Dear Sir,
My age is 48 years and I have taken house loan of Rs. 25 Lacs two years back, EMI per month is 20K, my monthly salary is 75 k. I m investing Rs. 39 k per year in LIC, 50k in PPF per year and 12500 per month in SIP. After all this investment at the end of the month I barely able of save Rs. 15K. My son age is 5 years .
Please suggest any changes and further future planning so that after retirement I have atleast 1 Cr.
Ans: You have shown good discipline in managing your finances. You have started early planning for your child and your retirement. That is very good. You also have a good monthly income and manageable loan EMI. But, a few adjustments will help build stronger wealth for retirement.
Let me now help you with a step-by-step review of your current financial structure and suggest better ways for future financial well-being.
1. Income and Expense Overview
Your monthly salary is Rs. 75,000.
You are paying Rs. 20,000 as home loan EMI.
You are investing Rs. 12,500 in SIPs every month.
You are investing Rs. 50,000 per year in PPF. That is around Rs. 4,167 per month.
You are paying Rs. 39,000 per year in LIC premium. That is around Rs. 3,250 per month.
After all expenses and investments, you save around Rs. 15,000 per month.
Your savings habit is strong. That is a great quality. But now, you need to optimise your savings and investments better.
2. Home Loan Management
Rs. 25 lakhs loan is manageable with your income.
Rs. 20,000 EMI is reasonable. But loan closure before retirement is important.
Aim to close the loan by 58 years. That will reduce stress after retirement.
If you receive any bonus or surplus, use that partly to reduce loan.
But do not stop SIPs or long-term investments for loan prepayment.
Balance is important.
3. LIC Policy Assessment
You are paying Rs. 39,000 yearly in LIC.
Most likely, this is a traditional endowment or money-back policy.
Such plans give very low returns. Usually below 5% per year.
Also, mixing insurance with investment is not ideal.
What to do now?
If the policy has completed more than 3 years, check surrender value.
If surrender is financially suitable, stop and reinvest in mutual funds.
Take pure term insurance separately if not already taken.
Term plans give large cover at low cost.
This one change will free up funds and give better returns.
4. PPF Investment Review
You are investing Rs. 50,000 per year in PPF.
PPF is safe and gives tax-free returns.
Current interest is around 7% to 7.5% per annum.
But this return may not beat inflation over 15–20 years.
Still, PPF is good for safety and diversification.
Continue PPF, but do not increase allocation too much.
Keep PPF limited. Focus more on higher return options.
5. SIP Investment Strategy
You are investing Rs. 12,500 per month in SIPs.
SIP in mutual funds is one of the best long-term tools.
Ensure you are investing in diversified, actively managed funds.
Actively managed funds give better returns over long term.
Avoid index funds. They copy the market and don’t beat inflation strongly.
Avoid direct funds unless you are experienced and review portfolios often.
Regular plans through a Mutual Fund Distributor with CFP support are better.
You get proper guidance, rebalancing, and tracking.
SIP should be your main engine for wealth building.
6. Retirement Goal Planning
You want Rs. 1 crore at retirement. That is a good starting goal.
At age 48 now, you have around 12 years left to build this.
You are already investing in SIP and PPF.
After surrendering LIC, redirect that amount into mutual funds.
Even your current Rs. 12,500 SIP + Rs. 3,250 LIC (if re-directed) = Rs. 15,750.
This amount, if invested in equity mutual funds, can create strong growth.
Also, your savings of Rs. 15,000/month is available.
Use part of this savings also to boost your SIP.
Retirement goal can be achieved. Just need disciplined investing and small adjustments.
7. Child’s Education Planning
Your son is 5 years old. You have time to build corpus.
Higher education expenses will start after 13–15 years.
Create a separate SIP for this goal. Do not mix with other investments.
Invest in diversified equity mutual funds for child goal.
Even Rs. 5,000–7,000/month SIP can build good corpus by then.
Review the portfolio every year with your Certified Financial Planner.
Do not depend on insurance plans or ULIPs for child goals.
They give poor returns and lock your money for long.
8. Insurance Protection Plan
At 48, insurance is critical. You are the family’s main earning member.
Take pure term insurance of minimum 10–12 times your yearly income.
That is Rs. 75,000 × 12 × 10 = Rs. 90 lakhs at least.
Premium will be low if taken soon.
Do not mix insurance with investment.
Also take health insurance for family if not already covered.
Company cover is not enough. Take personal health policy also.
9. Tax Planning and Optimisation
You are using LIC and PPF for tax benefits.
Also SIPs in ELSS funds can give tax benefits.
Consider ELSS only if you need 80C limit and can take 3-year lock-in.
Do not over-focus on tax saving. Wealth creation is more important.
If your 80C is already full, invest in non-tax saving mutual funds.
SIPs in equity mutual funds held for more than one year will attract LTCG.
LTCG above Rs. 1.25 lakh is taxed at 12.5%.
Keep track of capital gains yearly. Use your limit smartly.
10. Emergency Fund Management
Keep at least 4 to 6 months of expenses in emergency fund.
Use liquid mutual funds or savings account for this.
Do not invest emergency funds in PPF or SIP.
You should be able to withdraw anytime when needed.
Use your Rs. 15,000 monthly saving to slowly build this buffer.
11. Key Adjustments You Can Make Now
Surrender low-return LIC policy if suitable.
Redirect Rs. 3,250/month to mutual funds.
Increase SIP by at least Rs. 5,000 more monthly using your surplus.
Start a child education SIP separately.
Build emergency fund of Rs. 3 to 4 lakhs gradually.
Do not increase EMI. Prioritise investment and loan closure balance.
Finally
You have already done many things right. That is a great starting point.
Just fine-tune your investment structure now. Shift from low-return products to higher growth investments. Don’t stop your SIPs. Keep increasing SIP as income rises.
Work with a Certified Financial Planner. Review your plan every year. This is not a one-time setup. Financial planning is a regular process.
With the right steps, Rs. 1 crore for retirement is very much possible. Also, your child’s education will be secure. Just stay consistent and focused.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment