Hello Hemant, Greetings. Request a serious suggestion on my investment planning. Have majority of my savings into FDs due to my earlier conservative approach and even now am having the tax benefit as the FDs are on my wife's name where we do get the tax benefit. Also started significant portion into MFs which is a portfolio by itself of nearly 50 lac INR. My question is, I want to plan for my younger son's future and our retirement which almost have the same time duration of about 12-13 years. How can I go for my investment if am looking for around 5-7 crore of corpus by then ? What options could you provide me assuming I do have good risk apettite now as I have seen a good 5 year cycle in the MFs now. I want you suggest 2 options, 1 - With a fresh investment now and the products which I should go around and 2 - If you advise to use the fixed deposits also to contribute to the wealth creation ( I have a total of around 60-70 lac as FDs). So please suggest a good portfolio with the above 2 scenarios.

Ans: Currently, your portfolio is overly diversified in a similar category funds (ELSS), although the funds are well performing and have delivered decent returns till date. The ongoing SIPs in these funds will help you in accomplishing your goals along with tax savings but we recommend you to reduce the funds to two. The other funds in your portfolio are also fundamentally strong and decent performers. Hence, we recommend you to not introduce new funds in your portfolio and allocate the additional SIPs amount in the existing funds.

For your post retirements commitments, NPS is a good investment asset class as it will maintain your cashflows. You also have a decent health insurance for medical uncertainties but I recommend you to increase the term plan to 1 Cr.

Ans: Based on your query, we understand that you are looking for investment options to plan for your younger son’s future (Education and Marriage) and your retirement life. You have mentioned that both goals have a similar time duration of about 12-13 years. You also mentioned that you have a good risk appetite now and have seen a good 5-year cycle in mutual funds (MFs).

To achieve a corpus of around Rs 5Cr by then, we have evaluated both the options:-

Option 1: Fresh Investment: This is the most recommended option from our end as considering your investment horizon and knowledge, we suggest you to rebalance your current fixed income oriented investments to equity orient funds with 20-25% allocation towards mid and small caps.
Benefits on shifting:
• Lower tax liability on returns generated.
• Tax deferment and compounding (higher returns) in long run.

Option 2: Continuing with Fixed Deposits (FDs) (Not suggested by us)
As you know, FDs are very safe asset class and yielding higher returns due to current interest rate scenario. Although, we all know sooner and later rates will came down to support the economy so does the FD rates.
Also, FDs as investment are not considered good for horizon of more than 5 years because:
a) Yearly taxation reduce the compounding and returns.
b) Equity generally outperform in terms of returns over the same horizon.

Final Recommendation:
We suggest you to shift 30-40 Lakhs from FDs and reinvest the same in a well-diversified portfolio of Equity and hybrid funds. Also, considering your goal of reaching a corpus of 5cr with current mutual fund investments it will require whopping returns of 20%+ on annual basis for a period of 12-13 years which is not very likely to achieve.

As a summary, allocate a total of Rs 80-90 Lakhs towards diversified equity-oriented funds and keep invested Rs 20-30 Lakhs in FDs in your wife’s name for taxation benefit.

Ans: Have 6-12 months of your monthly expenses as contingency in FD's, everything else can be deployed towards your goal.

Assuming you have 1cr today to allocate to the goals & need 6 cr in 12 years, you will have to do an SIP of 70K over & above the 1cr that you will allocate towards the goals.

MF's are the best way for you. Invest in 4-5 well diversified MF's & start an SIP in the same MF's