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Sushil

Sushil Sukhwani  |543 Answers  |Ask -

Study Abroad Expert - Answered on Aug 13, 2024

Sushil Sukhwani is the founding director of the overseas education consultant firm, Edwise International. He has 31 years of experience in counselling students who have opted to study abroad in various countries, including the UK, USA, Canada and Australia. He is part of the board of directors at the American International Recruitment Council and an honorary committee member of the Australian Alumni Association. Sukhwani is an MBA graduate from Bond University, Australia. ... more
Sumeet Question by Sumeet on Aug 08, 2024Hindi
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Hi,if one plans to study abroad may be in Australia,is is better to go after class 10th or 12th ?

Ans: Hello Sumeet,

First and foremost, thank you for getting in touch with us. To answer your question first, I would like to tell you that going to study abroad in Australia post completing your 12th grade is generally preferable for the simple reason that you will have a stronger educational background, as well as access to a broader selection of university-level programs in Australia.

For more information, you can visit our website: www.edwiseinternational.com

You can also follow us on our Instagram page: edwiseint
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Sushil

Sushil Sukhwani  |543 Answers  |Ask -

Study Abroad Expert - Answered on May 17, 2023

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Sir,i am actually way more confused in which stream to choose after my 12th..iam just interested in too many things..and i just feel like i don't have a proper path to move on..i want to continue my studies after degree abroad..and it's just that i don't know what would be best to choose gor degree.
Ans: Hello Yumi,

To begin with, thank you for contacting us. After completing your 12th grade, selecting a field of study might be difficult, especially if you have a variety of interests. Many others experience similar difficulties, so it's normal to feel perplexed at this point. We completely comprehend, and we want you to know that you are not alone. Following the completion of your degree, consider the following ideas to aid in your decision-making and set you on the right course:

1. Self-reflection: Spend some time thinking about your hobbies, qualities, and long-term objectives. Think about the things that really interest you and where you envision yourself in the future. Consider your favourite skills and the professions that share your interests.

2. Investigate and learn: Investigate several professions that fit your interests. Find more about the educational requirements, employment outlook, and career development options for various professions. Talk to experts in such fields or seek advice from career counselors who can offer insightful analysis.

3. Set your priorities: While having a variety of interests is fantastic, it can be useful to rank them according to your level of excitement and long-term objectives. Think about the professions that give greater opportunity to study abroad or that have better chances to advance globally. Selecting a stream that integrates some of your interests or allows you to study interdisciplinary topics may be advantageous.

4. Seek counsel and direction: Speak to the people who know you best, viz. your parents, professors, and mentors. Talk to them about your goals and concerns. Using their expertise and knowledge, they can provide advice.

5. Take the aptitude: Examine your academic accomplishments and areas for improvement. Study overseas consultants in general are aware of the challenges students experience while choosing a course of study for higher education. An aptitude test and a program called the APP for career guidance is conducted in order to meet these expectations. Evaluate your knowledge, academic standing, and your preferred subjects of study.

6. Examine your possibilities for studying abroad: Consider international schools or institutions that have courses that interest you. Look at their eligibility requirements, financial aid options, and any requirements for international students. Speaking with educational experts who focus on assisting students with their international studies may also be beneficial. We'd be happy to help you if you could provide us with your contact information.

Remember that your degree choice is not final; many people change careers or continue their education in later life. It's important to pick a career path that appeals to you right now and offers a strong basis for your future endeavours. Trust your gut, learn as much as you can, and decide based on what seems right for you.

For more information, you can visit our website.

..Read more

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Hello Sir, my age is 37 and I am currently employed in the private sector with a monthly salary of 1.75 lakhs. I would like to provide a summary of my financial situation and seek advice on how much corpus I would require to comfortably retire at the age of 45. Current Financial Overview: Real Estate: 3.5 crores (includes 3 houses and a plot) Stocks: 7.5 lakhs Mutual Funds: 13.5 lakhs Corporate Bonds: 2 lakhs Employees' Provident Fund (EPF): 21.5 lakhs Public Provident Fund (PPF): 8.5 lakhs (investing since 2013) PPF (Wife’s Name): 1.5 lakhs (invested this year, continue to invest the same amount each year) Gold: 20 lakhs Home Loan: 23 lakhs (balance with LIC), Planning to close within 1 year time-frame. Systematic Investment Plan (SIP): Investing 30,000 monthly (recently started, 3 months ago) Term Insurance: 1 crore (premium of approximately 35,000 annually) Health Insurance: Company-provided (7.5 lakhs limit) National Pension System (NPS): Investing 50,000 annually (started this year) Monthly Expenses: 50,000 (including child’s fees and other expenditures, excluding investments) & Investing 50K in Gold every month. Family Details: I have a 6-year-old son and am expecting a new baby in October 2024. My wife is a homemaker. Could you please provide guidance on how much corpus I would need to retire comfortably at 45, considering my current financial situation and future goals? Thank you for your assistance.
Ans: You've outlined a comprehensive overview of your financial landscape, which provides a solid foundation for planning your retirement. With a goal to retire at 45, you have eight years to build and secure a sufficient corpus to ensure a comfortable retirement for you and your family.

Key Financial Assets and Liabilities
Real Estate: Rs 3.5 crore
Stocks: Rs 7.5 lakhs
Mutual Funds: Rs 13.5 lakhs
Corporate Bonds: Rs 2 lakhs
EPF: Rs 21.5 lakhs
PPF: Rs 8.5 lakhs (self), Rs 1.5 lakhs (wife)
Gold: Rs 20 lakhs
Home Loan: Rs 23 lakhs (planning to close in 1 year)
SIP: Rs 30,000 per month (recently started)
NPS: Rs 50,000 annually (started this year)
Insurance: Term insurance of Rs 1 crore, company-provided health insurance of Rs 7.5 lakhs
Monthly Expenses: Rs 50,000 (excluding investments)
Evaluating Your Retirement Corpus Needs
To determine the corpus required for retirement at 45, we need to consider several factors, including your expected expenses during retirement, inflation, and the number of years you plan to be retired.

1. Estimate Post-Retirement Expenses:
Current Monthly Expenses: Rs 50,000 (excluding investments)

Inflation Adjustment: Assuming an average inflation rate of 6%, your current monthly expenses will likely increase by the time you retire.

Post-Retirement Monthly Expenses: Assuming you maintain a similar lifestyle, and considering inflation, your monthly expenses could rise to approximately Rs 80,000 by the time you retire.

Yearly Expenses: Rs 80,000 x 12 = Rs 9.6 lakhs annually at retirement age.

2. Determine the Number of Years in Retirement:
Retirement Age: 45 years
Life Expectancy: Assuming you plan up to 85 years, you'll need to plan for 40 years of retirement.
3. Estimate Required Corpus:
Corpus Required: The corpus needed to sustain your lifestyle for 40 years considering inflation, and safe withdrawal rates.
Assumptions:
Post-retirement, you could adopt a safe withdrawal rate of 4% annually.
Expected returns on the retirement corpus post-retirement could be around 7%.
Using these assumptions, the corpus required to sustain annual expenses of Rs 9.6 lakhs for 40 years with a 4% withdrawal rate can be calculated.

4. Corpus Calculation:
Given the complexities of long-term retirement planning, a simplified method to estimate the corpus is:

Corpus Calculation Formula:
Annual Expenses at Retirement Age (Rs 9.6 lakhs) x 25 = Rs 2.4 crores
This formula is based on the 4% rule, which suggests that if you withdraw 4% of your corpus annually, your savings should last for 30-40 years.

However, considering the uncertainties and potential changes in your lifestyle, a more conservative approach would be to plan for a corpus of around Rs 3-4 crores. This takes into account potential healthcare costs, lifestyle changes, and other unforeseen expenses.

Current Asset Evaluation and Future Planning
Now, let’s break down how your current assets can contribute towards building the required corpus and what additional steps are necessary.

1. Real Estate: Rs 3.5 Crores
Real estate is a significant part of your net worth. However, liquidity is an issue with real estate.
You might want to consider whether you plan to keep these properties for rental income, sell them closer to retirement, or downsize.
2. Stocks: Rs 7.5 Lakhs
Your current stock portfolio is modest. Over the next 8 years, aim to increase your investment in stocks through systematic investments (SIPs or direct stock purchases) to leverage market growth.
3. Mutual Funds: Rs 13.5 Lakhs
Continue your SIPs, and consider increasing the amount when feasible. Diversify into equity funds with a good track record, and consider a mix of large-cap, mid-cap, and hybrid funds to balance risk and return.
4. Corporate Bonds: Rs 2 Lakhs
While bonds are safer, they offer lower returns. It’s good to have them for stability, but focus more on equity for growth at this stage.
5. EPF and PPF: Rs 31.5 Lakhs
Your EPF and PPF investments are doing well. Continue with these contributions as they provide tax-free returns and security. Consider increasing your contribution to PPF if possible, as it offers a secure, long-term return.
6. Gold: Rs 20 Lakhs
Your monthly investment of Rs 50,000 in gold is significant. While gold is a good hedge against inflation, it should not dominate your portfolio. Consider reducing the monthly investment in gold and reallocating some of these funds into equity SIPs or mutual funds to enhance growth.
7. Home Loan: Rs 23 Lakhs
Closing this loan within a year is a wise decision, as it will free up cash flow and reduce your financial liabilities, allowing you to invest more aggressively for your retirement.
8. NPS: Rs 50,000 Annually
Since you’ve just started investing in NPS, it’s a good tax-saving tool with the added benefit of a pension. Continue with this investment, as it will provide you with a regular income post-retirement.
9. Term Insurance and Health Insurance
Your term insurance cover of Rs 1 crore is adequate. Ensure it is kept active as it provides financial security for your family. Review your health insurance coverage to ensure it meets your future needs, especially as your family grows.
Future Investment Strategy
Given your current asset base and retirement goal, here’s a roadmap to help you reach your target:

1. Increase Equity Investments
With 8 years to retirement, your portfolio should have a higher equity exposure to maximize growth. Gradually increase your SIP amounts in equity mutual funds or direct stocks.
Consider reallocating some of your monthly gold investment into equity funds to enhance returns.
2. Diversify Mutual Fund Investments
While continuing with your current SIPs, consider adding diversified equity funds and index funds to your portfolio. A balanced mix of large-cap, mid-cap, and small-cap funds will provide the necessary growth potential.
3. Consider Additional Real Estate Monetization
Evaluate if selling one of your real estate holdings closer to retirement could provide liquidity and enhance your retirement corpus. Alternatively, rental income can supplement your retirement income, but be cautious about the management and upkeep costs.
4. Maximize Tax-Advantaged Accounts
Continue contributing to your PPF and NPS accounts, as PPF provides tax-free returns and NPS contributes to a secure retirement corpus. Maximize contributions to these accounts within the allowable limits.
5. Focus on Debt Repayment
Prioritize closing your home loan within the next year. Once this debt is cleared, redirect the EMI amount into your retirement savings.
6. Emergency Fund
Ensure you have a sufficient emergency fund, equivalent to at least 6 months of expenses, to cover any unforeseen events without dipping into your retirement savings.
7. Plan for Healthcare and Child’s Education
Given that your family is growing, it’s essential to plan for increased healthcare needs and your children’s education expenses. Consider setting up dedicated funds for these goals, separate from your retirement corpus.
Regular Monitoring and Review
Retirement planning is dynamic. It’s crucial to review your investments regularly, at least once a year, to ensure they are aligned with your retirement goals. Adjust your strategy as needed based on market conditions, changes in your financial situation, and progress towards your retirement target.

Final Insights
Based on your current financial situation and assuming disciplined investment and regular reviews, accumulating a corpus of Rs 3-4 crores by the time you retire at 45 is feasible. This corpus, combined with your real estate assets and other investments, should provide a comfortable retirement with a reasonable withdrawal strategy.

Focus on increasing your equity exposure, reducing unnecessary debt, and ensuring your portfolio is well-diversified to achieve higher growth. As you approach retirement, gradually shift your portfolio towards more stable, income-generating assets to preserve your capital.

Retirement planning requires careful consideration of both current and future needs. By staying committed to your investment strategy and making informed adjustments, you can secure a financially independent retirement at 45.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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