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Ans: Your current financial position is strong and has potential for improvement. You are proactive, which is appreciable. Let us review the situation step by step.

Equity Investments: You have Rs. 25 lakh fully invested in equity with a 13% growth. This is a healthy start, but diversification is necessary to reduce risks.

Insurance: Your LIC investment of Rs. 85,000 annually may not be the most efficient plan. Typically, LIC combines insurance and investment, which leads to lower returns compared to mutual funds.

Medical Cover: Your health insurance coverage of Rs. 20 lakh is reasonable. However, with future adoption plans, a family floater policy with higher coverage may be beneficial.

Real Estate: You own a property worth Rs. 1.75 crore for residential purposes, which is ideal for a stable lifestyle.

Business Revenue: A revenue of Rs. 1.5 crore per annum shows excellent business performance. Your office rent of Rs. 42,000 per month is manageable within this revenue.

Retirement Goal Assessment
Your target corpus of Rs. 2.5 crore in 10 years is achievable. However, it requires disciplined investments and strategic asset allocation. Let us break down the plan.

Building a Corpus of Rs. 2.5 Crore
Invest More in Mutual Funds:

Shift your LIC investment to equity mutual funds. Actively managed mutual funds, when invested through a Certified Financial Planner, deliver higher returns than ULIPs or traditional policies.
Invest in diversified funds with a balanced mix of large-cap, mid-cap, and small-cap funds.
Increase Monthly SIPs:

Start or increase systematic investment plans (SIPs) in mutual funds. Considering your goal and timeframe, allocate a minimum of Rs. 1 lakh monthly into equity mutual funds.
Emergency Fund:

Maintain a 6-month emergency fund in a liquid mutual fund or bank account for unforeseen expenses. This prevents dipping into your investments during emergencies.
Asset Allocation:

Allocate 80% of your investments in equity for growth and 20% in debt for stability. Adjust this allocation closer to retirement.
Tax Efficiency:

Use long-term capital gains (LTCG) exemption limits to reduce tax outgo. Equity mutual funds attract LTCG tax of 12.5% above Rs. 1.25 lakh annually.
Insurance Review:

Surrender your LIC policy and switch to a term insurance plan. Term plans provide higher coverage at a lower cost. Use the freed-up funds for investments.
Consider Child Expenses:

After adoption, start a dedicated fund for your child’s education and future needs. Use equity funds for long-term education goals.
Strengthening Health Insurance
Upgrade Coverage:

Increase your health insurance to Rs. 50 lakh with a family floater policy. Include critical illness coverage for additional protection.
Premium Management:

Ensure premiums remain below 2-3% of your annual income for cost efficiency.
Top-Up Plans:

Opt for super top-up health insurance plans for enhanced coverage at lower premiums.
Managing Business Revenue
Optimize Surplus Funds:

Invest any business surplus systematically. Avoid keeping large amounts idle in current accounts.
Business Contingency Fund:

Set aside at least 6 months of office rent and expenses in a business-specific liquid fund.
Professional Help:

Consult a Certified Financial Planner to review business finances and recommend suitable investment vehicles.
Key Recommendations for Retirement
Focus on Equity:

Equity delivers higher inflation-adjusted returns. Maintain a significant equity allocation till 5 years before retirement.
Debt Transition:

Gradually increase your allocation to debt funds or fixed deposits after 5 years for stability.
Target Income Post-Retirement:

Plan for regular monthly income through SWP (Systematic Withdrawal Plan) in mutual funds.
Avoid Annuities:

Annuities have low returns and inflexible terms. SWPs are a better alternative.
Monitor Portfolio:

Review your portfolio annually with a Certified Financial Planner to stay aligned with your goals.
Evaluating LIC Policy
Low Returns:

LIC policies often give returns between 4-6%, which is lower than inflation.
Switch to Mutual Funds:

Surrender your policy and invest the proceeds into equity mutual funds for better growth.
Term Insurance:

Replace LIC with a Rs. 1 crore term insurance plan. This will ensure adequate financial security for your family.
Financial Discipline
Automate Investments:

Set up automatic SIPs to ensure disciplined investing.
Control Expenses:

Maintain a detailed budget and control unnecessary expenses.
Emergency Preparedness:

Keep insurance policies and emergency funds updated for peace of mind.
Final Insights
With consistent investments and proper financial planning, you can achieve your goal. Focus on equity for growth and debt for stability closer to retirement. Adjust your insurance, optimize business surpluses, and plan for future child expenses.

Adopt a disciplined approach to investing and review your plan regularly.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment