Hi Sir, i am 55, earning around 14L PM , am the single earner in my family.
I have a daughter who is 14 year and doing her higher Secondary.
I hold the following assets MF- 1.7 cr Shares - 1.6cr Two properties worth - 1.6 cr + land worth - 35 L in cr mkt value. Getting a rental income of 25K from one property and the other one 20K which i give to my monther for her exp ( she lives with me only) still i give her
Insurance in HDFC Life which will give a guaranteed return of 27 L when my daughter gets into graduation. + life cover of 1.25 cr which am servicing. + gold and few liquid assets worth 15L .
With monthly expenses of around 75K hardly saving much - managing some 20K pm in MF .
how to plan for my child studies and a cushion as retirement corpus. As am working in a pvt co, don't see any retirement age as of now.
Ans: Assessing Your Current Financial Situation
You have a robust portfolio with diversified assets. Let's look at your current holdings:
Mutual Funds: Rs 1.7 crore
Shares: Rs 1.6 crore
Properties: Rs 1.6 crore
Land: Rs 35 lakh
Rental Income: Rs 45,000 per month (Rs 25,000 and Rs 20,000)
Guaranteed Return from Insurance: Rs 27 lakh
Life Cover: Rs 1.25 crore
Gold and Liquid Assets: Rs 15 lakh
Monthly Expenses: Rs 75,000
Monthly Savings: Rs 20,000 in Mutual Funds
Planning for Your Child’s Education
Your daughter is 14 years old, and higher education expenses are approaching. Here's a structured plan:
Guaranteed Insurance Return: The Rs 27 lakh guaranteed return will be a significant help when she starts her graduation. This ensures you have a secured fund for her education.
Mutual Funds and Shares: Continue to monitor and adjust your investments in mutual funds and shares to ensure they align with her education timeline. You can consider a systematic withdrawal plan (SWP) from mutual funds when required.
Building a Retirement Corpus
To ensure a comfortable retirement, let's outline your strategy:
Rental Income: Continue to utilize the Rs 45,000 monthly rental income. Consider renting both properties if selling is not a viable option. The rental income can supplement your monthly expenses post-retirement.
Mutual Funds and Shares: With a total of Rs 3.3 crore in mutual funds and shares, ensure a balanced allocation between equity and debt. As you near retirement, gradually increase the proportion of debt to reduce risk.
Monthly Savings: Increase your monthly savings if possible. If you can increase your investment in mutual funds from Rs 20,000 to Rs 50,000 per month, it will significantly boost your retirement corpus.
Liquid Assets and Gold: Keep a portion of your assets liquid for emergencies. You can also leverage gold if needed during retirement.
Insurance and Risk Management
Your current life cover of Rs 1.25 crore is substantial, but review your insurance needs periodically to ensure it remains adequate. Health insurance is also crucial, especially as you age.
Investment Strategy
Mutual Funds: Continue investing in diversified mutual funds. Consider consulting a Certified Financial Planner (CFP) to evaluate the performance of your current funds and explore better-performing options.
Equity Investments: Stay invested in high-quality stocks. Periodically review your portfolio to ensure it is well-diversified and aligned with your risk tolerance.
Key Recommendations
Increase Savings: Aim to save and invest more than Rs 20,000 monthly if possible. This will help you reach your retirement goals faster.
Rental Income: Consider renting out both properties if feasible. This can provide a stable income stream during retirement.
Education Fund: Utilize the guaranteed return from your insurance policy for your daughter's education expenses.
Balanced Portfolio: Gradually shift from equity to debt as you approach retirement to reduce risk.
Final Insights
Your financial foundation is strong. With careful planning and adjustments, you can achieve your retirement goals and provide for your daughter's education. Regularly review and rebalance your portfolio to stay on track.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in