Hi, I am a 35 year old female working in an IT company in India with monthly salary of Rs. 70k. I am unmarried with no kids. I have about 30 lakhs in PPF, 10 lakhs in FD/Savings along with own car. I want to take a decent flat in an urban City within a year for which I have to take home loan of 50-60 lakhs and also plan for my retirement in the next 20 years. I have never invested in MF/SIPs earlier but want to start now. Please help me with plans to achieve the above goals and to create a portfolio of min. 5 crores by my retirement. Also, pl. Suggest some SIPs for starters which are medium in risk and returns along with any other investment options

Ans: Your goal of purchasing a flat and creating a retirement corpus of Rs. 5 crores by the time you retire is achievable with a well-structured plan. Let's break it down step-by-step to ensure we cover all aspects of your financial journey.

Current Financial Snapshot and Analysis

You are 35 years old, working in IT with a monthly salary of Rs. 70,000. Your current financial assets include:

PPF: Rs. 30 lakhs.
FD/Savings: Rs. 10 lakhs.
Own car.
You plan to take a home loan of Rs. 50-60 lakhs for buying a flat and start investing in mutual funds (MFs)/SIPs. You aim for a retirement corpus of Rs. 5 crores in the next 20 years.

1. Home Loan Planning

Buying a flat is a significant financial commitment. Here’s how you can approach it:

Down Payment: Use part of your FD/Savings for the down payment. Keep some funds aside for emergencies.
Loan Amount: You plan to take a loan of Rs. 50-60 lakhs. Ensure your EMI is manageable and does not exceed 40% of your monthly income.
2. Building an Emergency Fund

An emergency fund is crucial for financial security. You should have 6-12 months' worth of expenses saved.

Emergency Fund: Allocate Rs. 2-3 lakhs from your FD/Savings. Keep it in a liquid fund or savings account for easy access.
3. Retirement Planning

To achieve a retirement corpus of Rs. 5 crores in 20 years, you need a disciplined investment strategy.

PPF Contributions: Continue contributing to your PPF. It’s a safe, tax-free investment with decent returns.
Mutual Funds: Start SIPs in mutual funds to harness the power of compounding. Given your medium risk appetite, opt for a balanced portfolio of equity and debt funds.
4. Investment in Mutual Funds

Starting SIPs in mutual funds is a great way to build wealth over time. Here’s a plan for you:

Balanced Funds: These funds invest in both equity and debt, offering a mix of growth and stability. Ideal for beginners.
Equity Funds: Focus on large-cap and multi-cap funds. They are relatively less volatile and provide good returns.
Debt Funds: Include debt funds for stability and regular income. They are less risky compared to equity funds.
5. Systematic Investment Plan (SIP) Strategy

Starting SIPs will help you systematically invest and grow your wealth. Here’s a suggested allocation:

Monthly SIP Amount: Start with Rs. 20,000 per month.
Allocation:
40% in balanced funds.
40% in equity funds.
20% in debt funds.
6. Diversification and Regular Monitoring

Diversification reduces risk and maximizes returns. Regular monitoring ensures your investments are on track.

Diversify Investments: Spread your investments across different asset classes and sectors.
Regular Review: Review your portfolio annually. Rebalance if needed to maintain desired asset allocation.
7. Insurance Planning

Adequate insurance is essential for financial security.

Life Insurance: If you don’t have life insurance, consider getting a term plan. It’s affordable and provides substantial coverage.
Health Insurance: Ensure you have a comprehensive health insurance plan. It covers medical expenses without draining your savings.
8. Tax Planning

Effective tax planning helps you save more and invest better.

Tax-Saving Investments: Utilize the Rs. 1.5 lakhs limit under Section 80C through PPF, ELSS funds, and life insurance premiums.
Health Insurance: Premiums paid for health insurance are eligible for deduction under Section 80D.
9. Setting Financial Goals

Clear financial goals guide your investment strategy.

Short-Term Goals: Buying a flat, building an emergency fund.
Medium-Term Goals: Planning for vacations, buying a car.
Long-Term Goals: Retirement planning, creating a corpus for future needs.
10. Maintaining Financial Discipline

Financial discipline ensures you stay on track to achieve your goals.

Budgeting: Create a monthly budget. Track your income and expenses diligently.
Savings Habit: Aim to save at least 20-30% of your income. Automate your investments to ensure consistency.


I understand your ambition to secure a comfortable future and the excitement of buying your own flat. Your proactive approach towards financial planning is commendable.

You have already built a substantial corpus in PPF and FD/Savings, reflecting your disciplined savings habit. Starting investments in mutual funds is a smart move to grow your wealth.

Final Insights

Achieving a financial goal of Rs. 5 crores for retirement in 20 years requires a strategic approach. Here’s a summary of the steps to follow:

Home Loan Planning: Use savings for down payment, keep EMIs manageable.
Emergency Fund: Set aside Rs. 2-3 lakhs for emergencies.
Retirement Planning: Continue PPF contributions, start SIPs in balanced, equity, and debt funds.
SIP Strategy: Invest Rs. 20,000 per month in a diversified portfolio.
Insurance Planning: Ensure adequate life and health insurance coverage.
Tax Planning: Utilize tax-saving investments to maximize savings.
Financial Goals: Set clear short-term, medium-term, and long-term goals.
Financial Discipline: Maintain a budget, save consistently, and review your investments regularly.
Your financial journey is unique, and this plan will help you achieve your goals while ensuring financial security. Stay committed to your investments and regularly review your progress.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in