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44-Year-Old With Rs. 31 Lakh Salary: How to Save Rs. 3 Crore for College and Retirement?

Ramalingam

Ramalingam Kalirajan  |8269 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 27, 2025

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more
Chella Question by Chella on Feb 08, 2025Hindi
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Hello Sir, I am 44 and my current salary per annum is 31 lakhs, I have a home loan of 10 lakhs which I am paying emi of 18 k per month, I have an EPF contribution of 50 k per month including additional VPF, a total of 45 lakhs corpus now.. and investing 1.4 lakhs per month in NPS HDFC fund with a total corpus of 6 lakhs. FD of 18 lakhs. SIP index fund nifty 50, 5k per month a total of 2 lakhs.. I have a son 9 year old.. I need to save for his college fees and our retirement.. planning to work for another 10 years.. monthly expense is 50k and Need a corpus of 3 crore, can you please advise how I can reach there?

Ans: I will provide a detailed plan to help you reach your Rs 3 crore target for retirement and your son's education.

Assessment of Your Current Investments
EPF + VPF: Rs 45 lakh corpus with Rs 50,000 monthly contribution is strong.
NPS: Rs 6 lakh corpus with Rs 1.4 lakh monthly contribution is high but has liquidity constraints.
FD: Rs 18 lakh is stable but gives lower returns.
SIP in Index Fund: Rs 5,000 per month with Rs 2 lakh corpus is not the best strategy.
You are saving well, but a better asset allocation is needed.

Issues in Your Current Portfolio
1. Over-Reliance on NPS
NPS has withdrawal restrictions.
Only 60% of maturity corpus is tax-free.
The remaining 40% must be used to buy an annuity.
You may not have full flexibility in retirement.
2. Index Fund Limitation
Index funds give average returns.
Actively managed funds can generate better long-term returns.
Your Rs 5,000 SIP in Nifty 50 can be reallocated.
3. Excess Fixed Deposits
FD rates do not beat inflation.
Keeping Rs 18 lakh in FD will reduce long-term growth.
A better option is debt mutual funds or hybrid funds.
Adjusting Your Investments
1. Retirement Corpus Planning
Your goal is Rs 3 crore in 10 years.
Your EPF and NPS will grow significantly.
Redirect some NPS contributions to mutual funds.
Increase SIPs in well-managed diversified funds.
2. Son’s Higher Education Planning
You need a separate education fund.
Estimate his college cost based on inflation.
Invest in equity mutual funds for growth.
Systematically transfer funds to safer options as the goal nears.
3. Debt Management
Your home loan is Rs 10 lakh with Rs 18,000 EMI.
Continue paying EMI instead of early closure.
Invest surplus funds for better returns.
Recommended Investment Strategy
1. EPF + VPF (Continue as is)
EPF + VPF ensures stable tax-free returns.
Avoid reducing contributions unless liquidity is needed.
2. Reduce NPS Contribution
Reduce monthly NPS contribution from Rs 1.4 lakh to Rs 50,000.
Redirect Rs 90,000 into mutual funds.
This will give better liquidity and flexibility.
3. Increase SIPs in Mutual Funds
Increase SIPs from Rs 5,000 to Rs 1 lakh per month.
Invest in a mix of large cap, mid cap, small cap, and flexi cap funds.
Actively managed funds will deliver better long-term growth.
4. Reallocate Fixed Deposits
Keep Rs 5 lakh in FD for emergencies.
Move Rs 13 lakh into hybrid and debt funds for better returns.
5. Education Goal Investment
Start a dedicated SIP of Rs 25,000 per month in diversified equity funds.
Switch to debt funds 3 years before the goal to reduce risk.
Tax Considerations
Long-term capital gains (LTCG) above Rs 1.25 lakh is taxed at 12.5%.
Short-term capital gains (STCG) is taxed at 20%.
Debt mutual funds are taxed as per your income slab.
Plan redemptions carefully to minimize tax liability.
Final Insights
Reduce reliance on NPS and increase mutual fund investments.
Maintain EPF + VPF contributions for stable returns.
Shift Rs 13 lakh from FD to better-performing options.
Invest separately for your son's education with a dedicated SIP.
Increase SIPs from Rs 5,000 to Rs 1 lakh in well-diversified mutual funds.
This approach will help you reach your Rs 3 crore target efficiently.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

www.holisticinvestment.in

https://www.youtube.com/@HolisticInvestment
Asked on - Mar 06, 2025 | Answered on Mar 06, 2025
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Thank you sir, this is really Helpful !
Ans: You're welcome! If you have any more questions or need further assistance, feel free to ask. Best wishes on your financial journey!

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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