Hi I am 40 years old who is earning 1.2 L per month income working in private sector. I am the only earner in my family. I have one kid who is in PP-2 (5 years old) and wife along with my mother. She is getting pension of 30 K per month. I have one Home Loan of 20L and personal loans of 5L. My sons school fees is 2L per annum. There are not much savings. I am investing in 50K in ICICI Gift Plan and 50K in Reliance Nippon. Started 1 year back. I would like to take suggestion setting up the plan for my child future and also for my retirement plan. I am also thinking of setting up a tea stall in near future. Please suggest

Ans: You are doing your best in a tough situation. Being the only earner, with family and loans, is not easy. You still invest Rs. 1 lakh monthly. That is a strong commitment. Let’s now structure a practical, balanced, and long-term plan. We’ll look at your current income, expenses, loans, and future goals.

You want a proper path for your child’s future and your own retirement. Also, starting a tea stall shows your drive to improve income. Let's plan it from all angles.

Income and Household Review

Your income is Rs. 1.2 lakh per month.

Mother gets pension of Rs. 30,000 per month.

So total household inflow is Rs. 1.5 lakh monthly.

That is a good income level for a four-member family.

Your child’s annual fee is Rs. 2 lakh. It needs monthly setting aside.

You have Rs. 25,000 monthly EMI (roughly) for Rs. 20 lakh home loan.

Rs. 8,000 to Rs. 10,000 likely EMI for Rs. 5 lakh personal loan.

You are investing Rs. 1 lakh monthly. That is very high in current situation.

You are left with little room for other goals or emergencies.

Loan Situation Needs Adjustment

Home loan is fine if EMI is under 30% of income.

You may be paying 25% to 27% of income towards home loan. Acceptable range.

Personal loan of Rs. 5 lakh is short-term pressure.

Interest rate is usually high for personal loan.

Target to close personal loan in next 12 to 18 months.

Till then, reduce monthly investments.

Personal loan closure gives mental peace.

Your Current Investments Need a Review

You invest Rs. 1 lakh monthly. That is almost 67% of salary.

ICICI Gift Plan and Reliance Nippon are likely insurance-based plans.

These are not suitable for wealth creation or child education.

Insurance-cum-investment plans give poor returns.

Their long lock-in and high charges reduce actual gain.

You started one year back. So, minimal lock-in completed.

Ask for surrender value of both policies.

If surrender value is close to premiums paid, consider exiting.

Redeploy funds into diversified mutual funds through MFD with CFP credentials.

Actively managed mutual funds are better suited.

Avoid direct plans. Regular funds with CFP/MFD give right advice.

Direct funds miss personal guidance. Mistakes can be costly.

Building Emergency Buffer is Priority

First, stop new investments till loan EMIs are reduced.

Build Rs. 2.5 lakh to Rs. 3 lakh emergency fund in savings account or liquid fund.

It covers 3 to 4 months of family expenses.

Emergency fund prevents panic in job loss or medical cases.

Use your wife's pension to partly build this buffer.

Avoid investing pension in insurance schemes.

That money must be liquid and easily available.

Child Education Planning

Your child is 5 years now.

College cost is expected to be high 12 to 15 years later.

SIP of Rs. 8,000 to Rs. 10,000 monthly in equity mutual fund is ideal.

Use regular fund route with help of MFD/CFP.

Do not use index funds. They lack fund manager flexibility.

Index funds mirror markets, not good during volatility.

Actively managed funds perform better in long run.

Goal-specific SIPs give better discipline.

Keep these funds separate from your retirement goal.

Retirement Planning Strategy

You are 40 years old now.

Retirement goal is only 18 to 20 years away.

It needs proper fund allocation early.

Pension from mother will not continue forever.

You should aim to build a corpus from age 40 to 58.

Rs. 8,000 to Rs. 12,000 monthly SIP is good for retirement start.

Begin this only after emergency fund and personal loan are settled.

Do not mix retirement planning with child education goal.

Each needs separate tracking and investment.

Setting Up the Tea Stall – Smart Way to Plan

You are thinking of extra income. That is a very good idea.

Tea stall business needs Rs. 1.5 to 2 lakh setup cost.

Don’t take loan for this new venture now.

Use small savings or wait till personal loan closes.

Test it on weekends before going full time.

If business gives Rs. 10,000 to Rs. 15,000 extra income, use it for savings.

Don’t stop current job until business is stable.

Make your wife also a part of the stall if she’s interested.

Extra income will reduce pressure on main salary.

Insurance – A Key Area to Check

You have dependent wife, kid, and elderly mother.

Must have term life insurance cover.

Ideal cover is 12 to 15 times your annual income.

Go for plain term plan only. Avoid ULIP or return plans.

Health insurance for full family is also very important.

Avoid depending only on employer cover.

Check if you have personal health insurance for family.

If not, take one immediately.

Tax Saving Can Be Done Smarter

Current investments in ICICI and Reliance might be tax-saving policies.

Better to use ELSS mutual funds through regular plan.

They give better post-tax returns.

They have 3-year lock-in only.

PPF can also be part of long-term planning for tax saving.

Don't focus only on tax saving. Think about wealth building.

Spending and Budget Control is Important

Track monthly spending habits.

Use a diary or mobile app to write all expenses.

Cut unnecessary spends by 10%.

Don’t use credit cards for non-essential expenses.

Save on luxury items or online shopping.

Focus on family needs and long-term benefits.

Your Action Plan – Step by Step

Stop investment in ICICI and Reliance plans after checking surrender value.

Focus on repaying personal loan in next 12 to 18 months.

Build Rs. 2.5 lakh emergency fund before new investments.

Start SIPs for child education and retirement after loan closure.

Use only regular mutual funds with MFD/CFP support.

Do not choose direct funds. Lack of guidance can cause loss.

Get term insurance and health insurance soon.

Start tea stall only after loan repayment and buffer in place.

Try it part time first to understand business ground.

Finally

You have taken a strong step by asking for help. That shows your vision and intent. Your income is good. But debt and investment mismatch is blocking growth. With right steps, you can create secure future for child and self.

Don’t wait for perfect time. Take small steps now. Review yearly with support of Certified Financial Planner.

Stay focused on planning. Not on shortcuts. This gives peace, growth, and confidence.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment