Cost of Child Education – Planning and Calculator

Loving your child is what comes naturally but as a responsible parent you have certain obligations towards your child's future. No matter what, you will always want to do your best and ensure that funds are available at appropriate time to meet all those turning points in his/ her life such as higher education, marriage, etc. These milestones in your child's life are some of those very precious events and will always be cherished by you and your child if met well and on time.

But, you can only do so when you plan for such events well in advance and in a systematic manner. Saying so, the birth of your child is one of the most important phases in your life and this is when your responsibility as a parent begins. If you realize this and take the first wise step towards securing your child's dream from the very day, there will be no regrets.With you or without you, the regular inflow of funds to meet the financial obligations of funding your child's tuition fees,higher education abroad or a dream wedding should be timely funded for. That's when you will feel a sense of accomplishment and achievement towards the responsibility of your child.

You always want to be there to fulfill their dreams at every step of the way. But just wishful thinking is not enough and you must plan effectively to secure the future of your child. So, here are some factors that you must consider while planning
Must Read : Why Real Estate is a dull investment compared to Mutual Funds

The rising cost of education
The costs of education is constantly increasing. In the last 10 years, private school fees has gone up by 150% as per survey conducted by  ASSOCHAM (May, 2015).
Graduation and post-graduation costs are also going to increase drastically. 

Below is a table which shows the data for a private school in Kandivali in Mumbai for a child studying in STD : III. It may be less or more depending on the school which you select.

Cost	Annual Cost- For One Child	Annual Cost- For Two Children
School Fees	45000	90000
Shirt/ Trousers/ Skirts	2500	5500
Shoes	3500	6800
Bag / Bottles	1500	3000
Sports Kit	2000	4500
Text books	3400	7000
School trips	2500	5500
School Clubs	1500	3000
Technology	1500	2500
Tution Coaching Expenses
Primary Level	5,000	10,000
Secondary Level	25,000/-	50,000
Extra Co-curricular Expense
Primary Level	3,000	5,000
Secondary Level	8,000	10,000
Total	79400	202800

Increase in Education Cost of 1 Child with an Inflation of 5%

The total cost of education for a single year for STD III is Rs 79400 which calculated up to 10th Standard with an inflation of mere 5% comes to around 111723
Apart from the above it is clear that savings are not enough and you need investment where diversification is a must.

Must Read : Retirement Planning : Beating the Inflation Blues

Start Investing as early as possible

Indian Institute of Management Ahmedabad (IIM-A) has increased the fee for its flagship two-year postgraduate programme in management (PGPM) from Rs 18.5 lakh to Rs 19.5 lakh. Increase in 1 lakh fee is 5% inflation of Rs 18.5 Lakhs. 
Fees in IIM-A in 2011 was Rs 14.5 Lakhs. click here to find out the fees for various year in IIM.
If you looking to send your child for a post graduate degree abroad in a Institute like Harvard Business School cost is approximate Rs 96 Lakhs in present value

Source : economictimes.com

 A child in India normally completes graduation at 21 years of age and below are different scenarios depending on the age of child and funds required for a reputed institute like MBA in IIM-A after 5,10,15,20 years.
In my example i have selected MBA but it could be any Post-Graduation degree. You need to find the present cost today and future value with future value calculator (search in google there are hundreds of websites available) 
Let us understand the cost and investment required with the help of a sample case study: 

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Assumption made while calculating the scenarios 
Current Savings : NIL 
Increase in Yearly Savings : NIL  


Scenario 1 : Mr & Mrs Bajaj, a married couple with a child of 1 year

MBA cost after 20 years at an inflation of 5% would be Rs 51.73 Lakhs. Mr Bajaj would have to invest Rs 5625 every month in an asset class which would provide at-least 12% returns.

Scenario 2 : Mr & Mrs Sharma blessed with a kid of 6 years

Mr Sharma will have to save Rs 8518 every month for 15 years to accumulate a corpus of Rs 40.50 Lakhs calculated at an inflation of 5% and investment returns of 12%.

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Scenario 3 : Mr & Mrs Mehta with a single child of 11 years old and they have 10 years for their child to graduate and in the meantime they have to create the corpus of Rs 31,76,345/- at assumed inflation of 5%.

Monthly investment of Rs 14000 is required which should fetch a return of 12% per annum adjusting inflation of 5%


Scenario 4 : Mr & Mrs Khan with a single child of 16 years old just completed 10th Grade and they have 5 years to accumulate amount of Rs  25 Lakhs approximate 

From the above scenarios it can be said that longer the horizon large the corpus required but with smaller monthly outflow 

Must Read : Why you should not buy ULIP

Achieve Child Education Goal with SIP

Child Age	Time Available	Instruments	Inflation	Future Value of Education Cost	SIP required	Rate of Returns
0-2 Years	Over 15 Years	Diversified Equity Funds	5%	4053910	8500	12%
		Stocks
		GOLD Funds
3-6 Years	12-15 Years	Diversified Equity Funds	5%	3501920	11366	12%
		Stocks
7-10 Years	8-11 Years	Diversified Equity Funds	5%	2881038	18348	12%
		Balanced Funds
		Debt Oriented Balanced Fund
11-14 Years	6-7 Years	Debt Oriented Balanced Fund	5%	2613186	28466	8%
		Debt Funds
		Recurring Deposit
15+ Years	<=5 Years	Recurring Deposit	5%	2370237	42034	8%
		Debt Funds
		MIP
		FMP

Reviewing your portfolio 

Once the above portfolio is in place, you will to have review it it at least once you also need to check check whether the amount required for meeting the goal has changed. "The education goal has two components: tuition fee and cost of living. Any of these could rise faster than expected. You need to find out whether the 5% per cent inflation rate that we have assumed is a realistic estimate" 

Must Read : Top 3 ELSS Tax Savings Funds in India to Invest via SIP 

Approaching the goal

The investment process is never the same, especially if you are investing for the long term. I have suggested equity funds for those with an investment horizon of over 12-15 years. However, five years before your goal, you should start shifting money out of equities to the safety of debt. Start a systematic transfer plan from your equity fund to a short-term debt fund (average maturity of 1-3 years). Keep in mind that the date of your child's admission for post graduation is fixed.

You can't let a downturn in the stock markets threaten your child's post graduation.


I hope you enjoyed reading the article , it takes time to write  articles with facts and figures, request you to please spread the word. A good way to start is to share this page on your social circle using floating social share bar on the left.

Who doesn't like a financial healthy life,In case if you want one contact me for Financial Planning, please do drop an email to me at vipuls1979@gmail.com. I would be happy to assist you

Mutual Funds & Insurance Related Articles :-
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Best 3 Large Cap Mutual Funds for SIP in 2016 
Best 3 Midcap Mutual Funds for SIP in 2016
Best ELSS Tax Savings Mutual Funds for SIP in 2016
Why you should not buy ULIP
How to Select Mutual Fund for Portfolio
Liquid Funds are better alternative than Savings Bank account
What is FMP in Mutual Funds
Complete Guide on Monthly Income Plans
Complete Guide on Credit Opportunities Fund
How to Save Tax using Equity Linked Savings Scheme
How to Budget Your Money
How Much Insurance Do You Really Need
Why Should you buy Term Insurance Upto 60 Years
5 Must Have Insurance Policies for Women

Disclaimer  :-

The Article is only for information purposes and Vipul Shah (https://investkiyakya.blogspot.com) is not providing any professional/investment advice through it. The article does not constitute or is not intended to constitute an offer to buy or sell, or a solicitation to an offer to buy or sell financial products, units or securities. https://investkiyakya.blogspot.com disclaims warranty of any kind, whether express or implied, as to any matter/content contained in this article, including without limitation the implied warranties of merchantability and fitness for a particular purpose. https://investkiyakya.blogspot.com and its subsidiaries / affiliates / sponsors / trustee or their officers, employees, personnel, directors will not be responsible for any direct/indirect loss or liability incurred by the user as a consequence of his or any other person on his behalf taking any investment decisions based on the contents of this guide. Use of this article is at the user’s own risk. The user must make his own investment decisions based on his specific investment objective and financial position and using such independent advisors as he believes necessary. https://investkiyakya.blogspot.com does not warrant completeness or accuracy of any information published in this guide. All intellectual property rights emerging from this article are and shall remain with https://investkiyakya.blogspot.com. This article is for your personal use and you shall not resell, copy, or redistribute this article , or use it for any commercial purpose. All names and situations depicted in the article are purely fictional and serve the purpose of illustration only. Any resemblance between the illustrations and any persons living or dead is purely coincidental.

Which tax-saving investment best suits your needs? Find out

"More and more investors have realized the importance of investing early and have begun making tax savings instruments at the beginning of the new financial year "

Gone are the days when you waited till the end of March to invest in tax-saving instruments to claim exemptions. More and more people have realized the importance of investing early during the year, which can bring relief to you and make investments sensible too. 

To give an example, it is widely seen that young investors put money either in a five-year bank fixed deposits (FDs) or endowment insurance schemes.
Now, instead of going in for these routine options, investors have begun putting the same amount in equity-linked saving schemes (ELSSs), which will enable them to enjoy the benefits of compounding and rupee cost averaging.

With rising awareness not only individuals but also financial institutions have started promoting tax-saving financial products at the start of the year.

The beginning of a financial year is a good time to start tax planning as it will give enough time to understand various financial products and thus help get more returns. In India, there are a range of tax-saving products from Public Provident Fund (PPF) and National Saving Certificates (NSC) to ELSS.
 
However, instead of blindly putting in money to save taxes, you need to plan for future and invest accordingly. 

The Savings Route: Tax-saving investments should be chosen from various asset classes so as to build your financial portfolio while lowering your tax burden.

In this article i will explain where you can invest and how you can benefit from investing in right products at the right time.

Must Read : Why Real Estate is a dull investment compared to Mutual Funds

NATIONAL SAVINGS CERTIFICATE (NSC)

National Savings Certificate also known as NSC is a successful  tax-saving instrument in both rural and urban India. NSC is backed by the government of India, and is one of the safest investment options available at post offices across the country. 

Currently, NSC offers interest at the rate of 8.10% and is a popular and safe small savings instrument that combines tax savings with guaranteed returns.

The interest is paid at maturity but is taxable annually. Investment up to 1 lakh per annum qualifies for income tax rebate under section 80C of the Income-tax Act. However, the interest that accrues every year is included in your taxable income and is liable for tax payment. 

Certificates can be bought from any head post office or general post office.
As far as liquidity is concerned NSC is liquid, despite the 5- and 10-year stipulated lock-in period. The liquidity is offered in the form of loans and withdrawals are subject to conditions. The amount and rate at which the loan is permitted depends on the lending institution.
 
This scheme is mainly for small businessmen and salaried individuals. People buy NSC every month for 10 years, which is re-invested on maturity as after retirement it will automatically fetch a monthly pension as the NSC starts maturing.

National Savings Certificates are not  inflation-protected. If inflation is above interest rates, it will fetch negative returns. But in present scenario where inflation is low, you can earn real return from this investment product.

Must Read : Retirement Planning : Beating the Inflation Blues

FIVE-YEAR BANK FIXED DEPOSITS (FDS)
 
Five-year bank fixed deposits are not  picked as often as other investment  products despite of it giving rebate under section 80C of the Income-tax Act. Five-year bank fixed deposits is a tax-saving investment product with a shorter duration and can be opted if you are a risk-averse investors. 

FDs offered by various banks have a lock-in period of five years and the interest is taxable. Different banks offer different interest rates on their tax-saving FDs. You can earn better interest through FDs as compared to the 4% to 5% interest otherwise earn from your savings bank accounts.

Currently, many private banks offer 7% to 8.5% interest on five-year FDs. The main advantage of such FDs is the guaranteed higher interest on them instead of regular bank deposits.
 
Here again you can enjoy the benefits when inflation is below the rates offered by banks. The interest rate is fixed and guaranteed for the duration of the deposit at the commencement of the deposit. The bank deposit is liquid, despite the lock-in during the tenure of the deposit. The liquidity is offered in the form of loans and withdrawals are subject to conditions. In case of an emergency, you can close FDs prematurely at the cost of losing the interest otherwise earn if it was kept till maturity.
 
Must Read : Why Diversification is a Must in Portfolio

PUBLIC PROVIDENT FUND (PPF)

Despite interest rates being cut for the current financial year from 8.7% to 8.1%, Public Provident Fund (PPF) remains the top choice for tax savers since many years. PPF is completely risk-free in nature as it is backed by the government of India. 

A person cannot open more than one account in his or her name or even have a joint account. The minimum amount of investment in a PPF account is 500 per annum and the maximum amount of investment in a year is 1.5 lakh. In case of a minor’s account, the investment in the minor’s and guardian’s account together cannot exceed 1.5 lakh per annum.
 
Deposits can also be made in 12  installments at the most in a year. PPF comes with a lock-in period of 15 years, which makes it a long-term investment option. PPF also offers liquidity to the you if you need money, you can withdraw after the fifth year, but withdrawals cannot exceed 50% of the balance at the end of the fourth year, or the immediate preceding year, whichever is lower.
 
Also, only one withdrawal is allowed in a financial year. You can also take a loan against PPF. But it cannot exceed 25% of the balance in the preceding year. Invest before the 5th of the month if you want your contribution to earn interest for that month as well. The biggest advantage of the scheme is that, it is EEE in tax status, meaning investments are exempt, interest earned is exempt and final corpus is tax free in the hands of the investors.

Must Read : Top 3 Large Cap Mutual Funds to Invest in 2016

National Pension Scheme

NPS as it is called is one of the cheapest investment options available to investors not only in India but also in the global markets. It is a defined contribution-based pension scheme,
launched by the government and is effective from 1st April 2009.

Earlier only government employees were able to enjoy the benefits of NPS, but now you can also invest in NPS and save for retirement.

The biggest advantage of NPS is the additional tax benefit of 50,000 under Section 80C of the Income-tax Act, which means investors would get tax benefits of 2 lakhs.
 
In order to bring parity among pensioners, in the last Union budget it was announced that investors can withdraw 40% of the total corpus at the age of 60, which would be entirely tax free. This new announcement will have a positive impact on NPS and might attract fresh flows as one of the major issues of taxation has been resolved by the government.

However, one of the major drawbacks of the scheme is that you cannot take out money before 60 years. But it is one of cheapest schemes available for them who want to enjoy an additional tax exemption of 50,000 and are willing to wait for retirement. For many investors, this is a positive feature as it prevents premature withdrawals. But a number of them refrain from investing in PPFs due to the longer tenure.

Must Read : Top 3 Mid Cap Mutual Funds Churning Money For Investors

EQUITY-LINKED SAVINGS SCHEME (ELSS)

Equity-linked savings scheme or  ELSS gives you the option to invest 100% in equities and claim tax exemption under Section 80C of the Income-tax Act. ELSS has the shortest lock-in period of three years among all tax-saving options under Section 80C.
 
Being equity funds, these schemes can generate good returns for investors over long term. If you invest regularly through systematic investment plans (SIPs) you can earn better returns compared to other tax saving products.
 
In the past five years as well as 10 years, this category has created wealth for investors with average returns in the range of 16% to 18%.
 
However, you have to understand that the potential to earn high returns comes with high risks. These funds can even give negative returns when markets are volatile and are in the red. Though most tax saving schemes can get better returns than the broader index, there are many schemes that have lost 12% to 14% in the last one year.

Therefore, If you have the patience to stay invested for a longer duration and can face volatility should consider this option.
You should avoid the dividend reinvestment option for ELSS schemes because the lock-in period will prevent them from exiting fully. Their best option is to take the SIP route since the start of the year.

Must Read : Top 3 ELSS Tax Savings Funds in India to Invest via SIP

UNIT-LINKED INSURANCE  PLANS (ULIPs) AND LIFE INSURANCE POLICIES
 
Unit-linked insurance plans (ULIPs) are a category of goal-based financial solutions and are long-term plans offering you the dual benefit of insurance and investments. 

In ULIPs, a part of the investment goes towards providing for your life cover. The remaining portion of the ULIP is invested in a fund, which, in turn, invests in stocks or bonds, the value of investments alters with the performance of the underlying fund opted by you. 

There are options for you like investing in equity, debt balanced or corporate bonds. However, insurance plans have their own pros and cons. So, you must research well before investing in insurance policies and not jump merely with the intention to save taxes by investing in such products. 

You should ascertain whether the plan meets your goals. Also, you should evaluate the performance of previous ULIPs. Additionally, you should find out if they are single or regular premium ULIPs. Consider choosing a policy tenure of at least 15 years, which can give good amount of money.

It is always seen that investors disband their insurance policies and not complete their full term, which impacts their savings. It is always advisable to either pay premiums for the full term or take other life insurance policies. While investors who want to look at other insurance products should also look at investing in term insurance, endowment or retirement plans that offer tax benefits under the Income-tax Act.
 
Must Read : How much Insurance do you need ?

In India, life insurance still remains the most preferred tax-saving  instrument and many believe that by paying insurance premium they save taxes as well as money for their retirement purposes. But you should invest only if you are sure of what returns you will get after the investment matures. You should always remember that investing in life insurance policies should not be made only to avail tax benefits but to get life benefits also. The main aim of an insurance product is to ensure a financially-secure future for your family members.
 
Finally, remember that before buying any investment product such as ULIPs, endowment or money back policy, you should always calculate your need for insurance. If you do not believe that insurance can fulfill you needs, then they can certainly invest in a term plan and the remaining money can be put in ELSS through SIPs, which can offer both tax advantage as well as exposure to the equity markets.

Must Read : Mutual Funds Vs ULIP 


I hope you enjoyed reading the article , it takes time to write  articles with facts and figures, request you to please spread the word. A good way to start is to share this page on your social circle using floating social share bar on the left.

Who doesn't like a financial healthy life,In case if you want one contact me for Financial Planning, please do drop an email to me at vipuls1979@gmail.com. I would be happy to assist you

Mutual Funds & Insurance Related Articles :-
Benefits of SIP
What is SWP in mutual Funds
Best 3 Large Cap Mutual Funds for SIP in 2016 
Best 3 Midcap Mutual Funds for SIP in 2016
Best ELSS Tax Savings Mutual Funds for SIP in 2016
Why you should not buy ULIP
How to Select Mutual Fund for Portfolio
Liquid Funds are better alternative than Savings Bank account
What is FMP in Mutual Funds
Complete Guide on Monthly Income Plans
Complete Guide on Credit Opportunities Fund
How to Save Tax using Equity Linked Savings Scheme
How to Budget Your Money
How Much Insurance Do You Really Need
Why Should you buy Term Insurance Upto 60 Years
5 Must Have Insurance Policies for Women

Disclaimer  :-

The Article is only for information purposes and Vipul Shah (https://investkiyakya.blogspot.com) is not providing any professional/investment advice through it. The article does not constitute or is not intended to constitute an offer to buy or sell, or a solicitation to an offer to buy or sell financial products, units or securities. https://investkiyakya.blogspot.com disclaims warranty of any kind, whether express or implied, as to any matter/content contained in this article, including without limitation the implied warranties of merchantability and fitness for a particular purpose. https://investkiyakya.blogspot.com and its subsidiaries / affiliates / sponsors / trustee or their officers, employees, personnel, directors will not be responsible for any direct/indirect loss or liability incurred by the user as a consequence of his or any other person on his behalf taking any investment decisions based on the contents of this guide. Use of this article is at the user’s own risk. The user must make his own investment decisions based on his specific investment objective and financial position and using such independent advisors as he believes necessary. https://investkiyakya.blogspot.com does not warrant completeness or accuracy of any information published in this guide. All intellectual property rights emerging from this article are and shall remain with https://investkiyakya.blogspot.com. This article is for your personal use and you shall not resell, copy, or redistribute this article , or use it for any commercial purpose. All names and situations depicted in the article are purely fictional and serve the purpose of illustration only. Any resemblance between the illustrations and any persons living or dead is purely coincidental.

Retirement Planning : Beating the Inflation Blues

"Make sure you have more than provident fund and gratuity to bank on at Retirement"

Image Source : Economic Times

I am sure most of you have seen Amitabh Bachchan starrer Baghban. One sympathies with the retired couple and their torment in the film. The movie is a classic example of how one should not approach their so called "golden years", or retirement period.

In one of the scenes, Bachchan avails a loan from his provident fund account and when asked whether his action is appropriate, he confidently makes a statement that his children would take care of him. Little did the actor realize what stood for him in the future.

The film clearly explains the need for one's retirement planning in today's world of nuclear families. It was indeed surprising for a banker to have made such a blunder. We need to pose this question to ourselves — is there something to learn from the film or we still want to continue being ignorant to such issues?

It is through this movie one could understand the disasters and helplessness of not having a planned retirement. I want to draw your attention to inflation which will play the most important role in your retirement period. 

Must Read : Why Real Estate is a Dull Investment compared to Mutual Funds ?

Inflation, in simple terms, means the increase in the over all level of prices over a period of time. It cannot be controlled by you as an individual but it surely affects you in great way. Inflation adversely affects retired people as the income is not in appropriation with inflation.

At the same time it does also affects people who are earning, but there are several ways in which they can mitigate the effect, rising wages being one of them. Retired people usually have fixed income. This income could be in the form of interest from fixed deposit or pension funds. These income does not change in respect to inflation.Moreover, they invest in debt products, which usually have a time frame of 3-5 years. With rising inflation it becomes more difficult for retired people to meet their expenses with the limited resources.

Let us understand with the help of an example, Mr Shah current age 35 years is having a yearly expense of Rs 420,000 (Monthly expense of Rs 35000 X 12). Assuming if he retires at 60 years of age how much corpus would he require to have the same lifestyle.
But as mentioned earlier inflation is the devil , all goods and services which can be bought today in Rs 420,000 will not be possible for them to buy after 25 years. There is a formula which derives the future value of present value which is shown below.

Future Value of Rs 420000/- after 25 years at an Inflation of 7% would be
FV = 420000 X (1+7/100)^25 = Rs 22,79,522/-
In order to maintain the lifestyle which Mr Shah is maintaining today he would require Rs 22,79,521 yearly starting in his first year of retirement and to generate that income he would require a corpus of 2,85,17,899.

Must Read : Top 3 Large Cap Fund to Invest in 2016 via SIP

But the story doesn't end year, even after retirement he may live up to 70 or 80 years and after 60 years it is his investments which are going to provide income.
Let us understand with an example how a corpus of Rs 2.85 Cr will not be sufficient if Mr Shah lives up to 70 years
In the below table I have assumed 5% inflation from 60th Year and return on investment at 8.5% if invested in a FD or Debt fund.

Year	Corpus Generated	Income	Needs	Suprlus / Deficit
61	28517899	2424021	2279521	144500
62	29943794	2424021	2495316	-71295
63	31440984	2424021	2620082	-196061
64	33013033	2424021	2751086	-327065
65	34663684	2424021	2888640	-464619
66	36396869	2424021	3033072	-609051
67	38216712	2424021	3184726	-760705
68	40127548	2424021	3343962	-919941
69	42133925	2424021	3511160	-1087139
70	44240621	2424021	3686718	-1262697

From the table is clearly seen that in 62nd year he will have to start erode his corpus. I have not factored high inflation which takes place once in a decade like we experienced in 2008-2009 recession.
The whole math would go haywire for Mr Shah, while his income is stagnant and his expenses are growing by every year passed even though he has the same standard of living.
This means that he would have to start using his corpus or lower his standard or a combination of both.It is a scary situation with no control over unfolding economic situation. 


Must Read : Best 3 Midcap Funds Churning Money For Investors

One cannot live with this situation but there is a solution for it. You need to factor in your expected life expectancy after retirement at the time of retirement planning with the annuity formula mentioned below
PVA = A * [ {(1+r)^n -1} / { r * (1+r)^n } ]
Where
PVA = Present value of Annuity (Amount you need to have at your retirement)
r= Rate of interest you expect to get
n = Number of years you want the Yearly Income.
or moneycontrol link here

From the above formula you would require 38453980 i.e approximate 3.85 Cr to live the same life up to 70 years.
If 3.8 cr is invested in bank FD of Liquid funds generating an income of 8.5% per annum, you would be able to get a yearly payout of Rs 3,080,000 vis a vis required payout of Rs 22,79,522. The surplus in addition  to existing corpus again is re-invested at 8%.
Let us do the maths now 

Year	Corpus + Surplus Reinvested	Needs (A)	Income (B)	Surplus/ Deficit ( C )
61	38500000	2,279,521	3080000	800,479
62	39,300,479	2,393,497	3340540.715	947,044
63	40,247,523	2,513,172	3421039.427	907,868
64	41,155,390	2,638,830	3498208.166	859,378
65	42,014,768	2,770,772	3571255.268	800,483
66	42,815,251	2,909,311	3639296.344	729,986
67	43,545,237	3,054,776	3701345.13	646,569
68	44,191,806	3,207,515	3756303.493	548,789
69	44,740,594	3,367,891	3802950.518	435,060
70	45,175,654	3,536,285	3839930.602	303,645
71	45,479,299	3,713,100	3865740.457	152,641
72	45,631,940	3,898,754	3878714.937	-20,040

From the above table it would be easy to manage monthly outflow till the age of 72.

For those who have already reached their retirement age and there is not much that they can go back and do, there is still some room to fight this battle with inflation. You should have a right asset mix or a diversified portfolio, which includes debt assets as well as growth-oriented assets. One, at this point, would definitely ask about the risks involved in the growth assets. I would say that the growth assets are less risky compared with inflation. Also, the risk involved in them reduces over a long-term horizon. This is definitely better then risking your corpus by the silent killer `inflation'.

Must Read : Best ELSS Tax Savings Funds to Invest in India in 2016 for Long Term

There are several such assets that are likely to generate a return adjusted for inflation equity, growing annuity etc. One would also wonder with the kind of equity market volatility whether it would be a right asset class for the retired people who have a limited corpus.
I am reiterating that the volatility has very minimal effect in the long-term.
 
One must understand the importance of 'inflation-beater' assets and should make them part of the overall portfolio both during the pre-retirement phase and retirement phase.

I hope you enjoyed reading the article , it takes time to write  articles with facts and figures, request you to please spread the word. A good way to start is to share this page on your social circle using floating social share bar on the left.

Who doesn't like a financial healthy life,In case if you want one contact me for Financial Planning, please do drop an email to me at vipuls1979@gmail.com. I would be happy to assist you

Mutual Funds & Insurance Related Articles :-
Benefits of SIP
What is SWP in mutual Funds
Best 3 Large Cap Mutual Funds for SIP in 2016 
Best 3 Midcap Mutual Funds for SIP in 2016
Best ELSS Tax Savings Mutual Funds for SIP in 2016
Why you should not buy ULIP
How to Select Mutual Fund for Portfolio
Liquid Funds are better alternative than Savings Bank account
What is FMP in Mutual Funds
Complete Guide on Monthly Income Plans
Complete Guide on Credit Opportunities Fund
How to Save Tax using Equity Linked Savings Scheme
How to Budget Your Money
How Much Insurance Do You Really Need
Why Should you buy Term Insurance Upto 60 Years
5 Must Have Insurance Policies for Women

Disclaimer  :-

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