These are my goals:
1. Accumulate a corpus of Rs 5 crore
2. A good corpus for the education or higher education of
My niece aged 10 years
My nephew aged 3 years
My newborn child
3. A corpus for medical emergencies.
I have employer mediclaim and my wife and I have a Rs 3 lakh mediclaim policy for my parents. I have an HDFC term insurance for Rs 1 crore without any riders and I want to take another policy with all the riders with some other insurer for diversification.
I can invest Rs 30,000 to Rs 35,000 per month for the next 20 years. I am confused between buying a house and investing in mutual funds, since doing one will thwart the possibility of the other. So, I would have to choose one. Currently, I am investing Rs 5,000 per month in Axis Long Term Equity Fund – Direct (G) via an SIP for my niece’s education.
— Akshay Jaiswal
Puneet Oberoi, founder, Excellent Investment Advisors, responds:
You have not given any tenure for your goals. So, I am making some assumptions about your investment horizon. To achieve these goals, assuming an annual return of 13 per cent and the inflation rate as 7 per cent, you need to invest in the following way:
To create a corpus of Rs 5 crore in 25 years, you need to invest Rs 22,250 per month.
For your niece: Today if you need Rs 20 lakh for higher education, it will cost around Rs 32,11,000 after inflation in seven years. You need to invest Rs 23,628 every month to achieve this goal.
For your nephew: Today if you need Rs 20 lakh for higher education, it will cost around Rs 51,50,000 after inflation in 14 years. You need to invest Rs 10,915 per month to achieve this goal.
Newborn: Today if you need Rs 20 lakh for higher education, it will cost around Rs 63,17,000 after inflation in 17 years. You need to invest Rs 8,545 per month to achieve this goal.
Contingency fund: You need to have Rs 5 lakh to Rs 10 lakh in your contingency fund. The health insurance for your parents is low on value. You are also depending on your corporate cover. So, I would recommend you to buy a higher top up cover of at least Rs 50 lakh for your immediate family. You will get it cheap at your age.
I am not sure whether you are planning to buy your first house or you want to buy a house for investment purposes. I am assuming that this is your first house. You have to realise, buying a house also comes under one of your goals. You need to know the amount required to achieve your goal and by when you want to achieve it.
If you have identified your goals, you can divide your investments into these goals according to priority.
I have already shared with you the amount you need to save for your above mentioned goals. You have to figure out whether buying a house is a priority or your other goals. If you can save for other goals and still have some surplus left, you can think about buying a house. But it does not make sense to shell out everything for buying a house by spoiling all your other goals.