People

Your Financial Plan

Suresh Parthasarathy | Updated on January 20, 2018 Published on May 01, 2016


I am 39 and work in a private company. My wife, a home-maker, is 35. I have a daughter (5) and a son (3). My parents, while financially independent, live with me. I was forced to come back to India and settle for a moderate salary, despite good experience. How do I meet my goals?

Paramasivam

Many people working abroad seem to think about investing for the future only after a certain age. And the real challenge starts if they return to India without adequate savings. To meet your aspirations, you need to invest monthly ₹29,500 against your surplus of ₹10,000. The silver lining is that you are young enough to look for a good job.

Children’s education: For your daughter, the present value of ₹5 lakh will be ₹11.2 lakh if inflated at 7 per cent (same considered for all goals) over the next 12 years. To meet this invest monthly ₹4,150 which should earn 12 per cent return.

For your son’s graduation you may need ₹12.9 lakh. If you earmark endowment policy, at maturity it will account for ₹8.4 lakh. To meet the shortfall, invest monthly ₹1,040 which should earn 12 per cent return.

For your daughter’s post-graduation, invest monthly ₹5,100 to get ₹29.5 lakh. For your son, invest monthly ₹4,500 for 18 years to get ₹33.8 lakh. Since you have limited surplus invest ₹2,920 for your daughter and ₹2,330 for your son. Step up each contribution by 10 per cent every year. With this, all your surplus will get exhausted.

Retirement: Assuming you need ₹15,000 per month to meet the household expenses for two, at retirement after 21 years it will be ₹62,000. At the time of retirement you need to have ₹1.6 crore and it should earn at least 1 per cent over and above the inflation to sustain till your wife turns 85. Once you have surplus, start saving for this goal.

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

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