Hi , I am 51 years old & have been working in a reputed private firm . I have been a risk averse & have been investing in Govt securities , EPF & VPF . Current corpus is - 3 cr in Govt securities as principal (NSC , PO TD , KVP) , 3.7 cr in EPF , 10 L in LIC Annulity , 15 L in PMVVY , 9 L in POMIS , 20 L in Sukanya Samriddhi Yojana , 1.2 crore in Bank FD , One house with current value 70 L other than self occupied , will get 25 L as gratulity on voluntary retirement . My only daughter entering college in current year .I wish to retire next year .Please advise future asset allocation post retirement for daughter 's education & marriage alongwith monthly expenditure of 1.5 L pm .
Ans: Congratulations on accumulating a substantial corpus through disciplined investing. Your cautious approach has built a strong foundation for your retirement and future needs. Let's structure a plan to ensure financial stability for your daughter's education, marriage, and your monthly expenses.
Current Financial Snapshot
Govt Securities (NSC, PO TD, KVP): ?3 crores
EPF: ?3.7 crores
LIC Annuity: ?10 lakhs
PMVVY: ?15 lakhs
POMIS: ?9 lakhs
Sukanya Samriddhi Yojana: ?20 lakhs
Bank FD: ?1.2 crores
Gratuity (Expected): ?25 lakhs
House (Investment Property): ?70 lakhs
Monthly Expenditure: ?1.5 lakhs
Financial Goals
Daughter’s Education and Marriage
Monthly Expenditure of ?1.5 lakhs
Maintaining an Emergency Fund
Ensuring Stable Post-Retirement Income
Future Asset Allocation Strategy
1. Daughter’s Education and Marriage
You need to ensure sufficient funds for your daughter’s education and marriage. The key is to invest in low-risk, stable return instruments.
Sukanya Samriddhi Yojana (SSY): Continue this for her education and marriage. It provides a good interest rate and tax benefits.
Bank Fixed Deposits (FDs): You have ?1.2 crores in FDs. Allocate a portion of these towards her education fund, maturing around her college years.
POMIS and PMVVY: These provide regular interest, which can be reinvested or used as needed.
Estimated Allocation:
Education Fund: ?50 lakhs in FDs (adjust the maturity to her college years)
Marriage Fund: Continue SSY contributions and consider an additional ?30 lakhs in FDs maturing around her expected marriage age.
2. Monthly Expenditure
Your requirement is ?1.5 lakhs per month. This can be ensured through a mix of annuities, interest income, and withdrawals from your corpus.
LIC Annuity and PMVVY: These provide regular monthly income. Calculate their combined monthly payout and subtract from your ?1.5 lakh requirement.
EPF and Govt Securities: These can be gradually withdrawn to supplement your monthly income.
Estimated Allocation:
LIC Annuity and PMVVY Monthly Income: Assume ?30,000
EPF and Govt Securities Withdrawals: Regular systematic withdrawals to cover the remaining ?1.2 lakhs monthly
3. Emergency Fund
Maintain a robust emergency fund to cover at least 12 months of expenses. This should be liquid and accessible.
Emergency Fund: ?20 lakhs in liquid mutual funds or savings accounts
4. Investment Property
The second house worth ?70 lakhs can generate rental income or be sold for a lump sum.
Rental Income: Consider renting out the property for additional monthly income. Assume ?25,000 - ?35,000 monthly.
Detailed Asset Allocation Post-Retirement
Low-Risk Investments
Govt Securities: Continue holding for stable returns.
EPF: Withdraw systematically.
Bank FDs: Allocate part for daughter’s education and marriage.
POMIS: Continue for regular interest.
SSY: Continue contributions for daughter’s future.
PMVVY and LIC Annuity: Continue for guaranteed monthly income.
Moderate Risk Investments
Mutual Funds: Consider balanced mutual funds for growth and income. Allocate a portion of your corpus to balanced or conservative hybrid funds to maintain moderate growth.
High Liquidity
Liquid Funds: Maintain an emergency fund of ?20 lakhs for immediate needs.
Savings Accounts: Keep a portion of your funds for monthly expenses.
Suggested Asset Allocation
Education and Marriage Fund:
FDs: ?50 lakhs for education
SSY and FDs: ?30 lakhs for marriage
Monthly Income:
LIC Annuity and PMVVY: ?30,000 per month
EPF/Govt Securities Withdrawals: ?1.2 lakhs per month
Rental Income: ?25,000 - ?35,000 per month
Emergency Fund:
Liquid Funds/Savings Account: ?20 lakhs
Growth and Income:
Balanced Mutual Funds: ?50 lakhs to ?1 crore
Regular Review and Adjustment
Ensure regular review and adjustment of your portfolio to align with changing market conditions and personal needs. Consulting a Certified Financial Planner (CFP) will help you tailor the plan and make informed decisions.
Conclusion
Your disciplined savings and strategic investments have put you on a strong path to a comfortable retirement. By reallocating your assets prudently, you can ensure financial security for yourself and your daughter's future needs.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in