Hello. I'm a Central Govt Officer and my wife, presently on maternity is a corporate employee with finance background. After all deductions, we both jointly earn Rs1.2L every month. I have about Rs30L in NPS corpus. About Rs 8L in mutual funds, Rs 3L invested in stocks. My wife's parents are partially dependent on her, with her sending about Rs10k home every month and I have a 13K p.m auto loan running for 2 years now and another 5 more years to go.
I presently invest 9K per month in mutual funds, 5k per month in LIC, Rs 28k in tier 1 NPS per month and a further Rs 12K per month in Group Insurance Fund.
We have been blessed with a baby boy, a couple of weeks back.
Please help me with an investment plan to secure my son's future and our old age, considering i intend to quit the central govt job, in the near future (2-3years).
Ans: Congratulations on the birth of your baby boy! Your commitment to securing a stable financial future for your family is commendable. Let’s create a comprehensive investment plan tailored to your goals.
Current Financial Situation
Income and Expenses
You and your wife jointly earn Rs1.2 lakh monthly after deductions. You send Rs10,000 to your wife's parents and have a Rs13,000 auto loan for five more years.
Investments
Rs30 lakh in NPS corpus
Rs8 lakh in mutual funds
Rs3 lakh in stocks
Rs9,000 per month in mutual funds
Rs5,000 per month in LIC
Rs28,000 per month in NPS Tier 1
Rs12,000 per month in Group Insurance Fund
Financial Goals
Securing Your Son's Future
Retirement Planning
Transitioning from Government Job
Recommendations for Securing Your Son's Future
Children's Education Fund
Start a dedicated education fund for your son. This can be a combination of equity mutual funds and child-specific plans.
Equity Mutual Funds: These provide higher returns over the long term. Consider a mix of large cap and balanced funds.
Children's Marriage Fund
Invest in long-term instruments for your son's marriage expenses. These can include:
Public Provident Fund (PPF): Provides tax benefits and steady returns.
Sukanya Samriddhi Scheme (if you have a daughter): High interest rates and tax benefits.
Recommendations for Retirement Planning
Diversify Your NPS
Your NPS corpus is substantial. Consider diversifying within the NPS by choosing a mix of equity, corporate bonds, and government securities.
Equity Exposure: Increase equity exposure for higher growth.
Debt Allocation: Maintain a balance with debt for stability.
Additional Retirement Savings
Mutual Funds: Continue with mutual fund SIPs. Focus on balanced and hybrid funds.
EPF and PPF: These are safe options with tax benefits.
Health Insurance
Ensure adequate health insurance coverage for you and your family. This protects your savings from medical emergencies.
Recommendations for Quitting Government Job
Emergency Fund
Build an emergency fund covering 6-12 months of expenses. This will provide financial security during your job transition.
Debt Management
Consider prepaying your auto loan if possible. This reduces financial stress when you transition to a new job.
Skill Enhancement
Invest in courses or certifications that can enhance your employability. This ensures a smoother transition from your government job.
Investment Strategy Overview
Diversification
Diversify your investments across various asset classes. This reduces risk and maximizes returns.
Equity: For long-term growth.
Debt: For stability and regular income.
Hybrid Funds: Balance between equity and debt.
Professional Guidance
Investing through a Certified Financial Planner ensures expert advice. This helps in making informed decisions and optimizing your portfolio.
Conclusion
Your proactive approach to financial planning is excellent. By implementing these strategies, you can secure your son’s future, plan a comfortable retirement, and smoothly transition from your government job.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
