Hello Sir, I am 33years old and have 2 kids, one is 5years old and other one is 1year old. Could you see my financial journey and feedback and provide details for wealth creation? I get 1.6L monthly(including rent, salary..) Currently i have 5L in ppf and 4L in NPS and recently i started with ssj for my girl child so i have invested 1.5L. I have term insurance of 1.5Cr and medical/health insurance of 5L. My monthly investment/debts includes Ppf-12.5k Nps-9k(including company sponsored) MF-5K Homeloan-26k Personal loan-19k( i have invested in RE) Gold-10k Ssj-125k I would like to make 2Cr by 10-15years for short term goals. Kindly suggest

Ans: You are doing a good job by staying invested and insured at a young age. With two kids and multiple responsibilities, you are taking the right steps. But there is scope for improvement. Let's assess your situation from every angle and design a 360-degree strategy for wealth creation.

Income and Cash Flow Review
– You have Rs. 1.6L monthly income including salary and rent. That’s appreciable.
– Your monthly EMI commitments are Rs. 45k (Home + Personal loan).
– Your monthly investments total around Rs. 1.61L. This includes SSJ, PPF, NPS, MF, and gold.
– This means you are spending more than your income or using past savings. That is not sustainable.
– It’s important to first check your actual monthly household expenses. This will help manage cash better.

Insurance Review
– You have Rs. 1.5Cr term cover. That is a good start.
– But with 2 kids and loans, this may not be enough.
– A thumb rule says 15–20 times of annual income is needed for term cover.
– You should consider increasing your term cover to Rs. 2.5Cr.
– You have health insurance of Rs. 5L. But is it family floater or individual?
– For family with 2 kids, at least Rs. 10L floater is advisable.

Analysis of Your Current Investments
Let’s evaluate your current investments from all angles.

##PPF Contribution
– You have Rs. 5L in PPF and contribute Rs. 12.5k monthly.
– PPF is good for safety but gives low returns.
– Interest is fixed yearly and locked for 15 years.
– PPF is not suited for aggressive wealth creation.
– You can reduce your PPF investment to Rs. 5k monthly.
– Redirect the balance to mutual funds for better growth.

##NPS Contribution
– You have Rs. 4L in NPS and Rs. 9k monthly goes in (including employer share).
– NPS is useful for retirement only. 60% is taxable at withdrawal.
– Long lock-in till 60 years. Not good for short-term goals.
– Don't increase contribution here beyond what company pays.
– Instead, use mutual funds for mid and short-term goals.

##SSJ for Girl Child
– Investing Rs. 1.5L yearly in Sukanya Samriddhi is good.
– This gives tax benefit and is safe. But interest is fixed and not market-linked.
– Maturity is when your girl turns 21. So use it only for long-term education.
– Don’t over-invest here. Limit to Rs. 1.5L yearly only. No more.

##Mutual Fund Contribution
– You are investing Rs. 5k monthly in mutual funds. This is too low for your goals.
– Mutual funds are ideal for 10-15 years goal like creating Rs. 2Cr.
– Increase this amount to at least Rs. 20k monthly over time.
– Choose good quality actively managed funds.
– Don’t go for index funds. They just copy the market. No strategy involved.
– Index funds can fall badly when the market crashes.
– Actively managed funds are handled by experts. They do better over long term.

##Gold Investment
– You invest Rs. 10k monthly in gold. That’s 6% of income. Too high.
– Gold is good for jewellery but not great for investment returns.
– Gold doesn’t create wealth. It just preserves value.
– Reduce gold investment to Rs. 2-3k per month if you must.
– Rest should go to mutual funds for better growth.

##Loan Situation – Home and Personal Loan
– You are paying Rs. 26k for home loan. That’s fine if interest is low.
– You also pay Rs. 19k EMI on personal loan. That’s worrying.
– Personal loan is costly. Usually interest is 11% to 14%.
– Please try to repay this loan faster.
– Stop gold purchase temporarily and divert that Rs. 10k toward personal loan repayment.
– Also reduce PPF and increase mutual fund allocation once loan is cleared.

Investment cum Insurance Products (If Any)
– You did not mention any ULIP, endowment or LIC plans.
– If you hold any LIC, ULIP or insurance-linked investments, please surrender them.
– These plans give low returns and lock your money.
– Reinvest the surrender value into mutual funds for better growth.

Your Goal – Creating Rs. 2 Crore in 10 to 15 Years
This is a realistic goal if we plan smartly.

– You want Rs. 2Cr in 10-15 years. That’s possible with discipline.
– You need to invest regularly in mutual funds for this.
– Direct funds are not suitable for this type of goal.
– In direct plans, no support or guidance is given.
– Regular plans through a Certified Financial Planner give you access to expert review.
– The extra 0.5% commission is worth the financial planning and ongoing monitoring.
– A CFP will adjust your funds based on market and life changes.
– Also, direct plans are not recommended for busy individuals with kids.

Tax Angle – Capital Gains Rules
– When you sell equity mutual funds, gains above Rs. 1.25L per year are taxed at 12.5%.
– If you sell before 1 year, STCG is taxed at 20%.
– This applies only to equity funds.
– For debt mutual funds, both short and long-term gains are taxed as per your income slab.
– So stay invested long term in equity funds to reduce tax.

Emergency Fund – Very Important
– You did not mention emergency savings.
– This is critical with 2 kids and EMIs.
– You must have 6 to 9 months of expenses in liquid form.
– Keep in sweep-in FD or liquid mutual fund.
– This will help during job loss, medical issues or other urgent need.

Children’s Education Planning
– Your elder child is 5 years. You have 12-13 years for college.
– Your girl child has 16+ years.
– You have already invested in SSJ. That is good for one child.
– But higher education cost will be much more.
– You should start SIPs in equity mutual funds specifically for both children.
– You can assign two separate mutual fund portfolios – one for each child.
– Start with Rs. 5k-10k monthly for each. Increase as income grows.

Retirement Planning
– You are 33 now. Retirement is still 25+ years away.
– Good to start now itself. You have NPS. But don’t depend only on NPS.
– You must build your own corpus via mutual funds.
– NPS has strict rules and withdrawal limits.
– Keep at least Rs. 10k monthly SIP in diversified equity funds for retirement.
– Increase it every year with salary hike.

What You Can Improve From Today
– Review all expenses. Trim non-essentials.
– Prioritise personal loan repayment first.
– Reduce gold and PPF investment.
– Increase mutual fund SIPs to minimum Rs. 15k monthly now.
– Target Rs. 25k to Rs. 30k monthly SIP in 2 years.
– Recheck life and health cover. Increase if needed.
– Build emergency fund of Rs. 3L to Rs. 5L minimum.
– Separate mutual fund portfolios for kids’ education and your own retirement.
– Use regular mutual funds with guidance of Certified Financial Planner.
– Review portfolio every 6 months with your planner.

Finally
You have made a promising beginning. You are investing and insuring. That’s the right base.

But the real wealth creation comes with a clear goal plan. You need to adjust cash flow. You must repay bad loans. You should invest more in mutual funds through a Certified Financial Planner.

Avoid over-investment in PPF, gold, and SSJ. Focus on equity mutual funds. Don’t go for direct or index funds.

Create a balance between today’s needs and tomorrow’s goals. A 360-degree plan is necessary for growing wealth with confidence.

With proper steps, you can achieve Rs. 2Cr in 10-15 years.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment