I am 19 years old and have been investing in stocks for two months. The purpose of my investment is wealth creation.
I want to earn at least 5% more than the current inflation rate, but I have no objective to beat the market, etc. I am a student of Chartered Accountancy (CA) and have a keen interest in investment and finance.
I invest based on my abilities and my own research, and I don’t want to invest in mutual funds. Currently, I invest 5,000 per month which will be increased by 5,000 for the next two years. After that, after my studies, I want to invest around 25-30% of my salary in the stock market every month.
Can I meet my financial goal of retiring by the age of 35?
-Himanshu
It’s nice to know that you are evaluating early retirement and savings towards your retirement goal at a very young age. Considering retiring at age 35 can be a bit ambitious, and a lot of this will depend on the completion of your professional qualifications, and your income and savings proportionately thereafter. It’s a good idea to save at least 30% of your income when you start working.
A targeted return of 5% per annum on inflation should be possible through a combination of passive and proactive strategies, although you must be prepared for volatility along the way.
I am a small businessman and earn 70,000 per month. I’ll need 1.2 crore to meet the higher education expenses for my two daughters in the year 2037 and 2038. How can I achieve this financial goal?
-Name withheld on request
You have to invest approx 50,000 per month. to receive a fund of 1.2 crore with an investment time horizon of 15 years to achieve the education target goals.
If your cash flow is irregular, you can invest through a Systematic Investment Plan (SIP) or a Systematic Transfer Plan (STP). It is a good way to invest in a disciplined manner towards this financial goal.
It is also important to ensure that you have adequate term life insurance coverage so that you do not have to compromise on your educational goals in case any unforeseen event affects your savings potential. About three years before the fund requirement, you should start getting into debt so that volatility in the equity market does not challenge the achievement of education goals.
You can consider a combination of domestic and international, flexi-cap funds and index funds to achieve the goal along with regular rebalancing.
Vishal Dhawan is a certified financial planner and founder of SEBI-registered investment advisory firm Plan Ahead Wealth Advisors.
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