I am 40 year old with wife and 2 kids (14 y and 1 y). I get approx 3L /month post taxes. Currently I have 85L in PF, 24L in PPF and 26L in NPS, 15L in MF (mostly small caps) and 1 LIC maturing in 2028 for 30L. Investing full in PPF and NPS and approx 75k /month in MF My wife also has approx 20L in PPF/NPS and 25L in FDs We have 2 flats approx 2CR. I want to retire in 10years but want to have at least 10+CR as retirement kitty to be able to pay for kids education (total bucket of 3CR) and be able to maintain livelihood with at least 2L/month post retirement Please suggest if current course of investment is ok.

Ans: It's great that you're planning for your future and considering your investments carefully. Let's analyze your current situation and see how you can achieve your retirement goals.

Understanding Your Current Financial Position
You’re 40 years old and want to retire in 10 years. You have a wife and two kids (14 and 1 year old). You earn Rs. 3 lakhs per month post-taxes. Here's a detailed look at your current investments:

Provident Fund (PF): Rs. 85 lakhs
Public Provident Fund (PPF): Rs. 24 lakhs
National Pension System (NPS): Rs. 26 lakhs
Mutual Funds (mostly small caps): Rs. 15 lakhs
Life Insurance Corporation (LIC): Maturing in 2028 for Rs. 30 lakhs
Wife's Investments: Rs. 20 lakhs in PPF/NPS and Rs. 25 lakhs in FDs
Real Estate: Two flats worth approximately Rs. 2 crores
Monthly Investments: Rs. 75,000 in mutual funds and full contributions to PPF and NPS
Retirement Goals
You want to retire in 10 years with a retirement corpus of at least Rs. 10 crores. Additionally, you need Rs. 3 crores for your kids' education and Rs. 2 lakhs per month for living expenses post-retirement.

Current Investment Strategy Analysis
Your current investments are diversified, which is good. However, achieving your goal of Rs. 10 crores in 10 years requires a strategic approach.

Provident Fund (PF)
Your PF is a significant part of your retirement corpus. Continue with this investment as it provides a stable and guaranteed return.

Public Provident Fund (PPF)
PPF is a safe investment but has a lock-in period and lower returns compared to equity mutual funds. Since you are investing the maximum limit in PPF, this is a good tax-saving instrument.

National Pension System (NPS)
NPS provides tax benefits and a mix of equity and debt investments. Keep investing in NPS as it offers good long-term returns and an annuity option post-retirement.

Mutual Funds
Your Rs. 15 lakhs in mutual funds are mostly in small caps, which are high-risk but high-reward investments. Diversifying into large and mid-cap funds will balance your portfolio.

Life Insurance Corporation (LIC)
Your LIC policy maturing in 2028 will provide Rs. 30 lakhs, which adds to your retirement corpus. Ensure you have adequate life and health insurance coverage.

Wife's Investments
Your wife's investments in PPF, NPS, and FDs add stability to the overall portfolio. Consider diversifying her FDs into mutual funds for better returns.

Real Estate
Real estate is a good asset but not liquid. Keep these for long-term value appreciation but don't rely solely on them for liquidity needs.

Strategic Recommendations
Diversify Mutual Fund Investments
Large Cap Funds: Invest in large cap funds for stability and steady returns.
Mid Cap Funds: Allocate a portion to mid cap funds for growth potential.
Balanced Funds: These provide a mix of equity and debt, balancing risk and return.
International Funds: Consider international mutual funds to diversify geographically and reduce domestic market risk.
Increase SIPs in Mutual Funds
Increasing your monthly SIPs (Systematic Investment Plans) in mutual funds can help you achieve your Rs. 10 crore goal. Aim to increase your SIPs by 10-15% annually as your income grows.

Review and Adjust Portfolio Regularly
Regularly review your investment portfolio and adjust based on market conditions and financial goals. Consulting a Certified Financial Planner (CFP) can help you make informed decisions.

Power of Compounding
Mutual funds harness the power of compounding, where your returns generate more returns over time. Starting early and staying invested for the long term maximizes the benefits of compounding. Your current SIPs and investments will grow significantly over the next 10 years if you stay consistent.

Managing Risks
Diversification: Spread your investments across different asset classes to reduce risk.
Emergency Fund: Maintain an emergency fund with 6-12 months of living expenses.
Insurance: Ensure you have adequate health and life insurance coverage to protect against unforeseen events.
Kid’s Education Fund
For your kids' education, consider investing in dedicated child plans or education savings plans. These plans offer targeted savings and potential tax benefits.

Final Insights
Your current investment strategy is on the right track, but you need to diversify and increase your investments to achieve your Rs. 10 crore goal. Focus on a mix of equity and debt funds, increase your SIPs, and regularly review your portfolio. Consulting with a Certified Financial Planner (CFP) can provide personalized guidance and help you stay on course.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in