I am 31, working in a software company in Chennai. My wife is a home-maker. I have a son who is a few months old. My parents live in their own house in Tiruchi. My PF balance is ₹50,000. How can I meet my goals?

Arunan

It is always good to buy a house in the city where you are likely to live for the next 15 years. The first house should be for consumption and second for investment. If your job profile is not going to allow you to settle down in Tiruchi, just buy land and construct later. If you are going to work in a metro, buy a flat there. To buy property worth ₹50 lakh don’t take loan beyond ₹35 lakh. This will help you meet other goals. Save for the next 6 years for initial funding. If you avail home loan for ₹35 lakh at 8.75 per cent for 15 years, your EMI will be ₹36,400. Earmark chit fund maturity for this goal as initial fund.

Children’s education: If you save as per the suggestion you will have a shortfall of ₹11 lakh. Since you are at the beginning of your career, increase the contributions to the goal as your salary increases.

Retirement: The present monthly expenses of ₹20,000 will be ₹1.24 lakh, if inflated at 7 per cent over the next 27 years. To meet the monthly expenses at retirement you should have a corpus of ₹3.54 crore and it should earn 0.93 per cent over and above the prevailing inflation. To sustain till 85, redeploy the earlier year surplus. If your contribution to EPF increases by 5 per cent and if it earns 8.75 per cent, at retirement your EPF balance will be ₹1.96 crore . Still there will be a shortfall of ₹1.58 crore.

The writer is a SEBI-registered investment advisor and founder, my assets consolidation.com

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