Hello sir, Myself Prakash, age 31. I am a salaried person (married) working in private sector and my in hand salary is 50k. I have joint bank loan of 33L for 20 years for our house jointly by three of us (brothers) in which I am paying 9-9.5k per month (4 yrs already passed). My monthly expenses are approx 35k. I have a Emergency Corpus of 1.5L. I have a term insurance policy of 1 cr with a premium of 1.7k to be paid till 2032. I have health insurance also for my family with premium of 1.5k We also have covered our parents in separate health policy of premium 40-42k per year split equally between three of us. Pls suggest investment for my below mentioned goals. A. Short term goal 1. Small Car after 6 yrs of approx 7-8L 2. Own house after 15 years of approx 35-40L B. Long term goal 1. Child education fund after 17 yrs of 15L 2. Child marriage fund after 24 yrs of 25 L 3. Retirement fund after 24 yrs which would give me monthly 50k. Pls advise.

Ans: It's great that you have a clear understanding of your financial goals and have started making investments. Here are some suggestions to align your investment strategy with your goals:

Emergency Corpus Fund:

• Aim for at least 3-6 months' worth of living expenses as an emergency corpus. Given your monthly expenses are Rs. 30,000, target an emergency fund of Rs. 90,000 to Rs. 1,80,000.
• Consider keeping this fund in a liquid or easily accessible instrument like a savings account or a short-term fixed deposit.

Medical Insurance:

• Get a comprehensive family floater health insurance policy. Ensure that the coverage is adequate to handle medical expenses for you, your spouse, and your daughter. The coverage should include hospitalisation expenses, critical illness coverage, and other relevant features.
• Review your policy periodically to make sure it remains adequate for your family's needs.

Short-Term Goal (Rs. 15 lakh in 5 years):

• Consider a mix of equity and debt instruments to achieve this goal. Since it's a short-term goal, a balanced approach is advisable. You may allocate a portion to equity mutual funds and the rest to fixed-income instruments like debt mutual funds, recurring deposits, or short-term bonds.
• Regularly monitor the progress towards your short-term goal and make adjustments as needed.

Long-Term Goals (Daughter's education, marriage, retirement):

• Since you have a long investment horizon for your daughter's education, marriage, and your retirement, you can afford to take more risk. Continue investing in equity-oriented instruments for these goals.
• Diversify across asset classes such as equity mutual funds, Public Provident Fund (PPF), Employee Provident Fund (EPF), and other suitable investment options.
• Gradually increase your equity exposure and consider allocating a portion to international funds for additional diversification.

Diversification and Asset Allocation:

• Ensure your portfolio is well-diversified across different asset classes (equity, debt, gold) to manage risk effectively.
• Periodically rebalance your portfolio to maintain the desired asset allocation based on your risk tolerance and financial goals.
• Keep an eye on the performance of individual investments and make adjustments if needed.

Regular Review and Monitoring:

• Regularly review your portfolio's performance and make adjustments based on changes in your goals, risk tolerance, and market conditions.
• Reassess your insurance needs periodically to make sure your coverage aligns with your family's requirements.
• As your income increases, consider increasing your monthly investments to align with your financial goals.

Remember, it's crucial to consult with a financial advisor to tailor a plan that suits your specific needs and risk tolerance. Adjust your strategy as life circumstances change, and stay disciplined in your long-term investment approach.

Ans: Given your financial goals and current situation, it's great to see that you've already established an emergency corpus and have adequate insurance coverage. Now, let's focus on your investment strategy to achieve your goals.

For your short-term goals like buying a car and a house, which are 6-12 years away, consider investing in a mix of equity and debt instruments. Equity mutual funds can provide the potential for higher returns over the long term, which aligns well with your time horizon. Debt instruments like fixed deposits or debt mutual funds can offer stability for your shorter-term goals.

For your long-term goals, such as your child's education, marriage, and your retirement, you can afford to take more risk and invest primarily in equity mutual funds. These investments have the potential to generate higher returns over a longer period, helping you build the required corpus.

Since you're new to investing in stocks or mutual funds, it's advisable to start with systematic investment plans (SIPs). SIPs allow you to invest regularly in mutual funds, helping you benefit from rupee-cost averaging and reducing the impact of market volatility.

Considering your current salary of 50k in hand, assess your monthly surplus after meeting your expenses and allocate a portion towards SIPs for each of your goals. A Certified Financial Planner can assist you in creating a customized investment plan tailored to your goals, risk tolerance, and financial situation.

Remember to review your investments periodically and make adjustments as needed to stay on track towards achieving your financial goals. With discipline and patience, you can build a solid foundation for your future financial security.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: Current Financial Situation
Age: 32 years old

Profession: Engineer

Family: Married, expecting first child next year

Parents: Receiving a pension of Rs. 50k

Income: Rs. 60k in hand + Rs. 20-30k perks

Needs: Rs. 25k max

Investments:

Saving account: Rs. 60k
Emergency fund: Rs. 2.5 lakhs (12 months+)
ULIP funds: Rs. 3 lakhs (Current value Rs. 4.6 lakhs, 10 years left, Rs. 60k/year)
Term Plan: Rs. 1 crore + Rs. 10 lakhs critical illness cover (5 years left, Rs. 36k/year)
Assets:

Owns a 3 BHK flat with own income
Ancestral property (value Rs. 20 lakhs, 2-floored house, expected rent Rs. 15k/month in next year)
Gold: 90-100 grams
Own a car & a 2-wheeler
Insurance: No health insurance for self and wife till 35 years of age

Financial Goals
Early retirement by age 50.
Investment strategy for SIP, PPF, RBI Bond funds, mutual funds, SGBs, or any other suitable funds.
Buy a term plan of Rs. 1-2 crore for wife.
Buy a house at age 43 (PV in 2024: Rs. 70-80 lakhs).
Build a corpus for child’s higher education and marriage.
Assessment of Current Strategy
Emergency Fund
You have a good emergency fund. This is a crucial safety net.

ULIP Funds
Your ULIP has a high cost. Consider moving to more efficient investment options.

Term Insurance
Your current term plan is good. Consider adding more coverage.

Ancestral Property
The expected rent will provide a steady income stream.

Gold
Gold is a stable asset but consider other investment avenues for growth.

Recommendations for Improvement
Health Insurance
Immediate Action: Get health insurance for yourself and your wife. This protects against unforeseen medical expenses.
Investment Strategy
SIP in Mutual Funds:

Diversified Equity Funds: Start SIPs in diversified equity mutual funds. These funds have high growth potential.
Allocation: Consider investing Rs. 15-20k monthly in SIPs.
PPF:

Tax Benefits: PPF is a good tax-saving instrument. It provides stable, risk-free returns.
Contribution: Start contributing Rs. 1.5 lakhs annually to PPF.
RBI Bonds and SGBs:

RBI Bonds: Invest in RBI Bonds for safe, long-term returns.
Sovereign Gold Bonds (SGBs): Invest in SGBs for additional gold exposure with interest.
Mutual Funds:

Actively Managed Funds: Prefer actively managed funds over index funds for better returns.
Diversification: Invest in a mix of large-cap, mid-cap, and small-cap funds.
Term Insurance for Wife
Coverage: Buy a term plan of Rs. 1-2 crore for your wife. This ensures financial security.
Future House Purchase
Savings Plan: Start saving for the house you want to buy at age 43.
Investment: Allocate a portion of your monthly savings to a dedicated house fund.
Child’s Education and Marriage Corpus
Education: Start an SIP dedicated to your child’s education. Aim for a mix of equity and debt funds.
Marriage: Similarly, start a separate SIP for your child’s marriage expenses.
Additional Recommendations
Review and Adjust:

Annual Review: Regularly review your investments. Adjust based on performance and goals.
Diversify Portfolio:

Reduce ULIP: Consider moving funds from ULIP to mutual funds for better growth.
Balanced Portfolio: Ensure a balanced mix of equity, debt, and other assets.
Tax Planning:

Maximize Benefits: Use tax-saving instruments like PPF, ELSS, and NPS.
Final Insights
Your current strategy is a good start. Health insurance is a must. Diversify your investments through SIPs, PPF, RBI Bonds, and SGBs.

Consider adding more term insurance for your wife. Plan for future house purchase and child’s education/marriage by starting dedicated SIPs.

Review and adjust your portfolio annually. Ensure a balanced mix of assets for growth and security.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

Ans: Hello;

For goal under heading "a", I recommend you the following;

1. Invest 10 L in Arbitrage type of mutual fund (low risk) for the education funding requirement of your daughter.

2. Buy an immediate annuity for 40 L from a life insurance company which may yield you a monthly income of 20 K as desired. 6 % annuity rate considered.

3. Invest MF corpus(5.6 L) and FD sum(2 L) into an equity savings type mutual fund (low to moderate risk)
This will help fund your international vacations. Value 9.84 L in 3 years considering 9 % returns.

For achievement of goal under heading "b" invest 10 L lumpsum in a pure equity mutual fund for 20 years after which it will provide you a sum of 1.15 Cr. Top-up this investment as and when possible to prepone your target achievement in 15 or 12 years.(13% return considered)

You should have adequate term life cover atleast upto 60 years of age (Check for postal life insurance at your nearest post office if you want to buy) with suitable riders and also health care cover(HDFC ergo and Niva Bupa are good)despite CGHS.

Happy Investing!!

*Investments in mutual funds are subject to market risks. Please read all scheme related documents carefully before investing.

Ans: Hello;

For goal under heading "a", I recommend you the following;

1. Invest 10 L in Arbitrage type of mutual fund (low risk) for the education funding requirement of your daughter.

2. Buy an immediate annuity for 40 L from a life insurance company which may yield you a monthly income of 20 K as desired. 6 % annuity rate considered.

3. Invest MF corpus(5.6 L) and FD sum(2 L) into an equity savings type mutual fund (low to moderate risk)
This will help fund your international vacations. Value 9.84 L in 3 years considering 9 % returns.

For achievement of goal under heading "b" invest 10 L lumpsum in a pure equity mutual fund for 20 years after which it will provide you a sum of 1.15 Cr. Top-up this investment as and when possible to prepone your target achievement in 15 or 12 years.(13% return considered)


You should have adequate term life cover atleast upto 60 years of age (Check for postal life insurance at your nearest post office if you want to buy) with suitable riders and also health care cover(HDFC ergo and Niva Bupa are good)despite CGHS.

Happy Investing!!

*Investments in mutual funds are subject to market risks. Please read all scheme related documents carefully before investing.