annuities.
Healthcare Planning
Ensure your health insurance coverage is adequate for post-retirement needs.
Increase coverage if necessary to avoid financial strain later.
Invest in Equity for Growth
Continue investing in equities for long-term wealth appreciation.
Equity helps combat inflation effectively over the years.
Final Insights
Your investment portfolio is commendable and diversified. However, some adjustments can improve alignment with your goals. Reduce sectoral exposure and shift towards safer instruments for short-term needs. For retirement, continue SIPs in diversified equity and hybrid funds. Regular monitoring and rebalancing will keep your financial plan on track. With these changes, you can achieve your goals while ensuring a comfortable and self-sufficient retirement.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
