With limited surplus earmark assets.
I am 50 and self-employed. My wife, 43, is also self-employed. We have a son studying in class nine. We have medical cover for ?5 lakh and term insurance for ?20 lakh and ?10 lakh, respectively.
I will need ?20 lakh for my niece’s marriage in a few years’ time, ?10 lakh for my son’s education and ?35 lakh for his post-graduation studies. I also need to save for my retirement. How do I plan for these goals?
– Balaji
Saving for your niece’s marriage may be a tad difficult. It may be prudent to allocate one of the plots (see table) for this goal. Since real estate is highly illiquid, sell the plot at least one year before her marriage and move the proceeds to fixed deposits.
With regard to your son’s education, for his graduation, you will need ?13.6 lakh over the duration of the course if inflation is at 7 per cent. Invest ?28,400 every month. For his post-graduation you may need ?56 lakh. Save ?40,000 every month. Since you have limited surplus, earmark your existing mutual fund holdings for the goal. If the funds deliver 12 per cent return, the value after seven years will be ?46.4 lakh. To meet the shortfall save ?7,400 every month for the next seven years.
As for retirement goals, your monthly expenses will be ?69,000 at the time of your retirement. You should have a corpus of ?1.14 crore and it should earn more than inflation. Earmark the plots for this goal. Even if the sale value of the plots grows at 7 per cent you can meet the target.
Investment strategy: Invest 60 per cent of your surplus in equity mutual funds, 30 per cent in debt and the balance 10 per cent in gold.
Term insurance: Increase the cover by ?20 lakh.
The author is a financial planner and founder,myassetsconsolidation.com.The author is a financial planner and founder,
myassetsconsolidation.com. Send your queries to FP @thehindu.co.in