Strategic Financial Planning for Long-Term Growth and Security: A Case Study of Abhijit Sen’s Rs 2 Crore Inheritance

Abhijit Sen, a 39-year-old father of two children, recently inherited a substantial amount of money totaling around Rs 2 crore. With a moderately high-risk appetite, Abhijit is looking to secure his financial future, plan for his children’s education, ensure a comfortable retirement, and achieve optimal diversification. To navigate this process, Abhijit sought advice from Girirajan Murugan, the CEO of FundsIndia.

Murugan recommended a structured investment approach using the “3 Bucket” strategy. This strategy involves dividing the funds into three distinct categories: safety, short-term, and long-term investments, each serving a specific purpose. By following this approach, Abhijit can balance the need for immediate liquidity, short-term financial goals, and long-term growth, such as retirement planning.

In the safety bucket, Abhijit should allocate 5% of his savings for emergency requirements, investing in a good liquid fund. The short-term bucket, meant for goals within the next five years, should receive 5% of his savings and be invested in a Low Duration or Short-Term Debt fund. The remaining 10% should go into the long-term bucket for goals more than five years away, starting an SIP into good equity funds.

For long-term objectives, Murugan suggests an equity-heavy portfolio with 60-80% equity exposure, diversifying based on investment styles such as Quality, Value, Blend, Mid/Small Cap, and Momentum. Additionally, funds can be set aside from the long-term bucket for children’s higher education and retirement planning.

To ensure a comfortable retirement, Abhijit can use online calculators to determine the required retirement corpus and start a monthly SIP into equity funds if the time frame is more than five years. Diversification across different asset classes is also crucial to mitigate risks, with recommendations for specific funds in each category.

Overall, with strategic financial planning and the guidance of experts like Murugan, Abhijit can make the most of his inheritance to secure his financial future and achieve his long-term goals.