FUNDS REQUIRED TO MEET GOALS

WHILE PLANNING IS CRITICAL TO OUR FINANCIAL WELL- BEING, IT HAS BECOME INEVITABLE IN THE UNCERTAIN TIMES WE NOW LIVE IN. HERE, DR RAVINDRAN ANALYSES YOUR FINANCIALS AND LAYS OUT A ROADMAP FOR ACHIEVING FINANCIAL GOALS.

PLAN OF ACTION

■ Retirement is sometime away but risk exists on life and health. He needs to buy a term assurance of ` 1.5 crore for about 30 years which will cost about ` 25,000 per year.

■ The disposable surplus of ` 5.9 lakh a year needs to be invested in the following manner for the next 25 years:

■ Invest ` 25,000 a month in a systematic investment plan of balanced ( equity and debt) over the next 25 years. This will help in creating a corpus of ` 75 lakh at cost (` 2.36 crorein value terms if growth is aimed at 8% pa). This will help him to plan for his retirement needs in full.

■ A sum of ` 1.50 lakh needs to be parked every year in a PPF yielding 8.10 per cent a year. Over 20 years, this will translate into a future value of ` 75 lakh. This money can be placed in a debt fund from the age of 55- 70 years and systematically withdrawn for later on needs in life.

■ The EPF accumulation presently of ` 10 lakh with funding at same pace, earning 8 per cent a year and gratuity at retirement will fetch him about ` 1 25 crore 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, in view of parents staying with them.

■ Create a Will in favour of each of the spouse and ensure that all financial holdings have a nomination to secure the assets.