I am 54 years old and my wife is 49. My daughter is studying in sixth grade. My monthly income is Rs 75,000 and expenses are Rs 25,000.

I took two insurance policies last year, for which I need to pay premiums totalling Rs 3,50,000 for the next four years.

I took these policies without understanding their utility.

An endowment policy with sum insured of Rs 70,000, is maturing in 2013.

I have invested in fixed deposits worth Rs 12 lakh, which will mature next year. I have direct equity exposure of Rs 25 lakh. My MF portfolio is worth Rs 25 lakh with investments in 25 debt and equity schemes .

I have little time for monitoring fund performances. Please suggest debt oriented MF schemes. Through a portfolio management service (PMS), I have invested Rs 10 lakh.

I own a house in Coimbatore, which I have rented out.

This sum is deposited in my SB account and is lying unused. I have a plot worth few lakh of rupees. Post-retirement, I may settle down in Coimbatore.

I will have to meet my daughter’s higher education cost of Rs 20 lakh and her marriage expenses of Rs 10 lakh.

At retirement, I am eligible for fixed pension of Rs 20,000. At retirement, my PF balance will be Rs 40 lakh.

After factoring this, how much money would I need to meet my present standard of living.

— Sundaram (Name changed on request)

Your portfolio is over weight on equity and accounts for 79 per cent of your assets. Regarding your PMS investment, exit it during market rallies. You have opted for the dividend option in all your MF schemes. Instead you should have opted for growth option, given your long-term investment horizon.

We suggest you reduce your direct equity exposure over a period of time and go for debt-oriented balanced schemes.

Education and Marriage

The present cost of Rs 20 lakh, if inflated at 7 per cent over 6 years will be Rs 30 lakh.

Her marriage expense of Rs 10 lakh will be Rs 24.1 lakh in 13 years.

Deploy your mutual fund investments for these goals, which can be achieved if the MF schemes deliver 9 per cent.


The present monthly expenses of Rs 20,000 will be Rs 37,500 at retirement. After factoring your pension, you need to have a corpus of Rs 44 lakh and it should earn a return of one per cent higher than inflation to sustain till you turn 80 .

Since, you will receive retirement benefits of Rs 40 lakh, the shortfall will be marginal. To meet the short fall, invest rental income in SIP mode in monthly income plans.


Since your employer does not offer medical support post retirement, take a health insurance policy. Consider taking a family floater policy for Rs 5 lakh.

Mutual Fund Investments

Invest one part of surplus in debt-oriented balanced schemes.

The other part can be invested in hybrid equity oriented funds such as HDFC Prudence, HDFC Balanced, Birla Sun Life 95.

You can opt for dividend option on these funds post retirement and until then use trigger option with 15 per cent return.

Don’t invest in more than 5-6 schemes. Accumulate gold through the ETF route for 10 per cent of the portfolio.

(The author is CEO, SPP Wealth and Financial Planners. He can be reached at suresh@myassetsconsolidation.com)

(This article was published on July 14, 2012)
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