I am 34, my husband is 38, and we work in a private firm. Our son is two-and-a-half years old. Please recommend MF schemes to meet our goals. Our employer will invest their share in the NPS beginning next year, will that benefit us? Should I close all my postal life insurance?

Debjaniphani

The new pension scheme (NPS) falls under the tax-exempt category and is best suited for those who prefer to invest equally in equity and debt. Well managed NPS funds can give returns higher than EPF. But if you wish to invest only in debt products you can go with EPF.

Endowment products deliver measly returns of 7 per cent (including tax benefits), hence avoid additional investment. Earmark the policy maturing in 2020 for any exigency. Keep aside the insurance policy (2031) maturity proceed of ₹17.5 lakh for your son’s education. To meet the short fall of ₹7.5 lakh invest a sum of ₹1,500 every month; this should earn 12 per cent return. Invest the maturity proceeds of endowment maturing in 2036 to earn tax-free return of 7 per cent for the next three years; the maturity value will be ₹21.4 lakh.

Your current monthly household expenses seems higher. For retired people this would be around 70 per cent of the present cost.

To receive ₹2 lakh as monthly income post retirement, you should have a corpus of ₹4.35 crore earning 1 per cent higher than inflation. You can use the proceeds of the insurance policy maturing in 2037 towards retirement. To meet the shortfall of ₹4.17 crore, invest a sum of ₹19,600; this should earn a return of 12 per cent. Follow the asset allocation of 60:30:10 in equity, debt and gold.

The writer is financial planner and founder of myassetsconsolidation.com

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