I am a 31 year old married, working woman and saving for my retirement. Am I on right

I am a 31-year-old working woman. I am married and do not plan to have kids. My only goal is to retire early and my risk appetite is high. Currently, my husband is takin
g care of all monthly expenses (around Rs 70,000) and I am investing my salary in the following: PPF (Rs 1.5 lakh per year), Rs 25,000 a month each in Axis Small Cap, Axis Bluechip, PGIM Mid Cap and PPFAS Flexi Cap Fund. I also invest Rs 5,000 a month in cryptos. We are building an emergency fund worth a year’s expenses by keeping the money in our savings account. We have health insurance from employers but are planning to get a separate one as well. Are we on the right track?

Dev Ashish, Founder, Stable Investor and Sebi-registered investment advisor replies, “A year’s worth of expenses amounts to about Rs 8.5 lakh and that is good enough for most contingencies. Unless it is in a high-interest savings account, it is better to park the fund in bank FDs and liquid/ultra short-duration funds. The portfolio of four funds you have curated is a good one. Later on, you can consider taking large-cap exposure simply via index funds. Also, consider introducing an international fund in your portfolio. You can simply pick a US-based index fund and ignore the rest. I cannot comment on your crypto investments as these are unregulated. Despite the perception of huge asymmetric payoffs, don’t forget that these are extremely risky. Put in an amount that you are willing to lose and completely write off. Keep an eye on the developing story of whether cryptos remain legal in India or not. Since information about your and your husband’s EPF investments isn’t available, I can only guess that your asset allocation is tilted towards equity, and rightly so. But do make sure that you rebalance the portfolio at least once every year so that it doesn’t become dangerously skewed towards one particular asset. You can also consider using VPF. Not depending only on your employer for health insurance is a sensible move. Ensure that both set of parents have some level of health insurance in place. I think both of you are doing well on all fronts. Early retirement is an attractive goal. But please make sure to get your retirement calculations right and only use conservative assumptions while doing so. You don’t want to call it a day with a corpus that isn’t large enough and expose yourself to the risk of running out of money before running out of years.”

We are expecting a child early next year. We are thinking of starting an SIP in ICICI Prudential Signature Plan for Rs 11,000 per month for 10 years to save for our child’s higher education and marriage. This plan gives insurance benefit and the maturity amount is not taxable. Should we invest in this or opt for a mutual fund?


Prableen Bajpai, Founder, FinFix® Research & Analytics replies, “First ensure that you have calculated the amount which will be needed for your child’s education and marriage based on reasonable assumptions. For example, college fee of Rs 40 lakh today will at 6% inflation become Rs 1.1 crore in 17 years. Likewise, do the math for marriage expenses. Once you broadly know the amount needed, create a portfolio of equity mutual funds by tagging schemes to the specific goal. Moving on to insurance. As a basic rule, don’t mix investments with insurance. For the life cover, buy a term plan after calculating the right amount of insurance cover needed using any of the four methods—human life value, income replacement value, expense replacement method, and underwriter’s thumb rule. The plan mentioned by you is a Ulip which typically provides 10 times the yearly premium as life cover. In your case, this would amount to around Rs 13.2 lakh. Inadequate life insurance can have dire consequences. List all your financial goals, health and life insurance requirements and then invest accordingly.”