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Is a Corpus of INR 3-5 Crores Possible? 46-Year-Old Investor Seeks Expert Advice

Ramalingam

Ramalingam Kalirajan  |6558 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Sep 09, 2024

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more
Chandra Question by Chandra on Sep 07, 2024Hindi
Money

**Subject:** Request for Investment Review and Future Corpus Estimation Dear Mr.Ramalingam, I hope this message finds you well. I wanted to review my current investment portfolio and seek your expert advice regarding the future growth potential, as I aim to build a corpus of at least INR 3 - 5 crores by the time my daughters turn 18 years old. Is this figure realizable? Here’s a breakdown of my current investments: 1. **Mirae Asset Large & Midcap Fund (Direct Growth)** – INR 5,000 monthly - Current value: INR 135,281 2. **Canara Robeco Small Cap Fund (Direct Growth)** – INR 10,000 monthly - Current value: INR 210,164 3. **Quant Small Cap Fund (Direct Plan Growth)** – INR 5,000 monthly - Just started; current value: INR 5,190 4. **ICICI Prudential Balanced Advantage Fund (Growth)** – INR 20,000 monthly - Current value: INR 583,113 5. **HDFC Balanced Advantage Fund (Growth)** – INR 15,000 monthly - Current value: INR 503,604 6. **SBI Balanced Advantage Fund (Regular Growth)** – INR 15,000 monthly - Current value: INR 321,491 7. **Sukanya Samriddhi Yojana (SSY)** – INR 50,000 annually for my 9-year-old daughter - Current value: INR 565,805 (since 2016) 8. **Provident Fund (PF)** – Current balance: INR 10 lakh 9. **Tata AIA Life Insurance Fortune Pro ** – Started last year INR 150,000 to be paid for 5 years till 2027 10. SBI Child Plan Smart Scholar - Completed INR 500,000 Total Investment for 5 Years in 2024. From this year every financial year I plan to invest my working bonus of INR 3 Lacs to INR 5 Lacs every year as a bulk investment and diversify in different funds. I am 46 years old and plan to continue working and investing for another 5 to 6 years due to health reasons. My spouse is 37, and we have two daughters aged 9 and 5. My goal is to accumulate a corpus of at least INR 3 to 5 crores by the time my daughters reach 18 years of age. Based on my current investments, do you think this target is achievable within the given timeframe? I would greatly appreciate any suggestions or adjustments you might recommend to help reach this goal. Thank you for your guidance.

Ans: You’ve put together a well-diversified portfolio with a mix of equity and hybrid funds, Sukanya Samriddhi Yojana (SSY), Provident Fund (PF), and insurance-linked investments. Each of these investments serves a different purpose, and it’s clear that you have a strong focus on building wealth while securing your daughters' future.

Given that you plan to invest a significant portion of your bonus in the coming years, it’s important to assess whether your current strategy will meet your target corpus of Rs 3-5 crores when your daughters turn 18. Let’s evaluate your portfolio in detail.

Assessment of Equity Mutual Funds
Mirae Asset Large & Midcap Fund, Canara Robeco Small Cap Fund, Quant Small Cap Fund: These funds are growth-oriented with potential for substantial returns over the long term. Your monthly SIPs in these funds are well-placed, and their current values indicate a positive trend. However, as small-cap funds tend to be more volatile, it’s important to monitor them regularly and rebalance if necessary.

ICICI Prudential Balanced Advantage Fund, HDFC Balanced Advantage Fund, SBI Balanced Advantage Fund: These funds offer a balanced approach by investing in a mix of equity and debt. They are designed to manage volatility, making them a stable choice for medium-term goals. Your consistent investments in these funds are helping you build a solid foundation for your corpus.

Given that you are contributing significant amounts to Balanced Advantage Funds, this shows a prudent approach to managing risk while aiming for growth. However, it’s crucial to ensure that these funds align with your risk tolerance as you near retirement.

Sukanya Samriddhi Yojana (SSY) for Your Daughter
Sukanya Samriddhi Yojana (SSY): Your annual contribution to SSY for your 9-year-old daughter is a wise choice. This scheme offers guaranteed returns and tax benefits, making it an excellent option for long-term, low-risk investment. With the current value of Rs 5,65,805, you are on track, but it's essential to continue this contribution until maturity to maximize the benefit for your daughter's higher education or marriage expenses.
Provident Fund (PF)
Provident Fund (PF): Your PF balance of Rs 10 lakh is a significant component of your retirement savings. The regular contributions and employer match provide a stable, low-risk return, which is crucial for wealth preservation. This fund will serve as a backbone for your retirement corpus.
Insurance-Linked Investments
Tata AIA Life Insurance Fortune Pro: Insurance-cum-investment products like these generally have lower returns compared to pure investment products like mutual funds. While they provide life cover, the investment returns may not be sufficient to meet your high-growth goals. You might want to evaluate the performance after the lock-in period and consider redirecting future premiums into mutual funds if the returns are unsatisfactory.

SBI Child Plan Smart Scholar: Having completed your investment in this child plan, it's time to assess its performance. If the returns are on the lower side, consider using the maturity proceeds to invest in a high-growth equity fund or balanced fund to further boost your corpus.

Planned Bulk Investments
Future Bulk Investments: Your plan to invest Rs 3-5 lakhs annually as a lump sum from your bonuses is a great strategy. However, it's essential to deploy this lump sum in a staggered manner, like a Systematic Transfer Plan (STP), to mitigate market volatility. You might consider adding these funds to existing high-performing equity funds or explore new opportunities in growth-oriented funds.
Future Growth Potential and Target Realization
Assessing the Achievability of Rs 3-5 Crore Corpus
Your goal of building a corpus of Rs 3-5 crores by the time your daughters turn 18 is ambitious but achievable. However, it will require careful planning and disciplined execution. Here are some key points to consider:

Time Horizon: With a 9-year and a 5-year time horizon, your portfolio should focus on growth-oriented investments in the earlier years, gradually shifting towards more stable, low-risk assets as you near the target date. This will help protect your accumulated wealth from market volatility.

Asset Allocation: Currently, you have a mix of equity and balanced funds. As your daughters approach 18, you might want to shift a portion of your equity investments into safer options like debt funds or fixed deposits to preserve the capital.

Inflation and Taxation: Consider the impact of inflation on your target corpus. What may seem like a large sum today may not have the same purchasing power in the future. Also, be mindful of the tax implications on your investments, particularly on the returns from mutual funds and insurance plans.

Suggestions for Portfolio Adjustments
Enhance Equity Exposure: While you have a good mix of funds, increasing your allocation to high-growth equity funds can help you reach the Rs 5 crore target. Consider redirecting the future premiums of your insurance plans or part of your Balanced Advantage Fund investments into aggressive equity funds.

Surrender Underperforming Insurance Plans: If your Tata AIA Life Insurance and SBI Child Plan do not meet expectations, consider surrendering them after evaluating the surrender value and investing the proceeds in higher-return options.

Regular Reviews and Rebalancing: The market environment and your personal circumstances may change over time. Regular reviews of your portfolio and timely rebalancing will help ensure that your investments remain aligned with your goals.

Avoid Over-Diversification: While diversification is important, too much of it can dilute returns. Focus on a few high-performing funds and avoid spreading your investments too thin.

Risk Management: As you approach the end of your working years, it’s crucial to reduce exposure to high-risk assets. Gradually move a portion of your investments into safer instruments like debt funds, bonds, or even a fixed deposit.

Final Insights
Your dedication to building a secure financial future for your daughters is commendable. With consistent and strategic investments, your target of Rs 3-5 crores is within reach. The key will be maintaining a disciplined approach, regularly reviewing your portfolio, and making necessary adjustments based on market conditions and life changes.

Remember to keep an eye on both growth and safety as you transition into retirement. By doing so, you can confidently achieve your financial goals and provide your daughters with a strong financial foundation.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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Milind Vadjikar  |373 Answers  |Ask -

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**Subject:** Request for Investment Review and Future Corpus Estimation Dear Mr.Vivek, I hope this message finds you well. I wanted to review my current investment portfolio and seek your expert advice regarding the future growth potential, as I aim to build a corpus of at least INR 3 - 5 crores by the time my daughters turn 18 years old. Is this figure realizable? Here’s a breakdown of my current investments: 1. **Mirae Asset Large & Midcap Fund (Direct Growth)** – INR 5,000 monthly - Current value: INR 135,281 2. **Canara Robeco Small Cap Fund (Direct Growth)** – INR 10,000 monthly - Current value: INR 210,164 3. **Quant Small Cap Fund (Direct Plan Growth)** – INR 5,000 monthly - Just started; current value: INR 5,190 4. **ICICI Prudential Balanced Advantage Fund (Growth)** – INR 20,000 monthly - Current value: INR 583,113 5. **HDFC Balanced Advantage Fund (Growth)** – INR 15,000 monthly - Current value: INR 503,604 6. **SBI Balanced Advantage Fund (Regular Growth)** – INR 15,000 monthly - Current value: INR 321,491 7. **Sukanya Samriddhi Yojana (SSY)** – INR 50,000 annually for my 9-year-old daughter - Current value: INR 565,805 (since 2016) 8. **Provident Fund (PF)** – Current balance: INR 10 lakh 9. **Tata AIA Life Insurance Fortune Pro ** – Started last year INR 150,000 to be paid for 5 years till 2027 10. SBI Child Plan Smart Scholar - Completed INR 500,000 Total Investment for 5 Years in 2024. From this year every financial year I plan to invest my working bonus of INR 3 Lacs to INR 5 Lacs every year as a bulk investment and diversify in different funds. I am 46 years old and plan to continue working and investing for another 5 to 6 years due to health reasons. My spouse is 37, and we have two daughters aged 9 and 5. My goal is to accumulate a corpus of at least INR 3 to 5 crores by the time my daughters reach 18 years of age. Based on my current investments, do you think this target is achievable within the given timeframe? I would greatly appreciate any suggestions or adjustments you might recommend to help reach this goal. Thank you for your guidance.
Ans: Yes your target is achievable in the given time frame.(13% return assumed) I am sure you have planned for some regular income after you stop working (~6 years from now) to meet the regular expenses. Plz. Make sure you have good family floater health insurance coverage apart from the employer's group health policy if any. Insurers typically insist 3-4 years of continuous coverage after which pre existing illnesses are covered. Consider investing in SSY in the name of second daughter, if possible. As you approach your target move corpus away from equity MFs into liquid or ultra short term debt funds.

*Investments in mutual funds are subjected to market risks. Please read all scheme related documents carefully before investing

You may follow us on X at @mars_invest for updates

Happy Investing!!

..Read more

Ramalingam

Ramalingam Kalirajan  |6558 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Sep 17, 2024

Money
**Subject:** Request for Investment Review and Future Corpus Estimation Dear Ms.Jinal, I hope this message finds you well. I wanted to review my current investment portfolio and seek your expert advice regarding the future growth potential, as I aim to build a corpus of at least INR 3 - 5 crores by the time my daughters turn 18 years old. Is this figure realizable? Here’s a breakdown of my current investments: 1. **Mirae Asset Large & Midcap Fund (Direct Growth)** – INR 5,000 monthly - Current value: INR 135,281 2. **Canara Robeco Small Cap Fund (Direct Growth)** – INR 10,000 monthly - Current value: INR 210,164 3. **Quant Small Cap Fund (Direct Plan Growth)** – INR 5,000 monthly - Just started; current value: INR 5,190 4. **ICICI Prudential Balanced Advantage Fund (Growth)** – INR 20,000 monthly - Current value: INR 583,113 5. **HDFC Balanced Advantage Fund (Growth)** – INR 15,000 monthly - Current value: INR 503,604 6. **SBI Balanced Advantage Fund (Regular Growth)** – INR 15,000 monthly - Current value: INR 321,491 7. **Sukanya Samriddhi Yojana (SSY)** – INR 50,000 annually for my 9-year-old daughter - Current value: INR 565,805 (since 2016) 8. **Provident Fund (PF)** – Current balance: INR 10 lakh 9. **Tata AIA Life Insurance Fortune Pro ** – Started last year INR 150,000 to be paid for 5 years till 2027 10. SBI Child Plan Smart Scholar - Completed INR 500,000 Total Investment for 5 Years in 2024. From this year every financial year I plan to invest my working bonus of INR 3 Lacs to INR 5 Lacs every year as a bulk investment and diversify in different funds. I am 46 years old and plan to continue working and investing for another 5 to 6 years due to health reasons. My spouse is 37, and we have two daughters aged 9 and 5. My goal is to accumulate a corpus of at least INR 3 to 5 crores by the time my daughters reach 18 years of age. Based on my current investments, do you think this target is achievable within the given timeframe? I would greatly appreciate any suggestions or adjustments you might recommend to help reach this goal. Thank you for your guidance.
Ans: Your goal of building a corpus of Rs 3 to 5 crores for your daughters by the time they reach 18 years of age is realistic, but it needs a detailed evaluation. Let's assess your existing portfolio and provide suggestions to help you reach your target.

You are currently 46, and your elder daughter is 9, giving you around 9 years to achieve your financial goal. Your current investments are diversified, but we’ll focus on optimising them for long-term growth and stability.

Current Investment Portfolio Breakdown
You have a balanced mix of equity mutual funds, debt-oriented instruments, and insurance. Each type of investment serves a purpose, but we’ll examine them to see if they align well with your goals.

Balanced Advantage Funds:

You are investing Rs 50,000 monthly into three balanced advantage funds. These funds are designed to switch between equity and debt, providing a mix of safety and growth. While these funds have performed decently in volatile markets, they may not offer the aggressive growth potential needed to meet your target of Rs 3 to 5 crores in a relatively short timeframe.

Consider reducing the allocation to balanced advantage funds. These funds offer stability but may not provide the aggressive growth you need at this stage of your financial journey.

Instead, consider moving a part of this allocation into funds with higher equity exposure, such as large-cap, multi-cap, or small-cap funds. These have the potential to generate higher returns over a 9-year horizon.

Small Cap and Mid Cap Funds:

You have a strong allocation to small-cap funds, which is a good strategy for long-term growth.

However, small-cap funds are known for their volatility. You should maintain a long-term perspective and not get disheartened by short-term fluctuations.

With a combined monthly SIP of Rs 15,000 in small-cap funds, you can expect higher growth if the market performs well over the next decade. Stick to this strategy but periodically review the performance.

Sukanya Samriddhi Yojana (SSY):

You are consistently investing Rs 50,000 annually in SSY for your 9-year-old daughter. This is a fantastic step for her future education and marriage needs, as SSY offers a high fixed interest rate with tax benefits.

Continue this investment, as it provides a solid foundation for your daughter’s future. The guaranteed returns, along with the tax-free nature, make it an excellent low-risk investment.

However, SSY alone won’t suffice for your Rs 3-5 crore target. Hence, relying on equity mutual funds will be essential for wealth creation.

Provident Fund (PF):

You have Rs 10 lakh invested in PF, which will grow at a stable, assured rate.

PF is a low-risk investment, but its growth potential is limited compared to equities. Since you are already contributing a significant amount here, you don’t need to increase this allocation.

The PF will add to your retirement security but won't contribute significantly to your Rs 3-5 crore target due to the conservative interest rate.

Tata AIA Life Insurance Fortune Pro and SBI Child Plan:

Insurance policies like Tata AIA Life Insurance Fortune Pro and SBI Child Plan serve a dual purpose—insurance and investment. However, these plans typically offer lower returns compared to mutual funds.

Since you have already paid a substantial amount into the SBI Child Plan and Tata AIA, it may be worthwhile to keep these policies until maturity. However, any additional bonus or lump-sum investments should be diverted into equity mutual funds rather than insurance-linked plans.

These investment-cum-insurance policies tend to have high fees and lower returns. If you’re considering any future insurance-linked investments, you should reconsider them in favour of pure term insurance and higher-yielding mutual funds.

Adjustments for Future Growth
Now that we’ve evaluated your existing investments, let’s discuss the adjustments that can help you reach your goal.

Increase Equity Exposure:

Equity mutual funds, particularly large-cap, multi-cap, and small-cap funds, have the potential to generate higher returns than balanced advantage funds or insurance policies.

You should increase your SIP contributions to pure equity funds. While balanced funds offer stability, pure equity funds provide better growth potential, which is necessary to reach Rs 3 to 5 crores in 9 years.

Allocate more to large-cap or multi-cap funds. These funds invest in stable, well-established companies, providing growth potential with comparatively lower risk than small-cap funds.

Diversify Your Bulk Investments:

You plan to invest Rs 3-5 lakh from your working bonus each year. This is an excellent strategy to accelerate your wealth-building process.

Consider investing your bonus in high-growth funds like mid-cap or flexi-cap funds. These funds allow the fund manager to invest across different market caps, offering the potential for better returns.

You may also consider investing a portion of the bonus in international mutual funds, which can provide diversification and protect against domestic market volatility.

Balanced Asset Allocation:

While increasing equity exposure is essential, you should also maintain a balance in your asset allocation. Diversification between equity, debt, and other instruments will help manage risk.

You have a good mix of safe investments like SSY and PF. These will provide the necessary safety net for your portfolio.

Make sure to periodically review your asset allocation based on your risk tolerance, financial goals, and market conditions.

Reconsider Insurance-Linked Investments:

Insurance-linked investments like Tata AIA Life Insurance Fortune Pro are not ideal for wealth creation. They offer lower returns due to high fees and a limited range of investment options.

Consider completing the premium payments on existing policies but avoid adding more money to such plans. For future lump sum or bonus investments, it’s better to focus on mutual funds or other growth-oriented products.
Maintain Term Insurance:

If your life insurance policies do not include adequate term insurance coverage, you should consider purchasing a pure term plan. Term insurance offers higher coverage at a lower premium compared to investment-linked insurance plans.

A pure term plan will provide financial security for your family, without eating into your investment returns.
Tax Efficiency:

Ensure that your portfolio is tax-efficient. Investments like SSY, PF, and certain debt funds offer tax benefits, but the taxation on mutual funds, especially long-term capital gains (LTCG), can eat into your returns.

Choose funds that are efficient in terms of post-tax returns. This will help you maximize your wealth accumulation.
Review Your Portfolio Regularly:

It’s important to periodically review your portfolio and adjust the investment strategy based on changing market conditions and financial goals.

Conduct an annual review of your portfolio to ensure that your funds are performing as expected. Switch funds if they are underperforming consistently.
Final Insights
You are on the right track with your investments, and the target of Rs 3 to 5 crores is achievable within the given timeframe. However, some fine-tuning in your asset allocation and fund choices is needed to meet this goal.

By increasing your exposure to high-growth equity mutual funds, ensuring diversification, and maintaining a disciplined investment approach, you can significantly enhance your portfolio’s growth potential. Regular reviews will help keep your portfolio aligned with your objectives.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Milind

Milind Vadjikar  |373 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Sep 13, 2024

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**Subject:** Request for Investment Review and Future Corpus Estimation Dear Mr.Sunil, I hope this message finds you well. I wanted to review my current investment portfolio and seek your expert advice regarding the future growth potential, as I aim to build a corpus of at least INR 3 - 5 crores by the time my daughters turn 18 years old. Is this figure realizable? Here’s a breakdown of my current investments: 1. **Mirae Asset Large & Midcap Fund (Direct Growth)** – INR 5,000 monthly - Current value: INR 135,281 2. **Canara Robeco Small Cap Fund (Direct Growth)** – INR 10,000 monthly - Current value: INR 210,164 3. **Quant Small Cap Fund (Direct Plan Growth)** – INR 5,000 monthly - Just started; current value: INR 5,190 4. **ICICI Prudential Balanced Advantage Fund (Growth)** – INR 20,000 monthly - Current value: INR 583,113 5. **HDFC Balanced Advantage Fund (Growth)** – INR 15,000 monthly - Current value: INR 503,604 6. **SBI Balanced Advantage Fund (Regular Growth)** – INR 15,000 monthly - Current value: INR 321,491 7. **Sukanya Samriddhi Yojana (SSY)** – INR 50,000 annually for my 9-year-old daughter - Current value: INR 565,805 (since 2016) 8. **Provident Fund (PF)** – Current balance: INR 10 lakh 9. **Tata AIA Life Insurance Fortune Pro ** – Started last year INR 150,000 to be paid for 5 years till 2027 10. SBI Child Plan Smart Scholar - Completed INR 500,000 Total Investment for 5 Years in 2024. From this year every financial year I plan to invest my working bonus of INR 3 Lacs to INR 5 Lacs every year as a bulk investment and diversify in different funds. I am 46 years old and plan to continue working and investing for another 5 to 6 years due to health reasons. My spouse is 37, and we have two daughters aged 9 and 5. My goal is to accumulate a corpus of at least INR 3 to 5 crores by the time my daughters reach 18 years of age. Based on my current investments, do you think this target is achievable within the given timeframe? I would greatly appreciate any suggestions or adjustments you might recommend to help reach this goal. Thank you for your guidance.
Ans: Yes your target is achievable in the given time frame.(13% conservative return assumed). I am sure you have planned for some regular income after you stop working(~6 years from now) to meet the regular expenses. Please make sure you have good family floater health insurance apart from employer's group health policy if any. Insurers typically insist 3-4 years of continuous coverage after which pre existing illnesses are covered. Consider investing in SSY in the name of second daughter if possible. As you approach your target move corpus away from equity MFs into liquid or ultra short duration debt funds.

*Investments in mutual funds are subject to market risks. Please read all scheme related documents carefully before investing

You may follow us on X at @mars_invest for updates.

Happy Investing

..Read more

Ramalingam

Ramalingam Kalirajan  |6558 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Sep 09, 2024

Money
**Subject:** Request for Investment Review and Future Corpus Estimation Dear Mr.Nikunj, I hope this message finds you well. I wanted to review my current investment portfolio and seek your expert advice regarding the future growth potential, as I aim to build a corpus of at least INR 3 - 5 crores by the time my daughters turn 18 years old. Is this figure realizable? Here’s a breakdown of my current investments: 1. **Mirae Asset Large & Midcap Fund (Direct Growth)** – INR 5,000 monthly - Current value: INR 135,281 2. **Canara Robeco Small Cap Fund (Direct Growth)** – INR 10,000 monthly - Current value: INR 210,164 3. **Quant Small Cap Fund (Direct Plan Growth)** – INR 5,000 monthly - Just started; current value: INR 5,190 4. **ICICI Prudential Balanced Advantage Fund (Growth)** – INR 20,000 monthly - Current value: INR 583,113 5. **HDFC Balanced Advantage Fund (Growth)** – INR 15,000 monthly - Current value: INR 503,604 6. **SBI Balanced Advantage Fund (Regular Growth)** – INR 15,000 monthly - Current value: INR 321,491 7. **Sukanya Samriddhi Yojana (SSY)** – INR 50,000 annually for my 9-year-old daughter - Current value: INR 565,805 (since 2016) 8. **Provident Fund (PF)** – Current balance: INR 10 lakh 9. **Tata AIA Life Insurance Fortune Pro ** – Started last year INR 150,000 to be paid for 5 years till 2027 10. SBI Child Plan Smart Scholar - Completed INR 500,000 Total Investment for 5 Years in 2024. From this year every financial year I plan to invest my working bonus of INR 3 Lacs to INR 5 Lacs every year as a bulk investment and diversify in different funds. I am 46 years old and plan to continue working and investing for another 5 to 6 years due to health reasons. My spouse is 37, and we have two daughters aged 9 and 5. My goal is to accumulate a corpus of at least INR 3 to 5 crores by the time my daughters reach 18 years of age. Based on my current investments, do you think this target is achievable within the given timeframe? I would greatly appreciate any suggestions or adjustments you might recommend to help reach this goal. Thank you for your guidance.
Ans: You’ve put together a well-diversified portfolio with a mix of equity and hybrid funds, Sukanya Samriddhi Yojana (SSY), Provident Fund (PF), and insurance-linked investments. Each of these investments serves a different purpose, and it’s clear that you have a strong focus on building wealth while securing your daughters' future.

Given that you plan to invest a significant portion of your bonus in the coming years, it’s important to assess whether your current strategy will meet your target corpus of Rs 3-5 crores when your daughters turn 18. Let’s evaluate your portfolio in detail.

Assessment of Equity Mutual Funds
Mirae Asset Large & Midcap Fund, Canara Robeco Small Cap Fund, Quant Small Cap Fund: These funds are growth-oriented with potential for substantial returns over the long term. Your monthly SIPs in these funds are well-placed, and their current values indicate a positive trend. However, as small-cap funds tend to be more volatile, it’s important to monitor them regularly and rebalance if necessary.

ICICI Prudential Balanced Advantage Fund, HDFC Balanced Advantage Fund, SBI Balanced Advantage Fund: These funds offer a balanced approach by investing in a mix of equity and debt. They are designed to manage volatility, making them a stable choice for medium-term goals. Your consistent investments in these funds are helping you build a solid foundation for your corpus.

Given that you are contributing significant amounts to Balanced Advantage Funds, this shows a prudent approach to managing risk while aiming for growth. However, it’s crucial to ensure that these funds align with your risk tolerance as you near retirement.

Sukanya Samriddhi Yojana (SSY) for Your Daughter
Sukanya Samriddhi Yojana (SSY): Your annual contribution to SSY for your 9-year-old daughter is a wise choice. This scheme offers guaranteed returns and tax benefits, making it an excellent option for long-term, low-risk investment. With the current value of Rs 5,65,805, you are on track, but it's essential to continue this contribution until maturity to maximize the benefit for your daughter's higher education or marriage expenses.
Provident Fund (PF)
Provident Fund (PF): Your PF balance of Rs 10 lakh is a significant component of your retirement savings. The regular contributions and employer match provide a stable, low-risk return, which is crucial for wealth preservation. This fund will serve as a backbone for your retirement corpus.
Insurance-Linked Investments
Tata AIA Life Insurance Fortune Pro: Insurance-cum-investment products like these generally have lower returns compared to pure investment products like mutual funds. While they provide life cover, the investment returns may not be sufficient to meet your high-growth goals. You might want to evaluate the performance after the lock-in period and consider redirecting future premiums into mutual funds if the returns are unsatisfactory.

SBI Child Plan Smart Scholar: Having completed your investment in this child plan, it's time to assess its performance. If the returns are on the lower side, consider using the maturity proceeds to invest in a high-growth equity fund or balanced fund to further boost your corpus.

Planned Bulk Investments
Future Bulk Investments: Your plan to invest Rs 3-5 lakhs annually as a lump sum from your bonuses is a great strategy. However, it's essential to deploy this lump sum in a staggered manner, like a Systematic Transfer Plan (STP), to mitigate market volatility. You might consider adding these funds to existing high-performing equity funds or explore new opportunities in growth-oriented funds.
Future Growth Potential and Target Realization
Assessing the Achievability of Rs 3-5 Crore Corpus
Your goal of building a corpus of Rs 3-5 crores by the time your daughters turn 18 is ambitious but achievable. However, it will require careful planning and disciplined execution. Here are some key points to consider:

Time Horizon: With a 9-year and a 5-year time horizon, your portfolio should focus on growth-oriented investments in the earlier years, gradually shifting towards more stable, low-risk assets as you near the target date. This will help protect your accumulated wealth from market volatility.

Asset Allocation: Currently, you have a mix of equity and balanced funds. As your daughters approach 18, you might want to shift a portion of your equity investments into safer options like debt funds or fixed deposits to preserve the capital.

Inflation and Taxation: Consider the impact of inflation on your target corpus. What may seem like a large sum today may not have the same purchasing power in the future. Also, be mindful of the tax implications on your investments, particularly on the returns from mutual funds and insurance plans.

Suggestions for Portfolio Adjustments
Enhance Equity Exposure: While you have a good mix of funds, increasing your allocation to high-growth equity funds can help you reach the Rs 5 crore target. Consider redirecting the future premiums of your insurance plans or part of your Balanced Advantage Fund investments into aggressive equity funds.

Surrender Underperforming Insurance Plans: If your Tata AIA Life Insurance and SBI Child Plan do not meet expectations, consider surrendering them after evaluating the surrender value and investing the proceeds in higher-return options.

Regular Reviews and Rebalancing: The market environment and your personal circumstances may change over time. Regular reviews of your portfolio and timely rebalancing will help ensure that your investments remain aligned with your goals.

Avoid Over-Diversification: While diversification is important, too much of it can dilute returns. Focus on a few high-performing funds and avoid spreading your investments too thin.

Risk Management: As you approach the end of your working years, it’s crucial to reduce exposure to high-risk assets. Gradually move a portion of your investments into safer instruments like debt funds, bonds, or even a fixed deposit.

Final Insights
Your dedication to building a secure financial future for your daughters is commendable. With consistent and strategic investments, your target of Rs 3-5 crores is within reach. The key will be maintaining a disciplined approach, regularly reviewing your portfolio, and making necessary adjustments based on market conditions and life changes.

Remember to keep an eye on both growth and safety as you transition into retirement. By doing so, you can confidently achieve your financial goals and provide your daughters with a strong financial foundation.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

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Asked by Anonymous - Oct 07, 2024Hindi
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Money
Hello, My current age is 42. Our combined post tax salary is around 6.25 lakhs. We have around 50L in mutual funds, 80L in direct stocks, 14L in gold, 30L in NPS, 31L in PPF, 21L in SSY and 2.5cr in real estate. Our current household expenses are around 1.5L per month and we are contributing 1L/month to NPS, 2L/month to SIP, 20K/month to direct stocks,1.5L/yr to PPF, I.5L/yr to SSY. We have an EMI of 50000/month for next 5 years .Our kids are 12 years and 10 years. We want a corpus of 4 cr for their higher education and of 1cr for their marriage. We are living in a company provided accommodation and plan to live in it till requirement.We want a 4L monthly pension and don't have a home right now. If we are planning to retire at 55, how should we manage our finances?
Ans: Hello;

Since NPS will be available only after you reach 60 and no info. about any rental income from real estate investment hence both are kept out of our purview.

1.Higher education goals for children typically start after 12th so we have 6 to 8 years for kid's education financial goal(4 Cr) attainment.

I have split it in two tranches:
A. 2 Cr after 6 years
B. 2 Cr after 8 years

For achieving target A following will work:
Direct stocks corpus of 80 L will grow into a sum of 1.5 Cr after 6 years. (Moderate return of 11% assumed)

PPF corpus and contributions will grow into a sum of 50 L+ after 5 years block when you may withdraw this corpus towards this goal. (6.9% return considered)

So 1.5 + 0.5=2 Cr

For fulfilling target B following will work:
MF corpus of 50 L will grow into a sum of 1.15 Cr after 8 years. (11% return considered)

50% of SSY corpus eligible for withdrawal expected to be around 27.85 L. (8% return assumed)

Direct stock monthly sip of 20 K will grow into a sum of 30.85 L in 8 years.(11% return considered)

Gold corpus of 14 L will grow into a sum of 24.05 L. (7% growth assumed)

So 1.15+27.85+30.85+24.05~~2 Cr

2. Target for Marriage of offspring:
1 Cr.
3. Retirement pension: 4 L per month
13 years from now.
Investible surplus left after all monthly investments utilized for fulfilling above targets should be immediately redirected to monthly SIPs in mutual funds. That includes 20 K direct stock sip, 12.5 K/pm SSY investment after 8 years from now and 12.5 K/pm PPF investment 5 years from now.

Also the 50 K getting free from loan EMI after 5 years should be converted into a mutual fund SIP.

After accounting for monthly expenses and monthly investments, from the balance 80 K, I would suggest you to deploy 50 K into MF sip since it will help in target achievement.

So summarily 12.5 K/8 yr, 12.5 K/5 yr, 20 K/5 yr, 50 K/8 yr and 250 K/13 yr will yield you a comprehensive corpus of 9.89 Cr. Add balance 50% SSY corpus of 27.5 L to this and your total corpus comes to 10.16 Cr. (MF returns assumed at a modest 11%)

Earmark 1 Cr for offspring wedding as envisaged.

Net retirement corpus will be 9.16 Cr. An immediate annuity at 6% will yield you a monthly income of 4.58 L from the age of 55 as planned.

You may use commutable corpus of NPS(60%) to buy your house. While NPS annuity portion(40%) may yield you a delta per month so as to have post tax income of 4 L per month.

This looks achievable because you have managed your finances and investments outstandingly well.

I discourage people to take direct stocks exposure especially when they are nearing the retirement but if you have the knowledge and temperament you may dabble into it subject to some minimum amount earmarked as risk capital.

I am sure you have adequate insurance cover for life and health.

Kudos again to your meticulous fiscal planning and execution.

Happy Investing!!

*Investments in mutual funds are subject to market risks. Please read all scheme related documents carefully before investing.

...Read more

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Relationships Expert, Mind Coach - Answered on Oct 10, 2024

Asked by Anonymous - Oct 10, 2024
Relationship
Hi, I am not yet mairred. I used to like a man and after a month we decided to get married. He was of my caste so I thought my parents won't deny this mairrage. I used to talk to and wanted to let him know everything about my past so that we can built a strong root of our relationship. I spoke every detail of my past life to him. Then before he proposed me for mairrage I went for a vacation with my male friend to dehradun. I didn't tell him that day as he didn't proposed me till that day then why would I tell everything about me to anyone. He was noone to me at that time. After that he came to visit me in Delhi and on the same when he was on train a friend of mine along with his fiance came to meet me after a very long time. I asked him and he didn't denied. After returning home he blocked me. I cried and cried, called multiple times but he didn't received my call. Even I went to his location and waited for almost 3 hr but he didn't came. Then I asked my sister to call him. Then he talked to me but he said me so much of harsh and vulgar words that I went in shock. I cried a lot but he went on humiliating me. But somehow I convinced him to stay with me. I never talked to that friend ever. Then I told my parents about him that I want to get married with this men. Being a girl's father my father enquired about him by being annonymous. And trust me noone has said anything good about him. Later on we get to know that his father has a murder case on him of his brother in law. But then I wanted to get married. Finally my parents agreed only for my happines. Meanwhile I was never being respected by him. He always doubt me, humiliate me, abuse me mentally and physically, and when I was like I don't want to be with you he used to say sorry and begged me to be with him. He even used to restrict to visit my uncle aunty. His mother wants used to defend him and never used to make him realise that he was wrong. Then before engagement we went to Kolkata to buy dress. Yes one more thing I have informed him on the very first day that I used to drink and smoke occassionally. So whenever he used to visit me he always wanted to drink with me whether I want it or not. He always used to abuse me and humiliate me in front of everyone after drinking, so after a period of time I used to avoid drinking. Then he used to fight with me for that also that why will you not drink. In kolkata the same thing happen. We stayed there for 3 days and he was convincing to go to club from the very first day but I refused. On 3rd he hit me. After engagement his family asked for dowry. After a lot of dealing my parents agreed for an amount. But I felt betrayed. I stopped talking. After after when I initiated the conversation he picked up a fight and said he won't marry. I tried to convince. But when everyone was blaming me then I broke my silence and said everything about him to my parent. But he manipulated everything and made me villain. My parents want me to get married as the society will insult our parents. I am getting married in November only for my parents but I have already made up my mind that I'll divorce him after 1 year of mairrage and will live my life alone. Am I thinking right? What should I do?
Ans: Dear Anonymous,
No, you are not thinking right at all...This man is all RED FLAGS...
Are you actually thinking of spending one year with a person who physically abuses you? Seriously?
And then you expect him to agree to that divorce without any fuss? What world are you in? No compromises on your life please...
Be wise and protect yourself...

All the best!
Anu Krishna
Mind Coach|NLP Trainer|Author
Drop in: www.unfear.io
Reach me: Facebook: anukrish07/ AND LinkedIn: anukrishna-joyofserving/

...Read more

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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