Your Financial Plan

Suresh Parthasarathy | Updated on January 16, 2018 Published on October 16, 2016


I am 28 and work for the private sector. My wife is employed. I live with my parents who are financially independent. I have term insurance for ₹50 lakh. I wish to close my home loan at the earliest. Please suggest suitable investments.

Lalit Pitale

If one has the ability to earn more than the borrowing cost, it is prudent to defer repaying loan as long it is financially viable. Due to tax benefit, your borrowing cost will be around 8 per cent. So, don’t rush to repay the loan since there is a possibility of interest rates heading lower.

Assume you need ₹15 lakh now for your child’s graduation. After 18 years, it will be ₹50.7 lakh. Invest ₹6,700 a month and it should earn 12 per cent return.

Retirement: It is desirable to plan early for retirement and with compounding, a nominal investment will help you reach the goal comfortably. Your current monthly expenses of ₹25,000 will be ₹1.9 lakh when you are 58, at 7 per cent inflation. You need a retirement corpus of ₹5.30 crore and it should earn 1 per cent over and above inflation. If your EPF accumulation is factored, you need to invest monthly ₹12,900 and it should earn a 12 per cent return. Since you have limited surplus, invest ₹10,600 and increase the same by 5 per cent every year till you reach the goal. Follow the asset allocation of 60:40 in equity mutual fund and debt investments.

If you have recently started an endowment policy, close it and divert the funds to earn better returns. With saving in premium, increase your term insurance cover by₹25 lakh and buy a term cover of ₹25 lakh for your wife.

The writer is a SEBI registered investment advisor and founder, Send your queries to

Published on October 16, 2016
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