On track to reach goals
The
high surplus and investments will translate to a smooth financial ride for the
Chennai-based couple.
Rahul and Kavita Kumar stay with their five-year-old twins in Chennai.
Both are employed and bring in a combined monthly salary of 3.34 lakh, which
also includes rental income of 21,000. After considering all expenses and
investments, they are left with a surplus of 69,416. Their portfolio comprises
a house worth 1.1 crore, debt investments of 42.2 lakh, equity worth 89.1 lakh
and cash of 6 lakh. Their goals include saving for emergencies, kids’ education
and weddings, a car and another house, and their retirement. Financial Planner
Pankaaj Maalde believes they will be able to meet all these goals without much
problem.
The couple can start by building an emergency corpus of 6.1 lakh, which
includes a medical buffer of 2 lakh for Rahul’s parents. For this, they can
assign their cash and invest the amount in an ultra short-term fund. The couple
also wants to save 60 lakh each for their kids’ education in 13 years. This can
be amassed by allocating 15% of their mutual fund investment and starting SIPs of
7,000 each in equity funds for the kids. Similarly, for higher education, they
will need 1.4 crore in 16 years, for which another 15% of the mutual fund
investment has been allocated. Besides, they need to start SIPs of 18,000 each
in equity funds for both kids.
For the weddings in 20 years, they will need 1.9 crore each, and will
have to start SIPs of 6,000 each in equity funds, besides allocating stocks and
debt schemes. For a retirement corpus of 7.2 crore in 17 years, the PPF, EPF
and equity funds have been allocated. They will also have to start SIPs of 50,000
in diversified equity funds. As for the car worth 10 lakh after a year, the
couple should take a loan, which will result in an EMI of 20,500. This can be
sourced from the surplus. For the second house worth 1.2 crore after five
years, they can start SIPs worth 75,000 in an equity savings fund to build down
payment of 60 lakh in five years. They can review the situation at that point
of time.
For life insurance, the couple have two traditional plans and two Ulips.
Maalde suggests they retain these, but Rahul should buy a term plan of 1 crore.
They also have a health plan of 5 lakh, besides 10 lakh from the employers.
Maalde suggests they raise the family floater plan to 10 lakh. Rahul should
also pick a 50 lakh critical illness plan and a 50 lakh accident disability
plan for himself.
