Your Financial Plan

I am 48 and run an interior designing business. Construction slowdown hurt our business, and forced us to borrow heavily. I have also used up my savings. How can I manage my investments now, for my children’s future?


Many self-employed people tend to plough back all the profits into the business. In the process, family goals are not given due attention. Your case is similar.

The silver lining is that your average cost of borrowing is 14 per cent. It might be a few years before your business normalises. To tide over the situation, cut your expenses. This will help you to generate surplus.

Education: The present value of ₹5 lakh needed for your daughter’s education will be ₹7 lakh in 2020, if inflation is at 7 per cent. To reach the goal you need to invest ₹8,600 per month and your portfolio should earn 12 per cent return. After accounting for this payment, your surplus will be ₹1,400.

For your son’s education, take a loan. However, if you invest the surplus it will be ₹61,000. Since your daughter’s college fees is needed only for four years, the amount earmarked for it can be used if there is a shortfall. To meet out-of-pocket expenses, earmark mutual fund portfolio. If your portfolio delivers 12 per cent return it will be ₹7 lakh. For marriage the present value of ₹25 lakh will be ₹60 lakh after 13 years. Earmark insurance proceeds or alternatively a part of the plot. The rest can be earmarked towards retirement goal. Reduce health insurance from ₹20 lakh to ₹10 lakh. If you want a higher cover, take a cheaper super top-up health policy.

The writer is a financial planner and founder,

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