PLAN OF ACTION

The disposable surplus of 10 lakh a year needs to be invested for the next 15 years in the following proportion:

Term assurance of 1 crore may be taken for about 20 years which shall cost about 25,000 per year.

Contribute 1.5 lakh per year in PPF in the name of his son for the next 15 years which shall be valued at

44.37 lakh growing at 8.1 per cent a year at maturity.

ULIP may be undertaken so as to gain on an upside, with a 15 years horizon. A sum of about 1,05,000 per year over 15 years shall yield a future value of 30.79 lakh with eight per cent a year growth.

Invest in a systematic investment plan of balanced ( equity and debt) of 75,000 per month aggregating to 9 lakh over the next 15 years. This shall help create a corpus of 135 lakhs at cost (` 263.91 lakhs) in value terms if growth is aimed at eight per cent a year). This will help him to build up the retirement corpus fully. This fund can be placed in a safe debt fund to earn monthly dividends at retirement.

PPF and pension plan can be used to buy a pension policy at retirement. Bank deposits may be converted into a tax free bond upto an extent of 50. lakhs immediately, maturing 12 years from date. Create a Will and ensure all investments have a nomination.