I am 34. I work with railways and at present my income is around 50000 per month. My would be wife is also a railway employee and earns around 70000 per month. My mother is working and earns around 50000 however she will retire on 2028. My father is retired and earns 60000 as pension.
I have:-
19.77 lakhs in PPF
31 lakhs in stock market and mutual funds
Around 10lakhs in bank fd, kvp, nsc,etc.
2lakhs in NPS in tier 1 and tier 2 combined.
My family asset is a 2bhk flat whose current valuation is around 40lakhs, and other savings instruments but I donnot know the exact figure and I wish not to entitle my self as it's rightful heir until it is transferred to me.
My parents are not dependent on me. But my would be wife's mother is dependent on her.
I have taken mediclaim of 20lakhs.
I have a insurance policy of 35lakhs whose premium I have to yearly but the premium paid will be reversed to me. (Sorry I don't understand these policies I had to take it since my friend was it's agent so Inhave no idea how it works)
I have no loan in my name as of now.
I want to have sufficient corpus for my retirement since at present there is no pension scheme for central government employees. I want to buy a house in next 5years. And if I have children a sufficient fund for them as well.
If possible I want to retire around 50 to explore world so need funds for that as well.
Please suggest.
Ans: Current Financial Situation
Income and Assets
Your Income: Rs 50,000 per month
Your Fiancée's Income: Rs 70,000 per month
Mother's Income: Rs 50,000 per month (retiring in 2028)
Father's Pension: Rs 60,000 per month
Investments
PPF: Rs 19.77 lakhs
Stock Market and Mutual Funds: Rs 31 lakhs
Bank FD, KVP, NSC: Rs 10 lakhs
NPS Tier 1 and Tier 2: Rs 2 lakhs
Assets
2BHK Flat: Rs 40 lakhs
Other Savings Instruments: Value not known
Mediclaim: Rs 20 lakhs
Insurance Policy: Rs 35 lakhs
Goals
Buy a house in the next 5 years
Adequate corpus for retirement
Adequate fund for children (if any)
Retire at the age of 50 to explore the world
Analyzing Your Financial Goals
House Purchase in 5 Years
You want to buy a house after 5 years. It needs a lot of planning and saving.
Down Payment: You can start saving from now for this down payment. It should be around 20-30% of the house value.
EMI Planning: Ensure that your EMI does not go beyond 30-40% of your combined income.
Retirement Planning
Retirement at 50 is quite ambitious but very much achievable. With no pension scheme to back you, your investments need to work harder.
PPF and NPS Contribution: You may continue the contributions in PPF and NPS. They do provide tax benefits and steady returns.
Mutual Fund: Increase your SIPs. Actively managed funds can give better returns than Index Funds.
Diversification: An intelligent mix of your investment portfolio in equity, debt and hybrid funds.
Children's Education Fund
If you are a parent, early start saving for funding the education of your children.
Education Plans: Invest in child education plans which have maturity benefits when your child turns 18.
SIP in Equity Fund: Invest in equity funds through a SIP for greater returns in the long run.
Travel Fund
For the travel in retirement, use a portion of your investments exclusively for this goal.
Travel Fund SIP: Create a separate SIP for your travel fund. Estimate the cost and plan accordingly.
Investment Recommendations
Increase SIP Contributions
Equity Funds: A good portion should be invested in equity funds for high growth.
Debt Funds: A good portion should go into debt funds for stability.
PPF and NPS
Continue Contributions: Both PPF and NPS are excellent for long-term growth and tax benefits.
Avoid Real Estate Investments
Liquidity Issues: Real estate can become illiquid and harder to manage.
Insurance Policy Review
You have an insurance policy with a yearly premium refund. Understanding its benefits is of essence.
Review Policy: Have this policy reviewed by a Certified Financial Planner. Better investments exist.
Emergency Fund
Have in place an emergency fund covering your 6-12 months of expenses. This would provide for financial stability in case unanticipated situations arise.
Financial Plan Execution
Regular Review
Check on your financial plan every 6 months. Update according to market conditions and your personal changes.
Professional Guidance
Do seek the advice of a Certified Financial Planner from time to time. They can offer you personalized advice and keep your investments on track.
Final Insights
Your financial situation is strong. Reach-out goals, of course, are quite achievable with disciplined saving and investing. Step up your SIP contributions and diversify your portfolio. Review your insurance policy and have in place a good emergency fund. You would be on the right track if regular reviews and professional guidance from time to time are there.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
