MONEY MATTERS

Managing your money can be tricky. Send your queries, and top- notch industry leaders will help you resolve any issue.

Financial Planning

Yasmeen Wajid: I am 40 years old and earning ` 2 lakh a month. We are a family of three and I have a fouryear-old daughter. How much will I need if I want to retire at 50, keeping in mind the inflation factor? Also, how much will it cost to fund my daughter’s post-graduation? I currently have mutual fund and equity investments. So, going ahead, should I invest in debt or equity? What do you recommend for life insurance and health insurance policies?

Brijesh Parnami, Executive Director and CEO of Essel Wealth Services, replies:

If you want to continue a similar lifestyle post- retirement ( keeping in mind a 6.5 per cent inflation rate), you should have a monthly income of ` 3.3 lakh, which requires a corpus of ` 8.5- 9 crore. At present, a master’s degree could cost as much as ` 25 lakh. So, you will require ` 65-70 lakh after 16 years when she turns 20. You should start a monthly SIP of ` 10,000 in a diversified equity fund to create a corpus of ` 68 lakh to meet this goal. Also, when you buy a term plan for life insurance, the premium should not be the only criterion. Check the claims process and settlement ratio of the life insurance companies before you zero in on one. HDFC Life Click2Protect and ICICI Prudential Term Plan are good plans. For health insurance, one should check capping and deductibles. Finally, you should park your emergency fund in debt funds and invest in equities to grow your wealth.