Create separate mutual fund portfolios for each of your financial goals
For easy tracking, create separate mutual fund portfolios for each of your financial goals (you would need at least education portfolios, and a separate retirement portfolio)
I have SIPs in regular plans. I had started in January 2018, and I have an investment horizon of 20 years. I invest ₹7,000 each in Mirae Asset India Equity, DSP Black Rock Opportunities, Tata Equity P/E fund, Motilal Oswal Multicap 35, Principal Emerging Bluechip and L&T Mid cap. I also invest ₹6,000 in Reliance Small Cap and ABSL Pure Value fund. I want to build this corpus for my first child’s graduation (₹40 lakh); post-graduation (₹75 lakh); second child’s graduation and post-graduation(₹60 lakh and ₹1 crore) (planning for second child in 2-3 years); and retirement corpus (₹6 crore). I have also invested ₹10,000 in HDFC Balanced Fund to build up a house down payment in 5-6 years.
—Name withheld on request
It is good that you have charted out your life’s goals, and started your investment journey towards them. I don’t see much difficulty in you reaching most of your goals on the basis of your current investment allocations.
For your first child’s education in 16 and 20 years respectively, you would need an SIP amount of ₹6,000 and ₹8,000 (approximately) every month. For the second child’s education in another 20 and 24 years, the total SIP need comes to about ₹15,000. Your current SIP amount covers these goals more than adequately.
For your retirement, assuming there are another 25 years, you would need to invest ₹35,000 a month during the period. At the current investment levels, you are just a little short of this. If you can increase this allocation over the next few years, you will be on track on this count as well.
I would recommend that you create separate portfolios for each of these financial goals (you would need at least two education portfolios, if not four; and a separate retirement portfolio), so that you can track them separately.
In terms of the last goal that you have mentioned—down payment for a house in 5-6 years—you may fall short of the target amount. You will likely have a corpus of about ₹10 lakh in 6 years’ time with an SIP investment of ₹10,000 a month. This may not be enough. You may want to bolster this investment for a larger outlay for your house.
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Srikanth Meenakshi is co-founder and chief operating officer, FundsIndia.com
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