New Delhi :
I am 37 years old. I have a two year old daughter, and I want to make investments to meet her education needs, for her marriage and for my retirement. My current investments are in the following instruments: Sukanya Samriddhi Yojana in the Post Office; PPF; health insurance; term plan; Reliance Guaranteed Money Back Plan; ICICI Wealth Builder II; ICICI Guaranteed Returns; and mutual funds (Mire Emerging Bluechip and DSP Tax Saver). Apart from the said investment, I can afford to invest ₹from 15,000 ₹20,000 more per month. Is my current investment plan good enough to meet my goals? If not, what changes are needed?
—Name withheld on request
When it comes to working towards financial goals, there are a few things you should be doing from an overall investment perspective. You have a term plan and health insurance to ensure that no unfortunate event or illness affects your financial goals, it ensures financial loss protection. Your investment in PPF and Sukanya Samriddhi Yojana also acts as a loan allocation to the overall investment portfolio. You have purchased certain insurance policies that are a mix of unit-linked insurance and traditional policies; Here I would like to highlight that the returns from traditional insurance policies may not help you grow your money as much as equity-oriented mutual funds. All your financial goals are long term and you can look at equity-oriented investments instead of these traditional insurance policies for your financial goals. If necessary, you can reconsider your future commitment to these traditional policies, for which you can consult with your advisor.
Typically, parents target a fund for their child’s education when their child turns 18. This can help them make use of the accumulated wealth even if the child needs it for their education at the age of 16 or 21. If we consider the same for your daughter’s education, you will be able to accumulate closer ₹90 lakhs with your monthly investment ₹20,000 assuming 10% return per annum. Since you are already investing in other instruments, even those investments will be useful for his education and your retirement.
Just to give you a perspective if you invest ₹20,000 per month till your retirement assuming that it is at the age of 60, you will be able to build a corpus of approx. ₹2 crore from this monthly investment. retirement fund ₹2 crores will help you get out ₹75,000 per month from the age of 60 to the age of 85 with an inflation of 6% per annum. And ₹23 years later 75,000 is equal to ₹Today’s 20,000 given 6% inflation. This amount may not be enough to meet your monthly expenses at the time of retirement and hence you may need to increase your investments and utilize your existing investments optimally in all ways.
Your plan to make additional investments ₹from 15,000 ₹20,000 is good and you can invest in Equity Diversified Fund where you can consider investing in Nifty Index Fund, Parag Parikh Flexicap Fund, UTI Flexicap Fund and Kotak Equity Opportunities Fund along with your existing mutual funds. You can try to increase your annual investment by 5-10% every year and this can help you build more corpus for each of your financial goals.
Harshad Chetanwala is the founder, mywealthgrowth.com.
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