Hello Sir,
I am 32 yrs old, Engineer, Married, expecting 1st kid by nxt yr, Parents getting pension of 50k.
Income: 60k in Hand + 20-30k (perks separate)
Needs: 25k max
Investments:
Saving account: 60k
Emergency fund: For 12 months+ (2.5 lacs)- returns 5.5-6% RoR
EPF: 0
ULIP funds: 3 lacs (CV 4.6 lacs, 10 years left) 60k/yr
1Cr Term Plan + 10 lacs critical illness cover (5 yrs left) 36k/yr
Assets:
Owns a 3 Bhk flat with own income
Ancestral property (value 20 lacs approx, 2 Floored house- expected rent 15k/mnth in next 1 yr)
Gold: 90-100 gms
Own a car & a 2 wheeler
X No health insurance for self & wife till 35 yrs of age
Goals:
Plz guide me for:
1. Early retirement by the age of 50 yrs.
2. Investment strategy for SIP, PPF, RBI Bond funds, mutual funds, SGBs or any other funds which you find suitable.
3. Buying a term plan of 1-2cr for my wife.
4. Buying a house as per my wants @ 43 yrs (PV in 2024: 70-80 lacs)
5. Build a corpus for kids higher education & marraige
Thanks & Regards
Ans: Current Financial Situation
Age: 32 years old
Profession: Engineer
Family: Married, expecting first child next year
Parents: Receiving a pension of Rs. 50k
Income: Rs. 60k in hand + Rs. 20-30k perks
Needs: Rs. 25k max
Investments:
Saving account: Rs. 60k
Emergency fund: Rs. 2.5 lakhs (12 months+)
ULIP funds: Rs. 3 lakhs (Current value Rs. 4.6 lakhs, 10 years left, Rs. 60k/year)
Term Plan: Rs. 1 crore + Rs. 10 lakhs critical illness cover (5 years left, Rs. 36k/year)
Assets:
Owns a 3 BHK flat with own income
Ancestral property (value Rs. 20 lakhs, 2-floored house, expected rent Rs. 15k/month in next year)
Gold: 90-100 grams
Own a car & a 2-wheeler
Insurance: No health insurance for self and wife till 35 years of age
Financial Goals
Early retirement by age 50.
Investment strategy for SIP, PPF, RBI Bond funds, mutual funds, SGBs, or any other suitable funds.
Buy a term plan of Rs. 1-2 crore for wife.
Buy a house at age 43 (PV in 2024: Rs. 70-80 lakhs).
Build a corpus for child’s higher education and marriage.
Assessment of Current Strategy
Emergency Fund
You have a good emergency fund. This is a crucial safety net.
ULIP Funds
Your ULIP has a high cost. Consider moving to more efficient investment options.
Term Insurance
Your current term plan is good. Consider adding more coverage.
Ancestral Property
The expected rent will provide a steady income stream.
Gold
Gold is a stable asset but consider other investment avenues for growth.
Recommendations for Improvement
Health Insurance
Immediate Action: Get health insurance for yourself and your wife. This protects against unforeseen medical expenses.
Investment Strategy
SIP in Mutual Funds:
Diversified Equity Funds: Start SIPs in diversified equity mutual funds. These funds have high growth potential.
Allocation: Consider investing Rs. 15-20k monthly in SIPs.
PPF:
Tax Benefits: PPF is a good tax-saving instrument. It provides stable, risk-free returns.
Contribution: Start contributing Rs. 1.5 lakhs annually to PPF.
RBI Bonds and SGBs:
RBI Bonds: Invest in RBI Bonds for safe, long-term returns.
Sovereign Gold Bonds (SGBs): Invest in SGBs for additional gold exposure with interest.
Mutual Funds:
Actively Managed Funds: Prefer actively managed funds over index funds for better returns.
Diversification: Invest in a mix of large-cap, mid-cap, and small-cap funds.
Term Insurance for Wife
Coverage: Buy a term plan of Rs. 1-2 crore for your wife. This ensures financial security.
Future House Purchase
Savings Plan: Start saving for the house you want to buy at age 43.
Investment: Allocate a portion of your monthly savings to a dedicated house fund.
Child’s Education and Marriage Corpus
Education: Start an SIP dedicated to your child’s education. Aim for a mix of equity and debt funds.
Marriage: Similarly, start a separate SIP for your child’s marriage expenses.
Additional Recommendations
Review and Adjust:
Annual Review: Regularly review your investments. Adjust based on performance and goals.
Diversify Portfolio:
Reduce ULIP: Consider moving funds from ULIP to mutual funds for better growth.
Balanced Portfolio: Ensure a balanced mix of equity, debt, and other assets.
Tax Planning:
Maximize Benefits: Use tax-saving instruments like PPF, ELSS, and NPS.
Final Insights
Your current strategy is a good start. Health insurance is a must. Diversify your investments through SIPs, PPF, RBI Bonds, and SGBs.
Consider adding more term insurance for your wife. Plan for future house purchase and child’s education/marriage by starting dedicated SIPs.
Review and adjust your portfolio annually. Ensure a balanced mix of assets for growth and security.
Best Regards,
K. Ramalingam, MBA, CFP
Chief Financial Planner
www.holisticinvestment.in