Hi, I am 30 years old, F, married (no kids yet) earning 1.3L/m. Currently I have 4 lakh in FD and a RD of 25K/m earning 7.1% interest. I have been doing SIP of 17.5K(and increase in SIP by 25% yearly). Also, I have an emergency fund of 4 Lakh in savings account. I don't have any knowledge of investment and not sure I am ready to take risk. Please suggest me how to asses risk and what are the best savings option for next 10-12 years.

Ans: It's great that you have a clear understanding of your financial goals and have started making investments. Here are some suggestions to align your investment strategy with your goals:

Emergency Corpus Fund:

• Aim for at least 3-6 months' worth of living expenses as an emergency corpus. Given your monthly expenses are Rs. 30,000, target an emergency fund of Rs. 90,000 to Rs. 1,80,000.
• Consider keeping this fund in a liquid or easily accessible instrument like a savings account or a short-term fixed deposit.

Medical Insurance:

• Get a comprehensive family floater health insurance policy. Ensure that the coverage is adequate to handle medical expenses for you, your spouse, and your daughter. The coverage should include hospitalisation expenses, critical illness coverage, and other relevant features.
• Review your policy periodically to make sure it remains adequate for your family's needs.

Short-Term Goal (Rs. 15 lakh in 5 years):

• Consider a mix of equity and debt instruments to achieve this goal. Since it's a short-term goal, a balanced approach is advisable. You may allocate a portion to equity mutual funds and the rest to fixed-income instruments like debt mutual funds, recurring deposits, or short-term bonds.
• Regularly monitor the progress towards your short-term goal and make adjustments as needed.

Long-Term Goals (Daughter's education, marriage, retirement):

• Since you have a long investment horizon for your daughter's education, marriage, and your retirement, you can afford to take more risk. Continue investing in equity-oriented instruments for these goals.
• Diversify across asset classes such as equity mutual funds, Public Provident Fund (PPF), Employee Provident Fund (EPF), and other suitable investment options.
• Gradually increase your equity exposure and consider allocating a portion to international funds for additional diversification.

Diversification and Asset Allocation:

• Ensure your portfolio is well-diversified across different asset classes (equity, debt, gold) to manage risk effectively.
• Periodically rebalance your portfolio to maintain the desired asset allocation based on your risk tolerance and financial goals.
• Keep an eye on the performance of individual investments and make adjustments if needed.

Regular Review and Monitoring:

• Regularly review your portfolio's performance and make adjustments based on changes in your goals, risk tolerance, and market conditions.
• Reassess your insurance needs periodically to make sure your coverage aligns with your family's requirements.
• As your income increases, consider increasing your monthly investments to align with your financial goals.

Remember, it's crucial to consult with a financial advisor to tailor a plan that suits your specific needs and risk tolerance. Adjust your strategy as life circumstances change, and stay disciplined in your long-term investment approach.

Ans: Firstly, I commend you for taking proactive steps towards building your financial future at such a young age. Your commitment to increasing your investments over time is commendable and will serve you well in achieving your financial goals.

Regarding your query about ELSS tax saver funds, they can indeed be a valuable addition to your investment portfolio. ELSS funds not only offer tax benefits under Section 80C of the Income Tax Act but also have the potential to generate higher returns over the long term compared to traditional investment avenues like PPF.

As for comparing ELSS funds with small-cap funds, it's essential to understand that they belong to different categories with varying risk profiles. Small-cap funds typically carry higher risk but also have the potential for higher returns, while ELSS funds invest primarily in equity markets and have the added advantage of tax benefits. Both can play a role in diversifying your investment portfolio and achieving your financial goals.

Considering your goal of attaining financial freedom in the next ten years with a corpus of over 1 crore, it's essential to review your investment strategy periodically and make adjustments as needed. Increasing your monthly SIP to 30k and potentially reallocating some funds from other schemes could be a prudent move, given your high income and relatively low living expenses.

Regarding your existing LIC Jeevan Anand policy, surrendering it and reinvesting the proceeds in mutual funds could potentially yield higher returns, especially considering your long investment horizon and risk tolerance. However, it's essential to evaluate the surrender value, any applicable penalties, and the potential tax implications before making a decision.

In summary, continue with your disciplined approach to investing, consider adding ELSS funds to your portfolio, and review your investments periodically to ensure they align with your financial goals and risk tolerance.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in

Ans: It's great that you're thinking about your financial future at 29. With disciplined savings and strategic investments, achieving a savings target of 1 crore by the age of 55 is certainly feasible.

Considering your income and expenses, investing in RD, SIP, and FD can be a prudent approach to diversify your savings and manage risk effectively.

RD (Recurring Deposit): RDs offer a fixed interest rate and provide a systematic way to save regularly. Allocate a portion of your monthly income towards RDs to build a stable foundation for your savings.
SIP (Systematic Investment Plan): SIPs in equity-oriented mutual funds can help you harness the power of compounding and generate potentially higher returns over the long term. Invest a portion of your income into SIPs to capitalize on market opportunities and maximize growth potential.
FD (Fixed Deposit): FDs offer capital protection and steady returns, making them suitable for short to medium-term goals. Consider allocating a portion of your savings to FDs to preserve capital and mitigate risk.
To determine the monthly investment amounts, assess your desired rate of return and investment horizon. Allocate a higher portion towards SIPs for long-term growth, followed by RDs for stability, and FDs for short-term needs.

Regularly review your investment portfolio and adjust your allocations based on changing market conditions and financial goals. Stay disciplined with your savings and investments, and you'll be well on your way to achieving your target of 1 crore by the age of 55.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in

Ans: It's impressive how diligently you're managing your finances at 35. Let's assess your investment strategy and explore options for your savings.

Firstly, having a substantial monthly take-home salary is a solid foundation for financial stability and growth. Your commitment to investing a significant portion of your income demonstrates a commendable savings discipline.

Your current investment strategy, including SIPs, LIC policies, PPF, and EPF contributions, reflects a balanced approach towards wealth accumulation and retirement planning. These investments offer a mix of safety, tax benefits, and long-term growth potential.

However, let's address your surplus savings of 40 lakhs intended for buying a home. Since your home purchase plan is on hold, it's wise to explore alternative investment avenues that offer lower risk, moderate returns, and high liquidity.

Consider allocating a portion of your savings towards liquid mutual funds or short-term debt funds. These instruments provide stability, easy access to funds, and typically offer higher returns than traditional savings accounts.

Moreover, evaluate your overall asset allocation to ensure diversification across different asset classes. While your current investments offer a good mix, periodically reviewing and rebalancing your portfolio can optimize returns and manage risk effectively.

As a Certified Financial Planner, I recommend staying informed about market developments and adjusting your investment strategy as needed to align with your financial goals and risk tolerance.

In conclusion, your proactive approach to managing your finances is commendable. By exploring alternative investment options for your surplus savings and periodically reviewing your portfolio, you can continue to make informed decisions for a secure financial future.

Best Regards,

K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in