I am 42 years old and have been working in a Gulf country for 20 years . I plan to retire and settle in India next year. I have four dependents — my wife (37), and daughters (13 and 12), and a son (10).

Based on my standard of living, I may require Rs 60,000 as monthly expenses in India, and this is excluding my children's education. I have a rubber plantation in my home town and I get Rs 2 lakh a year from the plantation. I own a cottage in a resort from where I get a monthly income of Rs 12,000. I own a few plots in Kerala and their present value is Rs 1 crore. I have taken five insurance policies with Rs 50 lakh as sum assured. I have earmarked fixed deposits to pay the premium for two traditional policies. There are three ULIPs that are in the ‘paid-up' status.

I want my children to study either medicine or engineering. How much corpus do I need to take care of their education? We spend a lot on marriage. For my daughters I may require Rs 75 lakh each after 12 years. Suggest a good investment option to achieve the target with a lump sum investment.For my retirement, please advice the amount I would need to keep in the bank to lead a peaceful life till 80.

Once I move to India I may live in my own house. I am planning to leave the immovable assets to my son as estate. I intend to work only if there is a major shortfall.

— Shankar (name changed on request)

Solutions: As you have not stated your cash position, to arrive at the funds required to meet your goals, we have worked backwards — what could be the ideal corpus that would meet your goals and what you need to invest to get there. If you have Rs 3.6 crore currently, it can earn earn 8 per cent to meet all goals. But if your investment can fetch 12 per cent, you require only Rs 2.9 crore.

In our calculations for education and marriage expenses, we have worked with the assumptions of 8 and 12 per cent returns; and for your monthly expenses an inflation of 7 per cent has been considered.

If you have the required corpus as cash and cash equivalent at this juncture and if you can invest meticulously, you can certainly enjoy a relaxed lifestyle. If your current investments do not match the requirements you have to sell your plots when your daughter is getting married; that is if you don't wish to work.

Education: If you want your children to study medicine you should invest a lump sum of Rs 1.1 crore or Rs 61 lakh, based on your investment style and the ability to earn returns, as suggested earlier. These figures can go down by half if the children happen to pursue engineering. This is the upper limit that you would require and any savings here can be left for your children. For schooling expenses, use the income from the rubber estate and your cottage.

Marriage: Irrespective of inflation, individuals celebrate marriages in a grand manner. An expense of Rs 1.5 crore in 2023 can be achieved if you can invest Rs 60 lakh or Rs 39 lakh (depending on the interest) as a lump sum once you return to India.

Retirement: I think your anticipated monthly expenses of Rs 60,000 are likely to go down once your children settle in their lives. However, for the calculation of the retirement corpus we have taken an inflation-adjusted value of Rs 60,000 throughout your life expectancy. If you invest Rs 1.9 crore and if it earns inflation-adjusted return of 2 per cent, this corpus will take care of you till you turn 80.

To protect longevity risk, it is better to reinvest the life insurance proceeds to protect any shortfall in investment return.

Insurance: As you have decided to hang up your boots, your earnings loss risk is next only to nil. Hence you are not required to buy any life insurance protection plan. However, health risk has the potential to make a dent in your retirement corpus. So we suggest you take health insurance for Rs 5 lakh with an option to increase the sum insured every year rather than availing the premium discount.

Tax Planning: To increase yield on investments, spread the investment based on the financial goals. For instance, if you want to invest in debt schemes for your daughters' marriage, it is better to invest in their names and opt for compounding interest. Once they turn 18, interest income from deposits will be taxed based on their income-tax slab.

Investment: It's important to have a balanced portfolio for orderly investment returns. But your portfolio is skewed towards real estate and debt investments. Some of your goals — such as your son's education and daughter's marriage — are long-term ones. It is better to allocate equally to debt and equity and take 10 per cent exposure to gold. If you can manage 15 per cent from equity and 8 per cent returns from debt and gold, you can achieve a portfolio return of 11.1 per cent.

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