Your Financial Plan







I am 32. My wife and I are expecting our first child shortly. Of late, I have been parking all my money in fixed deposits. What is the best investment strategy to meet my goals?

Parthiban

For wealth creation, it is paramount to have a financial plan and prudent asset allocation. Since most of your goals are long term, start with an asset allocation of 50:40:10 in equity, debt and gold. As you understand the equity market better you can step up your allocation.

Also, your investments do not match your sizeable monthly household earnings surplus. And rather than leave the money in savings account, you can invest in arbitrage funds. They are tax efficient and have potential to earn better returns compared with your fixed deposits.

Education/Marriage: At times it may appear too early to plan for higher education or marriage but savings are always good. After 18 years, the present value of ₹20 lakh you have set as the goal for education will be ₹67.5 lakh, assuming 7 per cent inflation. You must invest a monthly sum of ₹10,000 for the next 18 years, assuming the portfolio delivers 11 per cent return.The goal of ₹20 lakh for marriage works out to ₹1 crore after 24 years. Invest ₹7,250 a month, with average return of 11 per cent per year towards this goal.

Retirement: The present monthly expenses of ₹25,000, if inflated at 7 per cent, will require a corpus of ₹4.4 crore after 28 years. You can build it by investing ₹19,700 monthly. The amount includes your EPF investments.

Buy a term insurance for ₹1.5 crore and a cover of ₹1 crore for your wife.





The writer is a financial planner and founder of myassetsconsolidation.com. Send your queries to blinefp@gmail.com

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