I am 33 years old. I have a daughter of 2 years. I have parents with high BP and diabetes. I am working on Government sector with net salary 55k. I am investigating 12k in SIP. 4K in axis small cap, 4k parag Parekh flexi cap, 4k in SBI ELSS and 2k in Mirar asset emerging cap. I HBL of 10 lakh. I have medicine insurance and term insurance of 50lakh.NPS contribution 14k. I want 1 CR for my daughter's education. How should I plan.Thank you.
Ans: 1. Current Financial Overview
1.1 Income and Expenses
Net salary: Rs 55,000 per month.
SIP investments: Rs 12,000 per month.
NPS contribution: Rs 14,000 annually.
Insurance: Health and term insurance coverage.
1.2 Existing Investments
SIPs: Rs 12,000 monthly.
Axis Small Cap: Rs 4,000
Parag Parikh Flexi Cap: Rs 4,000
SBI ELSS: Rs 4,000
Mirae Asset Emerging Bluechip: Rs 2,000
Fixed Deposits (FD): Rs 10,00,000
Term insurance: Rs 50,00,000.
2. Goal: 1 Crore for Daughter’s Education
2.1 Time Horizon
Assuming the goal is for your daughter’s education in 15 years, you have ample time to accumulate this corpus.
2.2 Investment Strategy
2.2.1 Increase SIP Contributions
Given your long-term goal, consider increasing your SIP contributions progressively.
You can start with a 10-15% increase in SIPs annually to keep pace with inflation and rising costs.
2.2.2 Diversify SIP Investments
Equity Funds: Continue with your current funds, which cover various sectors and market caps.
Balanced Funds: Include some balanced or hybrid funds for stability and growth.
Debt Funds: Consider investing a portion in debt funds for lower risk and stable returns.
2.2.3 Explore Additional Investment Options
Mutual Funds: Actively managed funds can provide better returns compared to passive funds.
Public Provident Fund (PPF): Consider adding PPF to your investment mix for tax benefits and guaranteed returns.
Systematic Investment Plans (SIPs): Increase your investments in equity funds to maximize growth potential over time.
2.2.4 Evaluate Fixed Deposits
While FDs are safe, their returns are lower compared to equity investments.
Consider allocating a portion of your FD corpus into higher-return investments for long-term growth.
3. Health Insurance and Emergency Fund
3.1 Health Insurance
Ensure your health insurance covers major medical expenses, especially for chronic conditions like diabetes and hypertension.
3.2 Emergency Fund
Maintain an emergency fund of 6-12 months of expenses to cover unforeseen situations.
This fund should be liquid and easily accessible.
4. National Pension System (NPS)
4.1 Contribution
Continue with your annual NPS contribution of Rs 14,000.
NPS provides a stable retirement corpus and tax benefits.
4.2 Review
Periodically review your NPS investments and ensure they align with your risk tolerance and retirement goals.
5. Financial Planning for Daughter’s Education
5.1 Target Corpus
To accumulate Rs 1 crore in 15 years, aim for a balanced investment strategy with growth-oriented assets.
5.2 Periodic Review
Regularly review your investment strategy and adjust contributions as needed.
Rebalance your portfolio based on performance and market conditions.
Final Insights
To achieve your goal of Rs 1 crore for your daughter’s education, increase your SIP contributions, diversify investments, and periodically review your financial plan. Balance your investments between equity and debt to ensure growth and stability. Maintain an emergency fund and ensure adequate health insurance coverage. Regularly monitor and adjust your investments to stay on track.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in