How can I turn my portfolio into a robust financial plan?
I am 41 years old and work at a PSU bank, earning a gross monthly pay of ₹1.8 lakh. I reside in a company-leased accommodation and receive around ₹30,000 per month in perks. Medical expenses for my family are fully reimbursed. Our monthly expenses total approximately ₹25,000. My financial assets include: bank fixed deposit (FD) of ₹30 lakh, savings account balance of ₹2.5 lakh, balance in US checking account of $65,000, investment in shares and sovereign gold bond worth ₹10 lakh, investment in mutual funds worth ₹21.57 lakh, systematic investment plans (SIPs) of ₹5,000 in SBI Consumption Opportunity, ₹10,000 in SBI Small Cap, ₹2,000 in SBI Magnum Global Fund, ₹1,000 in focused equity), and have ₹16 lakh in public provident fund (PPF) . I own one apartment (possession pending) valued at ₹50 lakh, and another (yielding monthly rental of ₹15,000) valued at ₹65 lakh. I have a home loan of ₹18 lakh and a ₹10 lakh car loan. I have insurance coverage of ₹1 crore with a term plan. How can I invest for a robust financial plan?
—Name withheld on request
Currently, your cash and investments total ₹2.2 crore. Out of this, ₹97 lakh is invested in real estate and ₹10 lakh is the car loan outstanding. This leaves you with ₹1.23 crore.
First, you must liquidate the US checking account balance and get it back to India. This amount, around ₹52 lakh when converted to INR, is a significant portion of your savings. These funds would yield very low returns if kept idle in the checking account.
You are currently investing ₹18,000 through SIPs every month. This can be scaled up to ₹40,000 or more. We would suggest initiating investment in schemes that can provide exposure to large caps and mid caps. For exposure to large caps, we would suggest investing in Nifty 50 Index Funds.
PPF is a good avenue to get high post-tax returns and we would suggest you invest till the investment limit of ₹1.5 lakh per annum. You can also consider exploring opportunities like corporate FDs or corporate bonds to give you a higher return as compared to bank FDs. You may be able to get 2-4% higher pre-tax returns at a slightly higher risk.
We also suggest you maintain an emergency corpus equivalent to six months of your salary. This fund can be kept in liquid or ultra short mutual funds.
It is recommended that one must have a term plan that is around 15 times your current income.
It is important to note that these recommendations are based on certain assumptions and may need adjustment according to your risk appetite and financial goals.
Vijay Kuppa is chief executive officer of InCred Money (formerly Orowealth).
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Updated: 24 Aug 2023, 09:36 PM IST
