I have worked on some planning for my twin kids education, marriage, and my retirement planning.
Below is my working:
Following are my questions:
- Am I expecting correct inflation rate?
- Am I expecting somewhat logical “Expected Return (%)” considering horizons?
- I have sufficient term plans, health insurance for my family
- I have one home loan (55 Lakh)
- The Lump sum, money which I have mentioned in the table, I would be withdrawing from PPF and discontinuing LIC Policies (Due to very low rate of interest), do you think that it would be a wise decision to take out all money from these investments and put that into various Mutual Funds for better returns? I can diversify according to my goals (Maybe in Equity or Debt Oriented Balanced Funds)?
- Do you suggest another way of diversification rather than just putting everything in Mutual Funds? Problem is, I don’t see good returns from other investment options
Thank for your kind help.
- Keep it around 8% to maximum of 10%.
- Why expected return going on increase with tenure of goal? Do you exposing too much into equity for long term goals? Keep expectation of around 10% to 12% equity and 7% to 8% from debt.
5) Why discontinuing PPF?If the goal tenure matching the maturity of PPF, then why can’t use this product as debt instrument? You can discontinue the LIC policies.
6) Debt and Equity with proper diversification is enough. In debt you can use ultra short term debt funds, FDs, RDs or PPF kind of products. However, where is your debt portfolio in above sheet? What asset allocation you did to arrive at expected returns?
Thank you for the quick response.
1. I will consider inflation as per suggestion.
2. I kept returns increasing considering long horizon, but I can keep it 11% from the balanced fund (65% Equity, 35% Debt). I hope balanced funds are good even for goals with the shorter horizon (6 years), what do you suggest?
5. Thanks for PPF, LIC suggestions. It makes sense.
6. I have not yet worked on asset allocation, but I am thinking to go with equity-oriented balanced funds (65% Equity, 35% Debt) as the horizon is long enough. What do you suggest?
2. Now it became trend of Balanced Funds. But do remember that they are also equity funds with some exposure (maximum 35%) towards debt. Hence, don’t be in the wrong belief that balanced funds mean returns will be higher.
6) Try to consider each goal separately. Then do asset allocation as per time horizon.