Carry A Diversified Investment Portfolio

Soundarya, Chennai, soundaryanarayanan@yahoo.com

I am a 30-year-old married woman with a year-and-a-half-old son. I need advice on Public Provident Fund (PPF) accounts. I am planning to open three PPF accounts; in my husband, son and my name. My husband and my accounts are for retirement funds. My son’s account will be used for his higher education. Is this a wise decision?

Investing in PPF is undoubtedly a wise decision keeping long-term investment and other features in mind. I am sure you are aware of the 15-year lock-in period. However, you may avail of a loan, and the maturity limit is tax-free. The interest rates are declared by the government every quarter, and it has been reduced to 7.1 per cent. I would also suggest planning for your son’s education and your retirement and then considering an investment in ELSS. Mutual funds also offer tax savings. However, there is a lock-in period of three years, and returns are higher. The risk involved can be mitigated by long-term investment. Spread your investment in different asset classes and consult a financial planner.

Hina Shah, Certified Financial PlannerCM & Coach, LUHEM

Yogesh Kumar Singh, Raebareli rucyog9491@gmail.com

I am investing in six mutual funds, and my monthly investment is Rs 9,500. These are for the long-term, and I have been investing for the last three years. Is it possible to achieve Rs 1 crore in the next ten years?

With your present monthly investment of Rs 9,500, you will be able to accumulate around Rs 34.5 lakh at 12 per cent annualised return. You will need to invest in equity funds through an SIP of Rs 38,000 to accumulate Rs 1 crore after 10 years at 12 per cent annualised return.

Suhel Chander, Certified Financial PlannerCM, Handholding Financials

Raghavendra, Bengaluru raagomi@gmail.com

I am 39 years old. My monthly income is Rs 32,000, and my monthly expense is Rs 18,000. I would request you to advice on the funds I can add to my portfolio. My investments are in ICICI Bluechip Regular Growth 2000-2030 for children’s education, SBI Focused Equity Regular Growth 3000-2031 and ICICI Pru Equity & Debt Regular Growth 3000-2030. Also, please suggest a retirement plan with a 20 years horizon.

Investments in equity mutual funds are always for the long term, depending on your goals and risk tolerance. The information given here is not sufficient to suggest any change. It should be reviewed yearly or every two to three years, depending upon the goal term. All funds in your portfolio have performed fairly well in the past. However, one should be aware of the risk versus return matrix of a fund compared to its peers and benchmarks. If you have been investing in this fund for more than three to five years, and its growth is not in line with your required rate of return, then it needs to change.

After considering the same expense and your retirement age (as per calculation), your first-month retirement expenses would be Rs 90,600 at an average 8 per cent inflation. Your return on investment will be 12 per cent. In that case, you have to start investing with Rs 11,200 per month in diversified equity mutual funds with some exposure in the multi-cap fund. Since you have 20 years, you can also consider a mix of mid and small-cap funds. But keep in mind the risks versus returns matrix of the funds and simultaneously keep increasing your SIP (10 per cent every year) to accumulate a sufficient retirement kitty. Get in touch with a certified financial planner for customised planning and review.

Hina Shah, Certified Financial PlannerCM & Coach, LUHEM