Hello everyone,
I am a 42 years male with a 38 year old wife and a 6 month baby. I earn Rs 1,50,000 per month and I have a salary structure with a 10% cut (retainer basis).
My current investments are:
PPF for 15 years= 1.5 lakh per year
Sukanya Samriddhi Yojana = Rs 1.5 lakh per year
Health insurance = Rs 32,000 per year
LICs worth Rs 30,000 per year.
I am about to start investing around Rs 40 lakh which is there in my bank account. I need to save money for my retirement, child’s education (bachelor’s degree) and her marriage.
I want to start investing in two FDs for Rs 30 lakh in total and the rest Rs 10 lakh in mutual funds. I want your advice on this or any other combination which you might suggest.
Thank you in advance.
Ram
Absolutely great idea to park money in FDs. This should be the foundation for investment. With regard to placing it in two deposit. I would rather spread it to three or more as you never know when emergency may creep in. In such scenario, you could break one smaller value FD leaving the others. Only you will know how you wish to spread the amount. Do check with tax consultant regarding this
As small finance Bank relatively offer higher interest rate, you could park 5 lakh each in such bank (but note these banks should be listed and should be covered by DICGC)
Look at your tax liability and if needed you can put money in your wife name so that tax liability gets spread and accordingly sign the 15G form so no TDS is deducted. Do note to put nominee.
You need to have FD in your portfolio. This is a must. How much and How little is upto you. Also consider a small amount as RD for your lil one. You will be surprised at the amount on maturity - of course RD should be in wife name - wonder if they open account for infant.
All the very best. Feels nice when someone out there thinks of FDs.
Disclaimer: The above are my personal choices so please do your own diligence.
There is atleast a few additional percentage-points of return available in GSECs / SDLs / TBills.
The main catch being that
you are potentially trading away liquidity (until maturity of these sovereign bonds)
in exchange for the additional returns.
Also, the periodic income from these bonds sets up a guaranteed income stream,
that in turn enables one to take additional risk in other aspects, (eg. invest a larger fraction of one’s salary/business profits into a SIP / Lumpsum investments.)
Will these not offset the commission payable in buying the GSEC. Also he need to buy from secondary market and this may have some premium. Is this correct or am I wrong.
Periodic Income - FD also gives periodic income if you opt for quarterly interest payout. Use this payout to open a RD.
In case FD interest rate increase in future, after two years or so, close and re open. yeah, there will be small penality.
You can get an OD against a FD. Use this for emergency purposes.
Close FD in a jiffy provided it is opened online and use the cash in case of emergency.
Yes, the ideal scenario is to purchase them at a discount.
While it is not trivial to do so, it is not that difficult either.
Patiently monitoring NSE/BSE
either manually or using API-automation or terminal software
provides crores of sovereign bonds at discount to their face-value.
Also, here are some of the common opportunities with bonds, that pop-up all the time…
of course, if you can do simple calculation with simple assumptions that say FD will give 7% and MF will give 12% in long duration. Factor taxes etc and see if with these strategy you can reach all your goals with some margin, if yes you dont have to worry about goal planning etc as you have simplest strategy.
Other way to approach your query is goal planning.
Typically its most difficult part to define goals and you have articulated important goals. So its very good start.
you will need to define two things
Goals
For every goal
a. when you will need money
b. how much amount you will need at that time. If you do not know future value, you will need to know at least todays value. you can assume 6-8% inflation for your goals. for education assume 10-12% inflation.
2 ongoing investment ability
a. how much money you would be investing every month
b. how many years you can keep on adding in investment kitty
once first point (goal amount and timeline) is defined , You should choose combination of mutual fund depending on duration… When you are 5-7 years away from goal you should start shifting money in safer haven like FD gradually.
ideally you shouldn’t be putting large lumpsump (single instance) of money in equity only funds and shouldn’t be waiting for last moment to take out gains from equity funds.
All this can look bit complex if you are not well versed terminology , asset classes and expected returns.
There are multiple ways by which you can overcome this difficulty.
Educated yourself , say personal finance /mutual funds section in zerodha varisity
you become proficient
its timeconsuming, and if you don not grasp well, it might be difficult to course correct.
Connect with mutual fund distributor and invest with hime
Till the time you are invested he/she is there to plan/replan and discus. Change investment if your goal or investment ability changes.
trail commission
Connect with Financial advisor and get one time plan
only once upfront commission.
typically its one time contract, After few year if you have any question or new goals you
need to restart the process.
