Hi Sir am 54 years old, working in a pvt co with annual income of 14 L.
having a child who is 15 year and in higher secondary. with todays Cost of living hardly saving some 20k pm > Have the following corpus
MF -1.7 cr
Shares - 1.5 cr
house - 1.35 cr ( 2 house Both on rent , getting 45k pm- give parents 25K)
insurance cover - 1.25 cr
hdfc life policy - will get 27 lacs in 2027 guaranteed scheme ( to cover education )
other liquid assets (FD/GOLD/RD/ )- 20L
need to plan atleaast a monthly pay our of 1 lac after 5-6 years so i can take it a bit easy .Kindly advice
Ans: Firstly, congratulations on building a substantial financial portfolio. Managing Rs. 1.7 crores in mutual funds, Rs. 1.5 crores in shares, and Rs. 1.35 crores in real estate while raising a child is commendable. Your financial discipline and foresight are evident.
Overview of Assets
You have significant investments across various asset classes. Let’s break down your current assets and cash flows:
Mutual Funds: Rs. 1.7 crores
Shares: Rs. 1.5 crores
Real Estate: Rs. 1.35 crores (two houses, Rs. 45,000 rental income, Rs. 25,000 given to parents)
Insurance Cover: Rs. 1.25 crores
HDFC Life Policy: Rs. 27 lakhs in 2027
Liquid Assets: Rs. 20 lakhs
Monthly Cash Flows
Income: Rs. 45,000 (rent) + Rs. 1.16 lakhs (salary after taxes and deductions)
Expenses: Rs. 45,000 (cost of living) + Rs. 25,000 (parents) + Rs. 20,000 (savings)
Goal: Rs. 1 Lakh Monthly Payout After 5-6 Years
Now, let's plan how to achieve a monthly payout of Rs. 1 lakh after 5-6 years.
Investment Strategy
Mutual Funds: Power of Compounding
Mutual funds are a strong pillar of your portfolio. The power of compounding can significantly grow your investments.
Advantages of Mutual Funds:
Diversification: Spread risk across various sectors and companies.
Professional Management: Fund managers handle your investments.
Liquidity: Easy to buy and sell units.
Systematic Investment Plans (SIPs): Regular investment helps in rupee cost averaging.
Categories of Mutual Funds:
Equity Funds: High returns but higher risk.
Debt Funds: Lower risk, stable returns.
Hybrid Funds: Mix of equity and debt.
Recommendation:
Continue investing in equity mutual funds for long-term growth.
Consider allocating some funds to hybrid funds for balanced growth and stability.
Regularly review and rebalance your portfolio.
Shares: Active Management
Your investment in shares is significant. Actively managing your stock portfolio can yield high returns.
Advantages of Direct Stocks:
Potential for High Returns: Direct exposure to company performance.
Dividend Income: Additional cash flow from dividends.
Recommendation:
Regularly review your stock portfolio.
Diversify across sectors.
Consider blue-chip stocks for stability and growth.
Stay updated with market trends and company performance.
Real Estate: Rental Income and Appreciation
Your real estate investments provide steady rental income and potential appreciation.
Advantages:
Stable Income: Regular rental income.
Capital Appreciation: Potential increase in property value over time.
Recommendation:
Maintain properties well to ensure consistent rental income.
Consider periodic rent reviews to keep up with market rates.
Keep a portion of rental income for property maintenance and unexpected expenses.
Insurance and Guaranteed Schemes
Your insurance cover of Rs. 1.25 crores is crucial for financial security. The HDFC Life policy maturing in 2027 provides a guaranteed corpus for your child’s education.
Advantages:
Financial Security: Protects against unforeseen events.
Guaranteed Returns: Assured maturity amount for planned goals.
Recommendation:
Continue with your current insurance plans.
Ensure coverage is adequate to meet family needs.
Liquid Assets: Emergency Fund
Your liquid assets (FD, gold, RD) of Rs. 20 lakhs provide an emergency fund.
Advantages:
Liquidity: Easily accessible in emergencies.
Security: Safe investment options.
Recommendation:
Maintain an emergency fund equivalent to 6-12 months of expenses.
Invest surplus liquid assets in mutual funds or stocks for higher returns.
Financial Planning for Monthly Payout
Estimating Future Needs
You aim for a monthly payout of Rs. 1 lakh after 5-6 years. Let’s plan accordingly.
Systematic Withdrawal Plans (SWP)
SWPs from mutual funds can provide regular income post-retirement.
Advantages:
Regular Income: Monthly payouts.
Tax Efficiency: Lower tax on long-term capital gains.
Recommendation:
Invest a portion of your corpus in mutual funds with SWP options.
Choose funds with a good track record and stable returns.
Dividend Income
Your stock portfolio can generate regular dividend income.
Recommendation:
Invest in dividend-paying stocks.
Reinvest dividends for compounding benefits.
Rental Income Management
Continue leveraging rental income from your properties.
Recommendation:
Ensure timely rent collection.
Regularly review rental agreements.
Additional Income Streams
Explore additional income streams to supplement your monthly payout.
Options:
Consulting: Use your expertise for consulting roles.
Part-Time Work: Explore flexible, part-time opportunities.
Risk Management and Diversification
Diversifying Investments
Diversify across asset classes to manage risk.
Recommendation:
Balance between equity, debt, and real estate.
Regularly review and rebalance your portfolio.
Risk Assessment
Assess and manage risks associated with your investments.
Recommendation:
Stay informed about market trends.
Consult with a Certified Financial Planner (CFP) for regular reviews.
Final Insights
Your disciplined approach and diversified portfolio are impressive. With careful planning, you can achieve your goal of Rs. 1 lakh monthly payout after 5-6 years. Continue leveraging mutual funds, stocks, and rental income. Regularly review your portfolio with a Certified Financial Planner to ensure you stay on track.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in