I am 32 years old. In hand Salary is 130,000. Below is break up of expenses - 1.Home Loan EMI = 44,000. 2. Monthly Assistance to Parent = 7,000 3. Other Household Expenses = 20,000 4. Health and Term Insurance = 3500 Investments = Equity = 6.5 lakh (Mine) + 2Lakh ( Wife) Mutual Fund = 8.5 Lakh (Mine) + 1 lakh (Wife) Emergency Fund = 2 lakh invested in FD. Below are Mutual funds which we own Monthly Investment in Mutual Fund 15,500 approx (mine) + 11,000 (Wife) Mine Mutual fund SIP = 1. Parag Parikh Flexi Cap = Rs.2200 2. DSP Midcap = Rs. 3300 3. SBI small Cap = Rs. 1,000 4. Motilal Oswal Focused Fund = Rs. 2,000 5. Mirae Asset ELSS Saver Fund = Rs. 2,500 6. Axis Blue Chip = ?4500. Wife Sip = 5 Sip each of 2000 month = 10,000 1. QUANT small Cap 2. Quant Flexi Cap 3. SBI Magnum Midcap 4. ICICI PRUDENTIAL BSE SENSEX INDEX FUND 5.HDFC Retirement Savings Fund Wife Invest monthly 1,000 in gold bees and 2,500 in Post office RD. My target - 1. Payoff my home loan of 54,000,00 in next 7 years 2. Retirement corpus at 60 = 4 Cr 3. Child 1 = Marriage and Education - 1.5 Cr 4. Child 2 = Marriages & education = 1.5 Cr 5. Buy Car of around 10 lakh in next 2 years. Need you suggestions how should I achieve my target. I have surplus of 20,000 every month should I invest in Equity of increase contribution to Mutual Fund.

Ans: Firstly, commendations on your meticulous planning and clear financial targets. You've made substantial investments and have a structured approach to your finances. Let’s dive deeper into how you can achieve your ambitious goals.

Current Financial Position
Your monthly income is Rs. 130,000, and you have a surplus of Rs. 20,000 after accounting for all expenses. You have diversified investments across equities, mutual funds, and an emergency fund, showcasing a balanced approach. Here's a detailed breakdown of your expenses and investments:

Home Loan EMI: Rs. 44,000
Monthly Assistance to Parents: Rs. 7,000
Household Expenses: Rs. 20,000
Health and Term Insurance: Rs. 3,500
Total Monthly Expenditure: Rs. 74,500
Surplus: Rs. 20,000
Investments
Your investment portfolio is diversified, with significant investments in equity, mutual funds, and fixed deposits. Here’s a summary:

Equity Investments: Rs. 6.5 lakh (yours) + Rs. 2 lakh (wife)
Mutual Funds: Rs. 8.5 lakh (yours) + Rs. 1 lakh (wife)
Emergency Fund: Rs. 2 lakh in FD
Goals
You have set clear financial goals:

Pay Off Home Loan: Rs. 54 lakhs in 7 years
Retirement Corpus: Rs. 4 crores by age 60
Child 1 Education and Marriage: Rs. 1.5 crores
Child 2 Education and Marriage: Rs. 1.5 crores
Buy a Car: Rs. 10 lakhs in 2 years
Debt Management
Your primary debt is the home loan of Rs. 54 lakhs. Paying off this loan in 7 years requires disciplined repayment.

Current EMI: Rs. 44,000
Target: Pay off Rs. 54 lakhs in 7 years
To achieve this, consider making additional principal payments using your surplus and any bonuses or windfalls. This will reduce the principal faster and save on interest.

Investment Strategy
To achieve your financial goals, let’s review and adjust your investment strategy.

Mutual Funds
You and your wife have invested in a mix of large-cap, mid-cap, and small-cap funds. This is a good strategy for long-term growth.

Parag Parikh Flexi Cap, DSP Midcap, SBI Small Cap, Motilal Oswal Focused Fund, Mirae Asset ELSS Saver Fund, Axis Blue Chip: Continue with these SIPs. They offer a good balance of growth and stability.

Wife’s SIPs in QUANT Small Cap, Quant Flexi Cap, SBI Magnum Midcap, ICICI Prudential BSE Sensex Index Fund, HDFC Retirement Savings Fund: These funds provide a diversified exposure.

Given your surplus, you can increase your SIP contributions. For instance, an additional Rs. 5,000 per month can be split into your existing funds to maximize growth.

Equity
Equity investments offer higher returns but come with higher risk. Your current equity investments (Rs. 6.5 lakh) should be monitored and managed actively.

Emergency Fund
An emergency fund of Rs. 2 lakh in FD is a good start. Ensure this fund is accessible and covers at least 6 months of expenses.

Child Education and Marriage
You aim to save Rs. 1.5 crores each for your children's education and marriage.

Current Investments: Diversify into child-specific mutual funds or balanced funds.
Monthly Contribution: Increase SIPs in balanced or child-focused funds.
Retirement Planning
Your target is Rs. 4 crores by age 60. Given your current age (32), you have 28 years to achieve this goal.

Increase SIP Contributions: Utilize your surplus to increase your SIP contributions.

Equity Exposure: Maintain a balanced portfolio with a mix of equity, debt, and mutual funds.

Car Purchase
You plan to buy a car worth Rs. 10 lakhs in the next 2 years. To achieve this:

Short-term Investments: Utilize short-term debt funds or recurring deposits to save for this purchase.
Investment Allocation
Let’s allocate your Rs. 20,000 surplus effectively:

Mutual Funds: Rs. 10,000 additional SIP in existing funds.
Equity: Rs. 5,000 for direct equity investments.
Short-term Savings: Rs. 5,000 in short-term debt funds or RDs for car purchase.
Insurance Coverage
Ensure your insurance coverage is adequate:

Health Insurance: Rs. 10 lakhs cover for unforeseen medical expenses.
Term Insurance: Ensure it covers at least 10 times your annual income.
Evaluating Index Funds
You’ve invested in an index fund (ICICI Prudential BSE Sensex Index Fund). While index funds offer low-cost exposure, they might not provide the superior returns of actively managed funds. Actively managed funds can outperform the market with expert fund management, especially in volatile markets. Consider shifting to actively managed funds for better returns.

Direct vs. Regular Funds
You might consider investing in direct funds for lower expense ratios. However, regular funds through a Certified Financial Planner offer professional advice and better management of your portfolio. The expertise of a CFP ensures your investments are aligned with your goals and risk profile.

Final Insights
Achieving your financial goals requires disciplined savings and strategic investments. Utilize your surplus effectively, diversify your portfolio, and maintain a balance between risk and return. Regularly review and adjust your investments to stay on track.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in