Sir, I am 38 years old, working in a PSB in a managerial post (Scale 3) in Kolkata. My dependents are two sons (twins) aged 2.5 years and wife. My gross salary is 1.56 lacs, and my net salary is 91k. My current investments are EPF (mandatory for my PSB), a monthly contribution of Rs. 33,740 (employee-25%+employer-10%) with a current balance of Rs. 32 Lacs, and NPS (mandatory for my PSB), a monthly contribution of Rs. 26,840 (employee-10%+employer-14%) with a current balance of Rs. 25.50 Lacs. Both PF and NPS amounts are progressive, with increments in salary and DA in each year/ quarter and the 5 yearly bipartite settlements (next due in 2027). I have recently started SIP of Rs. 25,000 per month. Funds are PSU-2k, Infrastructure-1k, Focused Equity-2k, Small Cap-2k, Blue Chip-2k, Magnup Midcap-2k, Contra-2k, Dividend Yield-2k, Technology Opportunities-2k, Magnum Global-1k, Healthcare Opportunities-1k, Energy Opportunities-1k, Nifty Index-1k, Nifty 50 Equal Weight-1k, Nifty Midcap 150-1k, Nifty Next 50-1k, and Nifty Small Cap 250-1k. All funds are from SBIMF. The current investment value is Rs. 65k. I also buy stocks of Rs. 5k monthly (only NIFTY 50 stocks), with my current investments being Rs. 55k. Other than this, I don't have any savings. My medical and Mediclaim are taken care of by my Bank through empaneled hospitals and reimbursement of domiciliary treatments (though I need to have an emergency fund). I have a home (inherited from my parents). The house is of 2 floors, and we are only 4 people (me, my wife, and 2 sons), though I wish to buy 1 in future in a good complex. Current liabilities are OD of 12 lacs and an internal loan from my bank of 5 lacs. Both EMIs (in case of internal Loan) and Interest (in case of OD) is served from my salary and Rs. 91k is what I get post deduction of EMI, Interest, PF and NPS. Hence this is my disposable income. My monthly expenses is around RS. 60k (including everything). Now are these investments enough to serve my 2 Child's Education and My retirement (I'll retire at 60 in 2046). I'm under NPS, hence I dont have a Pension, but my PSB gives both PF and NPS along with pother retirement benefits like Leave encashment of 8 months and Gratuity. Kindly advise.

Ans: Hello Ramiz,

It's great to see your detailed investment strategy. You have made significant strides in planning for your future and your family. Your current investment portfolio is diverse and well-structured. Given your goal of accumulating a corpus of Rs 10 crore by the age of 50, let's review your investments to ensure they align with your objectives.

Current Investment Overview
Life Insurance Policies
You have invested in several LIC plans for yourself, your wife, and your children. While LIC policies provide financial security and maturity benefits, they often offer lower returns compared to other investment avenues.

Mutual Funds
Your mutual fund investments are a mix of equity and hybrid funds, with a focus on long-term growth. This is a good approach as equity mutual funds tend to provide higher returns over the long term.

Systematic Investment Plans (SIPs)
Your SIPs are spread across various fund categories, including small cap, mid cap, and blue chip funds. This diversification helps mitigate risk while aiming for significant returns.

Stock Market and Cryptocurrencies
Investing in the stock market and cryptocurrencies adds another layer of diversification. However, these investments come with higher volatility and risk.

Emergency Fund and Insurance
Planning to build an emergency fund of Rs 10 lakhs in liquid funds is wise. Your mediclaim policy and term plan ensure financial protection for your family.

Review and Recommendations
Life Insurance Policies
LIC policies are secure but may not offer the best returns for wealth creation. Considering the lock-in period and the lower returns, you might want to reassess these investments.

Consider Surrendering Policies: You could surrender some LIC policies and reinvest the proceeds into mutual funds or SIPs with higher growth potential. This can accelerate your corpus building.
Mutual Funds
Your mutual fund investments are generally well-chosen. However, let's focus on maximizing their potential.

Actively Managed Funds Over Index Funds: Actively managed funds have the potential to outperform the market, unlike index funds which mirror market performance. Your mutual funds should remain actively managed to benefit from professional expertise and potential higher returns.

Regular Plans Over Direct Funds: Regular plans offer access to professional advice through Certified Financial Planners (CFP), which can be beneficial for making informed decisions and navigating market complexities.

SIPs
Your SIP investments are well-diversified, which is excellent for balancing risk and return. Here are some additional thoughts:

Continue Diversification: Your SIPs in small cap, mid cap, and blue chip funds ensure a balanced risk profile. Continue this strategy to maintain growth and stability.

Review Performance Regularly: Keep an eye on the performance of your SIPs and make adjustments as needed. This ensures your investments stay aligned with market conditions and your goals.

Stock Market and Cryptocurrencies
While these are high-risk investments, they can yield high returns. Here's how to approach them:

Limit Exposure: Given their volatility, limit your exposure to stocks and cryptocurrencies to a small percentage of your overall portfolio. This will protect your capital while allowing for potential growth.

Stay Informed: Keep abreast of market trends and news related to your stock and crypto investments. This will help you make timely decisions and mitigate risks.

Emergency Fund
Building an emergency fund in liquid funds is a sound strategy. Liquid funds provide easy access to your money and offer some returns.

Regular Contributions: Make regular contributions to your emergency fund until you reach your Rs 10 lakhs goal. This disciplined approach ensures you are prepared for any financial contingencies.
Insurance
Your current insurance coverage seems adequate. The mediclaim policy and term plan provide necessary financial protection.

Review Coverage: Periodically review your insurance coverage to ensure it meets your family’s needs. Adjust the coverage if necessary to keep pace with inflation and changing life circumstances.
Planning for Children's Education
Building a corpus for your children's education is crucial. Here are some strategies:

Invest in Child-specific Plans: Consider child education plans that offer a mix of equity and debt. These plans are designed to provide significant returns over the long term and ensure funds are available when needed.

Regular Investments: Continue regular investments in SIPs and mutual funds. This will help grow the education corpus systematically.

Consider Education Loans: If required, education loans can supplement your savings and ensure your children receive the best education without financial strain.

Achieving the Rs 10 Crore Goal
To reach your goal of Rs 10 crore by the age of 50, focus on the following strategies:

Increase Investment Amounts
Boost SIP Contributions: Gradually increase your SIP contributions as your income grows. This can significantly enhance your corpus over time.
Optimize Portfolio Returns
High-growth Investments: Allocate a portion of your portfolio to high-growth investments like mid-cap and small-cap funds. These have the potential to offer higher returns.
Monitor and Rebalance
Regular Review: Conduct regular reviews of your investment portfolio. Rebalance it periodically to ensure it remains aligned with your goals and risk tolerance.
Tax Planning
Utilize Tax-saving Instruments: Invest in tax-saving instruments like ELSS (Equity Linked Savings Scheme) to reduce your tax liability and increase your effective returns.

Tax-efficient Withdrawals: Plan your withdrawals in a tax-efficient manner to maximize the amount available for your goals.

Final Insights
Your current investment strategy is robust and well-diversified. By making a few adjustments, you can optimize your portfolio to achieve your financial goals. Focus on high-growth investments, regularly review your portfolio, and ensure your insurance coverage is adequate. With disciplined investing and strategic planning, you are well on your way to achieving your Rs 10 crore target and securing your family’s future.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

Ans: Hello;

Query1:

Yes it is better to sell low rent yielding commercial property now, utilise the sell proceeds to fund you goals next year i.e. daughter's marriage, son's education and car purchase while the balance should be invested in mutual funds(equity savings type mutual fund)

Query 2:

Exit all inactive mutual funds and invest corpus(16.9 L) in Mirae Asset equity savings fund (low to moderate risk profile).

You should then start an SWP at 3.6% so as to generate income of 5 K for additional monthly allocation to NPS.

You should do SIP only in following 3 funds:
SBI hybrid equity fund(15 K)
HDFC balanced advantage fund (15 K)
ICICI Pru Multi asset allocation fund (15 K)

The taxation of these funds is like equity funds but they have exposure to alternate asset classes to impart some stability to corpus during extreme market fluctuations which is also suited for your age category.

Liquid assets+ gold+ NPS corpus will add up to approx 6.51 Cr which if annuitized will yield post tax monthly income of 2.15 L.

MF corpus may still grow to build up your inflation war chest.

Health care cover for family needs enhancement upto 50 L minimum as a safe precaution.

Reduce exposure to direct equity as you near retirement. You may continue trading as a hobby with a minimum risk capital with adequate knowhow, setup and temperament.

Happy Investing!!

You may follow us on X at @mars_invest for updates.

*Investments in mutual funds are subject to market risks. Please read all scheme related documents carefully before investing.

Ans: Hello;

Your corpus value 9 years hence will be 7.80 Cr.

This working includes sip corpus, ppf, ssy, stock holding, dividend/interest reinvestment in SIPs, dormant sips future value after 9 years and parental house current value.

You may redeem the IDCW scheme dormant SIPs and reinvest the proceeds in current sip funds equally as lumpsum.

Regarding existing SIP funds, I suggest you to remove thematic funds like HDFC defence and HDFC manufacturing funds and redirect those SIPs into PPFAS flexicap fund and HDFC Top 100 fund.

Please confirm the EPF and NPS, if any, corpus available to you which can supplement the corpus gap of 2.2 Cr.

The prospect of sip enhancement or top-up to meet target shortfall is prohibitively high hence unfeasible.

Please feel free to revert.

Happy Investing;