I am 46 years old and work in the private sector. I will retire by 58. My wife, aged 42, is a homemaker. I have a son studying in Std 8. My mother is financially independent. I have not saved enough despite working all these years. Should I sell my old flat worth ₹45 lakh and settle the dues on my loan? I live in a house gifted by my father.

Shunmugam

In order to achieve financial goals, it is important to understand where we are now.

It is always a good idea to spread your investments across asset classes. Now your entire investment is in an illiquid asset, a flat. Real estate prices are likely to be under pressure for a few more years despite the recent interest rate cut. Your decision to sell the flat is, therefore, a good one. If you pre-close your personal and car loans, your monthly surplus will increase to ₹39,000. After accounting for the rental income, you will have adequate money to save for your retirement goal. For your son’s graduation you need ₹10 lakh. If you allocate ₹5.75 lakh and if your portfolio earns 11.8 per cent you can reach the target. To build the corpus for your son’s higher education in eight years, invest a sum of ₹14.4 lakh, allocate 60 per cent to equity mutual funds and the rest to fixed deposits and Voluntary PF.

Retirement : Your monthly expenses of ₹25,000 will equal ₹56,000 when you retire. To reach that goal you need to have a corpus of ₹1.32 crore. Your current balance in EPF, along with future contributions and the interest thereon, will grow to ₹33.7 lakh. To make up for the shortfall of ₹99 lakh, you need to save a sum of ₹31,000 every month and the portfolio should earn 11.8 per cent. The surplus, after making these investments, can be invested in land, to diversify the portfolio.

The writer is a financial planner and founder, myassetsconsolidation.com

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