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