From SIP to provident fund: Expert answers to queries on financial planning

I have twin sons. They are one-year-old at present. We intend to gift them a gap year at age 20 or 21 to travel the world. My goal is to create a corpus of Rs 15 lakh for each of them. Systematic investment plans (SIPs) worth Rs 20,000 is what I can afford. Which schemes should I invest in? I am a high-risk investor. 

That is a beautiful idea, but a Rs 15 lakh budget may not suffice. The good news is that you are in a position to invest Rs 20,000 every month. You will be able to amass about Rs 3 crore over 20 years. Now that looks like a reasonable budget for a year of holidaying and travelling the world. As for the schemes, consider one or two multi-cap plans. 

I migrated to Canada on a permanent resident visa last month. I have a provident fund (PF) account in India, which I have maintained for 18 years. For how long will my PF account earn interest? When would be the right time to withdraw the accumulated corpus?

You will continue to earn interest on your PF account till the age of 58. In my view, the right time to withdraw the accumulated funds is now. You will earn around 8 per cent.  As against this, you have the choice to earn either a higher rate with other investments in India or take the money to Canada.

I invest Rs 10,000 in multi-cap funds. They have given me decent returns for the past two years. I have a unit-linked insurance plan (Ulip) of Rs 10,000 for 10 years. Another Rs 10,000 annually will go into my Public Provident Fund (PPF) account for 10 years. I will also put Rs 1 lakh in equity-linked saving schemes (ELSS) every year for 10 years. I am 42 years old. Are my finances on track, or do I need to hire a financial adviser?

If you do not understand financial management, then you must hire a financial advisor. If you understand financial management but do not have time to manage your money, then again, it's an excellent idea to hire a financial advisor. Considering you are 42, I think you should be able to save much more and have more assets, too. So long as you invest most of your money in the equity markets, I believe you are good to go. The amount of wealth you make will depend on the quality of the decisions you take in the future. 

Some people call themselves financial advisors, some call themselves Certified Financial Planners, and some, Sebi Registered Investment Advisors. What's the difference between them, and whom should I go to?

Financial advisor is a generic term. CFP is a professional title but does not guarantee financial expertise. Sebi RIA is a regulatory registration and again does not guarantee any financial expertise. Go to someone who has knowledge, experience, expertise and can give the right financial direction to your life. We are assuming that this person will have the necessary educational qualifications and professional expertise.

I am 40 years old. I have a home loan at a floating interest rate of 9.50 per cent. The investment is worth Rs 45 lakh. I had taken it in December 2009. The principal outstanding is about Rs 28 lakh. I have made extra payments at times. The home loan rate has dropped to 8.5 per cent. Does it make sense to switch to another bank or financier now?

I think you're already getting the best rate of approximately 8.5 per cent. I do not see a reason for you to move. Ideally, you should change your financier if you get refinanced at a rate that is 50-75 basis points lower.

The writer is director, Transcend Consulting. The views expressed are the expert’s own. Send your queries to yourmoney@bsmail.in