I am 56 year old & investing for 5 years. Target is 1 crore

Ans: To plan your investment of Rs. 30,00,000, your financial advisor would require many details from you including client age, risk profile, current asset allocation, investment time horizon, etc.

As you are investing your major corpus in the market, we recommend youto link all your financial goals (Child Education, House Purchase, etc.) with your investments and make the portfolio diversified into mutual funds, FDs, and Bonds to manage your risk level.

Please connect with your financial planner for proper goal-based planning and a detailed explanation of the same.

Ans: Hello Rahul,

It's great to hear that you've been investing consistently over the past 6 years. Your proactive approach towards financial planning is commendable.

Considering your age and the goal of achieving a corpus of 70-80 lakhs by the time you turn 50, it seems you're on a good path. However, it's essential to periodically review and adjust your investment strategy to align with your goals and risk tolerance.

Given the funds you're currently investing in, they seem to cover a range of market segments which is good for diversification. However, ensure that the portfolio is balanced and not overly concentrated in one sector or style.

Remember, the investment landscape can be dynamic. Therefore, it might be beneficial to consult with a Certified Financial Planner periodically to reassess your goals, risk profile, and portfolio performance.

Keep up the good work, Rahul, and stay invested!

Ans: As you embark on this investment journey at 65, it's crucial to follow a systematic process to ensure your financial goals are met while considering your age and time horizon. Here's a general roadmap:

Define Your Goals: Clearly articulate your financial objectives for the next 5 years. Whether it's funding retirement expenses, leaving a legacy for your loved ones, or achieving a specific milestone, knowing your goals is the first step.
Assess Risk Tolerance: Understand your risk tolerance and investment preferences. At 65, capital preservation may be a priority, but some exposure to growth assets could still be beneficial.
Consult with a Certified Financial Planner: Seek guidance from a Certified Financial Planner who can assess your financial situation, goals, and risk tolerance. They can recommend suitable investment options tailored to your needs.
Choose Investment Avenues: Based on your goals and risk profile, select appropriate investment avenues such as mutual funds, fixed deposits, bonds, or a combination thereof.
Diversify Your Portfolio: Diversification is key to managing risk. Spread your investment across different asset classes and sectors to reduce vulnerability to market fluctuations.
Monitor and Review: Regularly monitor your investments and review their performance. Adjust your portfolio as needed to stay aligned with your goals and changing market conditions.
Stay Informed: Keep yourself informed about economic trends, market developments, and regulatory changes that may impact your investments.
By following these steps and seeking professional guidance, you can navigate the investment landscape with confidence, ensuring your financial objectives are met over the next 5 years. Remember, it's never too late to invest wisely and secure your financial future.

Ans: Achieving a 5 Crore Target: Strategic Investment Advice
Current Portfolio Overview
Your current investments demonstrate a commendable commitment to securing your financial future. Investing 75K annually in LIC Jeevan Saral for 15 years shows your discipline. Additionally, your SIPs in various mutual funds highlight your diversified approach.

Evaluating Your Current Investments
LIC Jeevan Saral:

Traditional insurance plans offer moderate returns with insurance benefits.
Consider whether the returns meet your aggressive 10-year goal.
Insurance-cum-investment schemes
Insurance-cum-investment schemes (ULIPs, endowment plans) offer a one-stop solution for insurance and investment needs. However, they might not be the best choice for pure investment due to:
• Lower Potential Returns: Guaranteed returns are usually lower than what MFs can offer through market exposure.
• Higher Costs: Multiple fees in insurance plans (allocation charges, admin fees) can reduce returns compared to the expense ratio of MFs.
• Limited Flexibility: Lock-in periods restrict access to your money, whereas MFs provide more flexibility.
MFs, on the other hand, focus solely on investment and offer:
• Potentially Higher Returns: Investments in stocks and bonds can lead to higher growth compared to guaranteed returns.
• Lower Costs: Expense ratios in MFs are generally lower than the multiple fees in insurance plans.
• Greater Control: You have a wider range of investment options and control over asset allocation to suit your risk appetite.
Consider your goals!
• Need life insurance? Term Insurance plans might be suitable.
• Focus on growing wealth? MFs might be a better option due to their flexibility and return potential.

Equity Mutual Funds:

Your choices include diversified equity funds and sector-specific funds.
Equity funds generally provide higher returns over the long term.
Strategic Adjustments for Better Returns
To achieve your 5 crore target in 10 years, consider the following adjustments and strategies:

Increase Equity Exposure:

Equities tend to outperform other asset classes over the long term.
Consider increasing your SIP amounts in high-performing equity funds.
Diversify Across Fund Categories:

Continue with diversified funds but also consider balanced advantage funds.
Balanced funds offer a mix of equity and debt, reducing risk while aiming for growth.
Review Sectoral Funds:

Sector-specific funds can be volatile. Regularly review their performance.
Consider shifting to more stable, diversified funds if needed.
Additional Investment Strategies
Systematic Transfer Plan (STP):

If you have a lump sum amount, use STP to invest gradually into equity funds.
This strategy can help mitigate market volatility.
Top-up SIP:

Increase your SIP contributions annually by at least 10-15%.
This helps in compounding your returns significantly over time.
Focus on High-Performing Funds:

Regularly review your mutual fund portfolio.
Shift investments from underperforming funds to those with consistent track records.
Risk Management and Contingency Planning
Emergency Fund:

Ensure you have an emergency fund equivalent to 6-12 months of expenses.
This safeguards against unforeseen financial needs.
Adequate Insurance Coverage:

Maintain sufficient health and life insurance coverage.
This protects your investments and family’s financial security.
Tax Planning:

Utilize tax-efficient investment avenues.
Consider Equity-Linked Savings Schemes (ELSS) for tax benefits under Section 80C.
Monitoring and Reviewing Your Portfolio
Regular Portfolio Review:

Review your portfolio performance at least semi-annually.
Make adjustments based on market conditions and personal financial goals.
Consultation with a Certified Financial Planner:

Seek advice from a CFP to ensure your investments align with your goals.
A professional can provide tailored advice and timely adjustments.
Conclusion
Achieving a target of 5 crores in 10 years requires disciplined investing and strategic adjustments. By increasing your equity exposure, diversifying your investments, and regularly reviewing your portfolio, you can enhance your chances of meeting this ambitious goal. Remember, consistent and informed investing, coupled with prudent risk management, is key to financial success.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in