Retired bank employee seeks guidance to grow investment from Rs 149.5 lakh to Rs 175 lakh in 5 years

Ans: Current Investment Analysis

Your investment is diversified. You have bank FDs, mutual funds, LIC, and equity shares. Let's evaluate each part.

Bank Fixed Deposit (FD)

You have Rs 95,00,000 in FDs. FDs are safe but have low returns. Current interest rates are around 6-7% annually. This will not help you reach Rs 1,75,00,000 in five years.

Mutual Funds

You have Rs 35,00,000 in mutual funds. Mutual funds can give higher returns. Equity mutual funds can give 10-15% annually. You should focus more on these.

LIC Policies

You have Rs 15,00,000 in LIC policies. These usually give 4-6% returns. It is better to review their performance. You may consider surrendering low-return policies and reinvesting in mutual funds.

Equity Shares

You have Rs 4,50,000 in equity shares. These can give high returns but come with high risk. Diversification is important here. You should invest in a mix of large-cap, mid-cap, and small-cap stocks.

Investment Reshuffling Strategy

To achieve Rs 1,75,00,000 in five years, you need to reshuffle your investments.

Increase Equity Exposure

Increase your investment in equity mutual funds. Allocate around 50-60% of your total portfolio here. Equity mutual funds have the potential to give 12-15% returns annually. Diversify across large-cap, mid-cap, and small-cap funds.

Balanced Funds

Invest around 20-25% of your portfolio in balanced funds. These funds invest in both equity and debt. They provide stable returns with moderate risk. Expected returns are around 8-10% annually.

Debt Funds

Allocate around 10-15% in debt funds. These are safer than equity and balanced funds. They give around 6-8% returns. This will ensure some stability in your portfolio.

Review and Rebalance

Review your portfolio every six months. Rebalance your investments as needed. This ensures your portfolio remains aligned with your goals.

Emergency Fund

Keep some funds in a liquid asset for emergencies. This ensures you don't need to sell your investments in a hurry. Liquid mutual funds or short-term FDs can be good options.

Avoid Direct Funds and Index Funds

Direct funds may seem cheaper but require more expertise. They need regular monitoring and knowledge. Regular funds, through a Certified Financial Planner (CFP), offer professional management.

Index funds track market indices. They provide average market returns. Actively managed funds aim for higher returns. They have fund managers who make strategic decisions. This can lead to better performance.

Avoid Annuities

Annuities are not ideal for your goal. They offer low returns and less flexibility. Mutual funds and equities are better options.

Insurance Review

Check your LIC and other insurance policies. Ensure you have adequate life and health insurance. Surrender policies that give low returns. Reinvest in better options like mutual funds.

Final Insights

To reach Rs 1,75,00,000 in five years, diversify wisely. Focus on equity mutual funds for high returns. Balanced and debt funds provide stability. Review and rebalance your portfolio regularly. Work with a Certified Financial Planner (CFP) for professional guidance.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in