Age -32

Monthly Income - 2.5 Lac Cash and 35K PF deposit by Company, 4 Lac Annual Bonus

Single earner in Family

Monthly SIP -1.1 LAC

Total Corpus - 1.6 Cr as below
Equity - 45 Lac
MF- 16 Lac
FD - 38 Lac
EPF - 18 Lac
Cash & Bank Balance- 26 Lac
Gold, ESOP etc - 15 Lac

Question 1 - How i am Doing Financially?

Question 2 - I want to retire by 40 with 8 Cr Corpus. Will Above Investments Will it Work?

Question 3 - Should I Move My FD & Cash and Bank Balance to Mutual Funds like BAF?

likesmart
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Q1 - You are going great from my POV, but than against everyone where will be looking at this from their own lense so only you can determine this.

Q2 - 1.1L monthly sip should reach 2.15 cr if it compounds annually at 12% for the next 9 years, your equity will be worth 2 Cr at 18% CAGR, MF will be worth 45L, FD worth 65L, EPF worth 36L. So around 6-7Cr unless your ESOP vecome worth 4x.

If you want to reach 8cr, maybe move some of the money in cash and fd into equity or some riskier asset class.

Q3 - Keep 6 month to 1 year of your monthly expenses as reserve money in bank as fd or in liquid fund. Rest you can move to debt fund or MF.

I'll suggest you to keep some money (30% ideally) in debt fund to hedge your profolio against market volatility.


Hope it helps

Thank you so much for just detailed explanation. Just two questions did you factored 35K pf deposit by company in calculation? Plus why Equity increase at 18% and MF at 12%?

like

Yes.. I have considered EPF...

And regarding higher return of equity, I am assuming since you are picking them with efforts (reaserch) , they should give you a higher rate of return than MF.

MF traditionally don't have a enough wiggling space due to high AUM, but you do so you can grab opportunities quickly...

Question 1: How am I doing financially?

ANS : Based on the information provided, here's an overview of your financial status:
1. Income: Your monthly income is 2.85 lac (2.5 lac cash + 35k PF deposit). Additionally, you receive a 4 lac annual bonus.
2. Savings and Investments:
o Equity: 45 lac
o Mutual Funds: 16 lac
o Fixed Deposits: 38 lac
o EPF: 18 lac
o Cash & Bank Balance: 26 lac
o Gold, ESOP, etc.: 15 lac
o Total Corpus: 1.6 crore
3. SIP: You are investing 1.1 lac monthly in SIPs.
Assessment:
• You have a substantial corpus of 1.6 crore at the age of 32.
• Your savings rate and investment in SIPs indicate a strong commitment to building your financial future.
• Your diverse portfolio, including equity, mutual funds, fixed deposits, EPF, and other assets, provides a good balance.

Question 2: Will the above investments allow me to retire by 40 with an 8 crore corpus?

ANS : To determine if you can reach your goal, let's make some assumptions and calculations:
1. Current Corpus: 1.6 crore
2. Monthly SIP: 1.1 lac
3. Annual Investment Return: Let's assume an average return of 10% (this is a conservative estimate for a diversified portfolio).
4. Investment Period: 8 years
We can calculate the future value of your investments using the formula for compound interest and SIP returns.
1. Future Value of Current Corpus:
FVcorpus= P×(1+r)n
Where:
o P = 1.6 crore
o r = 10% (0.10)
o n = 8 years
2. Future Value of Monthly SIP:
FVSIP=SIP×r((1+r)n−1)×(1+r)
Where:
o SIP = 1.1 lac
o r = 10% (0.10)
o n = 8 years
Let's calculate these values:
FVcorpus=1.6×(1+0.10)8=3.43 crore
FVSIP=1.1×0.10((1+0.10)8−1)×(1+0.10)
=1.1×11.44=1.25 crore
Total Future Value=3.43+1.25=4.68 crore
This calculation shows that with your current corpus and monthly SIPs, you will have around 4.68 crore in 8 years, assuming a 10% annual return.
Conclusion: You may need to increase your investments or find ways to achieve higher returns to meet your 8 crore target by 40. You might consider increasing your SIPs, investing bonuses, or diversifying into higher-return assets.

Question 3: Should I move my FD & Cash and Bank Balance to Mutual Funds like BAF?

ANS : Balanced Advantage Funds (BAFs) dynamically allocate assets between equity and debt based on market conditions, providing a balance of risk and return. Moving your FDs and cash into BAFs can offer the following benefits:
1. Potential for Higher Returns: BAFs can offer better returns compared to FDs and cash, which generally have lower interest rates.
2. Diversification: BAFs provide a mix of equity and debt, which can enhance your portfolio diversification.
3. Tax Efficiency: BAFs may offer more favorable tax treatment compared to FDs, especially for long-term capital gains.
Recommendation: Moving a portion of your FDs and cash to BAFs can be a good strategy to potentially enhance returns and diversify your portfolio. However, ensure you maintain an emergency fund and consider your risk tolerance before making the switch.

Perfect Ritik, That’s the answer i was looking for for. Thank you so much

like

Can you share in which company you are. And what is your skill set

Got placed with 50% premium from market standard, Excellent performance so salary, Increment, Promotion all been Great.

Investing since long

With income increase i have not increased my life style in same proportion.

helpful

Would be really interested to know what's your plan on health and term insurances for you and family? That's one of the major burdens might face.

Till i Retire at 40- My Company provides a 3 Cr Term Insurance and 25 Lac Health Insurance (20 lac Top up taken by me in company at my cost on 5 lac insurance by company)

After 40 - I will have 8 Cr Corpus which covers everything so i won’t need Term insurance and health i can manage with my corpus.

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