Home > Money > Question
Need Expert Advice?Our Gurus Can Help

How can I retire with a monthly income of 10 lakhs at 50, with a current salary of 1.5 lakhs?

Ramalingam

Ramalingam Kalirajan  |8916 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Aug 16, 2024

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
Asked by Anonymous - Aug 15, 2024Hindi
Money

Hello Experts! I have recently got a job with 21 LPA fixed Salary My age is 30 and inhand Salary is 1.5 lak Below is my SIP investment along with start date Mutual Fund - 3000 (SD : 24-02-2020) Stepup (10%) MF IT - 5000 (SD : 02-11-2022) Stepup (10%) MF Mid Cap - 5000 (SD : 05-07-2024) Stepup (10%) MF Small Cap - 5000 (SD : 05-07-2024) PPF - 500/ month (current corpus 1 lakh) LIC - 2500 (SD: 06-04-2019 -> ED: 06-04-2035) NPS - 11000/month (current corpus : 60k) Health Insurance (Self): 12k/yr (10 lakh cover) Health Insurance (Mom): 27k/yr (10 lakh cover) Term plan : 6k/yr (50 lakh cover) Home laon : 26k/ month for next 19 yrs I also have 4.5 lakh in stocks 6 lakh in emergency fund Now I want to get retire in 20 yrs and after retirement i want 10 lakh/month as monthly income from my investment please suggest! what I need to do to achieve this!!

Ans: Your current financial situation is strong, given your age and income. You have a fixed salary of Rs. 21 lakhs per annum, and your in-hand salary is Rs. 1.5 lakhs per month. You are 30 years old and have made some smart investments and financial decisions. Let's take a closer look at your existing investments and financial commitments.

Existing Investments and Commitments
SIP Investments:

You have a SIP in mutual funds of Rs. 3,000 per month starting from February 2020 with a 10% step-up.
You have a SIP in IT mutual funds of Rs. 5,000 per month starting from November 2022 with a 10% step-up.
You have recently started SIPs in Mid Cap and Small Cap mutual funds, each with Rs. 5,000 per month starting from July 2024 with a 10% step-up.
PPF:

You are investing Rs. 500 per month in PPF, with a current corpus of Rs. 1 lakh.
LIC Policy:

You have a LIC policy with a premium of Rs. 2,500 per month, which started in April 2019 and will mature in April 2035.
NPS:

You are contributing Rs. 11,000 per month to NPS with a current corpus of Rs. 60,000.
Health Insurance:

You have health insurance coverage for yourself with a premium of Rs. 12,000 per year for a Rs. 10 lakh cover.
You also have health insurance for your mother with a premium of Rs. 27,000 per year for a Rs. 10 lakh cover.
Term Insurance:

You have a term insurance plan with a premium of Rs. 6,000 per year for a Rs. 50 lakh cover.
Home Loan:

You have a home loan with an EMI of Rs. 26,000 per month for the next 19 years.
Stocks and Emergency Fund:

You have Rs. 4.5 lakhs invested in stocks.
You have Rs. 6 lakhs set aside as an emergency fund.
Financial Goals and Objectives
You have expressed a desire to retire in 20 years, which means you plan to retire at the age of 50. This is an early retirement goal, and it requires careful planning to ensure you have enough funds to support your retirement lifestyle.

Analyzing Your Investments
Your investment in mutual funds through SIPs is a positive step towards wealth creation. SIPs allow you to invest systematically and benefit from rupee cost averaging. The step-up option of 10% annually is a smart move as it helps in increasing your investments gradually without affecting your budget.

Your investment in PPF is a safe option, offering tax benefits under Section 80C of the Income Tax Act. However, considering your retirement goal, you may need to increase your contribution to PPF or explore other investment options that offer higher returns.

The LIC policy you hold seems to be a traditional endowment plan. While it provides insurance coverage, the returns are generally lower compared to other investment options. You may want to reconsider this investment and explore other options like term insurance for protection and mutual funds for wealth creation.

Your NPS contribution is another positive step towards retirement planning. NPS offers tax benefits under Section 80CCD and is a good tool for creating a retirement corpus. However, you may need to increase your contribution to meet your retirement goal.

Your health insurance cover for yourself and your mother is adequate. It is important to have sufficient health insurance coverage to protect against medical emergencies.

Your term insurance plan is also adequate, providing financial protection to your family in case of an unfortunate event.

The home loan EMI of Rs. 26,000 per month is a long-term commitment. While it is important to own a home, it is also important to ensure that the EMI does not strain your finances.

Your investment in stocks is a good way to diversify your portfolio. However, it is important to regularly review your stock investments and ensure they align with your financial goals.

The emergency fund of Rs. 6 lakhs is a good safety net. It is important to keep this fund liquid and easily accessible.

Steps to Achieve Your Retirement Goal
To achieve your retirement goal in 20 years, you need to build a substantial corpus. Here's a step-by-step guide:

Increase Your SIP Contributions:

Considering your current income, you can afford to increase your SIP contributions. You can start by increasing your SIPs in mutual funds by 10-15% annually.
Focus on a mix of large-cap, mid-cap, and small-cap funds to balance risk and returns.
Avoid direct funds and consider investing through a Certified Financial Planner (CFP) to get professional guidance and regular monitoring of your portfolio.
Review and Reallocate LIC Policy:

The LIC policy you hold may not provide the best returns. Consider surrendering the policy and redirecting the funds to higher-yielding investments like mutual funds.
Ensure you have adequate term insurance coverage for financial protection.
Increase PPF Contributions:

PPF is a safe and tax-efficient investment option. Consider increasing your monthly contribution to Rs. 2,000 or more.
However, keep in mind that PPF has a lock-in period of 15 years, so you may want to balance this with more liquid investments.
Enhance NPS Contribution:

NPS is a good tool for retirement planning. Consider increasing your monthly contribution to Rs. 15,000 or more.
Regularly review your asset allocation within NPS and adjust it based on your risk tolerance and retirement goals.
Diversify Your Portfolio:

Diversification is key to managing risk. In addition to mutual funds and stocks, consider investing in debt funds or balanced advantage funds.
Regularly review and rebalance your portfolio to ensure it aligns with your risk tolerance and financial goals.
Maintain Adequate Insurance Coverage:

Ensure that your health and term insurance coverages are adequate. Consider increasing the term insurance cover as your income and responsibilities grow.
Review your health insurance coverage annually and make necessary adjustments based on your needs and premium affordability.
Manage Your Home Loan:

Your home loan EMI is a long-term commitment. If possible, consider making prepayments to reduce the loan tenure and interest burden.
Ensure that your home loan EMI does not exceed 30% of your monthly income to maintain financial flexibility.
Build a Strong Emergency Fund:

Your emergency fund should ideally cover 6-12 months of your expenses. Considering your current lifestyle, aim to increase your emergency fund to Rs. 9-12 lakhs.
Keep this fund in a liquid and easily accessible form, such as a savings account or liquid mutual funds.
Planning for Retirement
Calculate Your Retirement Corpus:

Estimate your retirement expenses, considering inflation and lifestyle changes.
Work towards building a corpus that can generate enough income to cover your post-retirement expenses.
Regularly Review Your Financial Plan:

Your financial goals and situation may change over time. Regularly review your financial plan and make necessary adjustments.
Work with a Certified Financial Planner (CFP) to get professional guidance and ensure you stay on track towards your retirement goal.
Avoid Annuities and Real Estate Investments:

Annuities and real estate investments may not be the best options for wealth creation and liquidity. Focus on mutual funds and other liquid investment options that offer better returns and flexibility.
Consider Inflation-Protected Investments:

Inflation can erode the value of your savings over time. Consider investments that offer inflation protection, such as equity mutual funds and NPS.
Regularly review and adjust your investments to ensure they are aligned with your long-term goals and inflation expectations.
Focus on Building a Retirement Corpus:

Your goal is to retire in 20 years. Focus on building a substantial retirement corpus that can generate enough income to cover your expenses.
Consider setting up a systematic withdrawal plan (SWP) in mutual funds to generate a regular income during retirement.
Final Insights
You have made commendable progress in your financial journey. However, achieving your early retirement goal requires disciplined saving, smart investing, and regular review of your financial plan.

Focus on increasing your SIP contributions and diversifying your investments.
Reconsider your LIC policy and explore better investment options.
Increase your PPF and NPS contributions to build a strong retirement corpus.
Regularly review your financial plan and make necessary adjustments to stay on track towards your retirement goal.
Finally, work with a Certified Financial Planner (CFP) to get professional guidance and ensure you achieve your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
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.
Money

You may like to see similar questions and answers below

Ramalingam

Ramalingam Kalirajan  |8916 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 26, 2024

Asked by Anonymous - Feb 29, 2024Hindi
Money
Hello, I am 43 Years old and earning in-hand 2.2+ lac per month, from this year I have started investment in MF SIP(60K/month), NPS(10% basic + 50k/yrs from past 5 yrs), PPF (12500/month from past 5 yrs), Emergency fund 3lac (FD), EPF(20+lac), No EMI(Debt free - hold 2 property), Term Plan (50 lac) + 1.5 CR (Corporates cover)-> have external plan for 1.5 CR more + minimum external medical insurance plan (Currently corporate medical plan of 15 lac available) Equity investment is 0. My monthly expense is around 50k. I have two kids 5 and 10 yrs old - need to plan for education and my retirement(at 60 age). I can invest more 80-90k/month, Risk capacity is high, please suggest. Requirement - Education 2 CR for (1 CR each Kid appx) and for retirement around 5 CR liquid cash.
Ans: It's wonderful that you have a solid financial foundation and a clear vision for your future. Let's review your current investments and suggest strategies to help you achieve your goals for your children's education and your retirement.

Current Financial Situation
Monthly Income and Expenses
In-hand Income: Rs. 2.2+ lakhs per month
Monthly Expenses: Rs. 50,000
Current Investments
Mutual Fund SIP: Rs. 60,000 per month (started this year)
NPS: 10% of basic salary + Rs. 50,000 annually (contributed for the past 5 years)
PPF: Rs. 12,500 per month (contributed for the past 5 years)
Emergency Fund: Rs. 3 lakhs (in Fixed Deposit)
EPF: Rs. 20+ lakhs
Term Plan: Rs. 50 lakhs + Rs. 1.5 crore (corporate cover) + additional Rs. 1.5 crore
Medical Insurance: Corporate plan of Rs. 15 lakhs + minimum external plan
Assets
Two Properties: Debt-free
Financial Goals
Children's Education: Rs. 2 crores (Rs. 1 crore for each child)
Retirement: Rs. 5 crores liquid cash by age 60
Investment Strategy
1. Enhance Equity Exposure
Given your high-risk capacity and long investment horizon, increasing your equity exposure is prudent. Equity investments can offer higher returns compared to other asset classes.

Increase SIP Amount: You can invest an additional Rs. 80,000-90,000 per month. This can be allocated to diversified equity mutual funds, mid-cap funds, and small-cap funds for higher growth potential.
2. Optimize Existing Investments
Mutual Fund SIPs: Continue your existing SIPs. Consider adding funds with a good track record and those that align with your risk appetite.
NPS: This is a good investment for retirement savings due to its tax benefits and long-term growth potential. Ensure your allocation is optimized between equity and debt within NPS.
PPF: Continue your contributions to PPF for tax-free returns and safety. However, PPF has a lower return compared to equities, so balance your investments accordingly.
3. Diversify Investments
Diversification helps manage risk and capture opportunities across different market segments.

Equity Funds: Increase investments in equity mutual funds. Consider large-cap, mid-cap, and small-cap funds for a balanced growth portfolio.
Debt Funds: To balance the portfolio, consider debt mutual funds for stability and predictable returns.
Gold: Small allocation to Sovereign Gold Bonds (SGBs) can act as a hedge against inflation and market volatility.
Education Planning for Children
1. Systematic Investment Plan (SIP) for Education
Start dedicated SIPs in equity mutual funds targeted for your children's education. This will help in accumulating the required corpus systematically over time.

2. Child Plans
Consider investing in child-specific mutual funds or ULIPs that offer long-term growth and benefits tied to education milestones.

Retirement Planning
1. Retirement Corpus Calculation
With a target of Rs. 5 crores by age 60, let's ensure your investments align to meet this goal. A mix of equity and debt will provide growth and stability.

2. Retirement-Specific Funds
Consider investing in retirement-focused mutual funds and increasing your NPS contributions. These funds are designed to grow your savings efficiently over the long term.

3. Review and Rebalance Portfolio
Regularly review and rebalance your portfolio to align with changing market conditions and life stages. This will help in maintaining the desired asset allocation.

Risk Management
1. Adequate Insurance Cover
You already have substantial term insurance and health insurance coverage. Ensure they are sufficient to cover any unforeseen circumstances.

2. Emergency Fund
Maintain or slightly increase your emergency fund to cover 6-12 months of expenses. This provides a safety net for unexpected events.

Consultation with a Certified Financial Planner (CFP)
1. Personalized Financial Advice
A Certified Financial Planner can offer personalized advice, taking into account your specific financial situation, goals, and risk tolerance.

2. Expert Management
CFPs help in managing your investments effectively, optimizing returns while minimizing risks.

3. Comprehensive Planning
CFPs can assist with comprehensive financial planning, including tax planning, estate planning, and more, ensuring all aspects of your financial health are covered.

Example Investment Plan
Here’s a simplified example of how you might allocate your additional Rs. 80,000-90,000 monthly investment:

Equity Mutual Funds: Rs. 50,000 in diversified large-cap, mid-cap, and small-cap funds.
Debt Mutual Funds: Rs. 20,000 for stability and income generation.
Gold/SGB: Rs. 10,000 for diversification and inflation hedge.
Regular Monitoring and Adjustments
1. Annual Review
Conduct an annual review of your investments and financial goals. Adjust your SIP amounts and asset allocation as needed.

2. Stay Informed
Keep yourself informed about market trends and economic changes. Staying updated will help in making informed investment decisions.

Conclusion
Your current investments and financial strategies are commendable and align well with your goals. By increasing your equity exposure, optimizing existing investments, and consulting a Certified Financial Planner, you can confidently work towards securing your children’s education and a comfortable retirement.

Your disciplined approach and willingness to invest more monthly will significantly enhance your financial security. Continue to monitor and adjust your investments regularly to stay on track.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |8916 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 07, 2024

Asked by Anonymous - Apr 22, 2024Hindi
Listen
Money
Hi Sir, Im 36 have 4.5 year old daughter and wife (home maker) i'm earning 1.40 lac monthly have a expanses of 70k including rent, daughter fee (UKG) and car loan. My investment: LIC - 70000 yearly 2037 maturity Lic 90000 yearly (2057 maturity) Max life insurance 3.6lac yearly Daughter SSY- 1.5 lac yearly (since 4 year) SIP - 30000 (monthly) axis bluechip 5k, axis mid cap 5k, axis small cap 5k, icici large 5k, icici prudential mid cap 5k, icici small cap 3k, tata small cap 2k. I want to retire in next 15 years. Please help me if my investment is correct or i need to revisit my investment especially SIP. Or any other suggestions you can provide
Ans: You're demonstrating excellent foresight by planning for your future and your family's financial security. Here's an assessment of your current investments and some suggestions:
1. Retirement Planning:
• Your goal to retire in the next 15 years is ambitious and requires careful financial planning to ensure you achieve your desired lifestyle post-retirement.
• Consider factors such as your desired retirement age, anticipated expenses, inflation, healthcare costs, and potential sources of retirement income.
2. Investment Analysis:
• Your current investment portfolio consists of a mix of life insurance policies, Sukanya Samriddhi Yojana (SSY) for your daughter, and SIPs in various mutual funds.
• Life insurance policies provide financial protection but may have limited investment growth potential compared to other investment options.
3. SIP Review:
• Review your SIP portfolio to ensure alignment with your long-term financial goals, risk tolerance, and investment horizon.
• Consider diversifying across different asset classes and fund categories to spread risk and optimize returns.
• Evaluate the performance of individual funds regularly and make adjustments as needed.
4. Asset Allocation:
• Assess your overall asset allocation to ensure a balanced mix of equity, debt, and other investment instruments based on your risk profile and investment objectives.
• Consider increasing exposure to equity for long-term wealth accumulation, but maintain a diversified portfolio to mitigate risk.
5. Emergency Fund:
• Ensure you have an adequate emergency fund to cover unforeseen expenses and mitigate financial risks. Aim to maintain 6-12 months' worth of living expenses in a liquid savings account or short-term investments.
6. Professional Advice:
• Consider consulting with a Certified Financial Planner to conduct a comprehensive financial review and retirement planning assessment.
• They can provide personalized recommendations tailored to your specific circumstances, goals, and risk tolerance.
7. Regular Monitoring and Adjustment:
• Periodically review your investment portfolio and retirement plan to track progress towards your goals.
• Make adjustments as needed based on changes in income, expenses, market conditions, and personal circumstances.
In summary, while your current investments show prudent planning, it's essential to periodically reassess your financial strategy to ensure it remains aligned with your evolving goals and circumstances. By staying proactive and seeking professional guidance, you can optimize your investments and work towards achieving a comfortable retirement for yourself and your family.

..Read more

Ramalingam

Ramalingam Kalirajan  |8916 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jan 30, 2025

Asked by Anonymous - Jan 30, 2025Hindi
Listen
Money
Hi, I am 41 years old and Married. I have 2 kids one daughter 15 years and son 7 years old. I am drawing annually 24 Lakhs salary. Having 3 houses one self occupied and two give letout with annual 4.2 lakhs rental income. All houses worth together 3 Crores. Housing loans principle outstanding of 85 lakhs with interest rate of 8.6% with monthly EMI of 1.13 lakhs per month for next 9 years. As of today I have SIP worth 90 lakhs with an IRR of 20%, Bank FD 30 lakhs – 7%, PPF 47 lakhs and PF 26 lakhs. I have term insurance of 1 CR and my wife term insurance of 50 Lakhs. For these for next 5 years, I have to pay premium of 1 lakh per annum. Medical insurance from company 5 lakh per annum for my family of 4 members. I am continuing my SIP of 86K per month – flexi cap 24L, small cap 29K, large cap 19K, Mid cap 14K. Any shortage of funds, I am moving from FD to SIP gradually. (SIP started 7 years back - started with 15K and now SIP at 86K) My annual expenses comes to 15 Lakhs including everything. I would like to take retirement at 50 years. Please check my details and suggest for any modifications for better returns. Also, please let me know how I can meet with liquid assets of 20 crores (in addition to my current properties) Thanks!
Ans: You have a strong financial foundation.
Your salary and rental income total Rs. 28.2 lakhs per year.
Your housing loan EMI is Rs. 1.13 lakh per month, which is manageable.
Your investments are well-diversified across mutual funds, FDs, PPF, and PF.
Your SIP portfolio has delivered an excellent IRR of 20%.
You have term insurance for yourself and your wife.
Your annual expenses are Rs. 15 lakhs, which is reasonable.
You have medical insurance of Rs. 5 lakh from your employer.
You gradually move funds from FD to SIP, which is a good strategy.
Your goal is to accumulate Rs. 20 crores in liquid assets within the next 9 years.
Retirement Readiness Assessment
You have 9 years left until your target retirement age of 50.
Your current investments are significant, but reaching Rs. 20 crores requires strategic planning.
Your housing loan is a major commitment, but it will end in 9 years.
Your SIP contributions are already strong and should continue.
Your rental income is a bonus but not reliable for long-term financial security.
Modifications for Better Returns
Increase SIP Gradually
Your SIP of Rs. 86K per month is excellent.
As your salary increases, try to increase SIP by at least 10-15% annually.
Move more funds from FD to SIP, as FD returns are low.
Reallocate Fixed-Income Investments
Your PPF and PF are too conservative.
You can stop fresh PPF contributions and allocate that amount to equity.
Maintain some FD for emergency funds but move excess FD to high-return investments.
Prepay Housing Loan or Invest More?
Your housing loan has an 8.6% interest rate.
Your SIP IRR is 20%, which is higher than your loan rate.
Instead of prepaying, continue investing in equity for wealth creation.
Additional Insurance Coverage
Your company’s medical insurance of Rs. 5 lakh is insufficient.
Consider a separate family floater health insurance of Rs. 15-20 lakh.
Your term insurance coverage is reasonable. No changes are needed.
Achieving Rs. 20 Crores in Liquid Assets
Step 1: Projected Investment Growth
Your SIP portfolio of Rs. 90 lakhs at 20% IRR can grow significantly in 9 years.
If you continue SIPs aggressively, you can accumulate a substantial corpus.
Additional investments from FD and PPF reallocations will further boost growth.
Step 2: Boosting Investment Contributions
As you get salary hikes, increase your monthly SIPs.
Reduce unnecessary expenses to redirect more funds into investments.
Consider lump sum investments when you receive bonuses or windfalls.
Step 3: Maintaining Investment Discipline
Stick to actively managed mutual funds through a Certified Financial Planner.
Stay invested during market fluctuations and avoid emotional decision-making.
Continue tracking and rebalancing your portfolio annually.
Finally
Your financial plan is strong, but small modifications can make a huge difference.
Increasing SIPs, reallocating low-yield investments, and maintaining discipline are key.
You are on track to build Rs. 20 crores in liquid assets if you execute this plan well.
Best Regards,

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

..Read more

Ramalingam

Ramalingam Kalirajan  |8916 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 07, 2025

Money
Dear sir, I am 46 yrs old investing in SIP of 25000 monthly last 4.5 Yrs in different companies mutual fund. I wants retire after 10 yrs and need a corpus of 5 crore. I have 2 children studying @ 6&8 grade. Invested in money back policy of 5-8 Lakh. 1C land purchased 2 yrs back. Comprehensive Health insurance is available for 5L yearly and Term insurance of 60L is available. Kindly let me know what sort of planning required.
Ans: It shows you are thinking ahead for your family and future. That itself is a great start.

Let’s break this down step by step.

 

Retirement Planning – 10 Years Away
 

You want Rs.5 crore in 10 years.

 

You are already investing Rs.25,000 monthly through SIPs. This is a good habit.

 

But just investing isn’t enough. The amount, fund selection, and review also matter.

 

Rs.5 crore is a big target. It needs a solid, focused investment plan.

 

You need to check whether Rs.25,000 per month is enough for this goal.

 

Based on typical growth rates, it may fall short. We need to increase SIPs gradually.

 

A Certified Financial Planner can help assess the exact shortfall. Then a step-wise plan can be made.

 

Your retirement plan should not depend on land. Land is not liquid. Selling it can take time.

 

Continue SIPs and increase it by 10% every year. That helps stay ahead of inflation.

 

Actively managed mutual funds should be selected. They give a better edge with expert fund manager decisions.

 

Index funds lack flexibility. They copy the index. No chance to beat the market.

 

With actively managed funds, the fund manager reacts fast to changes. That is an advantage.

 

Asset allocation should be reviewed every year. Rebalancing keeps the risk in control.

 

Keep a separate portfolio for retirement. Do not mix children’s education goal with this.

 

Children’s Education Planning
 

Your children are now in 6th and 8th grades.

 

In 6–8 years, you’ll need funds for their higher education.

 

Education costs are rising sharply. This cannot be ignored.

 

Start separate SIPs for their education goal now.

 

Do not depend on money-back policies for education.

 

These give low returns. Hardly beat inflation. Not suitable for education needs.

 

Surrender these policies. Reinvest the proceeds into mutual funds.

 

A Certified Financial Planner can guide on which policies to surrender and how.

 

Use mutual funds for better returns and flexibility.

 

Choose a mix of equity and balanced funds. This gives better growth with some safety.

 

Review this portfolio every year. Make changes if fund performance drops.

 

Never use retirement funds for education or other goals.

 

Keep clear boundaries between each financial goal.

 

Insurance Assessment – Life and Health
 

You have Rs.60 lakh term insurance. It is a good starting point.

 

But is it enough? Likely not.

 

A person at age 46 with children and a Rs.5 crore retirement goal needs more cover.

 

Term cover must be at least 12–15 times your annual income.

 

It should also cover children’s education and liabilities.

 

Top up your term insurance with an additional Rs.40–50 lakh at least.

 

Premiums are still manageable at your age.

 

Avoid ULIPs or money-back plans for life cover. They mix insurance and investment.

 

You have Rs.5 lakh health insurance. That is a positive step.

 

However, with rising medical costs, it is not enough.

 

Add a super top-up policy of Rs.10–15 lakh. It is cost-effective and gives added protection.

 

Ensure the entire family is covered under the policy.

 

Also keep some emergency fund in liquid funds for minor health expenses.

 

Emergency Fund and Contingency Planning
 

An emergency fund gives peace of mind.

 

It should cover at least 6 months of expenses.

 

Keep this in a liquid mutual fund or savings account.

 

Never invest emergency funds in equity or land.

 

Refill the fund if you use it anytime.

 

Existing Land Investment
 

You mentioned buying land two years ago.

 

It can be a personal asset. But not an investment.

 

Land does not generate regular income.

 

Selling land can take time. Liquidity is low.

 

Do not depend on land for your retirement or education goals.

 

Do not count land value in your net worth for investment planning.

 

Keep it as a reserve or personal utility asset only.

 

Money-Back Policies – Action Plan
 

You have Rs.5–8 lakh in money-back policies.

 

These offer low returns. Do not help in long-term wealth creation.

 

It is best to surrender these now. Don’t wait.

 

Reinvest that money into mutual funds through a Certified Financial Planner.

 

Use regular plans through MFDs. They offer continuous support and monitoring.

 

Direct mutual funds offer no guidance. That leads to mistakes and poor returns.

 

Regular funds give access to a CFP’s review and hand-holding.

 

Small cost difference, but better long-term results.

 

SIP Management – Next Steps
 

You are already investing Rs.25,000 monthly. That is commendable.

 

Increase it every year. This is called SIP step-up.

 

If your income rises, increase SIPs by 10–15% yearly.

 

This one habit helps you reach goals faster.

 

Choose 4–5 diversified equity funds. Review them every 6 months.

 

Use funds with consistent track records and experienced managers.

 

Avoid index funds. They are passive. No fund manager input.

 

Actively managed funds offer better opportunities.

 

Tax Planning – For Today and Tomorrow
 

Make use of Section 80C for tax savings. SIP in ELSS can help here.

 

Avoid locking too much in PPF or NSC. They are not flexible.

 

For capital gains tax, keep new rules in mind.

 

If you sell equity funds, gains above Rs.1.25 lakh are taxed at 12.5%.

 

If sold before 1 year, gains are taxed at 20%.

 

For debt funds, all gains are taxed as per your income slab.

 

Always check tax implication before switching or redeeming funds.

 

Goal-Based Investment Planning
 

Link each SIP to a specific goal.

 

One SIP for retirement.

 

One SIP for child 1 education.

 

Another SIP for child 2 education.

 

Do not combine goals. That leads to confusion later.

 

Clear goal tagging helps track progress.

 

A Certified Financial Planner can prepare this map for you.

 

Use colour-coded tracking for each goal.

 

Will, Nomination, and Estate Planning
 

Make a basic Will. Even if your assets are small today.

 

Nominate properly in every investment and insurance.

 

Review nominations every 2 years.

 

Teach your spouse the basics of your financial plan.

 

Keep one folder with all details – policies, accounts, mutual funds.

 

Inform your family where the file is kept.

 

Three Yearly Review System
 

Review your financial plan every year.

 

Do it with the help of a Certified Financial Planner.

 

Track SIP growth. Are goals on track?

 

Rebalance asset allocation if equity grows too much.

 

Check insurance covers every 2 years.

 

Update Will, nominations, and goals if needed.

 

Final Insights
 

You have taken important first steps. That shows awareness.

 

But awareness needs a plan to be successful.

 

Surrender low-yielding policies. Reinvest wisely.

 

Keep land aside. Do not count on it for goals.

 

Increase SIPs steadily. Choose only actively managed funds.

 

Use regular mutual funds through a Certified Financial Planner.

 

Protect family with higher life and health insurance.

 

Separate SIPs for each goal. Link every investment to a purpose.

 

Review your plan once every year. Adjust when needed.

 

Your dream of Rs.5 crore and children’s education is possible.

 

But you need focused, guided steps to reach there.

 

Best Regards,
 

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

..Read more

Latest Questions
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

Close  

You haven't logged in yet. To ask a question, Please Log in below
Login

A verification OTP will be sent to this
Mobile Number / Email

Enter OTP
A 6 digit code has been sent to

Resend OTP in120seconds

Dear User, You have not registered yet. Please register by filling the fields below to get expert answers from our Gurus
Sign up

By signing up, you agree to our
Terms & Conditions and Privacy Policy

Already have an account?

Enter OTP
A 6 digit code has been sent to Mobile

Resend OTP in120seconds

x