I wanted to create my first crore by investing in stock or mutual fund.please advise my current monthly investment are as follows 5k in ulip,10k in other ulip (for five years so that I can reinvest after five years again that amount)
10k psu direct mutual fund
4k in other mutual fund.
3k in digital gold.
1lakh one time in quant for five years
And 31k in PF+epf
And my home loan 23k and personal loan 25k.
Please guide me.
Ans: Evaluating Your Current Investments and Liabilities
Let's first understand your current financial position and investments. You are investing in various avenues and also have significant loans to manage.
Monthly Investments
ULIPs: Rs 5,000 + Rs 10,000
PSU Direct Mutual Fund: Rs 10,000
Other Mutual Fund: Rs 4,000
Digital Gold: Rs 3,000
One-time Investment in Quant: Rs 1 lakh (for five years)
PF + EPF: Rs 31,000
Monthly Liabilities
Home Loan EMI: Rs 23,000
Personal Loan EMI: Rs 25,000
Goals and Strategy to Reach Your First Crore
Your goal is to create a corpus of Rs 1 crore by investing in stocks or mutual funds. Let's outline a plan to achieve this.
Reassessing ULIPs
ULIPs combine insurance and investment. However, they often have high charges and lower returns compared to pure investment products.
Action Step: Consider stopping new investments in ULIPs once the lock-in period ends. Redirect this money to mutual funds for better returns.
Focusing on Mutual Funds
Mutual funds, particularly actively managed funds, can provide better returns. You already invest in PSU direct mutual funds and other mutual funds.
PSU Direct Mutual Fund: Direct funds may lack professional advice. Consider switching to regular funds managed by a Certified Financial Planner (CFP) for better guidance.
Other Mutual Fund: Evaluate performance and ensure it's aligned with your goals.
Digital Gold Investment
Digital gold is convenient but may not offer the best returns compared to equity mutual funds.
Action Step: Consider reducing or stopping investments in digital gold and reallocating to equity mutual funds.
Optimizing One-time Investment in Quant
You have invested Rs 1 lakh in Quant for five years. Ensure it aligns with your risk tolerance and goals. Regular review is essential.
EPF and PF Contributions
Your EPF and PF contributions are significant and provide stability. Continue these contributions for a secure retirement.
Managing Loans
Your home loan and personal loan EMIs total Rs 48,000 per month. High EMIs can strain your finances.
Action Step: Prioritize repaying the personal loan due to higher interest rates. Once the personal loan is cleared, consider using the freed-up amount to invest more in mutual funds.
Suggested Investment Strategy
1. Equity Mutual Funds
Diversify Across Categories: Invest in large-cap, mid-cap, and small-cap funds for a balanced portfolio.
Systematic Investment Plan (SIP): Continue or start SIPs in diversified equity mutual funds.
2. Reducing ULIP Contributions
Reinvest in Mutual Funds: Once the ULIP lock-in period ends, redirect funds to equity mutual funds for higher returns.
3. Professional Guidance
Certified Financial Planner (CFP): A CFP can help you choose the right funds and strategies.
4. Emergency Fund
Maintain Liquidity: Keep an emergency fund equivalent to 6-12 months of expenses in a savings account or liquid funds.
Action Steps for a 1 Crore Corpus
Stop New ULIP Investments: Redirect to equity mutual funds.
Review and Switch PSU Direct Fund: Consider regular funds with CFP guidance.
Reduce Digital Gold Investment: Reallocate to equity mutual funds.
Prioritize Loan Repayment: Focus on clearing the personal loan first.
Increase SIPs in Equity Mutual Funds: Once loans are repaid, increase SIP contributions.
Regular Review
Regularly review your investment portfolio and adjust as needed. Stay informed about market trends and consult with a CFP for ongoing advice.
Final Insights
To achieve your first crore, focus on equity mutual funds, reduce investments in ULIPs and digital gold, and prioritize loan repayments. Regularly review and adjust your investments with the guidance of a Certified Financial Planner.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
