The pursuit of retirement

Himanshu (37) works with a KPO and earns Rs 94,000 monthly. He lives in a rented house with his homemaker wife and their five-year-old daughter. He pays a rent of Rs 20,000 per month and other monthly expenses are usually around Rs 55,000. Himanshu wants to buy a house and accumulate a sufficient corpus for his daughter's higher education and wedding. While all these goals look achievable, it could be quite challenging for him to save enough for a comfortable retirement after he has invested for his other goals. Emergency corpus As his emergency fund, Himanshu has a fixed deposit of Rs 2.5 lakh. Ideally, one should have an emergency corpus equal to six months of expenses. It helps in dealing with any unforeseen financial emergencies that can derail one's finances. For Himanshu, this amount would be Rs 4.5 lakh. Although his FD is considerably less than the required amount, that shouldn't be a problem. He is in a fairly stable job and quite confident about his future income. Besides, he has adequate health insurance for medical emergencies. However, he can explore liquid funds to invest a part of the fixed deposit. While FD returns are taxable, one doesn't have to pay tax on investments in a debt fund unless one sells these. A good liquid fund can provide him FD-like returns. Insurance Himanshu has a pure term plan of Rs 1 crore and a family-floater health cover of Rs 7 lakh. These polic

This article was originally published on November 17, 2021.