Professional guidance for financial plans

Prema and Mohan were seeking professional guidance on their financial goals. Both are working in Bengaluru. Prema is working as a private school teacher, and Mohan is heading a business unit of an IT firm. They have two children, Ved (20), doing his Engineering in Bengaluru, and Vridhi (14), in Class IX.

To ensure adequate funds with liquidity based on their financial requirements.
Ved’s higher education fund to be placed with appropriate instruments for better liquidity. He may need around ₹40 lakh for the two-year master’s course in Europe.
Vridhi’s education goal is fluid at the moment. The parents intended to allocate a corpus sufficient to meet her education costs in India — for UG, excluding medicine.
Mohan wanted to ensure the family and their financial goals are protected, including his retirement at age 55, 10 years away from now.
Mohan wanted to ensure he builds a sizable wealth at the time of retirement. Prema and Mohan have inherited family properties and assets. One of their key objectives is to assess how much they can gift or transfer to their children after retirement without impacting their long-term financial independence.

Mohan has an aggressive risk profile, whereas Prema has a balanced risk profile. They currently have more than 70 per cent in equity asset class, including Mohan’s stock options.

The family has adequate life and health insurance. Fixed deposits cover six months of lifestyle expenses and the liquidity available through other financial investments are adequate to cover for the liabilities as a contingency measure.
They do not have surplus cash to manage additional expenses or savings and investments, due to their EMI commitments. They have committed to EMI in the recent past without allocating adequately for regular investments/savings towards their medium-term goals.
If rental income is not received consistently or family expenses increase, the expected cash flow surplus may not materialise as expected.
Ved’s education expenses may be met with funds allocated from existing investments. This will reduce the equity allocation to 60 per cent from over 70 per cent at current level in the financial assets. As Mohan is receiving stock options year on year, the allocation to equity will still be maintained at the desired allocation in the next three-four years. It was also recommended to continue the regular contribution in PPF and NPS by Prema.
Since they intended to maintain the same lifestyle at retirement, the retirement expenses will start with ₹2.36 lakh per month in the next 10 years at 7 per cent inflation per annum. The family needs ₹7.3 crore to fund the retirement lifestyle for the next 35 years.