Your Financial Plan

I am 43 and am employed with an MNC. My wife (40) is a home-maker. We have a three-year-old son. I have a group health cover for ₹6 lakh. I invest only in equity mutual funds, my fund balance is ₹6 lakh. Can I reach my goal with this?


To meet all your goals you must invest ₹56,000 per month or ₹44,200 if your salary increases by 5 per cent every year. But rising schooling expenses can reduce your surplus. So, if you are unable to save for your son’s post-graduation, take an education loan. If you have the risk appetite, continue with the current asset allocation.

Education (Specialised course): The present value of ₹10 lakh will be ₹19.6 lakh after 10 years. Invest ₹8,500 or ₹6,600 a month and increase it by 5 per cent till the goal is reached. For all goals, portfolio return assumed is 12 per cent.

Graduation: It will come to ₹25.7 lakh in 14 years at 7 per cent inflation. Save ₹4,600 a month, step up by 5 per cent.

PG: The present cost of ₹10 lakh will be ₹33.8 lakh after 18 years. Invest ₹3,400 per month, increase it by 5 per cent every year.

Construction: The present value of ₹30 lakh will be ₹59 lakh after 10 years. Invest ₹20,800 and step it up. Your surplus will be ₹2,500. If your salary increases beyond 5 per cent contribute more or avail home loan for the shortfall and repay before you retire.

Retirement: The present monthly expenses of ₹20,000 will be ₹55,180. You need a corpus of ₹1.56 crore to meet the expenses at retirement. Your EPF will account for ₹66.6 lakh. If your current mutual fund units earn a 12 per cent return, it will account for ₹32.8 lakh. To meet the shortfall of ₹56.5 lakh save ₹8,750 a month and increase the saving by 5 per cent.

The writer is a SEBI-registered investment advisor and founder,

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