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Can you please check my Mutual Fund SIPs and lumpsum investments and if they are aligned with my goal

My age is 45 years & investment is as following; SIP: 1. HDFC Midcap Opportunity Fund {G}: Rs. 5000, 2. ICICI Pru Focus Blue Chip {G}: Rs. 5000, 3. ICICI Pru Value Discovery Fund {G}: Rs. 5000, 4. UTI Equity {G}: Rs. 5000, 5. UTI Midcap {G}: Rs. 5000, 6. Birla Sunlife Equity {G} Rs. 5000, 7. Birla Sunlife MNC {G} Rs. 5000, 8. Reliance Equity Opportunity {G} Rs. 5000, 9. DSP BlackRock Micro Cap {G} Rs. 2000. All SIP's are from last one year. Lumpsum Rs. 250000 in Birla Sunlife Frontline Equity {G} since last 6 months. PPF : Rs. 25000 per year. Insurance: 35 Lakhs {Sum assured}. My targets: 1. Rs. 10 Lakhs in June 2018 for child education? 2. Rs. 15 Lakhs in 2021 for second child education? 3. Rs. 30 Lakhs for their marriage in 2026? 4. Rs. 1 Crore in 2027 for retirement?

Aug 9, 2016 by Sharad Gahandule, Manmad  |   Mutual Fund

In a few lines you have put up a big query which we would have answered in a better way if we had few more details.

Anyways, following is our assessment of your current investments and if these are adequate to meet your financial goals.

1. You are doing a SIP for Rs. 42,000 per month since last one year and we can assume that you will continue this till you retire. Since you are retiring in 2027 we have assumed it will continue till 2016. In 11 years your SIP corpus can grow upto Rs. 1.41 Crores at an assumed growth rate of 15%.

2. But, in between you require 10 Lakhs in 2018 for child education. Therefore, you can withdraw Rs. 10 Lakhs from the SIP corpus in 2018. Assuming returns @ 15% your SIP corpus after 4 years (from the date of start) should be around Rs. 27 Lakhs.

3. Again in 2021, you require another Rs. 15 Lakhs for children education. Therefore, again you can withdraw this amount from the accumulated SIP corpus.

4. in the year 2026 you require another Rs. 30 Lakhs for your child’s marriage. This amount can again be funded from your SIP corpus. However, please note that all these are based on ideal market situation and also on the assumed rate of return of 15%. But in case, the markets are not good and you are unable to fund these goals through SIP corpus then you should have separate provision for these. As we wrote earlier we do not have the complete details, therefore, based on assumptions only we can suggest you the way forward.

5. Since you will be withdrawing amounts if Rs. 10 Lakhs, 15 Lakhs and 30 Lakhs for meeting child’s education and marriage goals respectively, you will be left with 56 Lakhs for your retirement corpus. Since you are withdrawing the amounts in between the SIP period you are losing heavily on compounding and thus you will get around 28-30 Lakhs less than the SIP corpus amount we mentioned at the beginning of the post (without considering the withdrawals)

6. Since you are now left with Rs. 56 Lakhs for your retirement corpus, let us now look how much you have earned from your PPF deposit. Since you are depositing Rs. 25,000 per month and assuming returns @8% you will be getting approx from 87 Lakhs from PPF maturity. With this, therefore, your retirement corpus of 1 Crore is achieved. We have assumed that the maturity of the PPF account coincides with your retirement.

7. your investment of Rs. 250,000 should become Rs. 11.63 Lakhs in 11 years when you are retiring, assuming a return of 15%!

Based on some simple inputs received from you, we have explained how your financial goals can be met provided the markets are doing well and you have no other emergency expenses to meet etc. Having said that, financial planning is vast topic and it is better done through a financial planner. You should share complete details with him and get your financial plan made. You should also look at having adequate health and life cover to avoid any unpleasant circumstances.

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