Mutual Funds

Your Fund Portfolio

Aarati Krishnan | Updated on July 15, 2018 Published on July 15, 2018

I am 34 years old and have two kids aged five and 10. I have ₹40,000 in surplus every month which I want to invest in mutual funds through the SIP route. I don’t have any existing investments in MFs and want to raise a corpus of ₹1 crore for my 10-year old for his education at 18; another ₹50 lakh for the wedding of my two children when they turn 24. I also need a corpus of ₹1 crore for my retirement at 60. Which funds should I invest in and how much?


Sorry, your financial goals are way ahead of your present savings and investment ability. You may have to rethink your goals and scale them down significantly. Even to get to your first goal of ₹1 crore in eight years, you will need to invest at least ₹60,000 a month.

Let’s assume that since you are starting out at a fairly high equity market level, your equity MFs fetch 12 per cent compounded annual return in the next eight years. At this rate, a monthly SIP of ₹40,000 will grow to ₹64 lakh in eight years. That’s the sum you can realistically expect to have when your son turns 18, at your current rate of savings.

If you use that up for his education and continue with the same SIP, even assuming a higher 15 per cent return from there, you can get to a corpus of about ₹46 lakh by the time he turns 24. If you use that up for the wedding, it will leave you with another five years to save for your younger child’s wedding. At 15 per cent rate, with ₹40,000 a month, you can end up with another ₹35 lakh over the next five years.

You will be 53 years of age when you are done with these goals, and in the remaining seven years of your career, if you continue to save ₹40,000 and invest at 15 per cent, you will be left with ₹59 lakh by the time you turn 60. But the value of money when you retire will be far lower than it is today due to inflation. At 7 per cent inflation rate, ₹59 lakh at your retirement age will be equal to just around ₹10 lakh in today’s rupees. That will be inadequate to see you though retirement.

Given this scenario, you must make your children’s education and your own retirement the top priorities at this point in time. We suggest that you invest at least ₹10,000 a month towards your retirement and ₹30,000 a month towards education for the next eight years. As your income increases over time, step up these SIPs. Once the education goal is met, increase your retirement savings and invest only the balance towards funding wedding expenses. Multi-cap equity funds such as Mirae Asset India Equity, Franklin India Focussed Equity and ICICI Pru Value Discovery are good funds to meet your needs.

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