A young couple approached Geojit seeking expert guidance to manage multiple financial goals—closing their home loan early, planning for their son’s higher education, buying a car, and building a retirement corpus. Geojit’s Certified Financial Planner, Gibin John, provides a clear, step-by-step roadmap to help them prioritize their objectives, optimize investments, and move confidently toward long-term financial security.
I am a 36 years old, working for a private firm and my wife is 35 years and my 6 year old son is studying in the second standard. My monthly salary is Rs. 92,000 and my wife’s salary is Rs. 60,000. We live in our own house, built a year ago, for which we have taken a home loan of Rs. 32 lakh at an interest rate of 8.5%. We are paying Rs. 28,000 as EMI. The loan tenure is 20 years.
Our monthly living expense is Rs. 45,000, including our son’s education fees. We are currently investing Rs. 5,000 every month in a recurring deposit and Rs. 25,000 in mutual funds. Our savings account balance is Rs. 2,00,000. The current value of our property is approximately Rs. 1 crore.
I would like to know how I can close the loan early. We aim to accumulate around Rs. 30 lakh for our son’s higher education. In addition, we plan to purchase a car worth Rs. 15 lakh in four years. We are also preparing to retire at the age of 56, after which we will require approximately Rs. 30,000 per month to meet our expenses. Please advise us on how to achieve these goals.
Gibin John, a Certified Financial Planner, replies:
It is great that you have decided to plan your goals and have started investing accordingly. Your retirement is about 20 years away. Your total income is Rs. 1,52,000 and total outflow for meeting living expense and obligations is Rs. 73,000. The net surplus available for investment is Rs. 79,000. You are currently investing Rs. 30,000 from this amount. The major portion of your surplus amount is not properly invested or allocated towards any goal.
In this plan, we are focusing not only on closing the home loan but also on accommodating all other financial goals.
After analyzing your profile, it appears that you currently don’t have sufficient investments. Your current savings of Rs. 2 lakh in your bank account can be earmarked as an emergency fund. This reserve will help you manage unexpected expenses that may arise in the future. Use this funds for genuine emergencies only, avoiding non-essential purchases, debt payments, or investments. Also, make it a priority to rebuild the fund to its target level as soon as you can after using it.
One of your important financial goals is your son’s higher education. The estimated cost for this goal is Rs. 30 lakh. Considering an education inflation rate of 8%, the projected cost when he is 17 years old (11 years from now) will be approximately Rs. 70 lakh. To achieve this, you will need to invest Rs. 26,600 per month in an equity-oriented mutual fund. Along with your existing SIP of Rs. 25,000, you should add Rs. 1,600 to accumulate the required amount.
Additionally, for your goal of purchasing a car worth Rs. 15 lakh, after four years. Accounting for inflation, the cost will rise to about Rs. 19 lakh. To accumulate this amount, you should invest Rs. 35,000 per month in a recurring deposit or a debt-oriented mutual fund.
Retirement planning is another critical objective. You plan to retire at the age of 56 and expect monthly post-retirement expenses of Rs. 30,000. Considering inflation, after 20 years, this monthly cost will increase to approximately Rs. 96,200. To cover inflation-adjusted expenses until the age of 80, you will need to create a corpus of Rs. 2.48 crore at the time of retirement.
To build this corpus within 20 years, you should invest Rs. 27,000 per month in an equity-oriented mutual fund. Currently, you may not have sufficient funds to invest the full amount, so you can start with Rs. 15,000 per month. After four years, once you buy the car, you can increase your contribution by an additional Rs. 20,200 towards your retirement goal.
Your main goal is closing the home loan early. To achieve this, you will need to make additional payments. At this point, after considering all your other goals, you do not have sufficient funds for extra payments. However, after completing the car purchase goal, you can allocate Rs. 10,000 per month towards this objective. If you repay an additional amount of Rs. 1,20,000 every year, the loan can be closed within the next 13 years.
You should ensure a minimum health insurance coverage of Rs. 5 lakh for all family members. Additionally, to protect your family, you should start a life insurance policy with a coverage of Rs. 1 crore.
