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I am aged 46, working as GM in a private organisation in Hyderabad. In my earlier years, due to poor salary structures, I had not saved in a significant manner. However, my take-home pay from this month onwards will be Rs 1.2 lakh a month and from hereon I am targeting a minimum 30 per cent hike in my salary for the next 10 years. I have four dependents, including my wife and daughter, as well as my aged parents.

My monthly household expense is Rs 25,000 and from next month onwards my home loan EMI will be Rs 42,000. After meeting other commitments, my monthly surplus will be Rs 25,000. My daughter is studying engineering, for which I spend Rs 1.25 lakh annually.

Savings: I have gold worth Rs 2 lakh, and I have gold investment in Tanishq for Rs 1.2 lakh. I have one LIC policy for Rs 1 lakh, for which I pay a premium of Rs 8,000 annually. Recently, I have taken a HDFC ULIP for a sum insured of Rs 5 lakh, with monthly premium of Rs 11,000, and this policy will mature in 2022. I have PF balance of Rs 4 lakh, and my monthly deduction towards that from now on is Rs 8,000; my employer contributes an equal sum. I have NSC for Rs 30,000. I have taken an accident policy for Rs 25 lakh by paying a three-year premium and under the company group mediclaim my family is covered for Rs 15 lakh.

Liability: Recently, I sold my old house for Rs 17 lakh and took a loan of Rs 34 lakh to buy a new flat with a loan tenure of 11 years in Secunderabad.

My concerns: For my daughter's marriage, I need to save a sum of Rs 15 lakh (present value) in the next six years.

Based on my monthly household expense, please suggest how much I need to save for my retirement in 2023. Considering my present health condition, I may live up to 75 years.

Please suggest appropriate investments for my surplus.

— Ajay Chitte

We often find that individuals with lower surplus pay little attention to savings. If only you had identified a goal or a set of goals long back, you would have found a way to save. Savings as low as Rs 1,000 a month for the last 15 years, at a return of 12 per cent would be worth Rs 5 lakh, and that could have taken care of your daughter's education.

Even now, with your current surplus, you will find it difficult to allocate savings for all the goals. But if your income increases as projected by you, with financial discipline, you will be able to meet all the goals.

Marriage: The present cost of Rs 15 lakh will be Rs 22.5 lakh in six years, if inflation is at 7 per cent. Goal segregation is important. If you have to reach a target of Rs 22.5 lakh in the next six years, you ought to save a monthly sum of Rs 21,500 for the next 72 months, and it should earn a return of 12 per cent. Again, if you have decided that you require 400 g, you can allocate money for buying a minimum of 6 g a month.

For the rest, invest 60 per cent in debt instruments, such as recurring deposits, and take advantage of the current high interest rates, and put the balance in pure equity funds. If you earn 10 per cent in fixed income, and 15 per cent in equity, you can reach the target easily. While investing in fixed income, do invest in your daughter's name to reduce tax outgo.

Retirement: The present annual living expenses of Rs 3 lakh, at an inflation of 7 per cent, will be Rs 6.3 lakh when you turn 58. To receive such an income till you turn 80 (we are factoring in a higher lifespan for your wife) you should have a corpus of Rs 1.1 crore and it should earn a return of 2 per cent above inflation. If the current investment in your ULIP grows at 8 per cent, at maturity you will receive a sum of Rs 26.5 lakh. Given the current accumulation and the future savings in EPF, if it grows at 8.5 per cent, your accumulated value will be Rs 52 lakh at 58. So, your shortfall will be Rs 33 lakh. To meet the shortfall, you ought to save Rs 12,000 a month for the next 132 months, and it should earn 12 per cent. However, your current surplus will be short by Rs 7,000, hence we suggest that you start saving from next year, when your salary jumps.

Investment: It has become a common feature with uninformed investors who understand ULIP as an insurance product and think they will get assured return.

You say you have no clue regarding mutual funds, but you are investing in a product that invests in equity! Henceforth, while investing, do understand investment concepts, before writing a cheque. For the beginner in mutual funds, it is better to stay invested in large-cap funds, such as HDFC Equity, Franklin India Bluechip and HDFC Top 200. For your retirement, since you are accumulating a majority of your investments in debt, consider HDFC Prudence, HDFC Balanced or Birla Sun Life 95.

Insurance: Since your medical needs are taken care of by mediclaim, to protect all your goals, take term insurance for Rs 1.2 crore and the premium outgo will be around Rs 31,000.

All the calculations are based on your current income. Review the portfolio once every six months. Since your parents are aged, start building an emergency fund.

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