Personal Finance

Planning for your daughter’s wedding

Nalinakanthi V | Updated on March 04, 2018 Published on March 04, 2018

Diversifying exposure to large-caps and going for good mid-caps can pay off

Fulfilling responsibility towards children gives a great sense of happiness and relief to parents. A daughter’s wedding is a milestone in parent’s lives. But it entails significant expenditure and one needs to plan well ahead.

Jaipur-based financial services professional Pankaj Gupta wants to plan for his 17-year old daughter’s marriage, which he anticipates will take place eight years from now. “My daughter is currently in the 12th standard and plans to take up a career in finance after that”, says Gupta. According to him, the budget for the wedding at current cost is about ₹35 lakh. If we inflate that by around 7 per cent, the corpus needed by the end of the eighth year is ₹60 lakh.

Gupta’s monthly take home salary is ₹1.7 lakh. In addition, he also gets rental income of ₹20,000 from his ancestral property. The monthly family expenses amount to ₹40,000. Besides, he has a home loan outstanding of ₹30 lakh. He pays ₹60,000 as loan EMI. The property is worth ₹90 lakh.

Investments at a glance

With respect to his current investments, Gupta invests ₹40,000 every month in recurring deposit schemes run by a few banks. He has been making an additional allocation of ₹20,000 towards voluntary PF. He has also been investing ₹30,000 in equity mutual fund schemes through the systematic investment route.

This has largely been in large-cap oriented schemes — HDFC Equity Fund, HDFC Top 200 Fund and Principal Large Cap Fund.

The current investment corpus in mutual fund schemes stands at ₹10 lakh. His recurring deposit corpus is ₹35 lakh.

He has term cover provided by his employer; the sum assured is ₹2.1 crore, which is a little over 10 times his net salary. Gupta wants to mop up ₹60 lakh by 2026. His ongoing mutual fund monthly SIP of ₹30,000 should fetch him about ₹48 lakh by the end of the eighth year.

His current investment in recurring deposit earns him interest of about 7 per cent. Given that he already has significant investment in RD, he can consider reallocating a portion of it to equities, which can fetch him better returns in the long term. Of the ₹40,000 that he currently invests in RD scheme, he can allocate ₹6,000 towards equity mutual fund schemes.

Assuming that the investible amount increases by 8 per cent every year and the investments earn an annualised return of 12 per cent, he should have about ₹12 lakh by 2026.

This should help him comfortably manage his daughter’s wedding. Given that he is holding two large-cap schemes from the same fund house, he can look at diversifyng and considering other schemes that have consistently delivered healthy returns. He can also look to add some good mid-cap schemes to his portfolio.

Some other options

Among the large-cap oriented schemes, he can consider Mirae India Opportunities Fund, Kotak Select Focus Fund, Invesco India Growth Fund and Aditya Birla Sun Life Equity Fund. These schemes have delivered between 18 and 22 per cent annualised over a five-year period. In terms of mid-cap schemes, Gupta can consider Mirae Asset Emerging Bluechip Fund, Principal Emerging Bluechip, Canara Robeco Emerging Equities and L&T Midcap. These schemes have managed to deliver 28-30 per cent annualised over a five-year period and have had a consistent performance track record.

The writer is co-founder, RANA Investment Advisors

Read further by subscribing to

The Hindu Businessline

What You'll Get

  • Web + Mobile

    Access exclusive content of the Hindu Businessline across desktops, tablet and mobile device.

  • Exclusive portfolio stories and investment advice

    Gain exclusive market insights from the Hindu Businessline's research desk.

  • Ad free experience

    Experience cleaner site with zero ads and faster load times.

  • Personalised dashboard

    Customize your preference and get a personalized recommendation of stories based on your intrest.

This article is closed for comments.
Please Email the Editor