I am 47 years of age with a daughter aged 14. I would like to build a retirement portfolio that can take care of my daughter’s education, marriage (presumably around 2020-2022) and also cater to my family’s medical needs post retirement. I plan to retire when I turn 55.

I currently hold around Rs 30 lakh in FDs and have recently invested in Quantum Long Term Equity (D) mutual fund — a lumpsum investment of Rs 2 lakh. I already own an apartment and hence don’t need to invest in home-buying.

Please tell me whether I am going about my plans the right way.

Murali You have clubbed too many goals together with your retirement. Saving for your daughter’s higher education and marriage should be targeted in a different way, compared with setting aside amounts for retirement. Medical costs are a completely different requirement altogether.

Ideally, for our suggesting a plan, you need to state your income, expenses, surplus that can be set aside, your targeted corpus and risk appetite. You haven’t stated any of these.

Since your daughter is 14 now, you may need money for her higher education in another three years’ time. You can earmark a part (the proportion is determined by the course that she may pursue in the future) of the Rs 30 lakh you have in FDs for the purpose. It may be around Rs 8-10 lakh for an engineering degree for four years. For her marriage, you can let the balance amount grow in the fixed deposit itself.

You can accumulate gold by investing monthly through SIPs in Reliance Gold Saving Fund. You have chosen a good fund in Quantum Long Term Equity, though we would have liked you to invest through the SIP route rather than choose the lumpsum mode.

But you must not depend on a single fund to meet all financial goals. Since you have another eight years to go for retirement, you can invest some amount monthly in HDFC Balanced and ICICI Pru Focussed Bluechip Equity and withdraw the amount at retirement. This sum may be parked in an FD or a debt fund.

You could also consider buying an immediate annuity with the accumulated sum so that you have steady monthly cash flows post-retirement. For medical expenses, take a medical cover for Rs 5 lakh at least, immediately. That would help you cover pre-existing illnesses too after a waiting period of four years.

*** I am 28 and am investing in the following funds through the SIP route.

HDFC Top 200 - Rs 2,500; HDFC Tax Saver - Rs 1,000; DSPBR Top 100 Equity - Rs 1,000; DSPBR Small and Mid Cap – Rs 1,000; IDFC Premier Equity - Rs 2,000; ICICI Pru Focused Bluechip Equity - Rs 2,000; HDFC Equity – Rs 1,000; Canara Robeco Equity Tax Saver – Rs 1,000; Rs 4,000 a month towards LIC policy and Rs 3,000 a month towards PPF.

Do I need to reshuffle my portfolio in any way?

Pankaj Kumar Although you have chosen a good set of funds, your portfolio suffers from a few flaws. First, you have dispersed Rs 11,500 across as many as eight funds, which is far too many. This makes tracking them difficult and the portfolio too diffused. You must ideally spread the investment across 3-4 funds.

Second, you have considerable overlap in mandate in the funds that you have chosen with several large-cap and two tax saving schemes.

Third, there are several funds from the same fund houses, which would deprive you of the diversity you would get by allocating to different asset management companies.

You can split Rs 11,500 as follows: Invest Rs 3,500 each in HDFC Equity and ICICI Pru Focussed Bluechip Equity. This would give you exposure to solid multi- and large-cap funds, respectively.

Since you already have investments in HDFC Equity, you can exit HDFC Top 200 as there is some portfolio similarity in the two. You can also exit DSPBR Top 100 Equity, a fund with a consistent track record as you already have large-cap exposure through a stronger ICICI Pru Focussed Bluechip Equity.

Invest Rs 3,000 in IDFC Premier Equity, a mid-cap fund with an excellent track record. You can exit DSPBR Small and Midcap as you do not need another mid-cap fund.

Finally, you can invest the balance Rs 1,500 in Canara Robeco Equity Tax Saver as it has a slightly stronger returns record compared with HDFC Tax Saver which can be exited. Please note that each of your SIPs in tax saving schemes is locked for three years.

You have made adequate investments in debt by opting for a PPF account and parking sums there monthly. You have not stated whether the insurance policy is a traditional one or a unit linked scheme.

The former may not deliver high returns, while the latter is an expensive product which may deliver returns only over the long-term of, say, 7-10 years. Opt for a term cover instead.

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