I am 42 year old. Have 6 dependents ( 3 children / niece - 11,12 and 15 year old and 3 elders). Take home is 2.7lac now. Pf around 40 lac. Fd of 30 lac now, ppf around 12 lac. Equity 30 lac and sip in mf 40 lac now. Monthly mf sip 70k. Remaining invest in equity and fd based on market after monthly expenses.no emi. 2 flats around 55 lacs in total. Can u advise what should I do in future for finance perspective ?
Ans: You are 42 years old with:
Take?home salary: Rs.?2.7?lakhs per month
Dependents: 6 (3 children aged 11,12,15, and 3 elders)
No EMIs
Investments:
PF: Rs.?40?lakhs
FD: Rs.?30?lakhs
PPF: Rs.?12?lakhs
Equity (direct stock): Rs.?30?lakhs
Mutual fund SIP corpus: Rs.?40?lakhs (SIP of Rs.?70?k/mo)
Additional investments: monthly equity & FD based on surplus
Assets: 2 flats worth ~Rs.?55?lakhs (presumably for rent or future use)
You have good income, no debt, and strong savings. You support many dependents. Let’s craft a structured, 360?degree financial plan to ensure security, growth, duty coverage, and goal achievement.
1. Clarify Your Financial Goals & Timeline
You likely have these key objectives:
Children’s education and higher studies (in 5–10 years)
Elderly healthcare and support
Wealth build for retirement (15–20 years away)
Legacy or property planning
Possibly early retirement or financial independence
Immediate clarity on goal timelines, required vectors, and priority will shape your strategy.
2. Build an Emergency and Healthcare Reserve
You have Rs.?30?lakhs in FD, but it may not all be liquid or available. Create a structured reserve:
Emergency fund: 6–12 months of household expenses (~Rs. 15–20 lakhs) parked in liquid mutual fund or sweep-in FD
Healthcare reserve: For elders, allocate Rs.?5–10 lakhs separately
Keep these together or in two parts, always liquid.
This ensures unexpected expenses don’t derail your monthly plan under any scenario.
3. Insurance and Risk Mitigation
You support many dependents. Adequate insurance coverage is essential.
Health insurance: For self and entire family including elders and children—top-up plans may be beneficial
Term insurance: Should cover at least 20 times your monthly income given high dependency
Critical illness plan: Especially for elders or your own age group
Accidental cover: Optional, but affordable
Do not invest in ULIPs or linked insurance plans. Use regular mutual funds for investments.
4. Children’s Education Planning
Three children are approaching crucial education stages:
11–15 years now → college expenses start in 4–7 years
Goal amount per child: Rs. 10–15 lakhs each for higher education abroad or quality domestic institutions
Suggested structure:
Build a conservative hybrid or child-target fund with monthly SIPs
Allocate Rs. 20–25k per month across two child-specific goal funds
Reevaluate annually as they progress in schooling
This ensures funds grow while managing risk.
5. Elderly Care & Legacy Expenses
Elders bring recurring healthcare needs:
Allocate Rs. 5–10 lakhs in a conservative debt fund with periodic withdrawals
Create monthly SWP (Systematic Withdrawal Plan) from this corpus for elder care costs
Maintain healthcare insurance to reduce spending drain
Legacy planning (wills, nominees) ensures smooth succession without burdening next generation.
6. Retirement & Wealth Build Corpus
Currently you have:
PF: Rs.?40 lakhs
PPF: Rs.?12 lakhs
Equity: Rs.?30 lakhs
Mutual funds: Rs.?40 lakhs SIP
Strategy:
Maintain PF and PPF for long-term retirement corpus
Continue SIP in actively managed diversified equity/hybrid funds (Rs. 70k is already in place)
Post goal expenses, increase SIP for retirement allocation
Over next 15–20 years, you can build Rs. 5–10 crores corpus depending on returns and incremental investments
This ensures future financial independence.
7. Asset Portfolio Rationalisation
You own two flats worth Rs. 55 lakhs total:
Analyse rental yield vs cost (maintenance, taxes)
Confirm if they serve strategic purpose (backup accommodation, rental income stream)
If idle, consider renting them out rather than selling
Keep real estate to an extent, but avoid more property due to illiquidity and cost of ownership
Focus remains on productive, liquid, and professionally managed investments.
8. Portfolio Allocation & Diversification
Current investment distribution (excluding FDs and real estate):
Equity (stocks + MF): Rs.?70 lakhs
Debt (PF/PPF): Rs.?52 lakhs
Optimise it by:
Equity: 60–70% through active diversified and flexi-cap funds
Hybrid: 15–20% for stability during market downturns
Debt: 20–25% through PPF, PF, and liquid funds
Avoid index funds due to lack of active risk control and no advisor oversight. Use regular fund plans via certified MFD for guidance, not direct plans.
9. Tax-Efficient Allocation & Withdrawals
Be mindful of mutual fund tax rules:
Equity MF LTCG > Rs. 1.25 lakh taxed at 12.5%
STCG taxed at 20%
Debt and hybrid gains taxed per slab
Structure redemptions and goal withdrawals to minimise tax:
Withdraw at lower income years for children’s education
Use LTCG exemptions smartly for corpus or legacy transfers
CFP can guide you annually on tax?efficient strategies aligned to your plans.
10. Annual Review, Rebalancing & Discipline
You already invest via SIP, which is excellent. Complement that with structured checks:
Review fund and asset performance annually
Rebalance equity/hybrid/debt mix to maintain target allocation
Adjust SIPs on salary increases and tweak education corpus contributions
Reassess insurance coverage each year
This keeps your financial plan adaptive to life changes and market conditions.
11. Leverage Professional Guidance via MFD?CFP
Since you manage multiple portfolios and responsibilities:
Regular plans via CFP-led MFD offer ongoing strategic advice
They guide on fund selection, portfolio overlap, tax, retirement, and withdrawal planning
The minor commission paid is small compared to wealth protection and support received
No direct fund plan or index fund can offer this level of holistic guidance.
12. Avoid Additional Real Estate & Illiquid Assets
You already have two properties. Liquid capital is crucial for dependents and future goals.
Avoid further real estate exposure
Insist on staying in liquid assets (funds, PF, PPF)
These are accessible, professional, and adaptive
This preserves flexibility amid personal commitments.
13. Personal Development & Income Growth
You earn Rs. 2.7 lakhs now. Consider enhancing earning potential for future security:
Invest in skill upgradation or certifications for career boost
Pursue freelance consulting or mentoring in your field
Even a modest increase of Rs. 20–30k/month redefines your financial trajectory
This creates headroom to amplify goal funding.
14. Estate Planning & Legacy Structures
With dependents aplenty, consider planning:
Draft a clear will, listing nominees and asset distribution
Consider trust or guardianship documents for children and elders
Nominate beneficiaries in PF, insurance, bank, and MF accounts
This ensures assets are accessed swiftly by rightful persons and avoids probate delays.
15. Address Family Conversations & Decision Alignment
Managing six lives under one financial umbrella requires coordination:
Discuss goals, expectations, and financial structure with your spouse/elders
Align on educational paths, elder care strategies, and legacy intent
Create transparency so emergency or sudden needs are met collectively
This builds unity and reduces decision paralysis in crises.
16. Plan for Unexpected Life Events
You support six dependents. Prepare for mental and financial resilience:
Keep healthcare cover up to date and premium paid
If possible, keep letter of guardianship or support letter for kids/elders
Keep some emergency buffer not touched even during goals
Reassess every life event—kid’s education, elder’s health, employment changes
Preparedness keeps stress low and decisions calm.
17. Approach to FD Investments
You currently hold Rs. 30 lakhs in FD, some monthly surplus equity debt based on market.
Maintain only enough in FD to meet goal timelines (e.g., education start 5 years away)
Beyond that, invest surplus in debt or hybrid mutual funds for slightly better returns
FD penalty on breakage and lower after-tax returns may hurt long-term wealth build
Use FDs selectively, not as the default investment.
18. Timeline & Actions Summary
Timeline Actions
Immediate (0–3 mo) Create Rs. 20 lakh emergency buffer; purchase health and term insurance
Short term (3–12 mo) Increase SIPs for education goals; restructure FDs into liquid/hybrid funds
Mid term (1–5 yrs) Monitor children fund corpus; adjust elder care withdrawals; enhance income
Long term (5–10 yrs) Plan for college/liquidity needs; rebalance portfolio; plan estate documents
Retirement horizon (10+) Continue equity/hybrid investments, grow pension fund, adjust for withdrawal phase
This roadmap helps you progressively shift toward financial security and legacy.
Finally
You have built excellent financial strength at 42: diversified investments, dependents, no debt, and strong income. The recommended steps will give structure and clarity for future obligations.
By reinforcing insurance, emergency buffer, children’s corpus, elders’ care, retirement corpus, and estate planning, you ensure peace for all loved ones.
Embrace this journey with professional support via CFP?led planning. You can secure their futures and your legacy with wisdom, discipline, and compassion.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment