Hello Sir, I am 46 Y old . Recently i lost my job and serching for Job . I have 3 Flats , 80 L , 80L, 1.5 Cr . I have loan of 2 nd flat 6 L and Vila Loan 1,18 Cr . I have savings 15 L Mutual Fund, 9 L FD. 10L Govenment bonds, 17.5 L PPF(Eife)....

Hello Sir, I am 46 Y old . Recently i lost my job and serching for Job . I have 3 Flats , 80 L , 80L, 1.5 Cr . I have loan of 2 nd flat 6 L and Vila Loan 1,18 Cr . I have savings 15 L Mutual Fund, 9 L FD. 10L Govenment bonds, 17.5 L PPF(Eife). 7.5 L PPF(Myself), 2.5L gold bond, 2.5 L shares. EPF 72 L . I require 40 L for my daugter education in 4 year Span starting from 2024-2028. I require 40 L for my son education 2028-2032. If i sell my two flats and do loan free the Vila , I left with 40 L . I see visiblity of 30 L for my son and daughter education and left with 1.2Cr as saving . For house hold my wife earn 52 K which is ok for us monthy usage. Please help me a programe so that i can full fill my retirement objection ( 50K) per month . I may get job or not but want to secure the future of children as wella s my retietment . Please suggest .

Ans: I understand your situation and your desire to secure your children's education and your retirement. Let's outline a plan to achieve your objectives:

Education Fund for Children:
You have visibility of 30 lakhs for your children's education, which is a good start. To bridge the gap, consider allocating a portion of your remaining savings towards an education fund. You can invest in diversified mutual funds or fixed income instruments based on your risk tolerance and investment horizon.
Additionally, explore scholarship opportunities and educational loans to reduce the financial burden.
Debt Management:
Selling two flats to become loan-free on the villa is a prudent move to reduce debt burden. It will also free up cash flow for other financial goals.
Consider refinancing or restructuring the villa loan to reduce interest payments and accelerate debt repayment.
Retirement Planning:
With 1.2 crores in savings, you can create a retirement corpus through systematic investments in a combination of equity and debt instruments.
Allocate a portion of your savings towards diversified equity mutual funds for long-term growth potential. Aim for a balanced portfolio to manage risk effectively.
Consider investing in debt instruments like PPF, government bonds, and fixed deposits for stability and regular income during retirement.
Maximize contributions to EPF or consider opening a Voluntary Provident Fund (VPF) account to enhance retirement savings.
Emergency Fund:
Maintain an adequate emergency fund equivalent to 6-12 months of living expenses to handle unforeseen circumstances without dipping into long-term investments.
Review and Adjust:
Regularly review your financial plan and make adjustments based on changes in income, expenses, and market conditions.
Stay disciplined with your savings and investment strategy to achieve your financial goals effectively.
It's important to remain optimistic about your job search while simultaneously focusing on securing your family's future. Consider seeking guidance from a certified financial planner to tailor a comprehensive financial plan aligned with your specific circumstances and objectives. With careful planning and disciplined execution, you can work towards a secure and prosperous future for yourself and your family.

Ans: You have a strong financial foundation. Your income, combined with your wife’s, is Rs. 2.55 lakh per month. You have a diversified investment portfolio, including fixed deposits, mutual funds, EPF, PPF, gold, shares, and NSC. Your loan obligations are Rs. 25 lakh on your home loan and Rs. 3 lakh on your car loan, with EMIs of Rs. 24,000 and Rs. 8,000, respectively.

Your daughter's education costs will be Rs. 7 lakh annually for the next six years. Your son's education will require Rs. 7 lakh annually starting in four years for a period of four years. Additionally, you plan to retire at 55, with a desired monthly income of Rs. 1.5 lakh.

Financial Goals
1. Funding Education Expenses

Your immediate priority is securing funds for your children's education. For your daughter, you need Rs. 42 lakh over six years. For your son, you need Rs. 28 lakh starting in four years. These goals are crucial and require a robust plan.

2. Retirement Planning

You wish to retire at 55, with a target of Rs. 1.5 lakh per month. With nine years to retirement, it's essential to align your investments to ensure this target is met.

3. Loan Repayment

Paying off your home and car loans will free up cash flow, which can be redirected to other investments.

Strategic Financial Planning
1. Optimizing Loan Repayment

Home Loan: You have Rs. 25 lakh remaining on your home loan. With an EMI of Rs. 24,000, the remaining tenure is likely long. Consider prepaying a portion of this loan. Prepayment will reduce the tenure and save interest. You could use a part of your FD to do this. This action will free up Rs. 24,000 per month in the future.

Car Loan: The outstanding amount is Rs. 3 lakh with an EMI of Rs. 8,000. Given the smaller loan size, it’s advisable to pay this off early. You could use your savings or FD for this. This will free up Rs. 8,000 per month.

2. Investment Strategy for Education

Daughter’s Education: Rs. 7 lakh per annum for six years will need Rs. 42 lakh. You already have Rs. 77 lakh in FD, which is a safe option. However, considering inflation, it’s wise to ensure that these funds are not only secure but also growing. You might want to move some of these funds into a balanced mutual fund or a debt mutual fund. This will offer a better return than FD while still being relatively low-risk.

Son’s Education: Rs. 7 lakh per annum for four years, starting in four years, will require Rs. 28 lakh. You have time to grow this fund. Continue your current SIPs and consider increasing the amount. Mid-cap and small-cap funds can provide higher returns, but they come with higher risk. Since you have time, a mix of equity mutual funds is advisable.

3. Retirement Planning

Current Savings: Your EPF (Rs. 76 lakh) and PPF (Rs. 30 lakh) are solid foundations. Continue contributing to them. Additionally, your Rs. 18 lakh in mutual funds should continue growing. With Rs. 50,000 per month in SIPs, your portfolio will grow significantly over the next nine years.

Diversifying Investments: To achieve Rs. 1.5 lakh per month in retirement, you’ll need a combination of safe and growth-oriented investments. Continue with mutual funds but consider adding debt funds and conservative hybrid funds as you near retirement. This will protect your corpus from market volatility.

4. Building a Contingency Fund

Emergency Savings: With your current income, you should set aside at least six months' worth of expenses in a liquid fund. This would be about Rs. 18 lakh. Your FDs could partially serve this purpose, but you might also consider a separate contingency fund.
5. Health and Insurance Coverage

Health Insurance: Ensure you have adequate health insurance coverage for your entire family. Medical costs can be a significant burden, especially in retirement. If your current coverage is below Rs. 10-20 lakh, consider enhancing it.

Life Insurance: Review your life insurance needs. Your outstanding loans and future obligations mean you should have sufficient coverage. A term plan is the most cost-effective way to secure this.

Detailed Financial Recommendations
1. Education Funding

Daughter’s Education: Allocate Rs. 7 lakh per annum from your FD. Invest the remaining FD in a balanced mutual fund to keep pace with inflation. This approach balances safety and growth.

Son’s Education: Use your mutual fund SIPs to build this corpus. Consider increasing your SIPs if possible, to ensure you have Rs. 28 lakh by the time he needs it.

2. Prepay Loans

Home Loan: Consider prepaying Rs. 10-15 lakh from your FD. This will significantly reduce your loan tenure and interest burden.

Car Loan: Clear this loan as soon as possible. Use Rs. 3 lakh from your savings or FD to eliminate this EMI. This will increase your monthly cash flow.

3. Retirement Investments

Continue EPF and PPF Contributions: These are your safest investments. Ensure you’re maxing out your PPF contributions annually.

Increase Equity Exposure: Continue with your Rs. 50,000 SIPs. As you get closer to retirement, shift part of your portfolio to less volatile funds. This could include conservative hybrid funds or large-cap funds.

Explore Debt Funds: As you near retirement, consider moving a portion of your mutual fund corpus into debt funds. These provide stability and regular income, which aligns with your retirement goals.

4. Emergency Fund and Insurance

Create a Contingency Fund: Set aside Rs. 18 lakh for emergencies. This fund should be easily accessible, like in a liquid mutual fund.

Review Health Insurance: Ensure your family’s health insurance is adequate. Top up if necessary to cover Rs. 10-20 lakh per person.

Secure Life Insurance: Ensure you have a term insurance plan that covers your outstanding loans and future financial responsibilities.

Final Insights
You have a solid foundation, but optimizing your investments and managing your loans will help you achieve your financial goals. Prioritize your children's education, as these are immediate and significant expenses. Simultaneously, work towards clearing your loans to free up cash flow. Your retirement goal of Rs. 1.5 lakh per month is achievable with disciplined investing and strategic planning. Regularly review your financial plan, adjust as necessary, and keep your goals in focus.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in