I am 29 and earn Rs 40,000 each month. I am about to get married soon. I have some savings in Equity shares and EPF. I invest in funds including Birla Sun Life Frontline Equity Direct, Canara Robeco Equity Diversified, HDFC Prudence, SBI Emerging Businesses, Franklin India Bluechip, Quantum Long Term Equity. Our monthly household expenses are about Rs 18,000 each month. I have insurance from HDFC ERGO Health Suraksha. I want to accumulate for post retirement life, construction of house, kids education and marriage.
Suggest a portfolio and investment plan to achieve my goals on time.
-Lohith
You demonstrate great financial maturity by listing your financial goals as you are about to get married. Having a six-month contingency saving is a good start, which you should maintain at all times. On analysing the financial goals you have stated, it is clear that given your current financial resources, it will be difficult to achieve all of them. Going by your current expenses, you will need nearly Rs 2.45 lakh monthly to maintain the same standard of living after 36 years. We have taken inflation at 7 per cent and life expectancy to be 80 years. One of the things to consider is to either rescale your goals or delay some of them. For instance, you can delay the construction of the house. Likewise, reduce your discretionary expenses so that you have more cash in hand to invest.
Do's
* Considering most of your goals are some years to go, we suggest you invest in an aggressive growth portfolio with 50 per cent exposure to mid- and small-cap funds, 40 per cent in large- and mid-cap funds, with the remaining in ultra short term debt funds
* Given your age, you should consider taking a term insurance plan once you get married. You can opt for online term plans by HDFC Life, SBI Life, Aviva or ICICI Prudential, which have a low cost online option
* Though there is no thumb rule to calculate the quantum of life insurance you need; ensure that it is adequate to take care of your dependents in your absence. Diversify your insurance and take a policy from two insurers
* You may cover your wife under same medical policy. Convert your existing policy into family floater with a five lakh cover and buy Super Top Up policy from United India Insurance to cover heavy medical bills. This will be cheaper
* Prepare a household budget once you get married to track your expenses
* You need to check your expenses and invest more to achieve your financial goals. Before planning for children, ensure you understand the incremental expenses you will need to meet once they arrive
Finally, review your portfolio once a year, invest systematically and stick to your plan
Don'ts
* Avoid direct equity investment, unless stock picks that are winners comes easy to you
* Plan for less frequent vacations, save more and invest more, especially when your current income is not enough to achieve your goals
* Stay away from debt instruments for wealth accumulation, especially when you have a long investment horizon
* Invest in the suggested portfolio and gradually switch to debt instruments as you approach your goals
* Stop investing in poorly-rated funds such as HDFC Prudence. Redeem your investment once it completes a year to save the exit load. Deploy the money into the suggested funds
* Although the NPS is a good option, it limits your equity exposure to a maximum of 50 per cent, way below what you need
This article was originally published on January 07, 2014.
Ask Value Research 
New episodes every Friday 
New Process Alert 
Seems like you've uploaded a wrong QR code. Please upload the QR code downloaded from MF Central platform.
