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Understand the Need to Control your Finances

Having made the start, ensure that you stick to the plan and stay invested to achieve your listed financial goals

In your 40s you encounter multiple financial challenges: finances are generally limited and demands are on the rise. You have to work towards growing children and their future financial needs, commitment towards your retirement and repaying debts. Despite these challenges, you have made a start. And, some fine tuning will help you achieve the financial goals you have listed.

When working on your financial goals, we have assumed 8 per cent inflation, which means the `10 lakh that you have assumed towards your elder son's education will be actually `20 lakh when he needs it nine years later. Likewise, to arrive at the retirement corpus that you will need in your retirement, we have assumed your life expectancy to be 80 years. Assuming 8 per cent inflation based on your current living expenses you will need `2.8 crore to be financially comfortable for 20 years in retirement, if you continue working and earning till you turn 60.

There are few other basic financial facts that you need to follow: continue investing and review the performance of your investments at least once a year to assess its progress towards your financial goals. This way you will be able to not only trail its progress, you will also be able to step in when required to make any course correction. As you reach closer to the specific goal, start moving your equity investments to debt to protect it from volatility.


  1. Invest for each of your goals separately to ear mark investments that will achieve those goals. So, a portfolio allocation for one son's education, another for the second son's education, a third for your retirement and so on.
  2. Redeem your existing mutual fund investments to repay your car loan.
  3. Your investments in Canara Robeco Equity Tax Saver and L&T Tax Advantage have completed the mandatory three year lock-in, its time you redeem these investments.
  4. Stop SIPs from equity schemes that are not recommended by us. Redeem units that are older than a year for tax efficiency and start SIPs in the suggested portfolio.
  5. As you have ample time for your financial goals, we recommend an aggressive portfolio that is equally divided between mid- and small-cap funds and large- and mid-cap funds.
  6. Continue your PPF account with regular contributions to keep the account active.
  7. Retain the plot of land that you have purchased for your retirement.
  8. Exit the HDFC Balanced; given the long time ahead for your financial goals.
  9. Consider exiting the recurring deposit


  1. Don't limit your life insurance needs. You are under insured and you need an additional life cover of `50 lakh.
  2. Don't add health cover at the moment, you are adequately insured.
  3. Stick to a portfolio that you can manage, track and evaluate with adequate number of diversified investments.