Plan your expenses, savings and investments with goals in mind

I hold a government position with a monthly salary of 72,000 (without any deductions) and hopefully from July it will grow to 84,000 per month. Currently after all the expenses I am saving 50,000 per month. My job does not offer a pension, but a monthly withdrawal from the Contributory Provident Fund (CPF) began in May.

I am almost 25 years old. I plan to buy a house in the next 12-15 years, a sport utility vehicle in the next 3-4 years, go on vacation to Europe in the next 5-7 years and plan my sister’s wedding in the next 9 years. 10 years.

For retirement, I envision an income of at least 60,000 per month with an increase of 12% per year, taking into account inflation.

I started investing in January 2018 and my investments are as follows:

I invested 2,000 per month each in these SIPs …

1. ABSL 96 Reg-G Tax Relief

2. Axis LT Equity Reg-G

3.HDFC Taxsaver Reg-G

In March 2019, I added SIPs of 2,000 per month each in more funds …

4. Bluechip Reg-G axis

5. Small Cap Reg-G Axis

6. Kotak Emerging Equity Reg-G

7. Mirae Asset Emerging Bluechip Reg-G

8. SBI Focused Equity Reg-G

In December 2020, I also started a contribution to the public provident fund (PPF) of 5,000 per month.

Please tell me if my investments are suitable for my goals (time frames for each can be extended from 1 to 2 years). Please suggest changes, if necessary.

—Name hidden on request

There are several good points to note in your query. Most important of all is that you started a prudent investment journey early on. You will do well to continue down this path of a well-balanced approach to asset allocation by taking reasonable risks with your investments.

You are also doing a good job of considering your future financial needs. You should take it a step further and assign a numerical value (a target amount) to each of these goals. This will help you plan better and gain confidence in your finances. Once done, you need to separate your investments into portfolios that are assigned to each of these financial goals. When you do this, you will be able to better allocate the assets to these portfolios.

When it comes to your retirement, assuming you retire in 30 years, you can calculate the target amount you would need to save for (also assigning an amount value to that financial goal). An inflation percentage of 12% is too high, you can use a future inflation rate of around 8% for your calculations. With this in mind, and for a 60,000 per month, for another 30 years of life after retirement, your retirement goal would be a little higher 9 crores.

To achieve such a goal, it would be necessary to save and invest 25,000 per month from now. You can increase it slowly over the intervening years.

The investment choices you have made in the form of mutual funds are very good. However, since you are investing for the very long term, be sure to review your portfolio periodically to make sure you stay on target.

The key is to always be aware of your future financial goals and to plan your spending, savings, and investments now. You are well on your way to doing so.

Srikanth Meenakshi is co-founder of Primeinvestor.

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About Kristina McManus

Kristina McManus

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