Am I investing the right SIP amount for my goals

We are a working couple staying in Pune. My Goals: 1) Save Rs. 45,00,000 to pay back the home loan in 5 years. 2) Save Rs. 30,00,000 to pay the down payment of another house in 2022 (after 5 years when the first home loan completes). 3) Total amount required after 5 years: Rs. 75,00,000, 4) Total amount required after 28 years: Rs. 3,00,00,000 for early retirement, 5. Total amount required after 20 years: Rs. 40,00,000 for children's education. My current Investment SIP, LIC & PPF: 1. Axis Long Term Equity Fund: Rs. 2500, 2. UTI Mid Cap Fund: Rs. 2000, 3. ICICI Prudential Mutual Fund: Rs. 2000, 4. DSP BlackRock Mutual Fund: Rs. 5000, 5. LIC: Rs. 55000 per year (Commencement Date: 06/2014), 6. PPF: Rs. 20000. Queries: 1. What should I add/update to my current SIP/Investment routine? 2. Should I continue with LIC as it helps me to save taxes?

Aug 23, 2017 by Neha, Pune | Mutual Fund

Thanks for writing to us.

Glad to see that you are keen to plan for your financial goals. Let us see how much you need to save for reaching each of your financial goals.

Goal 1 - Rs. 45,00,000 to pay back the home loan after 5 years + Rs 30,00,000 to pay for the down payment of another house in 2022 - For this you need to save Rs 88,000 per month for 5 years, assuming 12% annual return.

Goal 3 - Rs 3 Crores after 25 years for retirement - You need to save only Rs 17,000 per month for 25 years to meet this goal, assuming 12% annual returns.

Your current monthly SIP is Rs 11,500 only, therefore, you can not meet all the 3 goals unless you increase your monthly SIPs substantially.

With regards to your MF scheme selection, as you have not mentioned couple of scheme names fully, we are unable to comment on those two schemes. However, UTI Midcap Fund is not a very good performing fund and as such you should replace with a better fund from the midcap category.

You can choose consistently performing funds from here https://www.advisorkhoj.com/mutual-funds...

Returns from LIC Policy will barely get you 5-6% return in the long run. Our suggestion would be that you can make the policies 'paid up' and stop paying premiums. To cover your life, you can take a pure term plan with life coverage of around 10-12 times your annual income. Pay the premium for the term plan by stopping the LIC premium and invest the rest amount into mutual fund SIPs. This will ensure that while you can protect your family adequately by paying a small premium, the rest amount invested in mutual fund SIPs creates wealth for you in the long run.

PPF can be continued as a diversification tool towards debt and saving taxes. For saving taxes, you should contribute both in PPF as well as ELSS Mutual Funds.

Hope you find the above suggestions helpful.

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