If my husband earns 8-9 lakh rupees and i earn 70k per month this is net profit after expenses how should we invest in order to have 20 cr in shares mutual funds etc apart from our real estate properties. Right now we are 39 yrs

Ans: Aiming for a Rs. 20 crore corpus in shares, mutual funds, and other investments by leveraging your earnings is a great goal. Here's a detailed plan to help you achieve this.

Understanding Your Financial Situation
You and your husband have a combined monthly net income of Rs. 70,000 from your business and Rs. 8-9 lakhs annually from his earnings. You are both 39 years old and have about 21-22 years until you reach 60. Achieving a Rs. 20 crore corpus by then requires a disciplined and strategic investment approach.

Evaluating Your Current Investments
First, let's assess your current financial position. You mentioned you have real estate properties, but you want to focus on other investments. Real estate is a significant asset, but diversification into equities and mutual funds is essential for growth.

Emergency Fund
Ensure you have an emergency fund covering 6-12 months of expenses. This fund should be in a liquid and safe instrument like a high-interest savings account or a liquid mutual fund.

Insurance
Review your insurance policies. Adequate term life insurance and health insurance are essential to protect your family’s financial future.

Creating a Solid Investment Plan
Define Your Financial Goals
Primary Goal: Accumulate Rs. 20 crore by the time you retire.
Secondary Goals: Any other financial goals such as children’s education, marriage, or personal milestones.
Systematic Investment Plans (SIPs)
SIPs in mutual funds are one of the best ways to build wealth over time. They allow disciplined, regular investments in a variety of funds. Here are some categories of mutual funds to consider:

Equity Mutual Funds: These funds invest primarily in stocks and have the potential for high returns. They come with higher risk but are ideal for long-term goals like retirement. Opt for a mix of large-cap, mid-cap, and small-cap funds for diversification.

Debt Mutual Funds: These funds invest in fixed-income securities and are less risky compared to equity funds. They provide moderate returns and add stability to your portfolio. Consider short-term debt funds or corporate bond funds.

Hybrid Mutual Funds: These funds invest in a mix of equity and debt instruments, balancing risk and return. They are suitable for moderate risk-takers and provide balanced growth.

Tax-Saving Funds (ELSS): These equity-linked savings schemes offer tax benefits under Section 80C and have a lock-in period of three years. They are excellent for long-term wealth creation and tax planning.

Diversification and Asset Allocation
A well-diversified portfolio reduces risk and enhances returns. Here’s a suggested asset allocation based on your age and risk profile:

Equity Mutual Funds: 70-80%
Debt Mutual Funds: 10-20%
Others (PPF, NPS, etc.): 10-20%
This allocation leverages the growth potential of equities while providing stability through debt instruments and fixed returns from other safe investments.

Power of Compounding
Compounding is a powerful concept where your investment returns generate further returns. The earlier and more consistently you invest, the more your wealth grows over time. Regular investments in SIPs will take advantage of compounding, ensuring substantial growth in your corpus.

Regular and Disciplined Investing
Increase SIP Contributions
Start with your current savings capacity and gradually increase your SIP contributions as your income increases. Regularly investing a significant portion of your monthly income in a mix of equity and debt mutual funds will significantly grow your corpus.

Regularly Review and Rebalance
Regularly review your investment portfolio to ensure it aligns with your goals. Rebalance your portfolio annually to maintain your desired asset allocation.

Tax Planning
Tax-efficient investing can enhance your returns. Utilize tax-saving instruments under Section 80C, such as PPF, ELSS, and life insurance premiums.

Equity Linked Savings Schemes (ELSS)
ELSS funds offer dual benefits: tax savings and equity market returns. They have a lock-in period of three years and are an excellent choice for long-term wealth creation and tax planning.

Utilizing Retirement Accounts
Public Provident Fund (PPF)
PPF is a safe, tax-saving instrument with decent returns and a 15-year lock-in period. Continue contributing to PPF for its tax benefits and assured returns.

National Pension System (NPS)
NPS is another excellent retirement-focused investment option. It offers tax benefits under Section 80C and 80CCD and invests in a mix of equity, corporate bonds, and government securities.

Mutual Funds: Advantages and Categories
Mutual funds are a pool of money collected from many investors to invest in securities like stocks, bonds, and other assets. Here are some key points about mutual funds:

Advantages of Mutual Funds
Diversification: Spreads risk across various assets.
Professional Management: Managed by experienced fund managers.
Liquidity: Easy to buy and sell.
Systematic Investment: Allows for disciplined investing through SIPs.
Categories of Mutual Funds
Equity Funds: Invest primarily in stocks. High risk, high return.
Debt Funds: Invest in fixed-income securities. Lower risk, moderate return.
Hybrid Funds: Mix of equity and debt. Balanced risk and return.
Index Funds: Track a market index. Lower management fees but less flexibility.
Sector Funds: Invest in specific sectors. Higher risk due to lack of diversification.
Avoiding High-Cost Insurance Products
High-cost products like ULIPs (Unit Linked Insurance Plans) have high charges, reducing overall returns. Instead, focus on term insurance for adequate coverage and mutual funds for investment.

Engaging a Certified Financial Planner
A Certified Financial Planner (CFP) can provide personalized advice based on your financial goals and risk tolerance. They can help optimize your investment strategy and ensure you are on track to meet your goals.

Risk Management and Contingency Planning
Adequate Health Insurance
Ensure you have adequate health insurance coverage for yourself and your family. Medical emergencies can deplete your savings quickly. A comprehensive health insurance plan will protect your finances.

Emergency Fund
Keep your emergency fund in a liquid and safe instrument like a high-interest savings account or a liquid mutual fund to ensure accessibility.

Retirement Corpus Calculation
To retire with Rs. 20 crore, you need to estimate your required retirement corpus. Consider your current expenses, inflation, and post-retirement life expectancy. Assuming an annual inflation rate of 6-7%, calculate your future monthly expenses and the corpus needed to sustain those expenses post-retirement.

Final Insights
Your goal to accumulate Rs. 20 crore is ambitious but achievable with disciplined savings and strategic investments. Continue contributing to your PPF and start investing in SIPs across various mutual fund categories. Diversify your portfolio with a mix of equity, debt, and hybrid funds to balance risk and returns.

Utilize the power of compounding by starting early and increasing your SIP contributions over time. Regularly review and rebalance your portfolio to stay aligned with your goals. Ensure you have adequate life and health insurance coverage to protect your finances.

Remember, starting early and staying disciplined in your investments will help you achieve your financial goals. Best of luck with your planning, and I hope you achieve a comfortable and secure retirement.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in