I am 41 years old and earn ₹85,000 per month. I pay an equated monthly instalment (EMI) of ₹15,000 for my home loan (I am planning to sell the house) and an EMI of ₹16,000 for a personal loan. I am investing via a systematic investment plan (SIP) in Franklin Small Companies fund ( ₹6,000) and saving ₹1,000 per month in Public Provident Fund (PPF). I am also saving ₹1,000 per month in Sukanya Samriddhi Yojana for my daughter, who is nine years old. I have ₹2 lakh in my Employees’ Provident Fund (EPF) account. My goals are having a corpus of ₹1 crore after 15 years for my daughter’s marriage; ₹1 crore after 10 years for my daughter’s higher studies; ₹1 crore after 15 years for my retirement corpus. Where all should I invest?
—Name withheld on request
You plan to sell your house on which you are having a loan and an EMI. It is assumed that it is an investment asset and you will be having a surplus of ₹15, 000 per month to add to your investment corpus. Over the next year or so or even earlier, your personal loan will also be over, which will further give an additional ₹16, 000 for increasing your investments. Also, you have your PF, which can be part of your retirement corpus.
Assuming all of the above, the total savings you have is ₹39,000 per month, which if saved for 10 years will result in a principal amount of ₹46.8 lakh and taking an average earnings of 10%, the corpus becomes ₹80 lakh. You need to ensure that the savings are increased every year to meet your daughter’s education expenses. The next five years with a similar savings rate makes will give you an additional corpus of ₹30 lakh, but is too short of your targets.
You need to make sure the funds realized from the sale of property also get reinvested and that too can be part of your overall corpus. In addition, you need to increase your savings rate every year to the best of your ability. The investments can be done preferably via mutual funds and here you can consider a combination of equity and debt. Do consider higher equity exposure as you have a long-term horizon subject to your risk profile.
Surya Bhatia is managing partner of Asset Managers. Queries and views at email@example.com