For Post Graduation avail education loan
I am 43 and am employed with an MNC. My wife (40) is a home-maker. We have a three-year-old son. I have a group health cover for ?6 lakh. I invest only in equity mutual funds, my fund balance is ?6 lakh. Can I reach my goal with this?
Ram
To meet all your goals you must invest ?56,000 per month or ?44,200 if your salary increases by 5 per cent every year. But rising schooling expenses can reduce your surplus. So, if you are unable to save for your son’s post-graduation, take an education loan. If you have the risk appetite, continue with the current asset allocation.
Education (Specialised course): The present value of ?10 lakh will be ?19.6 lakh after 10 years. Invest ?8,500 or ?6,600 a month and increase it by 5 per cent till the goal is reached. For all goals, portfolio return assumed is 12 per cent.
Graduation: It will come to ?25.7 lakh in 14 years at 7 per cent inflation. Save ?4,600 a month, step up by 5 per cent.
PG: The present cost of ?10 lakh will be ?33.8 lakh after 18 years. Invest ?3,400 per month, increase it by 5 per cent every year.
Construction: The present value of ?30 lakh will be ?59 lakh after 10 years. Invest ?20,800 and step it up. Your surplus will be ?2,500. If your salary increases beyond 5 per cent contribute more or avail home loan for the shortfall and repay before you retire.
Retirement: The present monthly expenses of ?20,000 will be ?55,180. You need a corpus of ?1.56 crore to meet the expenses at retirement. Your EPF will account for ?66.6 lakh. If your current mutual fund units earn a 12 per cent return, it will account for ?32.8 lakh. To meet the shortfall of ?56.5 lakh save ?8,750 a month and increase the saving by 5 per cent.
The writer is a SEBI-registered investment advisor and founder, Myassetsconsolidation.com
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