Hi
Our(mine and wife's) networth is 34L. Wife is 28 and I am 30. We have invested in physical Gold 50gms, stocks 12lac getting approx 15 - 25% returns p.a rebalancing once or twice a year and mirea asset large and midcap 1.3lac, quant less 64k, sbielss, zerodha less, mirae less each 21k and Nippon small cap 8k. We need to achieve our target of 7 cr at my age of 40. We planned to invest 1l per month 25k in gold, 20k in stocks, 10k Rd , 25k into our account were we will get 7.5%p.a in sb account, elss 12k and 8k for bonds. Is it a good way of diversification... We will use the money accumulated in our account to buy stocks incase of COVID like event when stocks were utter cheap. We have 5l as emergency fund and both parents and us are having medical insurance... I am learning about term insurance have to take one. Apart from this I am paying 11k as car emi. We are not planning to buy a home now. Or in near future. We are building a strict portfolio. Kindly help.
Ans: It sounds like you and your wife have a well-thought-out plan for your financial future! Let's break down your current situation and investment strategy, and see if there are any areas for optimization:
Current Financial Snapshot:
Net Worth: ?34 Lakhs
Investments:
Physical Gold: 50 grams
Stocks: ?12 Lakhs (with annual returns of 15-25%)
Mutual Funds:
Mirae Asset Large and Midcap: ?1.3 Lakhs
Quant: ?64,000
SBI, Zerodha, Mirae, and Nippon Funds: Various amounts
Investment Strategy:
Monthly Investments:
?25,000 in Gold
?20,000 in Stocks
?10,000 in RD
?25,000 in Savings Account (earning 7.5% p.a.)
?12,000 in ELSS
?8,000 in Bonds
Emergency Fund: ?5 Lakhs
Insurance: Medical insurance for both, planning for term insurance
Liabilities: Car EMI of ?11,000
Property Plans: No immediate plans to buy a home
Suggestions for Optimization:
Asset Allocation:
Your asset allocation seems reasonable, with a mix of physical assets (gold), equity (stocks and mutual funds), and fixed income (RD, savings account, bonds). Ensure it aligns with your risk tolerance and long-term goals.
Stock Portfolio:
Continue with your disciplined approach to investing in stocks. However, consider diversifying further by adding exposure to different sectors or market caps to reduce risk.
Mutual Fund Selection:
Review the performance of your existing mutual funds periodically. Consider consolidating your investments into a few high-performing funds to simplify management.
Emergency Fund:
Ensure your emergency fund covers at least 6-12 months of expenses. If not, consider increasing it before allocating more funds to investments.
Insurance:
Prioritize getting term insurance to provide financial protection for your family in case of unforeseen events. Aim for coverage that adequately meets your family's needs.
Liabilities:
Evaluate the cost of your car EMI relative to your overall financial goals. If possible, consider paying off the loan early to reduce interest payments.
Future Planning:
As you're not planning to buy a home in the near future, continue focusing on building your investment portfolio and increasing your net worth.
Final Thoughts:
Your investment strategy shows discipline and a clear focus on long-term wealth accumulation. With careful monitoring and periodic adjustments, you're well on your way to achieving your target of ?7 crores by age 40. Keep reviewing your plan regularly and consult with a financial advisor if needed to ensure you stay on track to meet your financial goals.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in