I am 29 years old and recently had a child. My net salary is Rs 1 lakh a month.

I purchased a house last year with a loan of Rs 27.95 lakh. The EMI is Rs 31,000 for 15 years.

I have a monthly surplus of Rs 40, 000. Starting last year, I have started investing in PPF with Rs 40,000 as the contribution. I wish my daughter studies to become a doctor, for which I need to accumulate a sum in the next 18 years.

Also, I want to invest in MFs through SIPs and wish to buy an insurance cover for Rs 1 crore.

Do I need to take a medical insurance policy? I am also planning to build a house for my parents next year, for which I may take a loan of Rs 10 lakh. How do I save for my daughter's education?

— Kalyan Pawar

When the age is on your side , it is always better to look out for a comprehensive financial plan.

When you start saving early for retirement, due to the compounding factor, you need to save less. Since you have adequate surplus, start factoring retirement goals along with your daughter's education and marriage.

Education

A management quota seat for an MBBS degree costs over Rs 20 lakh. If inflation continues to average at 7 per cent, when she turns 18, the cost will be Rs 68 lakh. If you save Rs 6,840 a month and if your investment earns 12 per cent, you can reach the target. If household expenses are inflated at 7 per cent you should have a retirement corpus of Rs 3.4 crore. The assumption made is that you will need at least 70 per cent of your current monthly expenses post retirement. To reach there, you need to save a sum of Rs 11,000 for 348 months and it should earn 12 per cent returns. This will help you to sustain yourself till you turn 80.

Insurance

With another home loan, your liability itself will be Rs 40 lakh. Hence, take a term insurance for Rs 1.25 crore to protect all your goals. Since you have no medical cover, take a floater medical insurance policy for Rs 4 lakh.

Investment strategy

Since you are a beginner in equity investments, start with large-cap funds such as Franklin India Bluechip, DSP BR Top 100 or HDFC Top 200. For the first year allocate 60 per cent of the savings in equity and as you gain confidence scale it to 70 per cent. Continue with your PPF investments.

I am 39 years old. I have been making SIP investments in the following mutual funds and ETFs.

DSPBR Top 100 Equity VIP for Rs 5,000 since December 2010.

I also do SIPs in Franklin India Bluechip - Rs 5,000, Rs 2,500 in IDFC Premier Equity and one gram in Gold BeES from January 2012.

The total value of investments in Reliance Equity Opportunities is Rs 59,000.

I have started an investment of Rs 5,000 in the New Pension Scheme with 50 per cent allocation to equity.

My monthly expenses are about Rs 20,000.

How much do I need to save for my retirement, if I finish working at 55. I may live till 80.

I have Rs 10 lakh in bank fixed deposits to take care of my son's educational expenses after 7 years.

I am willing to invest an additional Rs 15,000 a month. 

I have three Jeevan Anand policies with sum assured of Rs 5 lakh each, Komal Jeevan policy with sum assured of Rs 2 lakh. Both mature in 2029.

I have paid a one time premium of Rs 1.5 lakh in a ULIP. I have mediclaim for Rs 3 lakh.

— V.Srinivasa Rao

If you are eager to save for your retirement through MFs, you should do so judiciously.

If your present annual household expenses are inflated at 7 per cent, at retirement you will need Rs 7 lakh.

Assume you need 70 per cent of this annually after retiring, at 55, you should have a corpus of Rs 1.1 crore.

This amount should earn inflation-adjusted return of one per cent for you to sustain till 80 years.

Invest a sum of Rs 12,500 through SIPs, and it should earn 12 per cent return.

Then, after 192 months you can reach a corpus of Rs 72 lakh.

If your investment in MF reaches the target well ahead of your retirement, shift the proceeds to debt.

If your investment in NPS delivers average returns of 9 per cent, your retirement kitty will be Rs 21 lakh.

To meet the shortfall, invest your surplus in balanced debt-oriented funds.

Since you have adequate investments in insurance, allocate higher surplus towards retirement, once your son's education is completed.

Four years before your retirement, increase your medical insurance to Rs 8 lakh.

sureshpartha@thehindu.co.in

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