Please ask your questions HERE and rediffGURU Purshotam Lal, a chartered financial analyst and founder of Finphoenix Services LLP, will answer them.
Anonymous: I'm 39 years old and have two children (an elder son and a younger daughter), aged 11 and 8. My annual take-home salary is Rs 24 lakh. I have a home loan with an EMI of Rs 26,000 and an outstanding balance of Rs 24.5 lakh. The current property value is Rs 70 lakh, and I receive a rent of Rs 12,000 per month from it.
I also have another loan on a commercial property, with an outstanding amount of Rs 44 lakh and an EMI of Rs 52,500. I receive Rs 60,000 monthly as rent from this property.
Apart from these, I have a local loan of Rs 10 lakh for which I pay Rs 27,000 every month. This loan will be cleared in another two years.
A few months ago, I started a SIP of Rs 16,000 per month (Rs 8,000 in ICICI Thematic FOF and Rs 8,000 in ICICI Multi Asset Fund). I am planning to start another SIP of Rs 19,000 per month soon.
I plan to spend up to Rs 20 lakh on each child's education. I also estimate that I may need around Rs 75 lakh for my daughter's wedding and Rs 25 lakh for my son's wedding. I wish to retire at the age of 50.
I have term insurance cover of Rs 1.5 crore. Could you please tell me whether my planned SIP of Rs 35,000 per month is sufficient or if I need to invest more? Also, could you suggest suitable fund categories based on my goals and timelines?
I currently have a PF balance of around Rs 16 lakh and contribute Rs 20,000 per month (EE PF + ER PF). I also have an NPS contribution of Rs 5,000 per month.
As per the information provided, your monthly investable surplus is estimated to be around Rs 42,000, assuming household expenses at 40% (Rs 1.088 lakh) of your gross monthly income.
At an inflation rate of 8%, the projected marriage expenses could rise to approximately Rs 277.5 lakh for your daughter (after 17 years) and Rs 73.43 lakh for your son (after 14 years).
Since you plan to retire at 50, your investments will cease at that age. To meet your goals, a monthly SIP of Rs 66,000 in equity mutual funds is required for retirement, and an additional Rs 50,000 SIP for your children's education until you turn 50.
Your current SIP of Rs 16,000 is considerably below the required monthly investment.
Your PF balance, assuming an annual return of 8.25% with a monthly contribution of Rs 20,000, is expected to grow to about Rs 81 lakh -- which may not be adequate for a comfortable retirement.
You may consider:
Anonymous: I am 34 years old and the sole earner for my family. To date, I have invested Rs 12.5 lakh in mutual funds, Rs 1.8 lakh in fixed deposits, and pay a Kotak life insurance premium of Rs 66,000 per year (maturity in 2037). I invest Rs 1.5 lakh per year in PPF, with a current balance of Rs 9.9 lakh. I also invest Rs 50,000 per month in mutual funds.
Should I start investing in NPS at my age or continue with mutual funds? I invest around 50% of my post-tax salary every month. Please suggest if my portfolio is well-balanced or if I should make changes.
Portfolio:
I have been investing in mutual funds for only the last two years. I want to accumulate around Rs 5 crore in the next 10–15 years, but I'm not sure mutual funds alone will help. Should I explore additional sources of income?
You have already taken the right steps towards financial planning to achieve your goal of building a corpus of Rs 5 crore.
If you continue your current investment pattern and add an additional SIP of Rs 10,000 per month -- increasing it by another Rs 10,000 every two years -- you could potentially reach your target in 15 years.
Your selected funds have performed reasonably well. However, it would be prudent to consult a certified financial planner or investment advisor for personalised guidance.
Upadya: Hello, I am 40 years old and earn Rs 1.2 lakh per month working in the private sector. I am the only earner in my family. I have one child who is in PP-2 (5 years old), a wife and my mother. My mother receives a pension of Rs 30,000 per month. I have a home loan of Rs 20 lakh and personal loans of Rs 5 lakh. My son's school fees are Rs 2 lakh per annum. There are not many savings. I am investing Rs 50,000 in the ICICI Gift Plan and Rs 50,000 in Reliance Nippon per year. I started this one year ago. I would like some suggestions on setting up a plan for my child's future and also for my retirement. I am also thinking of setting up a tea stall in the near future. Please advise.
The total family income is Rs 1.50 lakh per month, according to the information provided. Assuming the home loan and personal loan have remaining periods of 15 years and 5 years with interest rates of 9% and 11% respectively, the EMI comes to Rs 20.29k and Rs 10.9k per month.
Considering the school fees per month, I would propose you go for MF SIPs (assuming an annualised return of 13% in aggressive equity MFs) of Rs 22.96k and Rs 9k per month for the child's higher education and marriage at ages 17 and 25 respectively.
The child's higher education is estimated at Rs 75.50 lakh after 12 years (current cost Rs 30 lakh with inflation of 8% p.a.), whereas marriage expenses are estimated at Rs 90 lakh after 20 years (current cost Rs 20 lakh with inflation of 8% p.a.).
After the monthly contribution to the ICICI Gift Plan and Nippon of Rs 8.3k per month, your remaining income is Rs 61.5k per month.
It is suggested that out of his remaining income you invest in another MF SIP of Rs 20,000 per month for 18 years in an aggressive equity fund, if your risk profile permits, so that you may accumulate over Rs 1.58 crore at retirement at age 58 (assuming an annualised rate of return of 13%).
The remaining Rs 41.5K per month may cover monthly household expenses.
If your monthly household expenses are higher, then reduce the SIP amount now, but as your income grows, you may allocate more to monthly MF SIPs.
Disclaimer: This article is meant for information purposes only. This article and information do not constitute a distribution, an endorsement, an investment advice, an offer to buy or sell or the solicitation of an offer to buy or sell any securities/schemes or any other financial products/investment products mentioned in this QnA or an attempt to influence the opinion or behaviour of the investors/recipients.
Any use of the information/any investment and investment related decisions of the investors/recipients are at their sole discretion and risk. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Opinions expressed herein are subject to change without notice.
