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I work for a software company and earn ₹1.2 lakh a month. My wife is a homemaker and we have two daughters aged seven and one. My parents are partially dependent on me. I have booked three apartments of which two will fetch rent of ₹20,000, and the third ₹10,000. My monthly expenses (including EMIs) is ₹92,100. My investments are as follows: mutual funds - ₹40 lakh, PF and PPF - ₹14 lakh and equity shares - ₹2.5 lakh. I have term cover for ₹2 crore, endowment and pension plan worth ₹6 lakh, and a health policy for ₹19 lakh (top-up cover for ₹15 lakh). My parents are covered to the tune of ₹2 lakh. I wish to save ₹23 lakh and ₹27 lakh for my daughters’ education and marriage and have a retirement corpus of ₹1.5 crore by 2036.
- Sachin
Restrict your health cover to ₹10 lakh and increase your parents’ cover to at least ₹3 lakh.
Education : For your elder daughter’s graduation, you will need ₹10.5 lakh, assuming 7 per cent inflation (same rate taken for all goals); so invest ₹3,870 every month for 11 years. Invest ₹2,390 every month for 15 years to keep ₹15.8 lakh for your younger daughter’s education, assuming 12 per cent annual return.
Invest ₹9,900 every month to have ₹49.6 lakh for your elder daughter’s higher studies. For your younger daughter’s post-graduation ₹65 lakh may be required; invest ₹7,500 every month for 19 years. Earmark your current SIP investments of ₹19,500 for these goals and to meet the shortfall, step up your contribution. For your elder daughter’s marriage you may need ₹85 lakh after 17 years. Set aside ₹12,900 every month for the goal. For your younger daughter’s marriage, earmark your holdings in mutual funds. If ₹9.5 lakh grows at 12 per cent, you will have enough for her marriage. For your nieces’ marriage, earmark ₹6.5 lakh out of the amount held in mutual funds.
Retirement : Your present corpus, together with the future contributions of EPF, will take care of a part of your retirement needs. You may need ₹12.4 lakh at retirement. To receive such a pension, you must have a corpus of ₹2.45 crore. The balance ₹24 lakh held in mutual funds would suffice. You can consider retiring at 55.
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