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How to plan my life financial goals

I am 23 years old and would like to start my SIP investment. I earn 50,000 per month post tax and My expenses are 10,000 per month. I already have 1 Crore term plan of HDFC Life Insurance and I do RD of 5,000 per month. I want to take full benefit of Sec 80C by investing 12,000-13,000 per month in ELSS funds and my balance investments of 12-13,000 would be in other mutual funds. Kindly suggest which funds to choose. I can increase the SIP by 10-15% every year as well based on my increase in income. I have 5 different goals:- Retirement - 15 Crores (37 years from Now), Marriage - 15 Lakhs (4 years from Now), Car - 10 Lakhs (10 years from Now), Children Education - 2 Crores (25 years from Now), Home - 10 Crore (25 years from Now)?

Apr 27, 2017 by Ankit Shah, Mumbai  |   Mutual Fund

Great to have received your query and delighted to note that you want to start investing in mutual funds from a very early age of 23! We are also glad to note that from a very young age you want to plan for your different life goals. As you are starting from an early age, you will immensely benefit from power of compounding and thus reach your goals easily. Let us now see how much you need to save in order to reach your different life goals.

1. Retirement corpus after 37 years - Rs 15 Crores - Assuming annual return on 12.5%, and also that you can increase your investment by 10% per annum, you can start with monthly SIP of Rs 9,000 and keep increasing by Rs 900 per month every year after 12month.

Corpus for Home after 25 years - Rs 10 Crores - Assuming annual return on 12.5%, and also that you can increase your investment by 10% per annum, you can start with monthly SIP of Rs 29,000.

Child higher education corpus after 25 years - Rs 2 Crores - Assuming annual return on 12.5%, and also that you can increase your investment by 10% per annum, you can start with monthly SIP of Rs 5,900.

Purchase of car after 10 years - Cost Rs 10 Lakhs - You need to save Rs 3,200 per month and increase the monthly contribution by 10% every year (returns assumed at 12.5%)

Your marriage goal after 4 years - Cost Rs 15 Lakhs - You need to save Rs 23,000 per month assuming annual return of 12.5%.

As you can see, your current investing surplus does not support the monthly requirements for saving for your long term future goals. We think, you should first plant to achieve the goal of your marriage after 4 years and then focus on other goals.

While investing for your marriage goal, you can allocate part of it, as you mentioned, into ELSS funds and rest in diversified equity funds.

As you can invest upto Rs. 26,000 per month and you need to save Rs 23,000 for the marriage goal, you can invest the remaining Rs 3,000 through monthly SIP into diversified equity funds. This will help you meeting your another goal of Rs 10 Lakhs for buying a car after 10 years

You have done the right thing by taking a life term cover of Rs 1 Crore. Increase the cover gradually in future when you are married and have liabilities (it should be around 20 times your annual income).

You are investing Rs 5,000 in recurring deposits which is not a very wise investment. If you can allocate that amount to mutual fund SIPs, you can actually reach part of your long term goal of your child's higher education.

Hope the above gives you a broad idea as to how you should plan your investments according to the priorities of the respective goals

You may like to explore this calculators

Goal Based Top Up SIP

Become A Crorepati

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