Hi sir M 34 years old and my income is just 22k help me how to plan and save for my kids and education one is 7yrs old and one is 5yrs old and m leaving in rented house till now no investment nothing pls guide me as m going down day by day and not able to concentrate on anything and help me planning financially as i want to educate my kids well and how to invest for more income and any scholarship also let me know

Ans: Given your monthly income, expenses, and family responsibilities, it's essential to start saving and investing for your child's future education. Here's a simple plan to help you get started:

Budgeting and Savings:

Track Expenses: Monitor your monthly expenses to identify areas where you can reduce spending and increase savings.
Emergency Fund: Build an emergency fund equivalent to 3-6 months of expenses in a liquid and accessible form to handle unexpected expenses without tapping into your investments.
Start SIPs for Child's Education:

Investment Amount: Allocate a portion of your monthly savings towards SIPs in mutual funds to build a corpus for your child's education.
Asset Allocation: Consider a balanced allocation between equity and debt mutual funds based on your risk tolerance, time horizon, and financial goals.
Investment Duration: Start SIPs with a long-term perspective (e.g., 10-15 years) to benefit from the power of compounding and potential market growth.
Education Planning:

Calculate Future Expenses: Estimate the future cost of education for your children based on the current cost and expected inflation rate.
Investment Goal: Set a specific investment goal and target amount to achieve by the time your children reach college age.
Regular Review: Periodically review and adjust your SIPs and investment strategy to stay on track towards achieving your education savings goal.
Insurance Coverage:

Life Insurance: Ensure you have adequate life insurance coverage to provide financial security to your family in case of any unforeseen events.
Health Insurance: Invest in a comprehensive health insurance plan to cover medical expenses and ensure your family's well-being.
Recommendation:

Start Early: Begin investing as early as possible to benefit from the power of compounding and achieve your education savings goal.
Systematic Investment: Start SIPs in mutual funds to build a disciplined saving habit and accumulate wealth over time.
Financial Discipline: Maintain financial discipline, avoid unnecessary expenses, and stay committed to your investment plan to achieve your financial goals.
Consult with a financial advisor to create a personalized education savings plan tailored to your needs, helping you achieve your financial goals and secure your children's future.

Ans: It's great that you're thinking ahead for your children's education and your retirement! Here's a suggested plan to meet your goals:

1. Children's Education Fund:

• Since you have 7 to 12 years for your children's higher education, you can invest in relatively aggressive investment options like mutual funds or diversified equity funds. These have the potential to offer higher returns over the long term.
• Allocate a portion of your savings every month towards this goal. Considering inflation and assuming an average annual return of 10%, you would need to invest roughly Rs 20,000 to Rs 25,000 per month to accumulate the desired amount for each child's education.

2. Retirement Planning:

• Since you and your wife have 15 and 7 years left for retirement respectively, you'll want to focus on building a retirement corpus.
• Consider investing in a mix of equity and debt instruments to balance risk and returns. You can invest in mutual funds, provident funds, and Public Provident Fund (PPF) for a balanced portfolio.
• Aim to save at least 15-20% of your combined monthly income for retirement. Considering your current earnings, you can aim to save around Rs 50,000 to Rs 60,000 per month for retirement.

3. Asset Allocation:

Since you have a relatively long investment horizon for both goals, you can afford to have a higher allocation towards equities for potentially higher returns. As you approach your retirement age, gradually shift towards more conservative investment options to preserve capital.

4. Emergency Fund:

Make sure to maintain an emergency fund equivalent to 3-6 months of your combined living expenses. This fund should be readily accessible in case of unexpected expenses or emergencies.

5. Regular Review:

Regularly review your investment portfolio and make adjustments as needed based on changes in your financial situation, market conditions, and investment goals.

6. Professional Advice:

Consider consulting with a financial advisor to tailor a plan specific to your financial goals, risk tolerance, and investment preferences.

By following this plan diligently and investing consistently over the years, you should be well-prepared to meet your children's education expenses and enjoy a comfortable retirement.

Ans: While your monthly salary is Rs 1 lakh, the surplus available after expenses is not known. But to give you an idea about how much would the investment requirement for both kids, we can run a simulation.

For the elder child aged 13 years, you have about 5 years to save money. If we assume a goal cost of Rs 20 lakh (in today's value) and adjust it for 10% inflation over the next 5 years, then the corpus required in 5 years will be about Rs 32 lakh. And since details of existing savings aren't available, then at 50:50 Equity:Debt allocation, you will need to start investing Rs 37,500 per month. And this amount needs to be increased by at least 5% each year (assuming similar growth in income) for the next 10 years.

Similarly for the younger child aged 8 years, you have about 10 years to save money. If we assume a goal cost of Rs 20 lakh (in today's value) and adjust it for 10% inflation over the next 10 years, then the corpus required in 10 years will be about Rs 52 lakh. And since details of existing savings aren't available, then at 75:25 Equity:Debt allocation, you will need to start investing Rs 20,500 per month. And this amount needs to be increased by at least 5% each year (assuming similar growth in income) for the next 10 years.

We don't have information about your risk appetite. But assuming that it is at least moderately aggressive, then, you can start investing in a combination of largecap index funds, flexicap funds, midcap funds.

Thanks
Dev Ashish,
SEBI Registered Investment Advisor (Fee-Only RIA)
Founder, StableInvestor.com
Twitter (@Stableinvestor)

Note (Disclaimer) - As a SEBI RIA, I cannot comment on specific schemes/funds that are provided or asked for in the questions in the platform. And the views expressed above should not be considered professional investment advice or advertisement or otherwise. No specific product/service recommendations have been made and the answers here are for general educational purposes only. The readers are requested to take into consideration all the risk factors including their financial condition, suitability to risk-return profile and the like and take professional investment advice before investing.

Ans: Current Financial Overview
You are 44 years old with a 10-year-old child. Your monthly household income is Rs. 1.6 lakhs. You have a home loan of Rs. 70 lakhs. You own a plot worth Rs. 70 lakhs. You have a term insurance of Rs. 60 lakhs and health insurance of Rs. 10 lakhs. You have Rs. 5 lakhs in fixed deposits and Rs. 10 lakhs in PPF. You have no other savings.

Financial Goals
Kid's Education
Your child's education is a key priority. Let's focus on creating a fund for higher education.

Debt Management
Managing your home loan effectively is important. Reducing this liability will free up funds for other investments.

Wealth Creation
With no other savings, you need to build a robust investment portfolio. This will ensure long-term financial stability.

Emergency Fund
An emergency fund is crucial. This will cover unforeseen expenses without disrupting your savings.

Action Plan
Kid's Education Fund
Start a dedicated investment for your child's education.
Consider equity mutual funds for long-term growth. These funds generally offer higher returns.
Regularly invest a fixed amount monthly. This will leverage the power of compounding.
Debt Management
Prioritize paying off your home loan. This reduces interest burden over time.
Allocate any bonus or extra income towards loan repayment.
Increase EMI payments if possible. This will shorten the loan tenure.
Building an Investment Portfolio
Diversify your investments. Include a mix of equity, debt, and hybrid funds.
Actively managed funds can outperform index funds. Professional fund managers can adjust the portfolio based on market conditions.
Invest through regular plans with a Certified Financial Planner. They provide valuable advice and ongoing support.
Emergency Fund
Maintain a separate account for emergencies. This should cover 6-12 months of expenses.
Use liquid funds or short-term debt funds for this purpose. They offer easy access to funds and better returns than a savings account.
Insurance Review
Term Insurance
Your term insurance of Rs. 60 lakhs is a good safety net. Ensure the coverage is adequate for your family's needs.
Health Insurance
A health insurance cover of Rs. 10 lakhs is essential. Check if it covers all family members and includes critical illnesses.
Fixed Deposits and PPF
Continue with your fixed deposits and PPF. They provide safety and moderate returns.
Consider using some of the FD amount for higher-yielding investments. Equity and hybrid funds can offer better returns over time.
Retirement Planning
Although not mentioned, retirement planning is crucial. Start a retirement fund to ensure a comfortable post-retirement life.
Regular investments in equity or hybrid funds can build a substantial retirement corpus.
Final Insights
Your financial journey involves balancing current needs with future goals. Focus on reducing debt, building an education fund, and creating an emergency reserve. Diversify investments for long-term growth. Seek guidance from a Certified Financial Planner to optimize your strategy.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in