Financial Planning & Portfolio review for long term goal achievements

POSTED BY Saif ON February 8, 2013 6:48 pm COMMENTS (7)

Hello JagoInvestor forum Experts,

Please help me with your suggestions, am I going on the right track to achieve my goals or should I need to change in my investment portfolio.

I am 29 yrs old & getting 42K monthly take home after all deductions, I am the only salaried person in my family & my wife is a home maker. Parents are not depending on me.

Expenses:Monthly living expenses – 18K(including rent) & Consumer durable Loan – 10K(0% interest & will end by Sep 2013)

Investments till date:

Fixed deposits – 7Lakhs

Mutual funds – 40K in HDFC TAX Saving MF invested in 2012

PPF – 10K started this year Jan 2013

Tax saving bonds – 65K(NSC – Maturity – Mar-2014)

Tax Savings FD – 1.8Lakhs(In Banks – 5yrs lockin – will get in 2017-2018)

Gold – 11Lakhs

Contingency fund for 6months – 1Lakh(in bank Flexible Fixed deposit)

Insurance Coverage:

Term Insurance – 50Lakhs from Aviva paying 4628/Annum

Medical Insurance – 2 Lakhs(For both Myself & spouse)

Shortterm Goals:

Planning to buy a house/Flat within 30Lakhs by Sep2013(planning to pay 7L FD amount as a down payment)

Longterm Goals:

Preclosing Home loan after 8years – 18Lakhs(After 8yrs Outstanding principal Amount)

Child higher Education – Current value is 15Lakhs(After 15Years)

Monthly income post retirement (after 26Years)

I am having 14K surplus amount to invest till September 2013 & After purchasing a flat i.e. Sep 2013, I will be having 15K surplus(48K(Expected take home sal after increment from Apr)-23K(Home Loan EMI)-10k(Monthly Expenses)

Below are my current plans to invest:

Planning to take 1 more term Insurance – 50L more(Paying 4.5K/Annum)

Planning for Medical Insurance – 2L more(Paying Around 3.5K/Annum)

DSPBR Top 100 Equity MF SIP – 4K/Month(For longterm – 20years)

HDFC Top 200 Equity MF SIP – 4K/Month(For longterm – 20years)

HDFC Tax Saving SIP’s – 4K/month(will be paying every Year for Tax savings purpose)

PPF Contribution – 2K/Month

Thanks & Regards, SP Pathan


7 replies on this article “Financial Planning & Portfolio review for long term goal achievements”

  1. Dear S P Pathan, first of all please accept my congratulations for the clarity of your thoughts. From your detailed write up, it seems you are very much clear on various things. It seems, you are already a Jago(ed)Investor. 🙂

    If you are asking for repayment of your home loan in next 8Y or so, my take ‘ll be to go for less home loan already. Please liquidate at least 50% of your current gold holdings. so you w’d have around 12L Rs. in your hand (7L FD & 5L gold). So your loan requirement ‘ll come down to 18L Rs. from original 23L Rs. & accordingly the issue as dear Ramesh is indicating for EMI as not more than 30% of mly income ‘ll also be sorted out.

    Why you are increasing Term cover for only 50L Rs. In my personal opinion, your total term cover should be 15 times of your yly income + loan liability. @ 50K gross mly income, your yly income is in the range of 6-6.5L Rs. so your cover requirement is around 1.25Cr.

    Please think over it.

    80c related issue is already discussed by dear FFc & dear Ramesh, hence not elaborating.



    1. SP Pathan says:

      Dear Ashal,

      Thanks for your appreciation. I would like to thank you for your valuable suggestions. I am planning to increase my term cover 25Lakhs more after purchasing house/flat. Is that fine? or suggest me on the same.

      1. Dear S P pathan, instead of keeping too many policies of small sum assured, please opt for a large sum assured.



  2. Ramesh says:

    My thoughts:
    1. Increase your contingency fund (18+10 * 6= so around 2 lakhs should be there presently, and after home loan, much more than that). Mostly get that amount from the Gold value.
    2. Insurances are adequate for current needs. But when you will take the home loan, then you will need the additional cover. Wait till then.
    3. Do not get into any more Tax saving bonds or Tax saving FDs. Either use PPF or the HDFC Tax savers.
    4. Additionally, if you purchase home (which I think, you will have a ready-to-move in house), then you will need to think how much Principal you are paying yearly, and that part will be considered in 80C. Provided current laws are not tinkered much. Then the PPF contribution has to be tackled that way. The minimum of 500 yearly has still to be paid.
    5. As FFC told, gold is quite a big chunk of your portfolio. You should probably decrease that exposure.
    6. The funds of DSP Top 100, HDFC Top 200 and HDFC Taxsaver are very good. Just continue and tweak the values as need be. No need to change the funds!! If possible, shift to Direct funds over a period of 1 year.
    7. Do not think of closing home loan. Think after 8 years, you would have paid 22 lakhs (23k*12*8) for a principal payment of 5 lakhs. So the bank got its lion share of 17 lakhs out of the total 30lakhs interest amount within that period. My opinion is just let the bank wait for its amount. Inflation will make sure, the later payments will be doubly beneficial for you rather than a prepayment. Do think about this.

    Overall, I think you have a pretty good idea about things.

    One more thing, with a salary of 48k, would an EMI of 23k be a good thing for you within next 2-3 years (Keep the EMIs below 30%). You must think about a larger downpayment, than a 8 year pre-payment anyways.

    1. SP Pathan says:

      Dear Ramesh,

      Appreciate your valuable suggestions on increasing my contingency fund to 2lakhs.

  3. You have most things in place.

    You do have way too much gold. You can liquidate some of it and align it with your goals. You can either invest for your long term goals or you can increase the down payment for your house to reduce the EMI

    Please use this goal optimizer to find out how much you need to save for your goals:

    There is a comprehensive child planner in the above which allows you to exactly compute your insurance amt and amt need for college education etc.

    You MFs are good. Only disadvantage with ELSS sips is the lock-in period. If need these for your 80C them make a few payments over a few months instead of a SIP. This makes exiting easier if the fund under-performs. HDFC tax saver itself is a an example of an under-performing fund! You might want to stop that SIP and invest in another fund.
    Can. Robeco tax saver is a good one

    1. SP Pathan says:

      Dear FFC,

      Thanks for your valuable suggestions. As suggested, i will liquidate gold atleast 50% to increase my home loan down payment.

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