Ask Mint Money | You must increase your pool of savings as income goes up

Ask Mint Money | You must increase your pool of savings as income goes up

I am 26 years old and my take-home is around 60,000 per month. There is no provident fund in our office. However, I have invested 1.31 lakh in Public Provident Fund (PPF). I have around 1.8 lakh as emergency fund, which is saved in a sweep-in saving account. I have a term insurance cover of 1 crore and a personal health insurance for 5 lakh. I have invested in mutual funds through systematic investment plans (SIPs) over the last couple of years and the value now is around 2,89,500. Currently, I invest 4,000 in PPF per month and 4,000 per month in equity-linked saving schemes (ELSS). I also invest 2,500 in DSP BlackRock Top 100 and 2,000 each in HDFC Top 200, IDFC Premier Equity and Reliance Regular Savings Fund Equity. I am planning to stop ELSS SIP by January as I will be done with my section 80C limit. I also have a surplus of 25,000 per month and I am thinking of adding another 5,000 per month in both DSP BlackRock Top 100 and HDFC Top 200. Please suggest how should I plan for my retirement corpus of 5 crore in another 25 years time. Also, how should I utilize the remaining surplus per month. My parents are dependant on me.

—Santosh

You have done most of it right and what’s best is the fact that you have started saving at the right age.

Your life insurance is more than adequate. Your health insurance is also in place.

Further, as you rightly mentioned, you need to increase your pool of savings to achieve the desired corpus. And the savings amount mentioned is adequate to help in achieving the target you have set for yourself. However, you need to make sure you increase your savings along with the increase in salary to match up the inflation rate. The additional savings can be distributed among mutual funds. At the same time, you need to maximise your savings in PPF from the existing 48,000 to 70,000 per year. This will not only help you increase your debt exposure, but also add stability to your portfolio. Also, you will not be able to do the ELSS saving from the next financial year once the Direct Taxes Code gets implemented, which is likely from April 2012.

Surya Bhatia is a certified financial planner and principal consultant, Asset Managers

Queries and views at

mintmoney@livemint.com

Close