I am 43 and work in Afghanistan. My wife, a home maker, and our two sons, aged eight and six, live in India. Next year I may return to India. On my return, I am not sure if I will continue to earn. By the time I am back home, I will have FDs worth ₹2.2 crore. Suggest a strategy to save for my retirement and my children’s education. I have very low risk tolerance, no liability and don't have a health insurance policy. I pay ₹50,000 premium towards unit linked insurance plans.

- Balaji Singh

To start with, for your retirement, invest 20- 30 per cent of your surplus in pure large-cap and balanced funds. This will help you offset inflation. The present monthly expenses of ₹75,000 may come down to ₹30,000 after your sons settle down. When you turn 61 you will need ₹1 lakh per month. You should have a corpus of ₹2.09 crore to generate such an income.

If you don’t earn once you are back in India, your retirement kitty may not be adequate. Investing ₹1.5 crore in bank deposits, at a post-tax return of 7 per cent, will fetch monthly interest income of ₹87,500. However, higher inflation could dent your savings. We advise you to take up employment so that your retirement corpus is left untouched till you turn 61.

Children’s education : To generate ₹1 crore each for your sons, you need to invest lumpsums of ₹42 lakh (10 years) and ₹35 lakh (12 years), respectively, assuming 10 per cent returns annually. Earmark ₹70 lakh for this from your future earnings. Since you are an NRI, you are not allowed to invest in small savings schemes. Close the deposits and earmark the proceeds to meet your children’s education costs. Follow an asset allocation pattern of 60:40 in debt and equity, respectively.

Insurance: Take a life cover for ₹50 lakh. Buy a floater health policy for ₹7 lakh.

The author is a financial planner and founder, myassetsconsolidation.com Send your queries to >fp@thehindu.co.in

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