How to plan for our long term goals considering inflation

Thanks for writing to us and we appreciate that you are aware why one should account inflation while planning for the long term goals. Following is our suggestions -

1. Emergency Fund - Keeping Rs 10 Lakhs as emergency fund in savings bank account is not a good idea at all! Savings bank interest is hovering only around 4% compared to liquid and ultra short term mutual funds. To enjoy savings bank like convenience, you can consider investing in liquid / ultra short term funds expecting around 7% return. These are open ended funds and no entry or exit loads apply. You can redeem the investments partly or fully anytime and the proceeds are credited to your bank account with 24 hours (Excepting holidays or Sunday).

2. We will not comment on the life covers you have taken excepting that it should be minimum 12 times you annual income + you should also add the current liabilities in it.

3. Similarly, we will avoid commenting on your stock market investments as we consider it risky and believe it is only meant for investors who have stock market knowledge.

4. Taking a family floater is a good idea.

5. Child education - After 18 years you need an amount equivalent to today's 1 Crore. The inflation adjusted amount after 18 years would be Rs 2.45 Crores (Inflation assumed @5%). To meet this goal, you should start a monthly SIP of Rs 6,500 for 18 years in equity or balance funds (returns assumed @12%)

6. Child Marriage - After 22 years you need an amount equivalent to today's 2 Crores. The inflation adjusted amount after 22 years would be Rs 5.85 Crores (Inflation assumed @5%). To meet this goal, you should start a monthly SIP of Rs 23,000 for 22 years in equity or balance funds (returns assumed @12%)

7. Your Retirement - After 26 years you need an amount equivalent to today's 7 Crores. The inflation adjusted amount after 26 years would be around Rs 25 Crores (Inflation assumed @5%). To meet this goal, you should start a monthly SIP of Rs 100,000 for 26 years in equity or balance funds (returns assumed @12%). To know inflation adjusted goals, you can try this calculator https://www.advisorkhoj.com/tools-and-calculators...

8. Your total current monthly SIPs stand at Rs 40,000 which you need to increase with immediate effect. A calculation shows that if you increase your current monthly SIPs from Rs 40,000 to Rs 60,000 and increase it by 25% (on the base value of Rs 60,000) every year, then you can meet up all your goals very comfortably. Check this https://www.advisorkhoj.com/tools-and-calculators...

This can generate a corpus of around 35 Crores if you continue the SIPs for next 26 years, that is the maximum period for which you need to save for your last goal, i.e. your retirement.

9. Your scheme selection for monthly SIPs is good and no changes are suggested at this point in time. However, you must review your portfolio once every year and ensure that the respective scheme performances are aligned with your long term goals.

Hope you find the above useful. Have a great investing time ahead !