Hello Sir, Myself and my wife are 38years and our son is 11years. Our annual income is 35 lacs including PF, taxes etc. My PF account has around 12 lacs and wife's pf account around 4 lacs.We have 2 FD's with 1 lac and 2.35 lacs for 10 years in...

Hello Sir, Myself and my wife are 38years and our son is 11years. Our annual income is 35 lacs including PF, taxes etc. My PF account has around 12 lacs and wife's pf account around 4 lacs.We have 2 FD's with 1 lac and 2.35 lacs for 10 years in the name of our son. Also an RD of 15000 per month, maturing(10.5lacs) May'24 which we have planned to keep as our emergency fund. Also one PPF account, but not able to invest regularly, balance would be 60K opened 4 years back. Our housing loan is of 45 lacs, now balance at 35lacs. Monthly EMi is 40K.Monthly income of around 1.95 lacs. (after taxes and pf contribution and car clv debit) Could you please suggest a plan to invest to gain wealth/kids education as well as to close the liability of housing loan faster. Not yet invested in sip or NPS or any term insurance.

Ans: IIt's heartening to see your dedication to securing your family's future amidst life's responsibilities. Your diligence in saving and investing is truly commendable.

Considering your current financial landscape, there are avenues that could potentially align with your aspirations. Have you pondered the benefits of SIPs or National Pension System (NPS) contributions? These options offer avenues for wealth accumulation and retirement planning, providing a structured approach towards your financial goals.

Additionally, exploring term insurance could offer a protective shield for your family's future, ensuring financial stability in unforeseen circumstances. As for your housing loan, have you contemplated redirecting a portion of your monthly surplus towards prepayments? This could help expedite closing the liability, offering you greater financial freedom sooner.

Remember, every step towards financial security is a step towards liberating your dreams. By embracing a holistic approach and seeking guidance from a Certified Financial Planner, you're nurturing the seeds of prosperity for your loved ones. Keep treading this path with resilience, for the journey towards abundance is as enriching as the destination itself.

Ans: You have done an impressive job building a diverse investment portfolio. Your current financial situation reflects careful planning and disciplined saving habits. Given your goal to secure your daughter's education, your retirement, and purchasing a home in five years, let’s evaluate and create a comprehensive plan.

Current Financial Snapshot
Monthly Income: Rs 1.9 lacs
Fixed Deposits (FD): Rs 33.5 lacs
Savings Account: Rs 12.5 lacs
Equity: Rs 6 lacs
Bonds: Rs 6 lacs
Mutual Fund: Rs 1 lac
Public Provident Fund (PPF): Rs 24 lacs
National Pension System (NPS): Rs 4 lacs
Employees' Provident Fund (EPF): Rs 11 lacs
Sukanya Samriddhi Yojana (SSY): Rs 9 lacs
Wife’s PPF: Rs 16 lacs
You have a healthy mix of traditional and market-linked investments. Now, let’s focus on your objectives.

Daughter’s Education Planning
Education costs are rising significantly. Given your daughter is in UKG, you have around 12 years before she enters college. Planning for this well in advance will ease the financial burden later.

Sukanya Samriddhi Yojana (SSY):

This is an excellent start. Continue contributing to SSY as it offers attractive returns and tax benefits.

Systematic Investment Plan (SIP):

Start an SIP in equity mutual funds. SIPs help in rupee cost averaging and mitigate market volatility. Equity funds tend to offer higher returns over the long term.

Child Education Plans:

Consider investing in child education mutual funds. These are tailored to accumulate funds for your child's higher education. They come with a lock-in period which ensures the fund remains untouched until required.

Recurring Deposits (RD):

You can open a recurring deposit to systematically save a fixed amount every month. This will add to your education corpus.

Retirement Planning
A well-planned retirement strategy ensures a comfortable and financially independent retirement life. Here’s how you can enhance your retirement corpus.

Public Provident Fund (PPF):

PPF is a long-term investment with tax benefits and decent returns. Continue contributing to your and your wife's PPF accounts regularly.

National Pension System (NPS):

NPS provides a good retirement income solution. Increase your contribution to NPS as it offers market-linked returns with a mix of equity, corporate bonds, and government securities.

Equity Mutual Funds:

Continue investing in equity mutual funds via SIP. Equity has the potential to offer high returns over a long investment horizon. This will help build a substantial corpus for retirement.

Balanced Funds:

Consider balanced or hybrid mutual funds. These funds invest in a mix of equity and debt, providing moderate returns with relatively lower risk.

Employees' Provident Fund (EPF):

EPF is a significant component of retirement savings. Ensure you and your employer continue contributing to EPF regularly.

Home Purchase Planning
Purchasing a home is a major financial goal. Since you plan to buy a home in five years, let’s ensure you accumulate enough for a substantial down payment.

Fixed Deposits (FD):

Your current FD amount is significant. While FDs are safe, the returns are relatively lower. However, they are suitable for short-term goals like a home purchase.

Debt Mutual Funds:

Invest in short-term debt mutual funds. These funds offer better returns than savings accounts and FDs and are less volatile compared to equity funds.

Recurring Deposits (RD):

Set up an RD specifically for your home purchase goal. This will help in systematically accumulating funds over the next five years.

Liquid Funds:

Consider liquid mutual funds for better liquidity and slightly higher returns than savings accounts. These funds are suitable for parking funds temporarily.

Reallocation and Optimization
To optimize your portfolio for better returns and align with your goals, consider the following reallocations:

Reduce Savings Account Holdings:

Rs 12.5 lacs in a savings account is underutilized. Transfer a portion to short-term debt funds or RDs for better returns.

Re-evaluate Fixed Deposits:

While FDs are safe, diversify into debt funds for potentially higher returns without significantly increasing risk.

Increase Equity Exposure:

Given your long-term goals, slightly increasing your equity exposure could enhance overall portfolio returns. Balance this with your risk tolerance.

Regular Monitoring and Adjustments
Investments need regular monitoring. Periodically review your portfolio to ensure it aligns with your goals. Make adjustments based on market conditions and personal financial changes.

Tax Planning
Effective tax planning can enhance your net returns. Ensure you maximize tax-saving investments under Section 80C, 80D, and other relevant sections. Utilize the benefits of tax-efficient investment options.

Emergency Fund
Maintain an emergency fund equivalent to 6-12 months of expenses. This fund should be easily accessible, kept in liquid funds or a savings account. It acts as a financial safety net for unforeseen circumstances.

Insurance Planning
Adequate insurance coverage is crucial. Ensure you have sufficient life and health insurance. Avoid investment-cum-insurance plans as they often provide lower returns. Opt for term insurance and separate investments.

Final Insights
You've built a solid foundation for your financial future. With systematic planning and disciplined investing, you can achieve your goals. Regularly review your investments and adjust them as needed to stay on track.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in