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Please ask your questions HERE to rediffGURU Reetika Sharma, who has an MBA from the ICFAI, and professional certifications from the FPSB, AMFI and IRDAI.
Chethan: Hello Sir, I hope you're doing well. I am 36 years old and currently investing in the following Direct Mutual Funds via SIP with a 10% annual step-up, aiming to build a strong retirement corpus.
My target is to continue these investments for the next 15 years. These are the mutual funds I am investing ICICI Prudential Value Fund-7K, Kotak Small Cap Fund-10k, Kotak Midcap Fund-7K, Mirae Asset Large Cap Fund-1K, 360 ONE Quant Fund-7K, Parag Parikh Flexi Cap Fund-8K and Index Funds (Combination)-5K.
My total mutual funds value is 19 Lakh and also have 35 Lakh in PF and 23 lakh in stock market.
I would like you to kindly review my current SIP allocations and advise: If this portfolio is well-aligned with my 15-year retirement goal. Whether any fund switches or rebalancing is needed?
Suggestions to optimize for long-term returns while managing risk. Any underperforming or overlapping schemes I should consider replacing?
Such good portfolio at your age is commendable. Your goal of early retirement at the age of 51 is easily possible.
Total stocks and mutual fund portfolio value after 15 years will grow to approx. 7 crore if you continue investing 45000 monthly with 10% step-up.
PF amount will help in managing the debt allocation of your overall portfolio and will be helpful for retirement.
You can retire with this amount if your monthly expenses do not exceed 1 lakh. It also assumes that you have no current liabilities and other financial goals.
Wrt to existing MFs shared by you, seems you have selected funds based on random online suggestions. These were top performer once. But you need to reallocate your current and future SIPs judiciously into a mix of equity and hybrid mutual funds.
Kindly eliminate Index Funds (over-hyped by Fin-Fluencers), Quant Fund and Value Fund. It is not easy for an individual to select mutual fund from a pool of funds.
Just like you need an expert doctor for your health, you also need an expert advisor for your wealth. Otherwise it can backfire.
Kindly consult a Certified Financial Planner who can guide you with exact funds to invest in keeping in mind your age, financial goals and risk profile.
Anonymous: I am CA and 39 years old. Currently I am doing Job and my take home salary after all deduction is Rs. 1.40 lakh. My total loan obligation is Rs. 95 lakh (75 lakh bank (all personal loan) + 20 lakh (friend/relatives). My monthly EMi obligation is Rs. 2.50 lakh. (However it getting reduced monthly, as small loan are getting close).
My saving at present is NIL. It's getting very difficult to manage monthly emi every time.
My family does not know about this and I don't know how to tell them. I want to get out from this debt trap instantly.
Two things are in my mind. 1. Get overseas job, where my salary will be double and able to dispose my all loan in span of 4-5 years 2. To sell the house property in which i am currently living. It will fetch approx 1 cr and paid off my entire debt and shift it to rental apartment.
I don't see any other option, pls help me out. What I should do to get out of this debt trap. Regards
Sorry to hear that despite being a CA, you have been in a debt trap.
Selling your current house looks like the only option for you to reduce your loan obligation and live a better life.
Early loans and homes at younger age usually make one trapped in a forever debt.
Getting an overseas job is a good idea but you can also have a decent life in India with your salary if you improve your loan habits. Try and avoid unnecessary spending.
Please consult a Certified Financial Planner who can guide you with exact fundamentals to go ahead in life, close loans and start investing, keeping in mind your age, goals and risk profile.
Anonymous: Dear sir, Hii...I am 38 year old central government employee.... Sir My question regarding the early age retirement.... Can i take retirement at the age of 50? I have 30000 monthly SIP and am going to increase this SIP up to 45000 within a year. My SIP corpus is 30 Lakh. Similarly, I my total NPS corpus is 28 lakh with monthly saving in NPS is 19000 . So plz give me suggestion that can i plan to early retirement at the age of 50? I have health plan of 10 lakh and term plan insurance of 1 Cr.
Telling you if you can retire by the age of 50 is not possible using this data. You will have a mutual fund portfolio of around 3 crore at the age of 50 if you increase you monthly SIP of 45000 by 10% each year.
NPS corpus is additional but you can only access it at the age of 60, not before.
To calculate if you can retire at 50, need to know your exact responsibilities, financial goals and monthly expenses.
Assuming your monthly expense of no more than 75,000 you can take early retirement at 50. This also has assumption of no added financial responsibility for you.
Kindly consult a Certified Financial Planner who can guide you with exact investment plan and retirement plan keeping in mind your age, goals and risk profile.
Anonymous: I am 38, sole earner for my family. till date I have invested 68 lakh in Mutual funds, 19.24 lakh in equity, FD of 6.4 lakh, LIC 1.37 per year, maturity date 2041, PPF around 60000 per year, till now 5.81 lakh. Monthly I invest 2 lakh in Mutual funds and some equity. Should I start investing in NPS at my age or stick to ELSS mutual funds? I try to invest 40 percentage of my post tax salary each month.
It sounds too complex for anyone at your age. Investments are supposed to be simple yet fruitful.
While the cumulative amount looks good on paper it is all too diversified for anyone.
1. FD of 6.4 lakh is good to go. It can be used in any emergency situation.
2. LIC -- 1.37 lakh per year. It is of no use. One should keep investment and insurance separate. Also overall return given by any LIC is equivalent to 4-5% only; not even beating inflation. FD is a better option than this.
3. PPF -- no use for you. You must already have an EPF account. Having PPF does not add to your purpose.
4. ELSS funds -- no use. ELSS funds are usually for saving tax under sec 80C which is now almost obsolete with new regime.
5. Stocks and MFs amount is good but more detail would be better for more detailed analysis.
Things to be done:
- Surrender LIC policy and put that amount in MFs.
- Reduce PPF to bare minimum and transfer all maturity proceedings to a debt fund upon maturity
- Don't opt for NPS. It does not fulfil its purpose for you
- Stop ELSS contributions and withdraw entire funds after the lock-in of 3 years is over.
- Also make sure to have ample life and health insurance coverage for yourself and family members.
You should definitely consult a Certified Financial Planner who can guide you with exact investments you should keep wrt your goals, requirements and risk profile.
Anonymous: I am 39 married with a kid of 5 years. I am a self-employed professional. 1. I have mutual funds and stocks of 1.2 cr, fds of 10 lakh. Right now sips of 2 lakh in mutual funds an Rd of 1.6 lakh going on. Gold coins of about 200 grams. One farmhouse on agri land worth 35 lakh. 2. My home+office loan emi is 1.49 lakh pm. Home+office value is between 4-5 cr. 3. Car emi is 99000 pm. Car's depreciated value is 60 lakh. How should I plan further? Thanks in advance!
Your plan looks quite good at your age. Let me highlight each in detail here:
- 1.2 crore stocks & MFs: Good amount. But as I do not know the exact details, cannot comment further but make sure your portfolio is not over-diversified or overlapped.
- SIP of 2 lakh is amazing but have it checked via a Certified Financial Professional who can assign it to your individual profile and customised goals.
- RD 1.6 lakh: It should be in alignment with a goal. Otherwise it does not look that good.
- Gold coins are another nice way to diversify. But avoid buying them physically. Instead start investing in gold ETFs online.
- Farmhouse: Good investment for peace of mind.
- Home and Office are assets for lifetime.
- EMI of 1.49 lakh per month: Share more details like time left and interest payable. But it is affordable.
- EMI for car looks quite high. Avoid such high EMIs as it can be tough to manage at the time of uncertainties.
Make sure you have ample emergency fund of at least 6 months of your total expense in FD or liquid funds. Total expense in your case would be business fixed cost + average business variable cost + household expenses + EMIs + insurance premiums.
Also make sure to have both life and health insurance for yourself and family members to avoid any unforeseen situation.
Kindly consult a Certified Financial Plannerwho can check your portfolio and current holdings and SIPs and guide you with exact funds to invest in keeping in mind your age and risk profile.
- You can ask rediffGURU Reetika Sharma your questions HERE.
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