|
Saving
rigour, few goals to help secure future
With a good asset base, disciplined approach and minor changes, the Ranjans can secure their finances. SAKINA BABWANI Real estate continues to remain a hot favourite among Indian investors.The Ranjans are no different,with about 46% of their portfolio in realty.However,it isnt as if they have ignored other avenues.While debt investment amounts to 22%,equity forms 28% of their portfolio,and the remaining 4% is held as cash.Amit Ranjan,a manager in a PSU bank,explains: I have largely relied on newspaper and television reports for investment advice.However,I feel the need for a financial plan so that my investments are well-planned and in line with my goals. Given that the Ranjans goals are realistic,their approach to investment is disciplined,and they have sought advice at the right time,it should not take much realignment to achieve their financial goals. Amit,30,lives with his 29-year-old wife Suvidha in Vadodara,Gujarat,and they have a two-year-old daughter,Aayushi.Like Amit,Suvidha is also employed as a manager in a PSU bank and the two have monthly salaries of 41,000 and 41,250,respectively.Their outflow entails a total expenditure of 77,813,with a major chunk going to service two loans: home and personal.The couple had taken a home loan of 30 lakh for 20 years for a property that they bought in Vadodara,in March this year,and in which they currently stay.They also have 6 lakh worth of land in Vadodara.The EMI for the loan works out to 12,500 (at a concessional rate offered to PSU bank employees),while the one for an overdraft loan of 3.5 lakh,which was also taken in March,is 4,000 (no repayment tenure).Amit invests 19,000 in debt instruments as well as in equity through the SIP route.This leaves him with a surplus of 4,437 every month. Pankaaj Maalde,CFP & head,financial planning,apnapaisa.com,suggests that the Ranjans first secure themselves against eventualities by acquiring adequate insurance.At present,they are under-insured,with a combined cover of only 19 lakh,which is worrisome considering that they are earning members with a dependant and two loans.Hence,Amit must immediately buy a cover of 1 crore,as must Suvidha.These new covers will cost them 1,000 a month.Of the five traditional plans that they have,the Ranjans can continue with all except the Jeevan Rekha policy since the return it gives is unlikely to beat inflation.Surrendering the plan will fetch them 20,000,which should be allocated towards the repayment of their overdraft loan.The couple has not only ignored life insurance,but also their health cover.Currently,the banks at which the Ranjans work reimburse all their medical bills,but the Ranjans must buy individual health covers of 3 lakh,which will cost them 833 every month.This can be partially funded by the premium ( 630) they save on surrendering the Jeevan Rekha plan. Now,the Ranjans can move to plan for their financial goals,of which amassing 62 lakh in 16 years for their daughters education is top priority.For this,they should earmark their current SIP investment of 7,000 in HDFC Equity,ICICI Pru Focused Bluechip and Birla Sun Life Dividend Yield.They must also invest 3,000 per month in the PPF.The equity investments,assumed to grow at 15%,along with an 8% growth in the PPF,should enable him to build the desired corpus within the set time frame. To build a corpus of 88 lakh in 23 years for funding Aayushis marriage,a monthly investment of 6,000 in equity and gold in the ratio of 70:30 will be required.Their current investment of 4,200 in IDFC Premier Equity and Reliance Regular Savings can be dedicated towards this goal.Currently,the Ranjans invest 1,000 in IDBI Gold fund every month.Maalde suggests that they shift to the SBI Gold fund and increase the amount to 1,800.They need to change the fund because IDBI Gold fund is relatively new and has no track record to rely on. Finally,the couple needs to build a retirement corpus of 9 crore in 30 years.The good news is that since both work with PSU banks,they are likely to get a monthly pension of around 3 lakh after retirement.This will contribute to nearly 50% of their retirement corpus.Additionally,their EPF corpus will comprise nearly 2.92 crore to their kitty.Further,their land in Vadodara will fetch them 1 crore,assuming its value grows by 10% every year.Amits LIC policies will fetch them another 35 lakh at different intervals in the next 10-20 years.As and when these policies mature,the couple must invest the proceeds in the PPF or debt products to make up for the balance. Maalde also recommends that the Ranjans pay the overdraft loan as soon as possible since it comes with a high interest rate of 12%.While they dont have sufficient resources,they can partially repay it by allocating 20,000 they receive on surrendering the Jeevan Rekha policy.They can also give up mutual funds like ICICI Infra,RMF Tax Saver,Sundaram Smile and Fidelity Tax Saver,which will generate about 1.12 lakh.It will also save the couple 3,000 per month,which will help finance their goals.Besides,Amit can dispose of his portfolio of good stocks like Petronet and Coal India,which will help produce 1.25 lakh and can be used to pay the loan since the interest rate on the loan is higher than the returns he gets. RANJANS GOOD MOVES ... Investing in equity. Having a high rate of savings. AND THE BAD ONES Having inadequate life insurance. Depending on the mediclaim provided by their employers.
RECOMMENDATIONS
INSURANCE Since Amit and Suvidha do not have sufficient life insurance,they should both buy online term plans of 1 crore each from Aviva.As for health insurance,the family can go for Apollo Munich's Optima Plus plan of 3 lakh for each family member. Financial plan by Pankaaj Maalde CFP,www.apnapaisa.com |
|
