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I am 45 years old and have not invested before. How do I start now?

03 Sep 2021 - Contact Sayan Sircar
7 mins read

This post shows how investors who are new to goal-based investing can get started near the mid-point of their careers.

Not yet started investing

There are many reasons why investors get started late with goal-based investing. It could be due to lack of knowledge, lack of planning or lack of time. As per our post on life-stage investing, at this point, there would be some assets created. We will use this asset base to start investing.

Table of Contents

Assumptions made

  • Existing asset base: assets excluding real estate of ₹ 1.6 crores in FD, Provident fund, ULIP/Insurance plans and a mix of mutual funds/stocks/NPS
  • Current family investible surplus: ₹ 1.5 lakhs/month (money left after all expenses, EMI and provident fund/NPS contributions), including any rental income
  • One primary residence (with or without home loan)
  • Zero or more investment real estate properties (residential/commercial)
  • Two primary goals: children’s UG education and marriage (child is ten years old) and retirement starting in 13 years (age 58)

Model assumptions

Retirement goal

Let us say that the retirement expense figure and related assumptions are

  • Twelve lakhs as first-year expenses in retirement estimated using this post
  • Forty lakhs for child’s UG education estimated using this post starting eight years from now (age 18)
  • twenty lakhs for marriage after twenty years (age 30)
  • 7% inflation both before and after retirement
  • eighty lakhs as lump sum available to invest today currently held in cash, bank and stocks/MF
  • eighty lakhs in a provident fund (EPF, PPF or VPF) or NPS
  • 30 years in retirement (until the age of 88)
  • 5% increase in yearly investments for the next 13 years
  • Risk profile is moderate (60:40 equity and debt allocation for goals > 15 years away: see this for details)
  • 11% and 3% as long term returns (post-tax) of equity and debt respectively

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Calculation results

Using the online Goal-based Investing calculator with these assumptions leads to

Goal SIP Equity SIP Debt SIP Equity Lump sum Debt Lump sum Lump sum
Retirement 1,35,020 79,604 55,416 80.19 54.81 135.00
UG College 57,388 15,265 42,123 1.08 2.92 4.00
Marriage 0 0 0 12.60 8.40 21.00
Total 1,92,408 94,869 97,539 93.87 66.13 160.00

Investments to be done

Goal SIP Equity SIP Debt SIP Equity Lump sum Debt Lump sum Lump sum
Retirement 1,35,020 79,604 55,131 80.00 61.00 141.00
UG College 14,980 14,980 0 0.00 0.00 0.00
Marriage 0 0 0 0.00 19.00 19.00
Total 1,50,000 94,869 55,131 80.00 80.00 160.00


  • It is generally difficult to break out money from provident funds (PF) so that corpus is left untouched. We will use PF for both retirement and marriage goals, as shown
  • There is a high chance that the college goal will be under-funded in 8 years. You will need to bridge this gap via an education loan
  • There is no monthly SIP amount left for the marriage goal since this will be the lowest priority, but we can use some of the PF money for it
  • Depending on progress made for these goals, it might become necessary to divert some money from PF into equity sometime later
  • If you are investing in NPS, then redirect those funds to the highest equity allocation option

Please refer to this post for a more extended discussion of goal-prioritization: retirement vs children’s goals.

Investment checklist: next steps

Step 1: ensure your prerequisites are in place

At all times, ensure that you have the following in place

  • an emergency fund with 6-12 months of expenses
  • a sinking fund for insurance payments (health, car) and known recurring expenses (like building maintenance and holiday travel)
  • a term insurance policy as long as you have income
  • a health insurance policy (separate from the company provided one if any) for 10-15 lakhs as a base policy with a 50-100 lakhs super-top up
  • no high-interest debt like credit card or personal loans

Step 2: choose funds for investing as per goal amounts from the calculator

  • equity funds from here to invest ₹94,869/month
  • debt funds from here to invest ₹55,131/month
  • liquidate cash and FD (after filling the emergency fund) to invest the remaining amount (around ₹ 80 lakhs) in equity funds from the previous step. You may spread that over a few months if you are not comfortable investing the whole amount at one go
  • if you have direct stock investments, please consider switching to mutual funds unless you have a high conviction regarding each of them

Step 3: dealing with other investments

We have not discussed what to do with the other significant investments, which would be real estate. These would be:

  • primary residence: this is not a part of the portfolio since it is generally difficult to sell it and stay on rent unless it is an emergency
  • Investments in residential real estate: check if the rent you are getting vs the property’s current market value makes sense. If the purpose of the property is to be used to retire (say in a low-cost city) or for a child’s education, then check that you can liquidate the asset in time before the goal
  • Investments in commercial real estate: if the yield is good (say 6% post-tax), then you can continue else exit.

Use the online Goal-based Investing calculator and check if it makes sense to hold on to the real estate asset or not. The calculator will take the post-tax sale proceeds value in the lump sum field.

Once you start investing,

Further reading:

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Asset Allocation (18) Basics (5) Behaviour (10) Budgeting (9) Calculator (10) Children (6) Choosing Investments (24) FAQ (2) FIRE (8) Gold (6) House Purchase (10) Insurance (6) Life Stages (2) Loans (10) NPS (3) NRI (3) News (5) Portfolio Construction (27) Portfolio Review (17) Retirement (20) Review (7) Risk (6) Set Goals (24) Step by step (3) Tax (10)

Next steps:

1. Email me with any questions.

2. Use our goal-based investing template to prepare a financial plan for yourself
use this quick and fast online calculator to find out the SIP amount and asset allocation for your goals.

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