Asked on - May 20, 2024 I am a self employee my age is 33 currently my earning 70k per month I have 2 kids 1 daughter is 7 yrs old and 1 sun is 1 yrs old . Currently I am investing is sip total 5k 1k canara robeco emerging equity fund Gr since 3 yrs 1k Marie asset large and midcap fund Gr since 3yrs 1k HDFC Midcap opportunities fund Gr since 1yrs , 1k Nippon India small cap fund Gr, 1k SBI small cap fund Gr Sukanya lumsum 3/5k/m Ppf 5k/m(Total 5lac) LIC 1500 SINCE 10YRS Pls suggest how much amount invest for kids Higher education & Retirement to get2- 5cr

Ans: Strategic Planning for Financial Security

It's commendable that you're proactively investing in your children's future and planning for your retirement at such a young age. Let's delve into strategic approaches to ensure adequate funding for your children's higher education and secure your retirement goals.

Assessment of Current Financial Position

Before outlining a comprehensive investment strategy, let's assess your current financial situation and investment portfolio.

1. Income and Expenses:

Your monthly income of ?70,000 provides a solid foundation for financial planning. It's essential to balance your expenses, including childcare costs and savings, to ensure sustainable financial growth.

2. Existing Investments:

Your SIP investments across various mutual funds demonstrate a diversified approach to wealth accumulation. Additionally, your allocation towards Sukanya Samriddhi Yojana (SSY), PPF, and LIC reflects a mix of long-term savings and insurance coverage.

Investment Strategy for Children's Higher Education

With a daughter aged 7 and a son aged 1, planning for their higher education is paramount. Let's outline a strategy to ensure adequate funding for their educational needs.

1. Goal Setting:

Estimate the anticipated cost of higher education for both children, factoring in inflation and the duration until they reach college age. This will serve as a benchmark for your savings target.

2. Systematic Investments:

Increase your monthly SIP contributions towards education-focused mutual funds, aiming to accumulate a substantial corpus by the time your children enter college. Consider gradually scaling up your investments as your income grows.

3. Long-Term Savings Vehicles:

Continue investing in SSY for your daughter's education, maximizing the benefits of the scheme's tax-efficient returns. Additionally, maintain regular contributions to PPF to complement your long-term savings strategy.

4. Education Loans:

While prioritizing savings for your children's education, keep education loan options in mind as a supplementary funding source. Evaluate the terms and interest rates offered by various financial institutions to determine their feasibility.

Retirement Planning and Wealth Accumulation

Securing your retirement with a target corpus of ?2-5 crores requires a strategic approach to long-term wealth accumulation.

1. Retirement Goal Setting:

Determine your desired retirement lifestyle and estimate the corpus needed to sustain it comfortably. Consider factors such as inflation, healthcare expenses, and post-retirement activities.

2. Retirement-focused Investments:

Allocate a significant portion of your savings towards retirement-focused mutual funds, pension plans, and other long-term investment vehicles. Prioritize growth-oriented funds with a track record of delivering consistent returns over the long term.

3. Tax Planning:

Optimize your tax liabilities by leveraging tax-saving investment options such as Equity Linked Savings Schemes (ELSS), National Pension System (NPS), and tax-saving mutual funds. Maximize deductions under Section 80C to enhance your savings potential.

4. Regular Review and Adjustment:

Periodically review your investment portfolio and retirement goals to ensure alignment with your evolving financial circumstances and aspirations. Adjust your savings strategy as necessary to stay on track towards achieving your retirement objectives.

Conclusion

By prioritizing systematic investments for your children's higher education and adopting a disciplined approach to retirement planning, you can lay the groundwork for a financially secure future. Regular review and adjustment of your investment strategy, coupled with prudent financial management, will help you achieve your goals effectively.

Best Regards,

K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in