Donot block your money just for a over draft.


I am 38, self-employed, and my wife, 36, is a home-maker. We have two sons aged 12 and 9. My parents are financially dependent. I have a health cover for ?10 lakh and ?5 lakh for my parents, and term insurance for ?1.5 crore. Most of my investments are in fixed deposits (?50 lakh), and gold (?35 lakh). Occasionally, I take an overdraft (OD) from my FD for business. Please suggest a plan to help me reach my goals.


It is always good to build a portfolio with proper asset allocation. Holding fixed deposits for overdraft (OD) facility is logical, but calculate the post-tax return. Since your OD limit is less than ?25 lakh, there are banks which offer collateral-free OD. So, don’t lock up such huge capital with poor return.Education: The total outgo for four years is ?1.52 crore. So re-allocate ?40 lakh from FDs to a portfolio of mutual funds, gold and fixed deposits to earn post-tax return of at least 10 per cent. This will account for ?71 lakh. To meet the shortfall, invest ?78,000 per month for six years. It should deliver 11.8 per cent return. Inflation is assumed at 7 per cent for all the cases. Invest in an allocation of 60:30:10 in equity mutual fund, debt including debt mutual funds, and gold.

For your second son’s education, invest ?13,000 a month to reach ?25 lakh. For your sons’ marriage, to meet the present value of ?40 lakh, save ?20,400 per month until you reach the target of ?1.22 crore

Retirement: Assume you need ?35,000 per month to meet monthly expenses for you and your spouse. At retirement, it will be ?1.55 lakh, for which you need a corpus of ?4.1 crore and it should earn 1 per cent above the prevailing inflation. To build this corpus, save ?33,000 per month.

The writer is a financial planner and founder,

Send your queries to

(This article was published on May 22, 2016)

Leave a Comment

Your email address will not be published. Required fields are marked *