Enjoy today, save for tomorrow: Financial planning for a balanced life

My husband and I are both 38 years old and save ₹1 lakh every month. We have always tried to strike a balance between saving for the future and enjoying our lifestyle. Recently, after reading a few reports, we want to understand where we are heading financially when it comes to our goals. We have a 6-year-old son for whose education we want to have ₹1 crore. We also want to have a substantial amount for our retirement, which we are thinking of taking at 55. We like travelling and would like to have an additional surplus for it. So far, we have ₹18 lakh in our provident fund (PF) accounts and ₹27 lakh in mutual funds. Between the two of us, we are currently investing ₹60,000 per month in systematic investment plans (SIPs), and the rest goes to our bank accounts for our annual travel. Do let us know if we are headed in the right direction when it comes to our goals.

—Name withheld on request.

Having a balanced life where you can enjoy today while saving for tomorrow is important. Hence, it is better to have a plan in place for all these objectives. At present, you are both investing ₹60,000 for your goals like your son’s education and retirement. The remaining ₹40,000, which effectively comes close to ₹5 lakh every year, you are keeping aside for your travel and vacation. With a ₹60,000 investment per month, at the end of 10 years, i.e., when your son is 16, you will have a corpus of ₹1.33 crore, which can easily take care of the education goal.

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If the remaining amount of ₹33 lakh continues to stay invested for your retirement, this amount along with the subsequent monthly investment will be able to reach the corpus of ₹1.49 crore at the age of 55, assuming a 12% per annum rate of return.

Along with this, you have your present mutual fund portfolio of ₹27 lakh, which can become ₹1.85 crore at retirement. The PF without considering additional investment as the amount is not available should add ₹57 lakh more. So, the total corpus for retirement across all would be close to ₹3.92 crore. If we consider 6% inflation, this corpus is good enough to take care of ₹56,000 per month at current expenses for 35 years after your retirement.

If you are comfortable with this monthly amount, then you can continue with the way you are saving and investing. However, if you feel it is less, then you should relook at the investment ratio and finetune from the overall investment and spending perspective.

Harshad Chetanwala is a certified financial planner and co-founder of MyWealthGrowth.com.