Hello sir, I earn monthly as 1.84 lakh.I spend 60% of my salary in living expense and 40% as savings I spend 11000 in mutual funds which include 5000 in HDFC balanced advantage fund, 2000 in eledweiss mutual fund,3000 in motilal oswal midcap fund direct growth. Have added step up of 20% in each one,also I spend 10000 in NPS and 5000 in PPF every month. This all saving I have started last year. My age is 40 currently. I have a target to generate 2 cr alteast till I reach 60. Will this be possible with this much investment or not, if not how much should I invest monthly. Also I am not able to have emergency fund. How should I manage my financial planning. Also what can be source of passive income. I not good in share market or digital marketing stuffs. Please suggest

Ans: To create corpus better invest in equity oriented funds and then post 15 years switch them to debt and hybrid – balanced advantage

Rs 6000 monthly investment can create a corpus of Rs 33 lakh to Rs 35 lakh; below schemes can be considered: Rs. 2000 each for 15 years

a)   UTI Flexi Cap – Growth

b)  Parag Parikh Flexi- Cap Growth

c)   DSP Mid Cap Fund – Growth

Post 15 years when you are 55, shift the above investment to (in equal proportion i.e. Rs. 11 to 12 lakh)

1) Aditya Birla Corporate Bond fund – Growth

 2) HDFC Banking and PSU fund – Growth

3) ICICI Pru Balanced Advantage fund - Growth

Then do a SWP of Rs. 6700 for each of the 3 funds for monthly Rs. 20000 requirements

Ans: Strategic Financial Planning for Retirement
Greetings! It's impressive to see your commitment to securing your family's financial future through thoughtful investments. Let's review your current portfolio and explore potential adjustments to align with your retirement goal.

Evaluating Current Investments
Genuine Compliments: Your dedication to financial planning for your family's well-being is truly commendable.

Empathy and Understanding: I understand the importance of ensuring a comfortable retirement for you and your loved ones, given your responsibilities and aspirations.

Assessing Investment Portfolio
Insurance-Cum-Investment Plans: Consider surrendering your LIC policies, as they may not offer optimal returns compared to other investment options.
Public Provident Fund (PPF) and Sukanya Samriddhi Yojana (SSY): These are excellent choices for long-term savings, providing tax benefits and stable returns.
Mutual Funds (MF): Your SIPs and lumpsum investments in equity funds are well-suited for long-term wealth accumulation, given their potential for higher returns.
Aligning with Retirement Goals
Reallocating Surrendered Amount: Reinvest the proceeds from surrendering LIC policies into mutual funds to benefit from potentially higher returns.
Retirement Corpus Target: Your goal of accumulating a retirement corpus of Rs. 10 Crores is ambitious but achievable with strategic planning and disciplined investing.
Passive Income Options: Explore avenues like dividend-paying stocks, rental income from real estate (if suitable), or systematic withdrawal plans (SWP) from mutual funds to generate passive income streams.
Benefits of Regular Funds Investing through MFD with CFP Credential
Certified Financial Planners can provide personalized advice and ongoing portfolio management, ensuring your investments align with your retirement goals.
Mutual Fund Distributors with CFP credentials offer expertise and guidance to optimize your investment portfolio for long-term growth and stability.
Conclusion
By reallocating your investments, focusing on high-return options like mutual funds, and seeking guidance from a Certified Financial Planner, you can enhance your chances of achieving your retirement goal and securing a financially stable future for your family.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: You’re doing great at 29 with your savings and investments! Let’s see how you can achieve your goal of Rs. 1 crore by the age of 45.

Current Financial Overview
You have a monthly income of Rs. 90,000 and take home Rs. 77,000. Your fixed expenses are Rs. 20,000 per month. Your investments include:

Rs. 9.5 lakhs in Fixed Deposits
Rs. 2 lakhs in Savings
Rs. 4 lakhs lent to someone
Rs. 12.5 lakhs in Mutual Funds
Rs. 7 lakhs in Stocks
Rs. 1 lakh in PPF
Rs. 3 lakhs in PF
You also have a monthly SIP of Rs. 25,000. Your mutual fund investments include a mix of tax saver, flexi cap, midcap, ETF, and small cap funds.

Goals and Planning
Setting a Clear Target
You aim to reach Rs. 1 crore by 45. That’s 16 years from now. Your current investments are well-placed. Now, let’s strategize to ensure you meet your goal.

Investment Strategy
Increase SIP Contribution
Currently, you’re investing Rs. 25,000 per month in SIPs. This is excellent. But increasing your SIP gradually will help you reach your goal faster. Consider increasing your SIP by 10% each year. This will leverage the power of compounding.

For instance, if you start with a SIP of Rs. 25,000 and increase it by 10% annually, it will significantly boost your corpus over the years. The power of compounding means your returns will generate more returns, accelerating your wealth growth.

Review and Optimize Portfolio
Your mutual funds include a good mix. However, it's important to review your portfolio annually. Check the performance of each fund. If any fund underperforms for more than 3 years, consider switching.

Emergency Fund
Maintain Liquidity
Keep 6 months of expenses as an emergency fund. You have Rs. 2 lakhs in savings, which is good. Ensure this fund is easily accessible. You can use a combination of savings accounts and liquid funds. This ensures you have funds available for unexpected expenses without having to liquidate your investments.

Fixed Deposits and Debt Investments
Utilize Fixed Deposits Wisely
You have Rs. 9.5 lakhs in FDs. FDs are low-risk but offer lower returns. Consider using part of this amount to increase your SIPs or invest in higher-return options like debt funds.

Debt funds can offer better returns than FDs while still being relatively low-risk. They invest in bonds and other fixed-income securities, providing a balance of safety and returns.

Stock Investments
Diversify and Monitor
You have Rs. 7 lakhs in stocks. Stock investments are high-risk, high-return. Ensure you diversify across different sectors. Regularly monitor and review your stock portfolio. Avoid putting all eggs in one basket.

Diversification reduces risk. If one sector underperforms, others may perform well, balancing your overall returns. Regular monitoring helps you stay updated on market trends and make timely adjustments.

PPF and PF Contributions
Long-Term Stability
You have Rs. 1 lakh in PPF and Rs. 3 lakhs in PF. These are great for long-term stability and tax benefits. Continue contributing to these regularly. PPF matures in 15 years, aligning well with your goal.

PPF and PF provide guaranteed returns and tax benefits. They are excellent for long-term financial security and should be a core part of your investment strategy.

Lending and Recovering Funds
Ensure Safety
You have Rs. 4 lakhs lent to someone. Make sure to recover this amount in time. Consider the safety and reliability of the borrower. Use this money to invest further once recovered.

Lending money can be risky. Ensure you have proper agreements in place and track repayment. Once recovered, reinvest it to generate returns.

Additional Investments and Insurance
Health and Life Insurance
Ensure you have adequate health insurance. Life insurance is crucial too, especially once you have dependents. Consider term insurance for adequate coverage.

Adequate insurance protects you and your family from financial distress in case of medical emergencies or untimely demise. Term insurance is cost-effective and provides substantial coverage.

Building Retirement Corpus and Child Education Fund
Power of Compounding
Mutual funds are excellent for building a retirement corpus. The power of compounding works wonders over long periods. Start early, invest regularly, and stay invested. This helps in growing wealth significantly.

Mutual funds, especially equity funds, have the potential for high returns over the long term. Compounding means you earn returns on your returns, exponentially growing your wealth.

Mutual Funds vs. Direct Stocks
Mutual funds offer diversification, professional management, and lower risk compared to direct stocks. They are suitable for investors who prefer a hands-off approach. Direct stocks require active management and market knowledge. Mutual funds are more consistent for long-term goals.

Direct stocks can provide high returns but require market knowledge and time to manage. Mutual funds, managed by professionals, offer diversification and consistent returns, making them suitable for most investors.

Regular Review and Adjustment
Annual Review
Review your financial plan annually. Adjust SIPs, check fund performance, and rebalance your portfolio. Stay informed about market trends and economic changes. Adjust your strategy as needed.

Regular reviews ensure your investments are aligned with your goals. Rebalancing helps maintain the desired asset allocation, reducing risk and optimizing returns.

Advantages of Mutual Funds
Professional Management
Mutual funds are managed by experienced fund managers who make informed investment decisions. This professional expertise can lead to better returns compared to individual stock investments.

Diversification
Mutual funds invest in a variety of securities, spreading risk. Diversification reduces the impact of poor performance by any single investment.

Systematic Investment
Mutual funds allow systematic investment plans (SIPs), enabling disciplined investing. SIPs help in averaging the cost of investments and reduce market timing risk.

Liquidity
Mutual funds offer high liquidity. You can redeem your investments anytime, providing flexibility in managing your funds.

Tax Efficiency
Equity mutual funds are tax-efficient, offering benefits like long-term capital gains tax exemption up to a certain limit. ELSS funds provide tax deductions under Section 80C.

Final Insights
Planning your finances to achieve Rs. 1 crore by 45 is attainable with disciplined investing and regular reviews. Ensure you maintain a diversified portfolio, leverage the power of compounding, and keep your goals in focus. Stay consistent with your investments, and increase contributions gradually. Remember, financial planning is a dynamic process. Regular reviews and adjustments are key to staying on track. Your current financial habits are commendable, and with these strategies, you’re well on your way to achieving your goals.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in