I am a civil engineer and run my own construction company. My monthly is Rs. 20 lakh. I am married and have a son who is 1.5 years old.
I have insurance coverage of Rs. 5 lakh. I also have mutual fund Systematic Investment Plan (SIP) of about Rs. 1 lakh per month by investing Rs. 5,000 each in 20 funds. All the funds have a 5-star rating from Value Research magazine. Initially, my total SIP was Rs. 20,000. After two years, I increased it to Rs. 1 lakh.
I have also invested Rs. 10 lakh in stocks. I have a lump-sum investment of Rs. 15 lakh in mutual funds (30 funds of Rs. 50,000 each, which is currently at a small loss). I believe I can continue these SIPs using my business income.
I also have Rs. 10 lakh in my bank account (an interest-free current account). From this, I keep aside Rs. 5 lakh for business emergencies. What should I do with the remaining Rs. 5 lakh? How many years will it take me to accumulate Rs. 10 crore through this investment approach?
– Vikas Venugopal, Kochi
Based on the information provided, a Systematic Investment Plan (SIP) of Rs. 1 lakh, plus Rs. 15 lakh in mutual funds (assuming equity funds) and Rs. 10 lakh in stocks, growing at an expected rate of 12%, could potentially grow to around Rs. 10 crore in approximately 19 years. If the expected return increases to 15%, the value could reach Rs. 10 crore in about 16.5 years, subject to standard market conditions and risks.
As for the Rs. 5 lakh in your bank account, if you feel the amount will not be needed anytime in the near future (say 3 or 5 yrs), then you may invest the same in equity oriented funds (in hybrid or large caps). You could also invest the money in low duration debt funds, in anticipation of any liquidity needs.
Could you please advise on the most suitable investment options for my family? I live in the UK with my husband and our three young children. We are both working professionals who have not yet started investing. Currently in our early 40s, we are seeking strategies to achieve financial independence through appropriate investments. Our long-term goal is to reside in our ancestral home in Kerala after a 10-year period. Thank you in advance.
– Dhanya Mathew, UK
It is prudent to begin investing as early as possible. The decision[1]making process requires a comprehensive evaluation of near-term and long-term financial needs, along with a thorough understanding of various investment instruments. Given that you have not yet started investing, we presume your accumulated savings are currently held in bank accounts, debt-oriented investments, or non-equity and non market-related financial products.
To start with you can think of investing systematically into equities through mutual funds – preferably a Flexicap or a Multicap fund. As Indian markets are currently down from their near term highs, you may also choose to invest a lumpsum amount as well.
Keep adequate amount in fixed income instruments for regular and anticipated liquidity. You can think of adding gold as well. We suggest you take expert advice from a certified financial advisor who will help you define your goals, evaluate your risk profile and plan investments accordingly.
