I am 36 and work for a private firm. My wife is 32. We have two sons. The eldest is five, while the younger is three. My monthly surplus is ?10,000. While buying a house, I borrowed ?2-lakh from friends, which I need to repay by 2015. My annual premium toward insurance is ?30,207. My home loan will be repaid by 2027. My EPF contribution is ?5,813.

My goals are saving for my sons’ higher education ? for which I may need ?15-lakh for each ? and for my retirement, I would need ?25,000 per month. All figures are in present value. With my income and investment strategy, can I reach all my goals?

– K Saravanan

At the time of buying the flat you could have withdrawn from your EPF corpus rather than taking a loan from friends. This would have helped you build your equity portfolio.

Among your financial assets, you can liquidate either direct equity or mutual funds to pay back the loan. With equity markets in a revival mode, allow the investments to grow and withdraw next year to settle the loan.

With your current surplus, it may not be possible for you to save for all your goals at once. To achieve all the goals, you ought to save a sum of ?20,250 every month, whereas your current surplus is only ?18,000. As your income increases, you can step up your savings.

Education: For your elder son’s education, the ?15-lakh you require now will become ?36.15-lakh, if inflated at 7 per cent (same rate considered for all goals. Earmark the present accumulation in direct equity (the balance after settling the loan), mutual funds, ULIPs and PPF for this goal. Assuming that these assets will deliver returns in the range of 8.5-15 per cent, you will have a shortfall of ?16-lakh. To meet the balance amount, you must save a sum of Rs 4,360 every month and the portfolio should deliver a 12 per cent return (same considered for other goals).

For your younger son, the ?15-lakh required will become ?41.3-lakh by 2029 by the time he qualifies for higher education. To meet the target, you ought to save a sum of ?8,300 every month.

Retirement: The present value of ?25,000 will be ?1.1-lakh at retirement. To receive such an income upon retirement, you should have a corpus of ?2.63-crore and it should earn 1 per cent over and above prevailing inflation to sustain you till you turn 80. If your future EPF contribution, along with that of your employer, increases by 5 per cent every year and the EPF continues to earn 8.5 per cent, it will amount to ?1.64-crore. To meet the shortfall, you ought to save a sum of ?7,600 every month till your retirement. If you fail to achieve the desired returns on your investments, utilise the maturity proceeds of your endowment policies.

In case any medical expense later in life, earmark your plot for this purpose.

Insurance: Buy a new term insurance policy online for ?1.35-crore and discontinue the present term cover when it comes up for renewal.

(The writer is an investment advisor and founder myassetsconsolidation.com. Send your queries tofp@thehindu.co.in)