Hello ! we are a couple in our last 40's and now earning around 3.5 lacs per month and live in 2 tier city in our own house and we have monthly expenses around 1 lacs per month. we are debt free and have no loan. with one child who is studying outside India and is in his 3rd year of bachelors. we seek advice on our existing investment pattern and savings and what best we can do further. We have around 65lacs in PPF , mutual fund 60lacs (through monthly SIP), fixed deposits 35 lacs , real estate 50lacs (apart from our residential house) and other misc movable assets of around 15 lacs in including gold bonds. we also have investment in gold jewellery whose current value is around 50lacs. Mutual funds in which we have invested our DSP Large & Mid cap, ICICI Prudential Thematic Advantage Fund,White Oak-Special Opportunities Fund -RG,Invesco India Multicap Fund - Regular PG,Invesco India Focused Fund - Regular PG,DSP Multicap Fund -Regular - Growth,DSP Business Cycle Fund - Regular - Growth and Invesco India Contra Fund - RG. We have paid already paid around 73lacs as overseas fees for our son's bachelors through our own funds. WE HAVE NO LOAN. we would request you to rate our investment in mutual fund as to what should we drop or add keeping in mind that we might have to invest additional 60lacs for our son's master in near future and also keep amount for our retirements. we have separate health insurance and term plan also. Thanks in advance

Ans: Given your financial goals and current investments, here's a suggested approach to structure your mutual fund investments:

Retirement Corpus (6 Crores in 20 years):
Start SIPs in diversified equity mutual funds with a focus on long-term growth. Allocate a significant portion of your investments towards equity funds to harness their wealth-building potential over the long term. Consider a mix of large-cap, mid-cap, and multi-cap funds to diversify across market segments and manage risk effectively. Review and increase your SIP amounts periodically, considering your income growth and inflation.
Son's Higher Education (1 Crore in 15 years):
Allocate a portion of your mutual fund investments specifically towards your son's education goal. Since the timeframe is relatively shorter, consider a balanced approach with a mix of equity and debt funds to balance growth potential with capital preservation. Gradually shift towards debt-oriented funds as the goal approaches to safeguard against market volatility and ensure capital protection.
Son's Marriage (50 Lakhs in 20-25 years):
Similar to the education goal, allocate a portion of your investments towards your son's marriage goal. Since the timeframe is longer, you can afford a more aggressive approach with a higher allocation towards equity funds. As the goal approaches, gradually shift towards more conservative investments to protect the accumulated corpus.
Review and Rebalance:
Regularly review your mutual fund investments and rebalance your portfolio as needed to ensure alignment with your financial goals and risk tolerance. Consider consulting with a Certified Financial Planner to periodically reassess your goals, investment strategy, and progress towards achieving them.
Remember, investing is a long-term commitment, and staying disciplined, diversified, and focused on your goals is key to achieving financial success.

Ans: Hi Piyush,

Let us cover the details one by one:
1. You are left with approx 25k per month to invest in order to achieve your goals.
2. Make sure to have proper emergency fund of 1.5 lakhs in FD.
3. You should have proper term and health insurance for yourself and family.
4. Monthly investment in PPF - 5k. It is a good debt instrument and gives tax free return of 7.1%. Can continue with it.
5. 2k in SBI Ulip - not recommended. ULIPs are very high charging policies and usually gives an average return of 7-8% which is at par with that of FD. It comes with high hidden charges. Hence avoid taking such policies in future.
6. 12k monthly in mutual funds. OVerall a good amount but not sufficient to cover your goals. You should increase this amount to your maximum capacity.
7. Also start investing some amount for your retired life.

And funds that you mentioned are overlapped and not recommended. Ideally just have large, mid, small and multi cap fund in your portfolio. This mix will give a return of 12-14% on an yearly basis.
Try not to follow random online advice to invest your hard earned money. Take the help of a professional advisor to guide you through.

Hence, stop your current mutual funds and redirect them onto the mentioned mix. Also consider consulting a professional Certified Financial Planner - a CFP who can guide you with exact funds to invest in keeping in mind your age, requirements, financial goals and risk profile. A CFP periodically reviews your portfolio and suggest any amendments to be made, if required.

Let me know if you need more help.

Best Regards,
Reetika Sharma, Certified Financial Planner
https://www.instagram.com/cfpreetika/

Ans: Its great to see the level of planning you have already done. At 42, you have built investments across EPF, PPF, mutual funds, NPS, stocks, gold and have also started planning for your 1-year-old child's future. That gives you a very good head start.

» Overall Financial Health

– Monthly income of around Rs.1.2 lakh.

– Monthly household expenses of around Rs.40,000 excluding EMI.

– Home loan EMI of Rs.35,000.

– Total monthly savings and investments are quite healthy.

– Family health insurance of Rs.15 lakh.

Overall, your savings habit is strong and you are moving in the right direction.

» Retirement Planning

– Planning to retire between 52 and 55 is an ambitious goal. It is possible only if the retirement corpus is built with discipline and expenses remain under control.

– Continue investing consistently and increase SIPs whenever salary increases.

– Try to direct at least 50% of every increment towards retirement investments instead of increasing lifestyle expenses.

– EPF, PPF and NPS together provide a strong stable foundation for retirement.

» Child Education Planning

– Your child is only one year old, which gives you a long investment horizon.

– The dedicated SIP for child education is a good step.

– Review the target amount every 3 to 5 years because education costs may rise much faster than normal inflation.

– Keep this investment separate from retirement money. Mixing both goals often creates confusion later.

» Mutual Fund Portfolio Review

– You have investments spread across multiple categories and fund houses.

– However, the portfolio is slowly becoming complex.

– Holding too many funds can create overlap and make monitoring difficult.

– A simpler portfolio with a limited number of well-managed actively managed mutual funds can be easier to track and maintain.

– Review the international equity exposure also. It should remain only a supporting allocation and not become a major part of the portfolio.

» About the Equal Weight Fund

– You have invested in an equal weight index-based strategy.

– In general, index-based investments have limitations because they simply follow predefined rules and cannot actively respond to changing market conditions.

– They continue holding companies irrespective of improving or weakening business quality.

– During changing market cycles, this lack of flexibility may affect long-term performance.

– Actively managed mutual funds, on the other hand, are managed by experienced professionals who continuously analyse businesses, reduce exposure to weak sectors and increase allocation to better opportunities.

– This active approach can provide better risk management and the potential for superior long-term wealth creation.

» Axis ELSS Investment

– Since you are already planning to move out gradually, avoid redeeming the entire amount in one shot.

– A phased exit can help reduce market timing risk.

– If the investment has completed the mandatory lock-in period, gradually shifting it into a suitable actively managed mutual fund portfolio aligned with your retirement goal can make the portfolio more focused.

– Also remember that long-term capital gains above Rs.1.25 lakh on equity mutual funds are taxed at 12.5%, while short-term gains are taxed at 20%. Plan withdrawals carefully.

» Child Insurance Plan

– Investment-cum-insurance plans generally provide lower flexibility and lower wealth creation potential compared to separate investments.

– Since you have mentioned a child plan, I would suggest reviewing whether continuing it adds value.

– If surrender charges are reasonable and the policy economics are not favourable, consider surrendering it and reinvesting the future premiums into suitable actively managed mutual funds dedicated for your child's education.

– Keeping insurance and investments separate usually leads to better financial outcomes.

» Health Insurance

– A family cover of Rs.15 lakh is a good starting point.

– But medical inflation is rising every year.

– Consider adding a Super Top-up policy of Rs.25 lakh or more. This can significantly improve your family's protection at a reasonable cost.

» Home Loan Strategy

– There is no urgency to prepay the home loan if your investments continue to generate long-term wealth.

– However, as retirement approaches, aim to become debt-free before leaving your job.

– Entering retirement without an EMI gives much greater financial comfort.

» Emergency Fund

– Keep at least 9 to 12 months of household expenses and EMIs in easily accessible debt instruments.

– This ensures that temporary job changes or market corrections do not disturb your long-term investments.

» Final Insights

– Your financial journey is on a solid path. The discipline is visible in almost every area.

– The next stage is not about investing more products but making the portfolio simpler and more goal-oriented.

– Review the investment-cum-insurance child plan, simplify the mutual fund portfolio, gradually reduce unnecessary overlap, strengthen health cover and continue increasing SIPs every year.

– If you follow this approach consistently, building a comfortable retirement corpus by the age of 52 to 55 and funding your child's higher education can become a practical and achievable goal.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

https://www.linkedin.com/in/ramalingamcfp/