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Sanjeev Govila  |442 Answers  |Ask -

Financial Planner - Answered on Dec 06, 2023

Colonel Sanjeev Govila (retd) is the founder of Hum Fauji Initiatives, a financial planning company dedicated to armed forces officers and their families.
He has over 12 years of experience in financial planning and is a SEBI certified registered investment advisor; he is also accredited with AMFI and IRDA.... more
Pankaj Question by Pankaj on Nov 30, 2023Translate

I am 35, govt employee with having inhand salary of 1 lakh /month. I have a term plan of 1 cr and the medical facility is provided by the office covers both OPD and IPD. I have a home loan EMI of Rs 20000, 15 lakh are still to be paid, and Investing about Rs 9000 in mutual funds Quant tax saver-2500, Quant small cap-2000, Nippon small cap-2000, Mirae Asset emerging bluechip funds-2500 corpus of 2.5 lakh is generated. 10% of basic is been deducted in NPS. Please review my portfolio and suggest to me which funds and stocks, to have a balanced and diversified portfolio for maximum gain. I should repay my home loan have an interest rate of 9.55% or invest. Please help me to fix the amount I should repay in the loan and the amount I should invest to generate a corpus of 2cr in 20 years by means of stocks, SGB, mutual funds, and other instruments & average monthly expenses amount. I have realized that I am investing after spending so expenses are higher, it should be investing first and the remaining amount to be spent. Help me to have balanced diversified portfolio of multiple instruments to achieve the goal of 2 CR. Long-term Goal (20 years) Amount Retirement (other than NPS) 1cr Child education (2) 40 lakhs Child Marriage (2) 60lakhs Pankaj

Ans: Your current portfolio is well-diversified across different asset classes, including mutual funds, NPS, and an Insurance.

However, there is a significant high allocation to small-cap funds, which tend to be more volatile. By replacing Quant Small Cap Fund, you can add Parag Parikh Flexi Cap Fund (Returns variation can be seen but the risk exposure reduced drastically)

We do not have your home loan details. So, in brief if you have paid EMIs for more than half of the loan tenure then it is not advisable for prepayment considering financial mathematics. But it is good from a psychological aspect.

To achieve a corpus of 2 Cr. In 20 Years, you have to do monthly investment of Rs. 20,000 @ 12% p.a. It is achievable by selecting Equity and Hybrid Mutual Funds with right risk to reward ratio.
For achievement of other goals, complete details are not mentioned.

I would advice you to take the help of a good financial advisor and plan for the future properly.
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.

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Asked by Anonymous - Mar 02, 2024Translate
As part of a couple in our early 30s, along with our elderly parents, we have a combined annual income of Rs 1.08 crores. How can we collectively plan for both our retirement and the financial well-being of our parents in the long run?
Ans: Balancing your financial needs and that of your parents, while planning for retirement, requires a comprehensive strategy. Here's a roadmap to get you started:

1. Understand your financial situation:

Gather information about:

• Income: List down your combined annual income (Rs 1.08 crore) and any other sources of income like rental income or investments.
• Expenses: Track your monthly expenses for a few months to understand your spending habits.
• Debts: List down any outstanding debts like mortgages, car loans, etc., including your parents' debts if applicable.
• Retirement benefits: Check your eligibility and potential benefits from social security or employer-sponsored retirement plans.
• Parents' needs: Estimate your parents' current and future financial needs, including healthcare costs.

2. Set retirement goals:

• Desired retirement age: Decide when you and your partner wish to retire.
• Desired lifestyle: Determine the lifestyle you envision in retirement, considering travel, hobbies, and potential healthcare needs.
• Financial goals: Based on your desired lifestyle and life expectancy, calculate the estimated corpus (total sum) required for your retirement. Consider inflation while making these calculations.

3. Create a financial plan:

• Debt management: Prioritise paying off high-interest debts to free up future income for savings and investments.
• Budgeting: Create a budget that allocates funds for essential expenses, savings, and debt repayments. You can involve your parents in creating a budget for their expenses as well.
• Savings and investments: Explore various investment options like mutual funds, PPF (Public Provident Fund), or NPS (National Pension Scheme) based on your risk tolerance and investment horizon. Utilize tax-advantaged retirement accounts like 401(k)s or IRAs if available to you.
• Healthcare planning: Consider health insurance plans for yourselves and your parents to manage potential medical costs in the future.

4. Open communication and support:

• Discuss openly: Have open and honest conversations with your partner and parents about your financial situation, goals, and expectations. This fosters transparency and builds trust within the family.
• Seek professional guidance: Consulting a financial advisor can help you create a personalized plan considering your specific financial situation and retirement goals. They can also guide you on investment strategies and risk management.

Additional considerations:

• Government schemes: Explore government schemes for senior citizens like the Senior Citizen Savings Scheme (SCSS) or the Pradhan Mantri Jan Dhan Yojana (PMJDY) that may benefit your parents.
• Downsizing: Consider downsizing your living situation or exploring alternative housing options in retirement to potentially reduce living expenses.
• Part-time work: If feasible, consider continuing part-time work in retirement to supplement your income and maintain an active lifestyle.

Remember, this is a general framework, and it's crucial to tailor it to your specific circumstances. Consulting a financial advisor can provide personalised guidance and ensure your financial plan considers all the complexities involved.

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