A reader says, “I created a financial plan using your robo-advisory tool. It was quite useful to understand where I stand, but I am now scared because I do not have enough to invest for my long-term goals. What should I do?”
This is a fairly common situation; most of us start our investment journey this way. There is nothing to despair about. Here are some options to consider.
1. Consider clubbing all long-term goals together (greater than 10Y away) and investing in a single portfolio for them. This unified portfolio will reduce the total investment to be made.
The unified portfolio approach assumes that once one goal is completed, more money will be available for investment. This is why the initial investment is lower than the independent portfolio approach.
The freefincal robo advisory tool offers independent and unified portfolio planning options with scheduled withdrawals (curved arrows). This is a screenshot from the tool.
Join 32,000+ readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email! (Link takes you to our email sign-up form)
🔥Enjoy massive discounts on our robo-advisory tool & courses! 🔥
The risk in choosing the unified portfolio is we depend on higher cash flow in future which may or may not pan out. However, it offers some hope to get started, so it is an acceptable risk to handle.
Suppose you have your daughter’s college education goal deadline 10Y from now and your retirement 20Y away. You will make gradual withdrawals from the unified portfolio, say from years 5/6 to 10 and put that money in a safe instrument to fund your daughter’s college fees. The rest of the portfolio and future investments continue to grow for retirement.
2. Reduce the target corpus for your Daughter’s college education. Down the line, with some luck, your portfolio may do better than expected and due to your skills and effort, you may end up with a higher-paying job. You can rethink this later on. Else you will have to fund this with an education loan.
3. Reduce the lifestyle you are aiming for in retirement. The ideal retirement plan ensures your current lifestyle does not change in future, but if you do not have enough to fund it, then we have no other option. As mentioned above, the future can pan out better, and we can get back on track.
4. Check your inputs and assumptions. Often investors include EMIs and expenses made for children, parents or in-laws in the retirement plan. These should be excluded. Also, if you consider a lower inflation rate, say 5% before retirement and 4% after. This is not ideal, but if it can motivate us to get started, it is not a terrible choice. A similar exercise can also be done with other long-term goals.
5. Postponing retirement is the final resort, but this is not in our control. There are other options, like a reverse mortgage, but this cannot be relied on when retirement is far away. See: Can reverse mortgages be used as an income source after retirement?
Regardless of whether we can afford to invest enough or not, we must try to increase our income as much as possible. Easier said than done but try, we must. See: Passive income is a crucial part of your retirement plan: How to get started.
🔥Enjoy massive discounts on our courses, robo-advisory tool and exclusive investor circle! 🔥& join our community of 7000+ users!
Use our Robo-advisory Tool for a start-to-finish financial plan! ⇐ More than 2,500 investors and advisors use this!
Track your mutual funds and stock investments with this Google Sheet!
We also publish monthly equity mutual funds, debt and hybrid mutual funds, index funds and ETF screeners and momentum, low-volatility stock screeners.
- Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
- Have a question? Subscribe to our newsletter using the form below.
- Hit 'reply' to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.
Join 32,000+ readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email! (Link takes you to our email sign-up form)
About The Author
Dr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter(X), Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! ⇐ More than 3,000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter the market condition is!! Watch the first lecture for free! One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course! Increase your income by getting people to pay for your skills! ⇐ More than 700 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!
Our new book for kids: “Chinchu Gets a Superpower!” is now available!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook is for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Do you want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or get the Tactical Buy/Sell timing tool!
We publish monthly mutual fund screeners and momentum, low-volatility stock screeners.
About freefincal & its content policy. Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified with credible and knowledgeable sources before publication. Freefincal does not publish paid articles, promotions, PR, satire or opinions without data. All opinions will be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
- Twitter @freefincal
- Subscribe to our YouTube Videos
- Posts feed via Feedburner.
Our publications
You Can Be Rich Too with Goal-Based Investing
Published by CNBC TV18, this book is meant to help you ask the right questions and seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want
This book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.Your Ultimate Guide to Travel
This is an in-depth dive into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, and how travelling slowly is better financially and psychologically, with links to the web pages and hand-holding at every step. Get the pdf for Rs 300 (instant download)