I am 33 years old with an in-hand salary of 57,000 per month and planning to get to 65k-75k per month by this year end, recently started investing in Mutual funds. I have a fund of 2.5 lakh in the bank for emergency and marriage related expenses in the near future as well.
My current investments for a 25 year horizon are-
1)- DSP NIFTY 50 equal weight index fund growth ETF
1000rs per month
2)-DSP Natural resources and new energy fund- 500rs per month (can stop if it's not the right investment right now)
3)-ICICI INFRASTRUCTURE growth fund- 1000 per month ( can stop if the investment is too risky long term)
4)-Nippon India nifty small cap 250 index fund- 500rs per month
5)-PF Deduction from Salary 1800 per month.
6)- PPF- 1000rs Per month
I am planning to invest a total of 15,000 per month in the next 6 7 months including the above investment systematically in different mutual funds for various mixtures and then increase my investment along with my salary increment.
I want to have 5 crore of total earning in today's Value in next 20- 25 years and also have a Regular retirement income of 25,000 after 25 years in today's money value.
I dont have kids right now and am planning to get married and have kids in the next 1-3 years depending on the finances.
I have "need" expenses (parents) of 10,000 per month and 10,000 (personal expenses) per month. I don't spend much on leisure as I am introvert and I usually spend time with friends hanging out, Can you Please suggest a way to achieve this Target or if I need to increase my investment?
Ans: It's wonderful to see your proactive approach towards financial planning, especially with your long-term goals in mind. Let's break down your current situation and chart out a plan to achieve your targets:
Income & Expenses:
Your current in-hand salary of 57,000 per month is a solid foundation. It's excellent that you're aiming to increase it to 65k-75k per month by the year-end. This upward trajectory in income will provide you with more flexibility in managing your expenses and investments. Your monthly expenses of 20,000 (10,000 for parents and 10,000 personal) are well-understood, leaving you room to allocate the rest towards savings and investments.
Emergency Fund:
Maintaining an emergency fund equivalent to 6-9 months' worth of expenses is a wise move. Your emergency corpus of 2.5 lakhs covers this criterion, ensuring you're prepared for any unexpected financial emergencies without disrupting your long-term investments.
Investment Portfolio:
Your current investment portfolio consists of a mix of mutual funds and traditional savings instruments. While the DSP Nifty 50 Equal Weight Index Fund and Nippon India Nifty Small Cap 250 Index Fund offer exposure to broad market indices, the DSP Natural Resources and New Energy Fund and ICICI Infrastructure Growth Fund provide thematic exposure to specific sectors. Additionally, your contributions to PF and PPF demonstrate a commitment to long-term savings.
Future Goals:
Your goals are ambitious yet realistic. Accumulating 5 crores over 20-25 years for retirement and securing a regular retirement income of 25,000 in today's money value after 25 years require diligent planning and disciplined investing. Given your plans for marriage and starting a family in the next 1-3 years, it's crucial to factor in these additional expenses and adjust your financial strategy accordingly.
Recommendations:
Review Existing Investments:
Regularly assess the performance of each fund in your portfolio. Consider discontinuing those that consistently underperform or no longer align with your investment objectives. Focus on funds with strong track records and robust fundamentals.
Increase Savings Rate:
As your income grows, aim to increase your monthly investments proportionately. A higher savings rate will accelerate your journey towards achieving your financial goals. Review your budget periodically to identify areas where you can cut back on expenses and redirect those funds towards savings and investments.
Asset Allocation:
Diversification is key to managing risk effectively. Consider diversifying your portfolio across different asset classes, including equities, debt, and alternative investments like real estate or gold. Maintain a balanced allocation that suits your risk tolerance and investment horizon.
Retirement Planning:
Calculate the corpus required to generate a regular retirement income of 25,000 in today's value after 25 years. Use a retirement calculator to determine the monthly contribution needed to reach this target. Consider investing in retirement-focused mutual funds or pension plans to build a robust retirement portfolio.
Marriage & Family Planning:
Factor in the expenses related to marriage and starting a family when setting your financial goals. Start building a separate corpus for these milestones by allocating a portion of your savings towards dedicated savings accounts or investment vehicles tailored to short-to-medium-term goals.
Conclusion:
By implementing these recommendations and staying committed to your financial plan, you can work towards achieving financial independence and securing a comfortable retirement. Remember to review your plan regularly and make adjustments as needed to stay on track towards your goals.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in