FINANCIAL GUIDANCE - Long-term Wealth Creation Plan

I am a sea-going professional, 36 years old. I intend to quit sailing in the next two years after having fully pre-paid my home loan. Thereafter,based on my new job profile, the take-home after tax deductions will be Rs 1,25,000. Presently, following are my fixed outflows:
• I have a housing loan whereby an EMI of Rs 62,500 per month is being paid. I expect to completely pre-pay the loan in the next 12 months.
• I have a term plan insurance. The monthly outflow (averaged out) is Rs 6,500. This is inclusive of the home loan protection insurance. The total term plan coverage (excluding home loan protector) is Rs 1.2 crore.
• I also have a ULIP plan, the monthly outflow of which is Rs 5,200 with a maximum exposure to equities. This will continue for the next five years.
I have zero knowledge of the market and investment matters,whether in stocks or mutual funds.
My goals are as under:
1) I am keen to invest on a long-term basis (about Rs 10,000 every month) in stocks/IPOs using a demat account. I do not have any demat account. Therefore, please advise with which bank should I open a demat account, as I would like to invest small amounts in recommended IPOs and good companies.
2) Additionally, I am also keen to invest in equities/stocks for the sake of raising a corpus for my two daughters (age 5 years and 2.5 years) for higher education. The maximum amount I wish to invest is Rs 10,000 per month. The intention is to utilise the fund for my daughters education/marriage, etc.after 12 - 15 years from now.
3) I am also seeking to invest on a monthly basis in gold, an amount of about Rs 5,000 per month. Please advise whether I should be buying physical gold or should I seek gold ETFs. The objective of this investment is to build a healthy security cover for my family. If this is to be done through ETFs, then please do advise about the bank or broker I should be opening the demat (three-in-one) account with.[PAGE BREAK]

4) Can I also seek to invest in Kisan Vikas Patra in the post office scheme whereby the money doubles after every eight years and seven months? My intention is to do so every six months by putting in Rs 50,000.
- Amit Mahendra

Amit, picking stocks or IPOs requires quite a bit of attention and skill. For you to develop the skill and knowledge you will need to put in some serious learning. Given that you are out at sea most of the time, this will not be easy at all. Till you do that, I recommend that you invest through equity mutual funds, which is like outsourcing the thought process to a professional fund manager for a very minimal cost. By enrolling yourself into a monthly systematic investment plan with a reputed and consistent performing fund, you would be on your way to building a long-term wealth creation plan for your family and yourself. What is needed is the quantum that you need to invest on a minimum basis and a good set of funds – both of which I will suggest here and now. Assuming that your children will need a good sum of money for their professional education by the time they reach the age of 17 years, I have projected the likely price of such education at the time, factoring inflation or increase in prices. Working backwards, the monthly amount for SIP is arrived at assuming that you will invest in an equity fund. The funds are chosen through an elaborate process that gives importance to not only returns, but also to how these returns are obtained. That is, the risk taken to deliver the returns must be commensurate with the returns given and there should be consistency in the performance. I would not appreciate a flash in the pan performance for a year or month and below par the next.
A disciplined savings habit should help you reach the goals. You could similarly accumulate gold through an SIP in a Gold Exchange Traded Fund, like the one Reliance has recently launched. [PAGE BREAK]

These funds simply follow the price of gold. Each unit represents a gram of gold. Once you decide on how many grams of gold you would like to accumulate for each of your daughters, start accumulating it through a monthly purchase plan in the gold ETF. No demat account is required for doing this. If you still think you would like to buy stocks, open an online trading account and demat account with a bank like ICICI Bank and commence your buying. As regards the equity funds that I would suggest for the SIP, they would be HDFC Equity Fund and Franklin India Blue Chip Fund. Two are enough. One is a diversified equity fund that has both large companies and mid-sized companies whereas the second is only large companies.