PLAN OF ACTION

Term assurance of 2 crore may be taken by Mr Sampath Kumar for about 30 years which shall cost about 40,000 per year.

Disposable surplus of 11.2 lakh can be invested in the following manner every year for the next 25 years:

Invest 50,000 per month in a systematic investment plan ( SIP) of balanced ( equity and debt) over the next 25 years. This will help him in creating a corpus of 1.5 crore at cost (` 4.72 crore in value terms if growth is aimed at eight per cent a year). This shall help him to plan for his children’s marriage and retirement needs in full.

A sum of 1.5 lakh needs to be parked every year in a PPF yielding 7.6 per cent a year. Over 20 years, this shall translate into a future value of 70.6 lakhs. This money can be placed in a debt fund from the age of 55- 70 years and systematically withdrawn for later on needs in life. In between the term, if required funds can be partially withdrawn for children’s higher education expenses.

The EPF accumulation presently of 10. lakh with funding at same pace, earning eight per cent a year and gratuity at retirement will fetch him about 1 25. cr at retirement.

The PPF at maturity can be used to buy an immediate pension policy at retirement.

Bank deposits may be kept at bare minimum levels to meet contingency requirement for the next 15 years.

Create a WILL in favour of each family member.