Savvy investing, saving to help
reach goals
As a single, working woman, Gargi Jain
has managed her finances well. With the right allocation of existing resources
and a higher equity exposure, she should have a smooth financial journey.
She could well be the epitome of how single, working women should plan
their finances. There are, of course, flaws in her portfolio, but Gargi Jain
has given herself a good start with savings spread across all asset classes and
a reasonably high net worth of nearly `58 lakh. She has given priority to her
retirement and has also insured her life, the two aspects that are typically
ignored by women. Her goals are also modest and with proper allocation of her
existing funds as well as some fresh investments, she can easily achieve her
financial objectives.
Existing financial status
The 35-year-old Jain works and stays in
Mumbai with her parents, aged 62 and 72 years, in their house. She is employed
in a private company and brings in a monthly income of `50,000, while her outgo
every month is `39,781. Of this, almost `35,000 is spent on household expenses
and `4,781 flows out as insurance premium. This leaves her with an investible
surplus of `10,219. “I wanted to approach a financial planner to find out if
all my goals could ever be achieved. I also need to know the instruments in
which I should invest,“ says Jain.
Among her current list of goals is
building an emergency fund, putting together a corpus for studies abroad, her
own marriage and a kitty for her retirement. Before analysing her portfolio and
suggesting course correction, if any, Pankaaj Maalde of Apnapaisa.com will
assess her insurance needs.
Insurance coverage
As for life insurance, Jain has done
well in buying herself an online term plan worth `50 lakh since she wants to
secure her parents. Since this amount is adequate given her income and the fact
that she has no liabilities in terms of loans, Maalde does not suggest any
action on this front.
However, when it comes to health
insurance, Jain has not planned well. She has no health cover and neither does
her employer provide any. So, Maalde advises her to buy an individual cover of
`3 lakh and a top-up plan of `5 lakh, with a deductible of `3 lakh. This will
cost her `6,700 per annum, which can come from her investible surplus.
Besides this, Maalde also suggests that
she buy an accident disability plan worth `50 lakh and a critical illness plan
worth `25 lakh. The premium for these will amount to `14,600 per annum.
Road map for the future
After planning for insurance, Jain
needs to build a contingency fund. Maalde suggests a kitty equal to three
months of expenses, and this comes to `1.24 lakh. However, since her parents
are aged and require medical attention, she should build a medical emergency
corpus worth `5 lakh for them. Hence, the total sum is `6.24 lakh and this can
be funded by allocating her debt fund investment of `6.93 lakh to the goal.
Now, Jain can start planning for her
other goals. Firstly, she wants to acquire `20 lakh after three years because
she wants to go abroad for further studies. This goal can be achieved by
assigning `15 lakh of the `16 lakh in her savings bank account for the purpose.
Jain should invest this money in an MIP fund and it will help her build the
required amount in the given time frame.
For the next goal, which is funding her
marriage, Jain has allocated no specific time period and doesn't want to have
too big a corpus. Hence, Maalde suggests that she use some of her existing
resources to fund this goal whenever she wants. She can keep aside the
remaining `1 lakh cash from her savings bank account, `1 lakh of her fixed
deposit, as well as athe gold exchange traded fund worth `1.29 lakh for this
goal.
Finally, to meet the most important
goal of retirement, Jain can go in for the strategy of combining some of her
existing resources with fresh investment. Based on her current lifestyle and
expenses, she has estimated that she will require `3.45 crore in 20 years. This is because she wants to quit working by the time she is 55 years old. To be able to meet this goal, Maalde
suggests that she allocate her EPF and PPF corpus of `11.81 lakh, as well as
the property investment of `6 lakh to this. She is advised to sell her property
and invest the amount in a balanced fund. Besides, she should assign her entire
stock investment worth `6.92 lakh and the equity mutual funds worth nearly `2
lakh for this goal. Maalde also advises that she sell her entire stock
portfolio and invest the amount in a balanced fund because it will not be
possible for her to devote time to research and analysis required for stock
investing. She should also shift from equity funds to balanced funds.
Jain can also continue to invest in her
pension plan, which was started with the intention of securing her retirement.
All these resources will combinedly provide her with nearly `2.8 crore in the
specified time period. To amass the remaining amount, Jain should start a fresh
SIP of `7,000 in a balanced fund. This will help fund her goal.
As for another of her goals to buy
property, Maalde suggests that since it is not a priority, she can put it off
for now. As she is staying with her parents and wants to go abroad or get
married in the next few years, she should take a decision on this after some
time. Financial plan by Pankaaj Maalde, Head, Financial Planning, Apnapaisa.com
I want to know if my goals can be achieved and the instruments I should invest
in.“ GARGI JAIN
