I am 39 years old and have systematic investment plans (SIPs) in DSP BlackRock Top 100 Equity Growth (Rs 5,000 since December 2010), Franklin India Bluechip Growth (Rs 5,000 since January 2012) and IDFC Premier Equity Growth (Rs 2,500 since January 2012). I also buy 1g of Gold BeEs-1 each month and I have been putting Rs 5,000 in National Pension System (NPS) since November 2011. I am discontinuing SIPs in Reliance Growth (Rs 3,000) and Reliance Regular Savings Equity (Rs 3,000) which I had since August 2010. I have redeemed my investment in Reliance Regular (Rs 59,000) and have switched the other investment to Reliance Equity Opportunity. I want to plan for my retirement at 55 years of age. My monthly expenses are about Rs 20,000 in today’s value. I have up to Rs 10 lakh in bank fixed deposits (FDs) for my child’s education. I can invest another Rs 10,000 per month. I have five life plans maturing in 2029 and a unit-linked insurance plan.
V. Srinivasa Rao
Your monthly investments are currently in two large-cap and one mid-cap funds. All three are good performers with consistent track record. This is in addition to your Gold BeEs and NPS.
You have switched one of your Reliance investments in Reliance Equity Opportunity fund, which again is a consistent performer and is one of the top performing schemes in recent times. However, why have you redeemed the other Reliance saving is hard to understand. It is good that you are proactive and keep reviewing your investments. If this process leads to redemption, the proceeds should be immediately reinvested.
You have planned your retirement corpus by investing a majority of the corpus in equity (except for the debt portion in NPS and gold). However, you have invested in FDs for your child’s education, which is a debt investment, even though your goal appears to be 10-12 years away. It is prudent to be safe. However, you can consider a combination of asset classes. An asset mix of hybrid funds (70% equity, 30% debt), monthly income plans, or MIPs, (70-80% debt, 20-30% equity) and debt funds can be considered. Funds such as HDFC Prudence and HDFC Balanced are recommended options for hybrid funds. Reliance MIP and HDFC MIP LT have done well. You can also consider short-term/dynamic debt funds such as Birla Sun Life Dynamic Bond Fund and Templeton Short Term Income Fund.
Lastly, as you have a lump sum (currently in FDs), you may also look at locking a part of the corpus in fixed maturity plans (FMPs). They are more tax-efficient than FDs if held for a longer time but do not offer the advantage of liquidity that FDs have. The additional monthly investment can be done in your existing or the above-mentioned funds.
You will not have any cover when you turn 56. And buying insurance then will be expensive. Consider a term plan to ensure that your financial plan runs smoothly.
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