Myself and my spouse are working and have 2 kids 9 & 10 years. We are in our early 40 and acquired corpus of 3 cr. Max of corpus 2.3 crore is in EPF , PPF , Sukanya for both children and rest in NPS (75 % equity) and mutual fund. We have recently increased Mutual fund investment after our home loan finished and doing SIP in large and mid cap index funds. As we have more in debt investment due to EPF and PPF investment, is it wise to increase MF at this age. We are investing 6 laks PA in PPf and Sukanya account and are confused whether to reduce this amount and contribute more to MF. We have saving capacity of 15 lakhs per annum after our mandatory 12 % EPF contribution.

Ans: PPF: corpus will be Rs 1 crore

SS: Corpus Rs 4 lakh

MF: Corpus will be Rs 1.45 crore

Total in next 7 years will be nearly Rs 2.5 crore.

Ans: You can not reach to your target of 40 crores plus education corpus of 1.5 cr for 2 children as most of your money is getting invested in fixed income type of instruments, since your goal is still 17 years away you can convert theses fixed income in mutual funds.

Ans: Given your goals, consider maintaining diversification by continuing investments in your current mutual funds. However, with an additional Rs. 30,000 monthly investment capacity, explore adding funds that align with your objectives, such as diversified equity funds and education-focused funds. Ensure new additions complement your existing portfolio and cater to your risk tolerance. Regularly review your portfolio's performance and adjust investments as needed to stay on track towards achieving your retirement and education goals. Consulting a financial advisor can provide personalized guidance tailored to your specific needs and help optimize your investment strategy.

Ans: You've done an excellent job of building a substantial corpus for your family's future, and your commitment to both debt and equity investments is commendable. Let's delve into whether it's wise to increase your mutual fund (MF) investments at this stage and whether to adjust your contributions to PPF and Sukanya accounts:

Assess Your Financial Goals: Consider your financial goals, time horizon, and risk tolerance when deciding on the allocation between debt and equity investments. While debt instruments like EPF, PPF, and Sukanya Samriddhi Yojana offer stability and tax benefits, equity investments through MFs provide growth potential over the long term.
Diversification is Key: It's important to maintain a diversified investment portfolio that balances risk and return. Given your substantial debt investments in EPF, PPF, and Sukanya accounts, increasing your exposure to equity through MFs can help diversify your portfolio and potentially enhance returns, especially considering your long investment horizon.
Evaluate Investment Horizon: At your age, you still have a significant investment horizon ahead of you, which allows you to benefit from the power of compounding and weather market fluctuations. Since equity investments tend to perform well over the long term, increasing your MF contributions can be a prudent strategy to capitalize on growth opportunities.
Review Your Financial Position: Assess your current financial position, including your income, expenses, and savings capacity, to determine if you have the flexibility to allocate more funds towards MF investments. Given your saving capacity of 15 lakhs per annum after EPF contributions, you may consider redirecting a portion of these savings towards MFs to achieve a balanced portfolio.
Consult a Financial Advisor: Consider consulting with a Certified Financial Planner to evaluate your investment strategy holistically. A financial advisor can help assess your risk profile, recommend suitable asset allocation, and tailor an investment plan aligned with your financial goals and aspirations.
Regularly Monitor and Adjust: Continuously monitor your investment portfolio and make adjustments as needed based on changes in your financial situation, market conditions, and investment objectives. Stay informed about investment opportunities and make informed decisions to optimize your portfolio's performance over time.
Ultimately, the decision to increase MF investments and adjust contributions to PPF and Sukanya accounts depends on your individual circumstances, goals, and risk appetite. By carefully evaluating these factors and seeking professional advice, you can make informed decisions to build a robust and diversified investment portfolio that serves your family's long-term financial well-being.

Ans: Given your financial situation and future goals, it's important to evaluate your current investments and assess whether they align with your retirement objectives and desired lifestyle. Here's some advice to consider:

Review Current Financial Position
Assets and Investments: You have significant assets in Bangalore, SIP investments, gold investments, monthly rentals, and EPF and NPS investments. Assess the performance and diversification of these assets to ensure they are optimized for your retirement goals.

Liabilities: Consider the impact of your housing loan on your cash flow and retirement planning. Evaluate whether it's beneficial to continue paying off the loan or if early repayment is advisable.

Insurance Coverage: Your term insurance coverage is adequate, but review your overall insurance needs, including health insurance and coverage for your children studying abroad.

Retirement Planning and Investment Strategy
Income Projection: Calculate your expected monthly income post-retirement, including pension schemes, rental income, and any other sources. Compare this with your estimated expenses to determine if there's a shortfall or surplus.

Budgeting: Create a detailed budget outlining your current expenses and anticipated expenses in retirement. Account for factors like inflation, healthcare costs, travel, and leisure activities.

Investment Allocation: Review your MF investments and assess whether increasing contributions would align with your retirement goals. Consider diversifying your investment portfolio further to mitigate risk and enhance potential returns.

Retirement Corpus: Estimate the corpus required to maintain your desired lifestyle in retirement. Factor in inflation, life expectancy, healthcare expenses, and other variables to determine an appropriate target.

Financial Independence and Early Retirement
Assess Feasibility: Evaluate whether your current assets and investments, combined with projected income streams, would provide sufficient financial independence for early retirement if desired.

Risk Management: Consider the risks associated with early retirement, such as market volatility, longevity risk, and unexpected expenses. Ensure your investment strategy accounts for these risks and provides a buffer against adverse scenarios.

Professional Advice: Consult with a Certified Financial Planner (CFP) to conduct a comprehensive analysis of your retirement plan. A professional advisor can offer personalized guidance, recommend adjustments to your investment strategy, and help you achieve your retirement goals effectively.

Final Thoughts
While your current financial position appears strong, it's essential to periodically review and adjust your retirement plan as circumstances change. Assess your risk tolerance, liquidity needs, and long-term objectives to make informed decisions about increasing your MF investments or pursuing early retirement.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in