Pls guide

POSTED BY prabhakaran prabha ON January 17, 2013 2:30 pm COMMENTS (10)

Hi Friends,

While going thru the various questions asked in this blog I understood that how little my investment is and how late it is started! It is unfortunate that certain things / reasons behind that delay which was beyond my control. However, I hope, with your guidance I can do it in a better way at least now on. Hope you all will give your ideas if possible.

I have two daughters of ages 16 and 12. I am 46 now.  For their education and marriage (not even think abt my retirement)I have started 6 Mutual Funds  SIPs (a) Large Cap : Rs 5000/- pm (3 funds) (B)Small & mid : Rs 1000/- (C) Diversified Equity : Rs 1000/- and (D) Balanced fund : Rs 1000/-SIP started since 2011.  (F) Also, Rs 5000/-pm remitting to PPF & current PPF bal is Rs 3 lac. (g)RD with bank @ Rs 2000/- pm and FD around 75000/- (h) another 75000/- is expected to be received from an LIC ULIP after March 2013(it is paid up now). Have a housing loan 7 years ago for 15 yrs tenure. EMI Rs 5600/-. After all this payments plus other day2day expenses, I can see only little in my salary a/c.

Now my doubts are listed below.

a) Exp for my 1st daughter’s education and marriage are not very far from now.  For her education I am planning to take 40% from my income and 60% from edu loan. But for her marriage (after 7 years) min 15 lac needed  at present value, then how much should I invest in mf & when should I shift the amt from Mf to bank considering the risk factor?

b)For my 2nd daughter’s education also, planned as above. For her marriage which is exptd. after 11 years. How much I should invest apart from the existing mf? & in which fund?

c) I don’t have any debt fund-SIPs in my protf. Do you think I am taking risk at this age investing in MF- equity? If so, what kind of investment can I follow to attain my goal? Pls suggest

d) My Co gives med. Claims to the family.  have a term insurance for Rs 10 lac for which I paid Rs 8250/- per year . Since the age is 46, amt of premium is high. I know I need min 50 lac term policy but that will be costly and not affordable at this time.

10 replies on this article “Pls guide”

  1. Dear Prabhakaran, mail acknowledged.

    Thanks

    Ashal

  2. Dear Prabhakaran, as already discussed by dear FFC, first of all please quantify your each goal. Regarding the education related expenses of elder D’ter, time is not there so Eq. MFs for this goal are not suitable. I w’d prefer MIPs.

    For all other goals of more than 10Y time frame, you can easily slip into Eq. mode.

    Please update with your views.

    In case you are not comfortable to disclose some personal things, you have the option to contact dear FFC or me over personal e-mails. This I’m saying to keep your personal data away from others.

    Thanks

    Ashal

    1. prabhakaran prabha says:

      Dear Ahal , Thanks for your help. A mail has been sent to FFC and you. pls reply when you are free. Thank You

  3. Dear Prabhakarn, do you really need 15K Rs. grand to spend on marriage of your elder D’ter & similar amount for y’ger one? With all due respect to you & your family, what ‘ll you say if a good education provided by you to your d’ter, she asks for your permission to marry a boy of her choice with almost nil expenses towards lavish marriage parties?

    Please ponder over this for a while. I’m not saying that you should not save for the marriage of your d’ters, all I’m saying is to give a different thought also.

    In my personal opinion, your own retirement should be your top priority & education of kids after that & marriage at last, in that order.

    I’m, ready to discuss more if you permit.

    Thanks

    Ashal

    1. prabhakaran prabha says:

      Hi Ashal

      I like your advice. Of course I agree with you that education is to be the prime important. If you think the money meant for dowry, no, i am against that. But I have to anticipate the coming expenses well in advance as a father, though for my case, it is late unfortunately :). Welcome for further discussion and give some tips like FFC has just given so that I can modify wherever necessitated.
      NB: I had the entire responsibly of my 3 younger sisters and by the time I came out of liabilities in connection with their marriages and all, I was 40, that is what I said ‘delayed due to reasons beyond by control’ If you don’t mind, pls look into the given data and give if you have some better ideas. Because, many things you experienced people are discussed is not followed fully but of course helping a lot to improve. If you need any further details which not mentioned above, pls advice. Thanks

  4. You could use income funds and MIPS as long term debt instruments.
    Use a website like Value Research Online to choose debt funds with 4-5 star rating

    As your goal approaches you can shift from existing diversified equity funds into your existing balanced fund first and then into pure debt instruments about 2 years before your goal

    If your initial funds are good performers with decent track record then you can use that for all your goals

    1. prabhakaran prabha says:

      Hi FFC : Thanks for your quick response. I failed to get the specific figure of monthly investment for each goal for 7 year and 11 year but I will try again with your calculator. I will take your advice for long term debt funds and equity in the ratio of 30-70 for 11 year goal. What % for 7 year goal ie equity & Balanced fund?
      Existing funds are below: Hope they are good.
      DSP BlackRock Top 100 Equity Fund – Regular plan- Gr @ Rs 1000
      ICICI P1191 Focused Bluechip Equity Retail Gro @ Rs 3000
      HDFC TOP 200 GROWTH @ Rs 1000/-
      ICICI PDFG Discovery Growth @ Rs 1000/-
      HDFC EQUITY FUND GROWTH @ Rs 1000/-
      HDFC PRUDENCE FUND GROWTH @ Rs 1000/-
      Net worth of above MF till date: Rs 1.98 lac
      Said PPF started 6 years ago.

      1. Dear Mr. Prabhakaran,

        If you have problems with the calculation please send me a mail to
        freefincal [AT] gmail.com

        Your funds are good.

        For a seven year goal I think you can just invest in HFDC Prudence of balanced and
        increase your investment in ICICI Pru Focused Bluechip Equity. This will initially take care of the debt component. After a couple of years just invest in the balanced fund after a couple of more years later switch to a debt fund.

        As Ashal has pointed out please do consider reducing marriage costs. This will allow you to save more for other goals

        1. prabhakaran prabha says:

          Dear FFC , as advised a mail has been sent. Pls help me calculate when you are free.

  5. First you need to use a goal planner for all your goals including your retirement and determine the amount to be invested. You could use this to calculate:

    http://freefincal.wordpress.com/goal-planning/optimize-your-goal-investment-amount/

    For a 7 year goal invest mostly in large cap and balanced funds. Get out of equity at least two years before goal.
    This is true for a 11 year goal but you can take a little more risk and invest in small and mid-cap funds with a total equity % of about 60-70% and the rest in debt funds

    You have a PPF acc which is good. hope you have checked if the maturity date matches with the goal

    Instead of RD use debt mutual funds.
    Age of goal is more important for deciding about equity % than age of individual

    Try and get more term insurance is possible

    Avoid taking any amount from your EPF for your childrens education. If there is no other option take an educational loan to the max extent possible

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