Your Financial Plan



I am 39. I work in a private company. My wife is a homemaker. We have two sons (7 and 4). I live in my own house. Since I started late, I do not have enough investments. Do let me know how to save for my future.

Kumar

With your current surplus you can meet all your goals. You have chosen insurance as an investment vehicle to meet long-term goals but you do not have any term insurance to protect your goals or family. Buy term insurance for ₹1 crore to protect all your goals. Do diversify and invest across asset classes to earn inflation-beating returns.

Education: The present value of the requirement of ₹8 lakh will be ₹16.8 lakh after 11 years, if inflated at 7 per cent (assumption for all goals). To meet the goal, you need to save ₹6,610 every month and the portfolio should deliver 11 per cent return (for all the goals). For your second son, the present value of the requirement will be ₹20.6 lakh. Earmark endowment policies for this goal. To meet the shortfall of ₹12.86 lakh, save ₹3,250 every month.

Higher education: To meet your elder son’s needs you ought to save monthly ₹15,170 to reach the target of ₹68.9 lakh.

Follow the asset allocation of 50:40:10 in equity mutual fund, debt and gold, respectively. Equity should deliver 15 per cent and the latter should deliver 7 per cent.

For your younger son’s needs, to reach ₹84 lakh, you need to save a sum of ₹12,540 every month.

Retirement: Considering household expenses at ₹20,000 a month, the sum will be ₹72,330 at retirement. To meet the expenses at retirement, you need to have a corpus of ₹1.73 crore. At retirement, your EPF will be ₹1.53 crore. To meet the shortfall you need to save ₹2,270 every month.

The writer is a financial planner and founder, myassetsconsolidation.com

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