Your Financial Plan



I am 45 and employed in the private sector. My wife is a homemaker. We have a son aged 15. I want to quit the corporate sector. I can earn my living doing consultancy work for the next 10 years. By 2020, I will receive ₹20 lakh from my father. After five years, I can sell my plot.

Prakash

You can exit the corporate work sector from the coming New Year. You have sufficient assets to help you hang up your boots.

From your fixed deposits and mutual fund, earmark ₹19 lakh for your son’s higher education. The rest can be set aside for retirement.

If we assume that you need ₹30,000 per month for your needs, you will need ₹59,000 by 2026 if inflation grows at 7 per cent. Since you plan to earn through consultancy, you can build your retirement corpus for the next 10 years.

To meet the monthly expenses of ₹59,000 at retirement, you need to have a corpus of ₹1.83 crore and it should earn 1 per cent over and above inflation to sustain you till you turn 85. Since you are going to lead a relaxed life, we have considered life expectancy till 85.

If your plot appreciates at 7 per cent, after five years, it will be worth ₹98 lakh. If you sell it and redeploy the proceeds along with your father’s gift at 10 per cent, at your retirement it will be worth ₹1.90 crore.

Your mutual fund portfolio of ₹16 lakh, if it grows at 10 per cent, will account for ₹41.5 lakh. With this, your retirement kitty will be more than your needs. For the next 10 years, if you save monthly a sum of ₹10,000 and if the portfolio earns 12 per cent returns, it will account for ₹23 lakh. Reserve it for your son’s marriage. Buy a health insurance policy for a sum of ₹10 lakh.

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

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