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Please ask your questions HERE and rediffGURU Janak Patel, a certified financial planner accredited by the Financial Planning Standards Board, India, and CEO and founder of InfiniumWealth, will answer them.
Anonymous: I have four mutual fund 1.HDFC bse sensex plan -direct growth - 2000 Rs 2.SBI small cap - 2000rs 3.Parag parik flexi cap -1000rs 4.HDFC mid cap opportunities fund - 1000 rs. My portfolio diversification is correct or i need to do some changes? Please suggest i am investing 6000 rs month SIP for long term.
You have a good diversified portfolio across market caps and the funds are also good for long term investing.
Please continue and increase SIP amount when your income rises. If you stay invested for a long term, the portfolio has potential for a good wealth creation.
Anonymous: Hi. I am 40 years old. I have a son in std 3. my salary is 1.1 lac per month. i have 50 lakh fd; epf 2 lakh; liquid 2.5 lakh cash. pls suggest me for retirement.
You have about 15-20 years before retirement and that's a good time period to accumulate a good retirement corpus.
Your son's education will remain your priority during this period also. Assuming you can fund his education from your monthly income at least till his 10th/12 grade. You can decide on an amount for his graduation/post-graduation that you want to provide to him. For example if you want to provide 10 lakhs when he is 18 years old, you will need to start investing a monthly SIP amount of 2000 in mutual funds assuming returns of 12%. So based on the amount required you can calculate the SIP amount required.
You have EPF of 2 lakhs which is not sufficient today but assuming you continue contributions and after 15 years this can be a considerable amount. But still may not be sufficient for retirement, so you can consider it as part of/contribution to your retirement.
So let's look at your FDs - you have 50 lakhs in FDs. Even at 7% interest on them you are not going to beat inflation as you will need to pay tax on the interest income.
This money has a potential to earn better returns and not just beat inflation, but also create a retirement corpus which can be sufficient for 20 years (this depends on your expenses also).
If you split this 50 lakhs and keep 5 lakhs in FDs for emergencies, you can invest the remaining 45 lakhs to create a good corpus.
If you invest 45 lakhs in mutual funds and assuming a return of 12% over 15 years, you will have a corpus of approx. 2.70 crores.
With 15-20 years for retirement, you have an advantage to achieve your goals.
Though these numbers may look good now, they have to be evaluated with all other parameters like your monthly expenses, other goals in life, son's education needs etc.
I recommend you consult a CFP or a fee based advisor and discuss all aspects towards a financial plan that will cover retirement and all other goals. The plan will help you better prepare for the future and provide alternatives and options and a clear roadmap towards achieving them. It will also cover aspects of health and life insurance.
Anonymous: Hi Sir/Madam, I'm 35 yrs old married man, no children, Working as QA analyst from past 13yrs. I'm earning 1-Lakh per month. I have no emis and no good savings. But rent is 25k per month I may go for house loan maybe 20-Lakhs to support my parents’ house But I'm worried about my future due to working in IT as QA and uncertainty about job security. Can you please suggest me how can I save money and pension plan? Any suggestions will be really helpful.
Based on the information provided, it’s difficult to provide specific responses. Even then, let me try to guide you with some pointers.
Savings:
As I understand your income and expenses do not leave any saving at this time. With 1 lakh income and 25K rent, you have 75k for other expenses. So first start by looking at these, create a budget for various expenses and see if there is any potential to make adjustments and arrive at saving a few thousands. Even a saving of 2k every month has a potential to build 10 lakhs in 15 years. So no amount is too small. Start small and keep looking for ways to save more with time.
Rent is also something to think about. Is there any way to reduce it -- a smaller house or another area or something that can work for you. When you consider new place keep in mind the overall expense you will incur not just rent, e.g. travel expenses. Overall there should be a benefit in terms of real savings in hand every month.
Loan:
Going for a loan to support your parents’ house will put additional burden on your budget. Do they live in the same city? If so is there an option to live with them. This can help service EMI with the rent saved.
Empower your spouse:
Another option to consider is your spouse's potential to contribute to the household income. You can encourage her towards something that she can start either a job or something on her own, may be tuitions or any other interests, anything that can generate a little more income to support/increase your savings.
Career:
As for your own future in IT, I can understand it may look challenging. Look for additional skills you can develop on the job. Many organisations have career growth options with trainings and new areas of focus where they would prefer an existing employee they can train and utilise. So look within your organisation and even outside. Developing new skills can be one way to stay relevant in IT. Keep yourself updated with new tools and techniques to get an edge over others.
Also consider any other areas of interest/expertise you have or can develop for an alternate career. I have been in the IT industry too for a long time. Somewhere in the middle of my IT career I developed interest towards finance and specifically personal finance area and pursued it with passion and eventually I started it as a profession/business.
So look for your areas of interest.
Anonymous: Advice on retirement planning corpus of 2.5 cr; monthly expectations: 2.5 lakhs
Retirement corpus amount of 2.5 Cr may seem good enough to start for a monthly 2.5 lakhs expectation.
Simply put, it can last approx. 17 years if you invest where returns is 10%.
You need to consider inflation and that will increase your monthly expectations each year. Depending on your lifestyle, inflation can be in the range of 6%~12% or even higher.
The corpus investment is another important factor -- we assumed above a return of 10%. Depending on your risk profile, this investment can make a difference to the growth potential of the corpus.
A generic recommendation would be to invest in a conservative or a balanced advantage mutual fund and start an SWP.
Recommend you consult an advisor for a detailed plan based on your profile.
- You can ask rediffGURU Janak Patel your questions HERE.
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