Hello, I have the following investmens/savings: 1) 7,50,00,000 in MF 2) 3,00,00,000 in debt/liquid fund 3) 15,00,00,000 in FD 4) 4,00,00,000 in Real estate development 5) 30,00,00,000 in corporate savings Expenses: 1) Loan emi (cars) - 40k/month 2) Business expenses - 2,00,00,000/yearly 3) Personal/Family expenses - 1,00,00,000/yearly Current situation/wants: 1) I am 35 y/o , want to retire by 42 and work not for money but for what I like to do. 2) I want to have substantial amount of returns coming in every month and per annum. 3) Align 15-20% ROI yoy. 4) Retire with enough cash to live until lifetime. Question(s): 1) Shall I re-align my investments? 2) I want to move the funds from Debt+FD to MF (80%), is it a wise decision? Considering that 50% of the MF investment will be invested considering it as a short term investment (i.e. 12-24 months) given the constant work related needs. 3) Considering the inflation and current expenses, I want maintain my expenses almost on the same level, would my current investments make enough to cover up monthly/yearly expenses and cover the retirement period as well?

Ans: You have a diversified investment portfolio with a mix of mutual funds, NPS, FDs, real estate, gold, and equities. This balanced approach is a good foundation for building your retirement corpus. Your goal to retire at age 51 with a monthly pension of Rs. 1.5 lakh is achievable with strategic adjustments and disciplined investing.

Let's review each component of your portfolio and provide insights for optimization.

Mutual Funds
Your investment in mutual funds, valued at Rs. 1.2 crore with Rs. 75,000 monthly SIPs, forms the core of your wealth-building strategy.

Positives:

Your diversification across large-cap, mid-cap, hybrid, and small-cap funds is commendable. This spread helps in mitigating risks while ensuring growth.
Areas for Improvement:

Ensure that the funds in your portfolio are actively managed and performing well against their benchmarks. Regular review of fund performance is crucial.
Avoid over-diversification. Having too many funds might dilute your returns. Consider consolidating your investments into a fewer number of high-performing funds.
National Pension System (NPS)
With Rs. 12 lakh invested in NPS and Rs. 15,000 monthly contributions, this is a tax-efficient retirement tool.

Positives:

NPS provides a steady, long-term investment in equities and government securities, which is ideal for retirement planning.
Areas for Improvement:

Consider switching the asset allocation towards a more equity-oriented mix within NPS as you are still several years away from retirement. This can potentially enhance your returns.
Fixed Deposits (FDs)
Your investment of Rs. 35 lakh in FDs is a safe, liquid asset but offers limited returns.

Positives:

FDs provide safety and liquidity, essential for short-term goals and emergencies.
Areas for Improvement:

Given your long-term horizon, consider reducing your exposure to FDs and reallocating to higher-return instruments like debt mutual funds. This will offer better post-tax returns while still maintaining a balance of risk and safety.
Real Estate Investments
You own two houses (market value Rs. 60 lakh) generating Rs. 20,000 monthly rent and a commercial property (market value Rs. 1.5 crore) yielding Rs. 50,000 monthly rent.

Positives:

Real estate provides regular rental income and can act as a hedge against inflation.
Areas for Improvement:

The real estate market can be illiquid and may not always provide the best returns. Consider whether these assets are aligned with your long-term goals. If necessary, you may explore the option of selling a property and investing the proceeds in more liquid assets like mutual funds or equity.
Gold Investments
Your gold investment, including Sovereign Gold Bonds (SGB), is worth Rs. 20 lakh.

Positives:

Gold is a good hedge against inflation and economic downturns.
Areas for Improvement:

Keep your gold investment as a small part of your portfolio. Avoid adding more unless you foresee significant inflation or economic instability.
Equity Stocks
You have Rs. 3 lakh invested in direct equity stocks.

Positives:

Direct equity can offer high returns if chosen wisely.
Areas for Improvement:

Regularly review your stock portfolio. Consider shifting focus to mutual funds if you lack the time or expertise for direct stock investments.
Recurring Deposit (RD)
Your RD of Rs. 10,000 per month provides a regular, safe investment option for immediate cash needs.

Positives:

RDs are safe and predictable, useful for short-term savings.
Areas for Improvement:

Similar to FDs, RDs offer limited growth. Evaluate if these funds could be better utilized in higher-return instruments for your long-term goals.
Insurance Coverage
You have a Rs. 25 lakh family health insurance plan and a Rs. 70 lakh term insurance plan.

Positives:

Adequate insurance coverage is vital for protecting your family’s financial future.
Areas for Improvement:

Review your insurance coverage periodically to ensure it keeps pace with inflation and your financial responsibilities. Consider increasing your term insurance coverage if required.
Children’s Education and Marriage
You plan to dispose of your plots, valued at Rs. 1.5 crore, to fund your children’s education and marriage.

Positives:

Selling non-core assets like plots to fund key life events is a sound strategy.
Areas for Improvement:

Ensure the timing of these disposals aligns with market conditions to maximize returns. Reinvest any surplus funds into your retirement corpus.
Retirement Planning
To achieve a monthly pension of Rs. 1.5 lakh post-retirement, a robust corpus is required.

Positives:

Your current investments, coupled with ongoing contributions, lay a strong foundation for meeting your retirement goals.
Areas for Improvement:

Focus on growing your retirement corpus by increasing your SIPs and NPS contributions over time. Aim for a higher equity allocation as it offers better growth potential in the long run.
Cash Flow Management
Your monthly expense is Rs. 75,000, with a mix of predictable and unpredictable expenses.

Positives:

Having a clear understanding of your monthly expenses helps in planning for retirement and other goals.
Areas for Improvement:

Maintain a budget to track and control unplanned expenses. Consider setting aside an emergency fund, separate from your investments, to handle these unexpected costs.
Final Insights
Your investment strategy is on the right track, but a few adjustments can help you achieve your retirement goals more efficiently. Prioritize equity-oriented investments for long-term growth, review and consolidate your mutual funds, and consider the liquidity and return potential of your real estate holdings. Regularly monitor your portfolio’s performance and make adjustments as needed to stay aligned with your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in