Hi, I am 35 years old and earning Rs 1200000 per annum, I have been investing in LIC insurance policy annually for Rs 27000 and investing in mutual funds through SIP of Rs 5000 per month in equity...and had health insurance covered for Rs...

Hi, I am 35 years old and earning Rs 1200000 per annum, I have been investing in LIC insurance policy annually for Rs 27000 and investing in mutual funds through SIP of Rs 5000 per month in equity...and had health insurance covered for Rs 10,00,000 by annually Rs 11000 and monthly income plan from tata AIA for 15 years annually for Rs 60000. and also saved Rs6,00,000 for emergency fund..How do I plan my goal of reaching Rs 2 crore in next 5-10 years...

Ans: Hello Thirunahari, firstly please understand the LIC policy you are investing heavily in as to what returns it is generating, is it required for a young person like you and how will it benefit you in terms of tax savings and growth in capital. As far as achieving a corpus of 2Cr is concerned in the next 10 years, assuming an annual CAGR of 15% you will have to invest 81,000 each month.
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Ans: You have made a disciplined start. At age 31, your proactive savings mindset is truly admirable. With your income and assets, you have built a strong foundation.

You are aiming for a Rs. 2 crore goal in 9 years. This is ambitious. But achievable with clarity, commitment, and a balanced approach.

Below is a detailed and structured assessment from a 360-degree financial planning lens.

» Income and Expense Management

– Your monthly income is Rs. 1.2 lakh.
– You are investing Rs. 40,000 each month.
– This is around 33% of your income. That’s a very good habit.
– However, you did not mention monthly expenses.
– Please track them carefully to optimise surplus further.
– Avoid lifestyle creep as income grows.

» Car Loan Assessment

– You have a car loan of Rs. 3.5 lakh.
– The EMI outgo is not mentioned.
– If EMI is over 10% of your income, consider early closure.
– Pay off in next 6-8 months if liquidity permits.
– Avoid any further vehicle loan unless absolutely required.

» PF and NPS Contributions

– Rs. 11.5 lakh in PF is a good base.
– Rs. 4.6 lakh in NPS at your age is a head start.
– Both are long-term, retirement-focused.
– They will not help for your 9-year goal.
– But do continue investing in both for retirement security.

» Stock and MF Holdings Review

– Rs. 6 lakh in direct stocks is moderately high at this stage.
– Rs. 9 lakh in mutual funds is a strong step toward diversification.
– But direct stock investing has higher risk.
– Do not allocate more than 10-15% of your total wealth to stocks.
– Review your direct stock picks every 6 months.

» FD Allocation Reassessment

– You have Rs. 6 lakh in fixed deposit.
– This gives low returns and is not tax efficient.
– Shift this amount gradually to mutual funds.
– Only keep 4-6 months' expenses in FD or liquid fund.

» Monthly Investments Review

– Rs. 15,000 per month in MF is a good start.
– But you are investing Rs. 25,000 per month in direct stocks.
– This is disproportionate and riskier.
– Shift Rs. 10,000 from stocks to mutual funds.
– Aim for Rs. 25,000–30,000 per month in diversified MFs.
– Direct stocks should remain at Rs. 15,000 or less.

» Goal of Rs. 2 Crore in 9 Years

– This goal needs focused planning.
– For a 9-year horizon, equity mutual funds are ideal.
– Stay with actively managed diversified funds.
– Avoid index funds. They mimic market returns blindly.
– They can underperform during volatile or flat markets.
– Good active funds beat index consistently.
– A Certified Financial Planner with MFD licence can guide fund selection.

» Avoid Direct Plans

– Direct plans may look cheaper.
– But they lack advisory support.
– Many investors pick wrong categories or funds.
– That hurts returns badly.
– Regular plans via a trusted Certified Financial Planner add value.
– You get portfolio reviews, rebalancing, risk alignment, and exit strategy.
– The extra 0.5% fee can deliver 2–3% extra return by avoiding mistakes.

» Investment Strategy to Reach Rs. 2 Crore

– Invest minimum Rs. 30,000 per month in equity mutual funds.
– Review and increase this yearly by 10–12%.
– Choose flexi-cap, large & mid-cap, and balanced advantage categories.
– Add a small portion to mid-cap once corpus is larger.
– SIPs should be linked to specific goals.
– Avoid switching between funds frequently.
– Rebalance once a year with a planner.
– Keep direct stocks under control.

» Portfolio Rebalancing Tips

– Present equity exposure is skewed toward direct stocks.
– You need better mutual fund diversification.
– Shift Rs. 3–4 lakh from stocks to mutual funds immediately.
– Allocate funds to 3–4 high quality, actively managed schemes.
– Avoid sectoral or thematic funds for now.
– Maintain debt exposure via PPF, NPS, and emergency fund.

» Risk Management Measures

– You have not mentioned health insurance.
– Get a family floater of at least Rs. 10–15 lakh.
– This protects long-term compounding.
– Term insurance is also critical if you plan to start a family.
– Minimum cover should be 10–12 times your annual income.
– Insurance should be for protection only.
– Avoid ULIPs, endowments, or money-back policies.

» Emergency Fund Strategy

– Keep at least Rs. 2–3 lakh in liquid fund or FD.
– Use this only for job loss or medical need.
– This ensures you won’t break SIPs.
– Separate it from investment corpus.

» Tax Planning and Cash Flow

– Keep investing in NPS if you use old tax regime.
– If you opt for new regime, then focus only on SIPs.
– Avoid investing just for tax savings.
– Focus on overall portfolio efficiency.
– Use FD interest income for short-term cash needs.

» Financial Planning for Family Expansion

– You are planning to start a family.
– Start a small SIP of Rs. 2,000–3,000 for future child goals.
– Gradually increase this once expenses stabilize.
– Keep education, healthcare, and home upgrade in mind.
– Review your plan every 12 months with a planner.

» Monitoring and Review

– Do a complete portfolio review once a year.
– Rebalance based on market performance.
– Avoid panic during market falls.
– SIP discipline matters more than timing.
– Work with a trusted MFD with CFP credentials.
– They will help avoid emotion-based decisions.

» Final Insights

– Your vision of Rs. 2 crore in 9 years is practical.
– Shift focus from direct stocks to MFs.
– Increase SIP gradually to Rs. 35,000 per month.
– Avoid DIY investing via direct or index plans.
– Seek personalised guidance from a Certified Financial Planner.
– Keep debt low and insurance strong.
– Protect your future family and financial goals.
– Your current assets and mindset show strong potential.
– Stay patient and consistent for the next decade.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment