How to strategically invest for your long-term financial goals?
—Name withheld on request Everyone who earns and saves should have a financial and investment plan. The key is to have a structure for your financial goals and invest based on these goals. Based on your query, there are three goals, i.e., your daughter’s education, buying a new home and retirement.
As all your goals are long term, you can consider moving around ₹12 lakh out of FDs into equity mutual funds. The rest of the money in FDs can continue to be your contingency fund. The reason for suggesting equity mutual funds is to ensure that your money is managed by experienced and professional fund managers.
Mutual funds as investment avenue works for investors across all ages, risk appetite and investment experience. Hence, you can certainly consider mutual funds in your overall investment plan without much concern. Coming to your goals, if you invest ₹10 lakh from fixed deposits in equity mutual funds for the next 5 years and assume an average return of 12% per annum (p.a.) then you will have approximately ₹17.62 lakh for buying your home.
For the remaining ₹2.38 lakh. you can invest ₹3,000 every month through systematic investment plans (SIPs) for 5 years. For your daughter’s education, if we assume that you want to accumulate a corpus of ₹1 crore, you can achieve this goal by doing an SIP of ₹21,000 for the coming 15 years.
Similarly, if we assume your monthly expenses to be ₹75,000 and if you plan to retire at the age of 58, you will need approximately ₹6.88 crore at retirement which you can use after retirement for 27 years, i.e., up to the age of 85. To build this corpus for your retirement, you need to invest ₹46,000 every month for the next 24 years. We have not factored in your EPF balance and its future value as
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