Jayant R. Pai CFP and Head – Products, PPFAS Mutual Fund replies: I assume you require Rs 1 crore each (pre-tax) the day your daughters turn 18 and you turn 60. I am further assuming that the Rs 10 lakh has been kept side for purposes like emergencies and home loan prepayment. PPF is also overlooked, owing to lack of information regarding the maturity date. Current SIPs of Rs 10,000 per month since 2015 are assumed to be in multi-cap funds, have earned a return of 8% and are devoted solely for your retirement. The amount accumulated so far is Rs 7.40 lakh. This lump sum amount will increase to Rs 43.45 lakh (at 8% pre-tax) by time you turn 60.
You will still have to accumulate around Rs 57 lakh. Assuming you earn a return of 8% annually pre-tax, you will have to invest Rs 7,200 per month. Similarly, for your elder daughter, the monthly SIP amount will be Rs 25,700 for the next 16 years, and for your younger daughter it will be Rs 23,100 per month. Both are assumed to earn 8% per annum pre tax. Hence, the total outgo for all three goals will amount to Rs 56,000 per month until their respective target dates. Scheme selection and portfolio reviews should be undertaken in consultation with your financial adviser.
I am a 28-year-old salaried individual. I have Rs 2-3 lakh already saved and can save Rs 20,000 a month. How should I invest the same if my time horizon is both long and short term?
Naveen Kukreja CEO and Co-Founder, Paisabazaar.com replies: Invest in ultra-short term debt funds to achieve your short-term financial goals. These funds usually generate higher returns than bank FDs and do not charge any exit loads. Opt for funds having maximum exposure to sovereign, quasi-sovereign and AAA rated bonds. You can consider direct plans of Aditya Birla Sun Life Savings Fund, HDFC Ultra Short Term Fund and SBI Magnum Ultra Short Duration Fund.
As equity as an asset class beats fixed income asset class and inflation by a wide margin over the long term, invest in equity funds to achieve your long-term goals. Start your journey through SIPs in large-cap funds. These funds are less volatile and more capable of withstanding steep market downturns than other equity fund categories. Consider any of these funds —Axis Bluechip, Mirae Asset Large Cap, ICICI Prudential Bluechip or IDFC Large Cap Fund.