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My spouse is 57 and works as a consultant. His earnings are spent in running his business and to meet expenses on charitable causes. We have a son and a daughter, who are employed abroad. We wish to be financially independent. We need ₹60 lakh for our children’s wedding in 2016 and to build an additional floor for our house.
We own a plot worth ₹45 lakh and an apartment valued at ₹45 lakh. There is also our ancestral property worth ₹1.5 crore. The cost of maintaining this ancestral home is ₹1 lakh annually. Both of us are quite healthy and have a medical cover for ₹19 lakh.
Radha Madhav
It is always advisable not to use your retirement corpus for goals such as buying a property or construction of a house. If you need ₹45,000 as monthly expenses from next year onwards, you should have a corpus of ₹1.23 crore and it should earn more than inflation to last till your life expectancy.
Your current financial assets total up to ₹1.29 crore. But if you withdraw ₹60 lakh for your children’s marriages and construction of your house, you will have to sell the plot that you own at a later date to meet your expenses. Since the rental income from your house is only ₹10,000, consider vacating the tenant and occupying it yourself. This will help you reduce the outgo from your retirement corpus. You can suggest that your children save a portion of their monthly income to at least partially meet their marriage expenses. This will help you leave estate for them after your time.
Investment strategy: If you use a portion of your retirement corpus for your children’s marriages, you will find it difficult to meet your lifetime needs. In your current portfolio, equity assets account for 11 per cent of the financial assets. Try to increase the exposure to 25 per cent. With markets in a growth phase, earning 12 per cent annually for the foreseeable future should not be too much of a challenge. Gradually trim equity exposure as you grow older in accordance with your risk appetite.
Insurance: Insurance premiums need to be paid at least till the lock-in period. For the policies that are just a few years away from maturity, continue to pay the premiums.
Your current health insurance cover appears to be on the higher side. Reduce it to ₹12 lakh. If necessary, buy a super top-up policy later on. Continue your mutual fund SIPs as long as you manage a surplus.
The writer is a financial planner and founder, Myassetsconsolidation.com. Send your queries to fp@thehindu.co.in
The writer is a financial planner and founder, Myassetsconsolidation.com. Send your queries to >fp@thehindu.co.in
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