Hello Sir, Me & my wife is working in IT and have net in-hand salary of 2.5 L . Current Savings (MF - 18L, PPF - 8L, NPS - 2L), Monthly Savings (MF - 75k, PPF - 15k, NPS-1L (Yearly) ), Monthly Expense (Average 50k). Planning to buy a flat with 80L as loan for 10 Years and also planning a baby. Can you please suggest how can i build my portfolio for next 15 Years with retirement corpus in mind (8 Cr.)
Ans: You and your wife earn a combined net salary of Rs 2.5 lakh per month. Your current savings are Rs 18 lakh in mutual funds, Rs 8 lakh in PPF, and Rs 2 lakh in NPS. Your monthly savings are Rs 75k in mutual funds, Rs 15k in PPF, and Rs 1 lakh yearly in NPS. Your monthly expenses average Rs 50k. You are planning to take an Rs 80 lakh loan for a flat and are also planning to have a baby. You aim to build a retirement corpus of Rs 8 crore in the next 15 years.
Portfolio Analysis and Recommendations
Current Investments
Mutual Funds: Rs 18 lakh
PPF: Rs 8 lakh
NPS: Rs 2 lakh
Monthly Savings
Mutual Funds: Rs 75,000
PPF: Rs 15,000
NPS: Rs 1,00,000 yearly
Loan Considerations
Taking an Rs 80 lakh loan will impact your monthly cash flow. Assuming a 10-year loan tenure, your EMI would be approximately Rs 1 lakh per month.
Revised Monthly Budget
Income: Rs 2.5 lakh
Loan EMI: Rs 1 lakh
Expenses: Rs 50k
Available for Savings: Rs 1 lakh
Building a 15-Year Plan
Adjusted Monthly Savings
Mutual Funds: Rs 60,000
PPF: Rs 10,000
NPS: Rs 1,00,000 yearly
Emergency Fund: Rs 5,000
Investing in Mutual Funds
Equity Diversification: Allocate your mutual funds across large-cap, mid-cap, and small-cap funds for better diversification.
SIP Approach: Continue with SIPs for disciplined investing and benefit from rupee cost averaging.
PPF and NPS
PPF: Continue your contributions for tax benefits and assured returns.
NPS: Contribute Rs 1 lakh annually to benefit from additional tax savings and long-term growth.
Child and Family Planning
Education Fund
Systematic Investment Plan (SIP): Start a dedicated SIP for your child's education. Aim for a mix of equity and balanced funds.
Health Insurance
Family Floater Policy: Upgrade to a family floater policy to cover your wife and future child. Ensure adequate coverage for all medical needs.
Retirement Corpus
Target Corpus: Rs 8 Crore
To achieve your target, you need a well-diversified portfolio:
Equity: Continue with diversified mutual funds. Allocate a portion to mid-cap and small-cap funds for higher returns.
Debt: PPF, NPS, and fixed deposits for stability.
Gold: Invest in gold bonds or digital gold for diversification.
Steps to Follow
Review and Rebalance: Review your portfolio quarterly. Rebalance to maintain the desired asset allocation.
Increase Investments: Gradually increase your SIP amount as your income grows.
Tax Planning: Utilize tax-saving instruments like PPF, NPS, and ELSS funds.
Emergency Fund
Build an Emergency Fund: Keep at least 6 months of expenses in a liquid fund. This will help you manage any unexpected expenses without disturbing your investments.
Final Insights
Achieving an Rs 8 crore retirement corpus in 15 years is feasible with disciplined saving and smart investing. Adjust your savings post-loan, diversify your investments, and focus on long-term growth. Regularly review and rebalance your portfolio to stay on track.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
