Your Financial Plan

I am 30. I work in a private bank. My wife is a home-maker and my son is two-and-a-half years old. I have land valued at ₹7 lakh. Please suggest changes in my investments to help me meet my son’s education and my retirement needs.

Akshay N

With a surplus of ₹27,000 you should allocate more to mutual funds. When the family size is small, seize the opportunities to build wealth. In NPS, the maximum tax benefit is restricted to ₹50,000 but you are investing ₹7,000 per month. But for Section 80C you are saving only ₹1.1 lakh. Such a mismatch in investments will not help you build wealth. To meet goals, follow an asset allocation of 60:30:10 in equity mutual fund,debt and gold. In mutual fund, don’t restrict investment to four years, rather continue till the goals are reached.

Retirement: To meet monthly expenses, at 58, you need a retirement corpus of ₹5 crore. Your EPF, NPS and employer contribution will account for ₹8,900. Invest ₹6,450 in equity mutual funds for this goal.

Stop PPF and restrict NPS to ₹4,200. Earmark the existing SIP for your son’s education. In future if you wish buy a house you need the initial corpus. Invest the surplus of ₹9,000 in balanced funds. Increase the term cover to ₹75 lakh.

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

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