Dear sir, I am 50 years old and working in private sector MNC 1.5 Lakhs on hand. My job security is very less.
I have two kids aged 18, 14 years old. My wife is housewife. I have 80L in Mutual funds and 20L in stocks, Bank deposits 40L. I am investing in SIP in below Mutual funds all direct growth around 57000 pm.
CR Bule chip fund, MA Large and Midcap, HDFC smallcap each 5000 pm (15000) step up 2000 every 6months.
Invesco Infra, JM Value fund, Nippon India Multicap, Small cap, Parag parekh Flexi cap,
Quant Small cap, Mid cap each 6000 pm (42000), all these SIPs started recently from June 2024.
Some Lumpsum in Axis smallcap 6L, Bandan core Equity 3L, CR Smallcap 8L, DSP smallcap 4L,HSBC Flexicap 3.5, HSBC Smallcap 3L, ICICI Pru Infra 3.5L, Value discovery 3L, Invesco Large & Midcap 2L, JM Flexicap 1L, Motilal Oswal Midcap 8L, SBI Bluechip 7L, Infrastructure 2L, Sundaram Smallcap 3L
My expenses per month are 1.2 Lakh. I don't have loans/EMIs.
Please advice me for my retirement life which need at least 1.5L per month, my kids education expenses, and also advice to my Portfolio.
Thanks and regards,
Yours sincerely,
Purushotham Thati
Ans: Your current portfolio and investment habits show a good start. Let us evaluate your financial standing, address your goals, and provide suggestions for optimisation.
Assessment of Your Current Financial Position
Income and Expenses: You have a monthly income of Rs. 1.5 lakh and expenses of Rs. 1.2 lakh. This leaves a surplus of Rs. 30,000 per month.
Investment Corpus: Your existing corpus includes Rs. 80 lakh in mutual funds, Rs. 20 lakh in stocks, and Rs. 40 lakh in bank deposits.
SIP Contributions: You are investing Rs. 57,000 monthly across multiple mutual funds.
Lump Sum Investments: You have allocated significant lump sums to small-cap, flexi-cap, and thematic funds.
Goals: Your goals include securing Rs. 1.5 lakh monthly for retirement and funding your children's education.
Planning for Retirement
Corpus Required
You aim for Rs. 1.5 lakh per month during retirement.
Factor in inflation to estimate future monthly expenses.
The current corpus and SIPs must grow consistently to meet this goal.
Recommendations
Maintain a balanced allocation between equity and debt for steady growth.
Avoid excessive concentration in small-cap and thematic funds, which are volatile.
Increase exposure to balanced and flexi-cap funds for stability.
Planning for Children’s Education
Current Needs
Your children are aged 18 and 14, which implies upcoming higher education expenses.
Plan for expenses within the next 4–8 years.
Recommendations
Create a dedicated education fund for both children.
Use debt-oriented hybrid funds or short-term debt funds for near-term goals.
Ensure part of your mutual fund corpus is earmarked for this purpose.
Portfolio Review and Suggestions
Strengths of the Portfolio
Disciplined SIP Investments: Investing Rs. 57,000 monthly shows financial discipline.
Diversification: Exposure to various categories like large-cap, mid-cap, small-cap, and thematic funds.
Areas for Improvement
Excessive Small-Cap Allocation: High exposure to small-cap funds increases volatility.
Thematic Fund Overlap: Thematic funds like infrastructure may lead to concentration risks.
Direct Fund Investments: Direct funds lack professional guidance and ongoing monitoring.
Portfolio Optimisation
Consolidate funds to reduce over-diversification and improve focus.
Shift some SIPs to balanced advantage or hybrid funds for stability.
Review and replace underperforming funds periodically.
Invest through a Certified Financial Planner to benefit from professional advice.
Optimising Lumpsum Investments
Review the performance of your lump sum investments.
Redeploy underperforming small-cap and thematic funds into balanced funds.
Keep a portion of your bank deposits in liquid funds for emergencies.
Avoid high allocations to sectoral or cyclical funds due to their dependency on market conditions.
Tax Planning
Long-term capital gains on equity mutual funds above Rs. 1.25 lakh are taxed at 12.5%.
Short-term capital gains on equity funds are taxed at 20%.
Debt mutual funds are taxed as per your income tax slab.
Plan redemptions considering these rules to minimise tax liabilities.
Emergency Fund Allocation
Maintain at least 6–12 months of expenses in liquid funds or fixed deposits.
This ensures financial security given your low job security.
Allocate Rs. 15–20 lakh from your bank deposits for this purpose.
Recommendations for SIPs
Reduce exposure to small-cap and thematic funds.
Increase allocation to large-cap and multi-cap funds for stability.
Consider balanced advantage funds to manage market volatility.
Step-up SIPs only after assessing fund performance.
Final Insights
Your financial foundation is strong, but optimisation is essential.
Prioritise stability and diversification in your portfolio.
Allocate funds separately for retirement and children’s education.
Maintain a robust emergency fund to handle uncertainties.
Seek professional advice to streamline and monitor your investments.
Consistent review and disciplined investing will help you achieve financial independence and secure your family’s future.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
Question by ABHIJIT on Nov 19, 2020Hindi
