Hi Sir,
I'm 32 year old and aim to build corpse 3 crore in next 25 year. I have NPS of about 1.80 lakh (monthly 4000), PPF 2lakh(2000monthly) 7 lakh of shares and 7 lakhs of mutual fund holding at present. 50k monthly goes to mutual fund and also contributed to 2 insurance for combine 40lakh which will mature in 20 year. Have 1.40 lakh monthly income and have 1 kid 1year old.
Ans: You are 32 years old and aim to build a corpus of Rs 3 crore in the next 25 years. You currently have:
NPS: Rs 1.80 lakh (Rs 4,000 monthly)
PPF: Rs 2 lakh (Rs 2,000 monthly)
Shares: Rs 7 lakh
Mutual Funds: Rs 7 lakh (Rs 50,000 monthly)
Insurance Policies: Combined Rs 40 lakh, maturing in 20 years
Monthly Income: Rs 1.40 lakh
One Child: 1-year-old
Evaluating Your Financial Goals
To achieve a corpus of Rs 3 crore in 25 years, it's essential to have a structured investment plan. Considering your current investments, income, and responsibilities, let's outline a strategy.
Building Your Investment Strategy
Emergency Fund
Ensure you have an emergency fund to cover at least 6-12 months of expenses. This should be your first priority before making new investments.
Emergency Fund: Rs 8-10 lakh
Review Existing Investments
National Pension System (NPS)
NPS is a good retirement tool. Continue your monthly contributions.
Continue NPS: Rs 4,000 monthly
Public Provident Fund (PPF)
PPF is a safe investment with tax benefits. Keep investing to build a secure fund.
Continue PPF: Rs 2,000 monthly
Shares and Mutual Funds
Your current equity and mutual fund holdings show a strong inclination towards market-linked investments.
Review Portfolio: Ensure diversification across sectors and market caps.
Insurance Policies
You have insurance policies worth Rs 40 lakh maturing in 20 years. Ensure these policies provide adequate coverage.
Review Insurance: Ensure they meet your insurance needs.
Strategic Investment in Mutual Funds
Actively Managed Funds
Actively managed funds can outperform the market. They are managed by professional fund managers.
Benefits: Expert management and flexibility.
Recommendation: Increase allocation to actively managed funds.
Disadvantages of Index Funds
Index funds track specific market indices. They may not outperform the market and lack flexibility.
Average Returns: May not beat the market.
Less Flexibility: Limited response to market conditions.
Monthly SIP Allocation
Allocate a portion of your monthly income to different mutual funds through SIPs.
Large-Cap SIP: Rs 20,000
Mid-Cap SIP: Rs 15,000
Small-Cap SIP: Rs 10,000
Balanced SIP: Rs 5,000
Diversification
Diversify your investments to reduce risk and enhance returns.
Sectoral Diversification: Invest across various sectors.
Geographical Diversification: Consider international funds for global exposure.
Regular Monitoring and Review
Review your investment portfolio regularly to ensure it aligns with your goals. Make adjustments based on market conditions and personal financial changes.
Quarterly Reviews: Assess performance and adjust as needed.
Consulting a Certified Financial Planner
A Certified Financial Planner (CFP) can provide personalized investment strategies and help you navigate the complexities of mutual funds and SIPs.
Personalized Advice: Tailored to your financial goals.
Regular Reviews: Ensure your investments stay aligned with your goals.
Additional Considerations
Education and Childcare
Consider setting up a fund for your child's education and future expenses.
Child Education Fund: Start a dedicated SIP for this purpose.
Retirement Planning
While aiming for a Rs 3 crore corpus, also focus on building a secure retirement fund.
Retirement Fund: Consider adding to NPS and PPF for retirement security.
Final Insights
To achieve a corpus of Rs 3 crore in the next 25 years, maintain a balanced and diversified investment strategy. Continue your current contributions to NPS and PPF, increase your SIP investments in mutual funds, and ensure adequate insurance coverage. Regularly review your portfolio and consult with a Certified Financial Planner to stay on track with your financial goals.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in