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Ramalingam

Ramalingam Kalirajan  |9752 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 24, 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
Nikesh Question by Nikesh on May 21, 2024Hindi
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Dear sir, have a very warm day to you. I ANS now 32, currently working as assistant professor in a college( recently joined). I have a lic term insurance with term plan of 40 lac sum.imsured at my age of 60 Currently I have around 6.5 lac in my NPS. I have a son (2 month old) now. My net salary around 75k currently which may further increases as the time.My wife is also working and she also earned around 40 k now I have a loan of around 2.5 lac which I have to pay in a year. I want to get a corpus of around 5 cr at the time of my retirement and also have to secure at least 25-40 lac for my son higher education. Now, my request is that please tell me some better plans for the better future of my family and me when I will be retired from my job as well as to secure the education support of my child

Ans: Securing Your Family's Future: Financial Planning for Long-Term Goals
Dear ANS, congratulations on the newest addition to your family and your commitment to securing their future. Let’s explore some effective financial strategies to achieve your goals of retirement planning and providing for your son’s education.

Current Financial Overview
Income and Expenses
You and your wife collectively earn around ?1.15 lakhs per month, with the potential for future salary increases.
You have a manageable loan of ?2.5 lakhs, which will be paid off within a year.
Savings and Investments
You have a LIC term insurance plan providing coverage of ?40 lakhs until the age of 60.
Your NPS balance is approximately ?6.5 lakhs, providing a foundation for retirement savings.
Planning for Retirement: Building a Corpus of ?5 Crores
Retirement Age: Assumed at 60
Determine your desired retirement age and estimate your post-retirement expenses based on your current lifestyle and inflation projections.
Retirement Corpus Calculation
Calculate the corpus required to maintain your desired lifestyle post-retirement, considering inflation and expected longevity.
Strategies for Retirement Planning
1. Increase Retirement Savings
Maximize contributions to your NPS account to benefit from tax benefits and build a substantial retirement corpus.
Consider diversifying retirement savings by investing in other tax-efficient instruments like PPF and ELSS mutual funds.
2. Regular Financial Reviews
Regularly review and reassess your retirement goals and investment strategy to ensure they remain aligned with your evolving financial situation and objectives.
Education Planning: Securing ?25-40 Lakhs for Your Son’s Education
Estimated Education Cost: Consider Inflation
Estimate the future cost of your son’s higher education, factoring in inflation and the duration until he starts college.
Education Fund Accumulation
Start a dedicated education fund for your son’s future expenses, such as a combination of mutual funds, SIPs, and fixed deposits.
Gradually increase contributions to this fund over time to meet the desired corpus by the time he begins his education.
Risk Management and Contingency Planning
Emergency Fund
Maintain an emergency fund equivalent to at least six months' worth of living expenses to cover unforeseen financial setbacks.
Adequate Insurance Coverage
Review your insurance coverage regularly and consider increasing the sum assured on your term insurance policy to ensure adequate protection for your family's financial security.
Long-Term Wealth Creation Strategies
Diversified Investment Portfolio
Build a diversified investment portfolio comprising equities, mutual funds, and fixed income instruments to achieve long-term wealth creation goals.
Professional Financial Advice
Consult with a Certified Financial Planner (CFP) to develop a comprehensive financial plan tailored to your specific needs, goals, and risk tolerance.
A CFP can provide personalized guidance, investment recommendations, and ongoing portfolio management to help you achieve your financial objectives.
Conclusion: Working Towards a Brighter Future
ANS, by implementing these strategies and staying disciplined in your financial planning, you can work towards achieving your long-term goals of a comfortable retirement and securing your son's education. Remember to review and adjust your financial plan periodically to adapt to changing circumstances and ensure you remain on track to meet your objectives.

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.
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Ramalingam

Ramalingam Kalirajan  |9752 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 03, 2025

Asked by Anonymous - Jul 03, 2025Hindi
Money
Sir, I am 42 years old, with 2 kids, one 8 year old and one 5 year old. I earn approximately around 2.5 lacs a month and my expenses are approximately 1 lac per month. I need to plan for both my kids higher education and my retirement. I have no liabilities. I have life cover of 2 crores for am paying 69k/year my self and 1.3 crore from company. Have health cover of 10 lacs each for myself, wife and both kids. I am doing 2 LIC each 5 Laks sum assured and totally paying 43k/year and 1 LIC 5 sum assured 5330/month . Having 400gms gold, doing 30k/month in gold purchase ,Currently paid 3.7 Lakhs paid in SSA and target to pay 1.5 lakhs/year 7 years to pay in SSA. 20 lacs in PPF. Please advise if can do any for retirement and kids educations?
Ans: You have created good savings, adequate insurance, and a manageable expense structure. Let’s now look at your situation deeply from a 360-degree view for:

Children’s higher education planning

Your retirement planning

Insurance review

Investment efficiency

Goal alignment

Policy re-evaluation

Each part below is built with your goals in mind and explained in a simple, practical manner.

Income and Expense Pattern

Monthly income is Rs. 2.5 lakhs.

Monthly expenses are Rs. 1 lakh.

That gives Rs. 1.5 lakh surplus every month.

You are saving 60% of your income.

This is an excellent savings ratio.

It gives strong scope for long-term wealth creation.

Insurance Evaluation

Life Insurance

You have Rs. 2 crore personal life cover.

You have Rs. 1.3 crore from your company.

Total Rs. 3.3 crore is a good number now.

You are paying Rs. 69,000 yearly for personal life cover.

Continue the term plan as it gives pure protection.

Company cover should not be fully relied upon.

It ends if you leave or lose your job.

LIC Policies

You hold 3 LIC policies.

Two policies of Rs. 5 lakh each.

One more LIC for Rs. 5 lakh sum assured.

You are paying Rs. 43,000 yearly and Rs. 5330 monthly.

These are low-return investment-cum-insurance policies.

Most of such plans give less than 5% return.

Insurance should not be mixed with investment.

You already have sufficient life cover.

These LIC policies do not serve investment or protection purpose efficiently.

Action Suggestion:

Please consider surrendering these LIC policies.

Reinvest the surrender value in mutual funds through an MFD with CFP credentials.

MFs can offer better returns over the long term.

Keep insurance and investments separate.

Health Insurance Assessment

You have Rs. 10 lakh health cover for each family member.

That is a total of Rs. 40 lakh for the family.

This is good and must be continued.

Ensure it is a family floater or individual as required.

If you don’t have super top-up, consider adding it later.

Premiums are rising with age.

Start early with top-up to reduce future costs.

Gold Investment Assessment

You already hold 400 grams of gold.

Also investing Rs. 30,000 monthly into gold.

This is on the higher side.

Gold should be a small part of portfolio.

Ideally 5% to 10% of overall assets.

Gold gives no interest, dividend, or bonus.

It only relies on price movement.

Long-term return is low compared to equity mutual funds.

Action Suggestion:

Reduce gold investment to Rs. 5,000–10,000 per month.

Use rest in child education and retirement corpus.

This will bring better wealth creation.

SSA and PPF Contributions

SSA Account

Excellent choice for your daughters.

SSA is tax-free and safe.

You are targeting Rs. 1.5 lakh yearly for 7 years.

This is disciplined and appreciated.

It will support girl child education and marriage expenses.

PPF Account

You have Rs. 20 lakh in PPF.

PPF is safe, tax-free and long-term.

But liquidity is very low.

Returns are limited to current interest rate only.

It should not be your primary retirement vehicle.

Consider this as a supporting retirement pillar.

Children’s Higher Education Planning

Elder child is 8 years now.

Younger one is 5 years.

You have around 10 and 13 years respectively.

This is the perfect time to act.

Education inflation is very high in India.

Cost doubles roughly every 7-8 years.

Action Plan:

Start mutual fund SIPs for both kids separately.

Use balanced advantage or large-cap active funds.

Choose funds with long-term proven track record.

Invest Rs. 25,000 each for both kids monthly.

You can increase this by 5-10% every year.

Do not withdraw this till the goal year comes.

Create a separate folio for each child’s goal.

Retirement Planning Evaluation

You are 42 years old.

Ideal retirement age is 58–60.

That gives you 16–18 years of investment time.

You are spending Rs. 1 lakh monthly.

At 6% inflation, this will be Rs. 2.5 lakhs monthly at retirement.

Your PPF is Rs. 20 lakh now.

This won’t be enough for 25+ years of post-retirement life.

Action Plan:

Start monthly SIP of Rs. 50,000 only for retirement.

Use actively managed multicap and flexicap funds.

Invest through a Certified Financial Planner via MFD route.

Regular plans offer handholding and behavioural guidance.

Direct plans miss out on professional advice.

Retirement goal needs adjustments and review every year.

Rebalance based on life stage and market condition.

Investment Style and Tax Awareness

Equity mutual funds give better returns in long run.

Do not go for direct mutual funds if you lack full understanding.

Invest through MFD with CFP guidance for better strategy.

Index funds are passive and track only the market.

They do not give downside protection in falling markets.

Actively managed funds offer better risk-adjusted returns.

Taxation is also a key factor to consider.

LTCG above Rs. 1.25 lakh is taxed at 12.5%.

STCG is taxed at 20%.

Debt fund gains taxed as per your slab.

Plan redemptions smartly with your advisor to reduce taxes.

Current Investment Misalignments

LIC policies are giving poor returns.

Gold allocation is too high.

SSA and PPF are low-yielding but safe.

No visible equity mutual fund allocation seen yet.

This needs realignment.

Insurance and investment are mixed wrongly.

No clear separation of goals seen.

You are missing equity growth in your portfolio.

Ideal Monthly Allocation Suggestion

Rs. 25,000 in SIP for elder kid

Rs. 25,000 in SIP for younger kid

Rs. 50,000 in SIP for retirement

Rs. 5,000 in gold savings

Rs. 12,500 for SSA account

Rs. 5,000 for PPF yearly can be continued

Remaining surplus can be in emergency fund, travel or home needs

Other Important Tips

Build an emergency fund of Rs. 6 lakhs minimum.

Keep it in liquid funds or sweep-in FD.

Review all goals every year with your advisor.

Rebalance investments every 12 months.

Do not stop SIPs during market falls.

Stay invested for long term always.

Delay short-term luxuries for long-term financial freedom.

Retirement is your biggest financial goal.

Don’t rely on EPF or pension from job alone.

Finally

You are financially disciplined already.
You have no loans and you save well.
Now it’s time to restructure and realign your plans.
Separate goals and give them the right asset class.
Avoid over-dependence on gold and PPF.
Replace LIC policies with better investments.
Start SIPs under professional guidance.
Stay focused, review often, and track each goal.

Your income can create strong wealth with correct action.
You just need direction and consistency from here onwards.

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

..Read more

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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.

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