I am 40 years old. I have 3 plots worth 40 lakhs, 10 lacs in MF, 8 lacs in PPF, 6 lacs in SSY. I have two daughters of 8 years and 3 years. My current salary is 1 lac per month.I want retirement at 50 with 1 lac per month regular income.
Ans: You have a solid foundation. Your assets include three plots worth Rs 40 lakhs, Rs 10 lakhs in mutual funds, Rs 8 lakhs in PPF, and Rs 6 lakhs in SSY. Your monthly salary is Rs 1 lakh. Your goal is to retire at 50 with a monthly income of Rs 1 lakh.
Assessing Existing Investments
Real Estate Holdings
You have three plots worth Rs 40 lakhs. Real estate can be a stable asset. However, it's less liquid. You may consider keeping these plots for long-term appreciation. Avoid additional real estate investments for diversification.
Mutual Funds
You have Rs 10 lakhs in mutual funds. Actively managed funds are beneficial. They offer better returns than index funds due to expert management. Direct funds lack personalized advice. Investing through a Certified Financial Planner (CFP) ensures guidance and higher returns.
Public Provident Fund (PPF)
You have Rs 8 lakhs in PPF. PPF is a secure, long-term investment. It offers tax benefits and decent returns. Continue investing in PPF for risk-free growth.
Sukanya Samriddhi Yojana (SSY)
You have Rs 6 lakhs in SSY for your daughters. This scheme offers high interest rates and tax benefits. Continue contributions for your daughters’ future needs.
Retirement Planning
To achieve your goal, you need a strategy. Here are the key steps:
Increase Mutual Fund Investments
Increase monthly SIPs in actively managed funds.
Aim for a diversified portfolio of equity, debt, and balanced funds.
Consult a CFP for personalized fund selection.
Maximize PPF Contributions
Max out your PPF contributions annually.
Benefit from the compound interest and tax savings.
Consider SSY for Daughters
Keep contributing to SSY for long-term benefits.
This will secure their education and marriage expenses.
Future Contributions and Savings
Monthly Savings Allocation
Increase your savings rate. Aim for 30-40% of your income.
Allocate funds to PPF, SSY, and mutual funds.
Emergency Fund
Maintain an emergency fund covering 6-12 months of expenses.
Keep this fund in a liquid asset like a savings account or liquid fund.
Insurance Needs
Life Insurance
Ensure adequate life insurance coverage.
Term insurance is a cost-effective option.
Coverage should be at least 10 times your annual income.
Health Insurance
Have a comprehensive health insurance plan for your family.
Ensure it covers all major illnesses and hospitalization expenses.
Tax Planning
Tax-Saving Investments
Utilize tax-saving options like ELSS, PPF, and SSY.
This will reduce your taxable income and enhance savings.
Final Insights
Your current financial position is strong. With focused planning, you can achieve your retirement goal. Prioritize diversified investments, tax planning, and insurance. Regularly review your portfolio with a Certified Financial Planner. This approach will ensure a secure and comfortable retirement.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
