14 Sep 2016

e-Khaliyan

How Can I plan to invest money to achieve my Financial Goals - Child Education, Family House Renovation, Child's Marriage, medical Emergencies and Retirement Fund

This is a question which we came across at Quora Post by 25 years old guy who earn handsome salary of around 40 to 50k, with all the NPS, Tax Saving Slots are already full and want to target following goals to achieve -  

Goals:

Child Education, Family House Renovation, Child's Marriage, medical Emergencies and Retirement Fund



Our Suggestions

 Goals are clearly put forward where you need money after 20–25 years, so here is ideal guide for you -
  1. First Let me tell your where NOT -TO-INVEST
    1. Never invest in LIC or any insurance plan, RD, FD or keep in savings account as all these methods will put tax burden after maturity morever returns are also not good.
    2. Never ever combine investment with insurance , both are completely different instead take Term Insurance Plan and rest of money use for investment.
Below are the Wealth Builder, Tax free investment options for your which will give you handsome amount after 20–25 years.
    1. Invest in Equity Mutual Fund i.e. Start an SIP for mid-large cap funds for let say 70% of your total amount you want to invest, this will fetch your average of 12–15% of return and in 20 years you will have enough money and this will be complete tax free. Here is basic example - If you invest 7k per month in Equity Mutual Fund with expected return of 14% you will have almost 2 crores in 25 years here is detailed calculation -
Since you are very young so you can take risk and start investing in MF. Please note that maturity amount or so called capital gain is not taxable if you keep invested for more then 5 years, that is best thing about mutual fund investment. If you are new to mf then you can search on google or quora what are mutual funds? etc.
    b. If you are not risk taker then you can always go with EEE methods for investment i.e. Invest in PPF where you will have 8 to 9% of returns and amount is safer for 15 years and you can extend them further.
You can divide your SIP amount for specific goals like child education, marriage etc accordingly and start investing.

Here are suggestion for your individual goals 
Child Education/ Child Marriage: Invest in  good equity mutual fund schemes on regular basis(SIP).{you have not specified the age of your kid but assuming you still have 15 years } Do not go for any child specific mutual fund scheme or insurance scheme)
 
Family house renovation: This is a short term goal (min5 yers) therefore invest in a well diversified mutual fund with blue chip stocks. but if you want to save and accumulate your money not more than for 2 years then keep saving regularly in bank for this goal.
 
Medical Emergiencies: Take an health insurance policy with all required riders. Talk with an insurance advisor, not agent, for this.
 
Retirement: Open an PPF account and invest regularly. PPF gives compound interest benefit and also offers tax benefits.
 
Do your homework before investing and do not invest until you don't understand fully about product.