Hello Sir, I am 46 and presently I have a corpus of 5.21 cr. 1.36 cr (MF + Shares + ULIP). 1.27 cr in FD, 2.15 cr in LIC, and the rest in PF + PPF. I have worked for many years as a software engineer and product manager, and presently, I own multiple businesses. I own 2 homes (no loans). I live with two kids (15 and 16 years old), my wife, and my mom (both have considerable incomes from independent sources). I aim to build a corpus of 25 cr before I retire at 66. I invest around 3 lakhs every month in the following way. 1.1 lakh in shares and MF, and the rest in LIC + PPF. This is how I have planned my next 20 years. Both my kids are American citizens and they will be in some American college between 2026 and 2031. To finance their education, I will use approximately 3 cr (1.5 cr/kid) from my FD and LIC corpus, and the rest they will have to manage through Financial Aid and Scholarships. I plan to keep my MF/Equity corpus (presently at 1.36 cr) untouched. I plan to keep investing 1.1 - 1.5 lakhs/ month in MFs for the next 20 years. My preferred MFs are HDFC Multi cap, Nippon Multi Cap, SBI Contra Fund, Nippon Small cap, Quantas Mid Cap and ICICI Flexicap. My question: With this strategy is a 25 cr goal achievable in another 20 years?

Ans: You have a well-thought-out plan and a good mix of investments. Let’s evaluate your strategy and see if your goal of achieving a Rs 25 crore corpus by retirement is feasible.

Current Financial Overview
Corpus: Rs 5.21 crore.

Investments: Rs 1.36 crore (MF + Shares + ULIP), Rs 1.27 crore in FD, Rs 2.15 crore in LIC, the rest in PF + PPF.

Monthly Investments: Rs 3 lakhs (Rs 1.1 lakh in shares and MF, the rest in LIC + PPF).

Family: Two kids (15 and 16 years old), wife, and mother (both have independent incomes).

Properties: Own 2 homes (no loans).

Kids' Education: Plan to use Rs 3 crore from FD and LIC corpus.

Retirement Goal
Your goal is to build a corpus of Rs 25 crore by the time you retire at 66, which is in 20 years.

Investment Strategy Review
1. Diversification and Current Allocations

Your portfolio is diversified across multiple asset classes, which is excellent. However, let’s assess each category to ensure optimal growth and stability.

Mutual Funds and Shares
1. Current Allocation

You have Rs 1.36 crore in mutual funds, shares, and ULIP. You plan to keep investing Rs 1.1 - 1.5 lakhs monthly in mutual funds for the next 20 years. Your preferred funds are diversified across multi-cap, contra, small-cap, mid-cap, and flexi-cap.

2. Analysis

This strategy is solid for long-term growth. Equity mutual funds typically offer good returns over the long term. However, actively managed funds tend to outperform index funds due to professional management. Avoid direct funds due to the complexities in managing them; regular funds through a Certified Financial Planner (CFP) offer better guidance and performance.

Fixed Deposits and LIC
1. Current Allocation

You have Rs 1.27 crore in fixed deposits and Rs 2.15 crore in LIC.

2. Analysis

Fixed deposits offer safety but lower returns. LIC policies may offer lower returns compared to mutual funds. If your LIC policy is an investment-cum-insurance plan, consider surrendering it and reinvesting in mutual funds. Pure term insurance is more cost-effective for life coverage.

Provident Funds
1. Current Allocation

Your remaining corpus is in PF and PPF.

2. Analysis

PF and PPF are excellent for safe and tax-efficient long-term savings. Continue contributing to these as they provide stability to your portfolio.

Monthly Investment Allocation
1. Current Plan

You invest Rs 3 lakhs monthly, with Rs 1.1 lakh in shares and MF, and the rest in LIC and PPF.

2. Analysis

Consider increasing your monthly allocation to mutual funds. This can enhance your growth potential. Ensure you have a balanced mix of equity and debt to manage risk.

Kids' Education Funding
1. Plan

You plan to use Rs 3 crore from your FD and LIC corpus for your kids' education. This is a sound strategy, as it ensures your equity investments remain untouched for long-term growth.

2. Analysis

Consider starting a separate education fund. Invest systematically in a mix of equity and debt instruments. This dedicated fund will ensure a more structured approach to financing their education.

Tax Planning
1. Efficient Tax Planning

Utilize tax-saving instruments under Section 80C, 80D, and others. Investments in ELSS funds, PPF, NPS, and health insurance can help reduce your taxable income. Efficient tax planning increases your investable surplus.

Emergency Fund
1. Establishing an Emergency Fund

Ensure you have an emergency fund covering at least 6-12 months of living expenses. This fund should be in a highly liquid and safe investment like a savings account or liquid mutual fund. This will provide a financial cushion against unexpected expenses or loss of income.

Estate Planning
1. Will and Estate Planning

Ensure you have a will in place. This will help in the smooth transition of assets to your heirs. Consider consulting with a legal expert for estate planning.

Regular Monitoring and Review
1. Regular Monitoring

Regularly monitor your investments. Ensure they align with your financial goals. Adjust allocations based on performance and changing goals.

2. Annual Review with CFP

Conduct an annual review with a Certified Financial Planner. This review will help in assessing your financial health, adjusting strategies, and ensuring you are on track to meet your goals.

Final Insights
You have a strong financial foundation with good income sources and investments. By diversifying your investments, utilizing systematic withdrawal plans, and regular monitoring, you can ensure a comfortable and financially secure retirement.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in