'Should I Sell MFs For Son's BTech?'

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Debasis: I have invested 22000 per month Mf last 2 years. I have ppf account for 7 years that I deposited fully amount per year. I have a land of 15 lakh and deposited 150000 per year in diff plans like health insurance and ulip plans. I invested nps 50000 for last 6 years. I invested sbi smart children plan.
Can I retire at 45 with 1 lakh pension in my hand? Kindly suggest.

Retirement at 45 is achievable. You have another 12 years before your target of retirement at 45 and assuming you will stay committed to your current investment plan.

As there is still a long life ahead I hope you will think about what to do post retirement.

Some information is missing so I will make some assumptions and provide my updates and views on your current portfolio

Mutual Funds - 22000 per month investment and assuming average return of 12% will help accumulate nearly 1 Cr

PPF - contributing 1.5 lakh yearly at 7 % will help accumulate nearly 60 lakh

ULIP - exact month is not available so assuming 1 lakh for the next 12 years at 9% return (it has a lot of expenses in the initial 5 years) will help accumulate nearly 22 lakh (see note below for ULIP)

NPS - 50000 per year at 10% returns (depends on asset allocation) will accumulate nearly 25 lakh

Note on ULIP: ULIPs are life insurance + investment product. They do not give enough life insurance nor do they give comparable returns like mutual funds. They will have high expenses in the initial 5-7 years (typical lock-in period) and its market linked (like mutual funds). The insurance is not really enough and hence advice is to take separate Term Life insurance for a good amount which is quite cheap and invest remaining amount into Mutual Funds/NPS. This will give best possible life insurance cover and investment returns. So if you have completed your lock-in period (check policy document), I recommend close the ULIP and re-plan as mentioned.

If this ULIP was part of tax plan under 80C, then re-invest in ELSS Mutual funds or NPS for same benefit under 80C, and even the Term plan premium will be considered under 80C. So effectively same amount under 80C but better cover and investments.

The total corpus accumulation is approximately 2 crore and this can definitely help you generate income of 1 lakh per month.

There are many aspects that are not considered in this scenario, do keep the below in mind.

The amount of health insurance you have, you should have cover of 1 crore for self and family.

The life insurance you require needs to be assessed/calculated. This depends on your net-worth and financial responsibilities towards your family/dependents. Once this is known, plan to get a term plan for the required amount ASAP.

Life expenses need to be calculated considering the inflation applicable for your lifestyle. Will 1 lakh be enough to cover your expenses after 12 years when you retire? Also inflation will keep increasing and thus initial 1 lakh will soon become much more each year.

I strongly recommend you connect with a Certified Financial Planner for personalised guidance and prepare a plan that will take into consideration all above points and much more to provide you a comprehensive financial plan. Benefits will include a more tax efficient plan which will consider your requirements and ensure retirement goals are achieved and if there is a shortfall then what alternatives you need to consider.

Hope this is helpful and all the best for the future.

Anonymous: My age is 40 and i want to retire in nxt 10 years my corpus in mf = 5 crore - ppf = 1 crore - term insurance 3.75 crore - lic = 2 crore - mediclaim = 50 lakh - owned house - land = 50 lakh - other recurring income monthly = 16 lakh a month

There are many things to consider for an early retirement (around age 50 as you mentioned), first is to start thinking about it in a more realistic manner. An early retirement has different meaning to each individual -- opportunities to relax and pursue your passion and interests and live life on your own terms. So do think about how to keep yourself occupied once you retire.

At 50 years of age, it a still a long life ahead. Considering the investments and assets mentioned in your query, it may seem more than adequate, but some critical information is missing in it for a full assessment. What are your expenses, liabilities and plans/goals in life and also who are your dependents and what are your financial responsibilities? These need to be considered before concluding if you are well placed for the long retirement ahead.

There are many aspects that will need planning and expert guidance:

• Expense management - Regular income to cover your monthly expenses and ad hoc/annual expenses

• Investment management - Optimise investment portfolio and plan on reinvesting maturing benefits of LIC that are aligned to your requirements

• Tax optimisation of investments and reimbursements - Tax is applicable on gains from most sources of income except a few and in your case LIC (depending on the policy type) and PPF balance are tax exempt

• Risk management - besides health insurance (increase it to 1 Cr), do you need any other type of insurance, that needs to be assessed/calculated

• Succession and inheritance planning - passing of your assets and investments to family, friends or anyone you wish

I recommend you to connect with a good advisor/Certified Financial Planner who will study all aspects of your life and provide guidance and feedback and help you plan the retirement.

Rajan: I am 50 yrs old an IT consultant doing own business, i invested in mf via sip 1. nippon smallcap 10k/month 2. Ppfas 7500/month 3. quant active fund 8500/month 4. Pgim lumpsum 60k. Please advise for long term benefit like my son btech education fees i am started mf sip past 1.5 years, my son going to join college this year can i withdraw all my money from mf.
Due to bearish movement of market last few month my overall percentage lower very much 26% to 19%. Pls advise.

Good to know you planned investment for your son's education. There a few things to keep in mind when planning investment which are market linked.

The time horizon is very important to reap the benefit from the market linked investments. In your case your son is going to join college this year and that means you will need this money for his fees. Along with this the also consider the fund selection based on the risk profile.

There have been 2 things that seem to be of concern at this time:

1. Markets are bearish currently and 2. Not enough time to stay invested. Also the funds you have selected are of very high risk category and hence you may see higher impact in the fund value compared to the market.

If you still see a return of 19% as mentioned, I would recommend you to withdraw and for whatever time you have the money before utilising it, do consider a low risk option of investment like Bank FDs.

This will provide safety and liquidity of your money when required.

All the best to your son for his future.

• You can ask rediffGURU Janak Patel your questions HERE.

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Any use of the information/any investment and investment related decisions of the investors/recipients are at their sole discretion and risk. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Opinions expressed herein are subject to change without notice.