Dev Ashish, Founder, StableInvestor, and Sebi-registered investment adviser:While your intent to build long-term wealth is commendable, it is advisable to evaluate your financial goals, determine specific goal values and the amount you need to invest for them, and then follow a goal-based approach to invest. You have listed only your monthly income, not your expenses. We shall assume you are able to save Rs60,000 a month. Considering your long-term investment horizon, it is advisable to have a higher allocation to equities to generate inflation-beating returns. Pick one scheme each from mutual fund categories like large-cap index fund (Rs 15,000 monthly), flexi-, large- and mid-cap fund (Rs 20-25,000), and mid-cap funds (Rs 7,500). If you want to have standalone small-cap exposure (though this is optional), limit yourself to one such fund, which should be enough to provide adequate diversification for your equity allocation. In addition, you can invest Rs 12,500 a month in the PPF (Rs 1.5 lakh a year) since you plan to continue investing in this instrument. You can also consider increasing your VPF contribution (in the EPF) as it offers a higher 8.15% return compared to 7.1% in the PPF. As your income increases, try to hike your monthly investment every year. You can also channel a major part of your annual incentives towards your portfolio if you don’t need it for other expenses or family requirements. Since no details of your other debt investments have been provided, we are assuming that you have set aside some money as emergency funds in bank fixed deposits or debt funds. If not, you should do it at the earliest. Instead of having a single large fixed deposit, invest the money in 3-4 smaller FDs so that you don’t end up breaking one FD even if your fund requirements are relatively low.
I am 45 years old and earn Rs 1.8 lakh a month. I invest Rs 20,000 a month in three mutual funds, and my portfolio is worth Rs 10 lakh. I jointly own a house worth Rs 85 lakh, in Delhi, with my wife. I also own a 3-BHK flat worth Rs 1.5 crore in Gurugram, which provides a monthly rent of Rs 44,000. I have a corporate health plan for the family and a term insurance plan of Rs 1 crore for myself. I have gold coins worth Rs 10 lakh, Rs 17 lakh in the PPF, Rs 7 lakh stock portfolio, and NPS corpus of Rs 40.5 lakh. I have Rs 50 lakh in a savings account. I have two kids, who are 11 and 6 years old. My present monthly expenses are `50,000. How can I invest to secure the education and weddings of both kids and generate a monthly income of Rs 1.5 lakh after retirement?
Vidya Bala, Co-founder, PrimeInvestor.in: It is good to have objectives, but you must translate these into estimates. You need a time frame for each goal and realistic assumption of returns. For example, if your Rs 10 lakh MF portfolio and Rs 20,000 monthly investment deliver 11% IRR over 15 years, it will give you a corpus of Rs 1.6 crore. You will need similar estimates for your PPF and NPS. You will also need to estimate how much you need after retirement using online calculators and taking inflation into account. Use a combination of equity and debt mutual funds, and your present PPF (higher allocation to equity for longer term goals), and build separate portfolios for children’s education and retirement. Use simple equity index funds so that monitoring is easy, and opt for short duration and corporate bond funds for debt exposure. Since you have two houses, you can liquidate one for any cash flow needs later on. You could also consider liquidating your financial assets which is much easier to do.
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