People

Your Financial Plan

Suresh Parthasarathy | Updated on January 22, 2018 Published on November 01, 2015


I am 39. I was working abroad but due to a personal issue I was forced to return to India, thereby losing the compensation due to me. I am now on an employment contract for three years. My wife is a homemaker. I have a daughter aged five and a son who is two. My parents are pensioners and I live with them. Do let me know how to reach my goals.

Kumar

Your age is an advantage as also the fact that your parents are sharing the monthly expenses. You can meet all your goals with your current surplus, provided you follow basic investment rules.

Children: Since most of your goals are long-term, follow asset allocation of 50:45:5 in equity, debt and gold, respectively. This can deliver a portfolio return of 11 per cent.

For your daughter’s education, you need to save ₹7,000 monthly till you reach the goal. This is arrived at by working out the present value of ₹10 lakh by inflating it at 7 per cent for the next 13 years. The sum required will be ₹24 lakh. Your son’s future education will cost you ₹29.5 lakh. To meet the cost, break the fixed deposit and invest ₹5 lakh in balanced and large-cap mutual fund schemes. Alternatively, if you wish to save monthly, you ought to save a sum of ₹5,700, till the goal is reached.

Retirement: Since your father shares the expenses, for retirement calculation, I have assumed ₹20,000 as your monthly expenses. At 60, your monthly expenses will be ₹83,000.To have this cash flow at retirement you need to save ₹22,600 every month to build a corpus of ₹2.2 crore by the time you retire. This should earn inflation adjusted return of 0.93 per cent to sustain you till 85 years. Buy floater medical insurance cover for ₹5 lakh and term insurance for ₹1 crore.

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

Send your queries to blinefp@gmail.com



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