Hi, Am 50 yrs old and my wife is 49..we both earn around 4.80 lacs p.a. We have invested around 1 Cr in MF, 1.5 Cr in FDs, 2 investment properties worth 2 Cr, 50 lacs in Equity shares, 50 lacs in ULIPs and 1 Cr in PF. Our estimated requirements are around 1.5 Cr in kids education, 50 lacs in kids marriages and monthly income of around 2 lacs after we leave jobs in another 2 yrs..pls suggest a suitable plan.

Ans: It's great to see you're thinking about your financial future. Planning for your children's education and your retirement is essential. Let's look at your investments and liabilities to better plan for these goals.

Evaluating Your Current Investments
Mutual Funds (MF): 20 Lakhs

Mutual funds are a great way to diversify your portfolio. Actively managed funds offer professional management and have the potential to outperform index funds. They can adapt to market changes and provide better returns.

Fixed Deposits (FD): 15 Lakhs

FDs are safe, but their returns barely beat inflation. They should be part of your portfolio for liquidity and safety, but not for growth.

Equities: 6 Lakhs

Direct equity investments can yield high returns but come with higher risk. Diversification is key here to manage risk.

Employee Provident Fund (EPF): 20 Lakhs

EPF is a stable investment for long-term savings and provides tax benefits. It’s excellent for retirement planning due to its consistent returns and government backing.

National Pension System (NPS): 6 Lakhs

NPS offers good returns with tax benefits. It's a smart addition for retirement planning, providing a mix of equity and debt exposure.

Public Provident Fund (PPF): 4 Lakhs

PPF is another safe investment with tax benefits. It’s suitable for long-term goals due to its tax-free returns and safety.

Gold: 5 Lakhs

Gold acts as a hedge against inflation but doesn’t generate regular income. It’s good to have some gold, but it shouldn't be a major part of your portfolio.

Assessing Your Liabilities
Home Loan: 25 Lakhs Pending

Home loans come with tax benefits, but it's crucial to manage them wisely. Reducing this liability can free up funds for other investments.

Car Loan: 5 Lakhs Pending

Car loans have no tax benefits and should be paid off quickly to reduce interest outflow.

Strategic Financial Planning
Prioritizing Goals

Children’s Education
Retirement
Let’s break down how to align your investments with these goals.

Children’s Education Planning
Start an Education Fund

Estimate the future cost of education considering inflation. Invest in diversified mutual funds as they offer potential for high returns. This can help you build a substantial corpus over time.

Regular Contributions

Make systematic investments (SIPs) in mutual funds specifically earmarked for your children’s education. This will ensure disciplined savings and harness the power of compounding.

Retirement Planning
Maximize EPF and NPS Contributions

Continue maximizing your EPF contributions and invest regularly in NPS. These are tax-efficient ways to build your retirement corpus.

Diversified Mutual Funds for Retirement

Invest in diversified mutual funds for higher growth potential. Actively managed funds can adapt to market conditions and provide better returns compared to index funds.

Maintain Liquidity with FDs and PPF

Keep some investments in FDs and PPF for liquidity and safety. They can serve as an emergency fund or provide stable returns during market downturns.

Managing Liabilities
Home Loan Prepayment

Consider prepaying your home loan partially. This can significantly reduce the interest burden and free up funds for other investments.

Pay Off Car Loan

Aim to clear your car loan quickly. It’s a high-interest liability without any tax benefits. Paying it off will improve your cash flow.

Insurance Review
Life Insurance

Ensure you have adequate life insurance coverage. Term insurance is cost-effective and provides substantial coverage for your family’s financial security.

Health Insurance

With a family, comprehensive health insurance is crucial. Ensure your policy covers major medical expenses to avoid dipping into your savings.

Regular Review and Rebalance
Portfolio Review

Regularly review your investment portfolio. Ensure it aligns with your goals and risk tolerance. Rebalance it periodically to maintain the desired asset allocation.

Stay Informed

Keep yourself updated on market trends and economic changes. This will help you make informed investment decisions and adjust your strategy as needed.

Advantages of Regular Funds over Direct Funds
Professional Advice

Investing through a Certified Financial Planner (CFP) provides access to professional advice. CFPs can help you choose the right funds based on your goals and risk profile.

Expertise and Guidance

CFPs offer valuable insights and guidance, ensuring your investments are well-managed. This can result in better performance and goal achievement.

Ease and Convenience

Regular funds through a CFP provide ease and convenience in managing your investments. They handle the paperwork, monitor fund performance, and make necessary adjustments.

Disadvantages of Index Funds
Lack of Flexibility

Index funds track the market index and cannot adapt to changing market conditions. This limits their ability to outperform in different market scenarios.

Market Risks

Index funds are fully exposed to market risks. During market downturns, they can suffer significant losses without any defensive measures.

Lower Returns Potential

Actively managed funds, with expert fund managers, have the potential to outperform the market and generate higher returns. Index funds lack this advantage.

Holistic Approach to Financial Planning
Emergency Fund

Maintain an emergency fund with 6-12 months’ worth of expenses. This will provide a safety net during unforeseen events without disrupting your long-term goals.

Tax Planning

Optimize your tax planning to maximize savings. Use tax-saving instruments and exemptions effectively to reduce your tax liability.

Retirement Corpus Estimation

Estimate the corpus required for retirement considering inflation and lifestyle. This will help you set realistic goals and work towards achieving them.

Estate Planning

Plan your estate to ensure your assets are distributed as per your wishes. This includes drafting a will and considering other legal aspects.


Your dedication to securing your family's future is commendable. Balancing children’s education and retirement planning is a challenging task. Your proactive approach will yield positive results.


Your diverse investment portfolio shows you have a good understanding of financial planning. With a few strategic adjustments, you can achieve your financial goals more efficiently.

Final Insights
To summarize, align your investments with your goals, prioritize education and retirement, manage your liabilities effectively, and regularly review your portfolio. Investing through a Certified Financial Planner can provide expert guidance and improve your financial planning.

Your proactive steps today will ensure a secure and prosperous future for your family. Keep up the good work!

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: You and your wife, both aged 34, are in a solid financial position, each earning Rs. 1.30 lakhs per month in the IT sector. You have two young children, one in 2nd class and the other just 6 months old. Your family’s financial situation involves various assets and liabilities, including real estate, stocks, gold, and insurance policies. You’ve taken significant steps to secure your future, but with some strategic guidance, you can optimise your financial planning further.

Financial Analysis
Income and Expenses
Monthly Income: Rs. 2.60 lakhs (combined)
Monthly Expenses: Rs. 45,000
Home Loan EMI: Rs. 47,000
Daycare Fees: Rs. 20,000
School Fees: Rs. 1.10 lakhs annually (approx. Rs. 9,167 monthly)
Assets
Term Insurance: Rs. 57,000 per annum
Life Insurance: Rs. 18,000 per annum
Home Value: Rs. 1 crore (current)
Plots Value: Rs. 50 lakhs
PF Balance: Rs. 23 lakhs
Stocks: Rs. 7 lakhs (profit Rs. 2 lakhs)
Gold: 220 grams
Cash on Hand: Rs. 30 lakhs
Liabilities
Home Loan Balance: Rs. 15 lakhs (3 years remaining)
Key Financial Goals
Children’s Education
Retirement Planning
Emergency Fund Creation
Medical Insurance Post-Retirement
Detailed Financial Planning
Children’s Education
Short-Term Education Plan

Your elder son’s school fees and upcoming daycare expenses for your younger son necessitate a dedicated fund. You can utilise short-term debt funds or fixed deposits for this purpose. These are low-risk options that ensure the money is available when needed without much volatility.

Debt Funds: These are mutual funds that invest in fixed income securities like bonds and treasury bills. They provide better returns than savings accounts and fixed deposits while maintaining low risk.
Fixed Deposits: These are safer but typically offer lower returns compared to debt funds. They are good for very short-term needs.
Long-Term Education Plan

For higher education, investing in equity mutual funds is advisable. Equity mutual funds offer high returns over a long period, making them suitable for goals that are 10-15 years away. Starting a Systematic Investment Plan (SIP) in these funds can help in averaging the cost of investment and compounding over time.

Equity Mutual Funds: These funds invest in stocks and aim for high growth. While they are riskier, they also offer the potential for higher returns over the long term.
SIP: A Systematic Investment Plan allows you to invest a fixed amount regularly in mutual funds. It helps in averaging out the purchase cost and harnessing the power of compounding.
Recommended Strategy

Short-Term: Invest in debt funds or fixed deposits for immediate schooling needs.
Long-Term: Start SIPs in equity mutual funds for higher education goals.
Retirement Planning
Utilise PF Wisely

Your Provident Fund (PF) balance is a significant asset. Continue contributing to your PF, as it’s a safe and tax-efficient way to build your retirement corpus. The power of compounding will help grow this amount substantially by the time you retire.

Diversified Investment Portfolio

In addition to PF, consider diversifying into equity mutual funds for better growth. These funds provide higher returns compared to traditional savings schemes. Adding some balanced or hybrid funds can help mitigate risks while still aiming for growth.

Retirement Corpus Calculation

Estimate your retirement corpus considering your desired retirement age, lifestyle, and inflation. Use this to set a monthly investment target. Regularly review your investments and adjust your SIP amounts to ensure you stay on track to meet your retirement goals.

Balanced/Hybrid Funds: These funds invest in a mix of equity and debt. They are less risky than pure equity funds but offer better returns than debt funds.
Regular Review: Periodically assess your investments and adjust based on performance and changing financial goals.
Recommended Strategy

EPF/PPF: Continue contributions to your Employee Provident Fund (EPF) and consider opening a Public Provident Fund (PPF) for additional tax-saving benefits.
Mutual Funds: Invest in equity and balanced mutual funds via SIP.
Emergency Fund Creation
Importance of Emergency Fund

An emergency fund is essential for unexpected expenses like medical emergencies, job loss, or urgent home repairs. Aim to save 6-12 months of expenses.

Investment Options

Keep your emergency fund in liquid funds or a high-interest savings account. These options offer easy access and reasonable returns.

Steps to Build

Start by setting aside a fixed amount every month. Automate this transfer to ensure consistency. Use part of your current cash on hand (Rs. 30 lakhs) to create this fund.

Liquid Funds: These mutual funds invest in very short-term instruments and provide liquidity with better returns than savings accounts.
High-Interest Savings Accounts: Offer immediate access and higher interest rates compared to regular savings accounts.
Recommended Strategy

Target Amount: Save 6-12 months of living expenses in liquid and easily accessible funds.
Investment Options: Use liquid funds and high-interest savings accounts.
Medical Health Insurance Post-Retirement
Assess Current Coverage

You currently have Rs. 16 lakhs coverage from your employers. This is good, but consider additional personal health insurance for comprehensive coverage. This ensures you’re protected even after retirement.

Long-Term Health Insurance

Look for family floater health plans that cover you, your wife, and your children. Choose a plan with lifetime renewability and adequate sum insured. Also, consider critical illness insurance for added protection.

Family Floater Plans: These plans cover all family members under a single policy. Ensure it offers sufficient coverage for all members.
Critical Illness Insurance: Provides a lump sum payout if diagnosed with specified serious illnesses. This can help cover costs not covered by regular health insurance.
Recommended Strategy

Personal Health Insurance: Opt for a family floater plan with lifetime renewability and a higher sum insured.
Critical Illness Insurance: Consider adding this for extra coverage against serious illnesses.
Investing Rs. 30 Lakhs Cash on Hand
Avoid Real Estate Investment

Instead of buying another house, which ties up funds and incurs maintenance costs, invest in financial instruments that offer liquidity and growth. Real estate investment, while potentially profitable, lacks the flexibility and liquidity you might need.

Investment Options

Equity Mutual Funds: For long-term growth. Allocate a significant portion to these funds. They offer higher returns and can be withdrawn partially when needed.

Debt Funds: For stability and moderate returns. Good for medium-term goals and partial withdrawals.

Hybrid Funds: Balance between equity and debt. Lower risk compared to pure equity funds but higher returns than debt funds.

Systematic Withdrawal Plans (SWP): Invest lump sum in mutual funds and withdraw a fixed amount regularly. Useful for supplementing income post-retirement.

Equity Mutual Funds

Long-Term Wealth Building: These funds are ideal for creating long-term wealth. Investing Rs. 30 lakhs here can yield significant returns over 10-15 years.
Partial Withdrawals: You can withdraw money partially when needed, providing flexibility.
Debt Funds

Stability and Returns: They offer more stability and are suitable for medium-term goals.
Safety: Less volatile than equity funds, making them a safer option for conservative investors.
Hybrid Funds

Balanced Growth: These funds offer a mix of safety and growth, making them suitable for medium to long-term investments.
Risk Mitigation: Less risky than pure equity funds, they provide a balanced approach to investing.
Systematic Withdrawal Plans (SWP)

Regular Income: Invest a lump sum in mutual funds and withdraw a fixed amount regularly.
Post-Retirement: SWPs can provide a regular income stream, supplementing your retirement corpus.
Recommended Strategy

Equity Mutual Funds: Invest a significant portion for long-term wealth building.
Debt Funds and Hybrid Funds: For medium-term stability and growth.
SWP: To create a regular income stream post-retirement.
Final Insights
You’re in a strong financial position with a good income and diverse assets. Focus on clearing your home loan and maintaining your insurance.

Prioritise building an emergency fund and investing in mutual funds for your children’s education and your retirement. Avoid additional real estate investments. Instead, leverage equity and debt mutual funds for liquidity and growth.

Regularly review and adjust your financial plan to stay on track. Consider working with a Certified Financial Planner to optimise your strategy and ensure you meet your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in