High income, savings to help secure future
The Goyals have a robust portfolio and
adequate risk coverage. With a minor realignment of their investments and a
higher equity exposure, they should be able to have a smooth journey.
The Goyals have nothing to worry. They are in a sweet financial spot,
with a high income, savings and net worth. All these not only translate into
easy achievement of goals, but offer long-term financial security, which is
what most people aspire for. Though their portfolio is heavily skewed towards
real estate, and they have a low equity exposure given their age and long
tenure of goals, these can be easily remedied. Unlike most investors, they also
have a robust risk coverage as they are adequately insured for life and health.
This means that Pankaaj Maalde of Apnapaisa.com has an easy task of charting
the financial road map for Goyals.
Existing financial status
Sandeep and Ruchi Goyal are both
employed and stay with their three-year-old daughter, Saanvi, in Delhi.
Strangely, while they have invested in two properties, which amount to a bulky
`1.05 crore, they still stay in a rented accommodation, paying a rent of
`18,000 per month. The couple brings in a combined income of `2.10 lakh per
month, and the rental income boosts this by `8,000, bringing the total monthly
inflow to `2.18 lakh.
As for their financial outgo, they
spend `1.58 lakh for household expenses, `10,000 for Saanvi's education, `9,767
as insurance premium and a huge amount of `60,700 as EMIs for four loans that they
have taken. While they have taken two home loans, the third is a personal loan,
and the last one, loan for furniture. Hence, their total liability amounts to a
massive `58.17 lakh.
Despite the high monthly outgo, they
are left with a substantial investible surplus of `59,533, a part of which they
invest in a few debt and equity options. After assessing their income,
expenses, current and future needs Maalde has formed the following plan for
them.
Insurance coverage
Beginning with the analysis of their insurance
portfolio, Maalde has come to the conclusion that Goyals have done well when it
comes to life insurance. Both Sandeep and Ruchi have term plans of `1 crore
each, besides other traditional plans. Since they are adequately covered,
Maalde does not suggest any other policies to cover life. Also, since the
tradition al plans will help them beat inflation, Maalde does not suggest
surrendering these and can be retained to form the debt portion of their
portfolio.
The Goyals have surprisingly done well
when it comes to health insurance as well. They have a family floater plan
worth `15 lakh, besides `5 lakh for each member. This is adequate for them and
Maalde doesn't suggest any action on this front. However, both of them should
buy accident disability and critical illness plans for `50 lakh each. This will
cost them `38,000 per annum, which can be easily financed by their surplus.
Road map for the future
Before the Goyals start planning for
their financial goals, they should keep an emergency corpus for unforeseen
needs. Based on their three months' expenses, the Goyals need to have `5.22
lakh as a contingency fund. For this, the couple can allocate their savings
bank balance of `1 lakh, besides their fixed and recurring deposits of `4.54
lakh.
Now they can start planning for their
goals, which include amassing funds for their daughter's education and
marriage, their own retirement, a house, a car and a foreign vacation. They can
begin by focusing on their primary goals. Maalde starts with the purchase of a
house worth `1 crore in one year's time, which the Goyals want for
self-occupation. To fund this purchase, they should sell their flat worth `60
lakh and take a home loan for the re maining amount. Since Ruchi works with a
bank, she will be entitled to a loan at low rate and the EMI will work out to
`40,000. This can be easily financed after the reduction in home loan EMI and
rent, along with the surplus amount.
The Goyals' next goal is the funding of
their daughter's education and marriage. For her education in 15 years, they
require a sum of `32 lakh. To secure the desired amount in the given time, they
will need to start a fresh SIP of `7,000 in a balanced mutual fund.
As for Saanvi's marriage after 22
years, they can allocate the gold worth `3 lakh and start an SIP of `5,500 in a
balanced fund. At an annual growth rate of 11.6%, the assigned amount will grow
to `81.5 lakh, the sum they have estimated for her wedding expenses.
Finally, to plan for a retirement kitty
of `18.27 crore in 28 years, the Goyals need to allot several of their existing
resources, which include their stocks and mutual funds, NPS and NSC investments
worth `3.3 lakh, EPF and PPF corpuses, as well as their second property, which
is currently valued at `45 lakh. Combinedly, they will amount to nearly `11
crore in the specified period. As for the remaining amount, the couple should
increase their existing investment in the equity mutual fund to `21,500, and
continue to invest in the NPS. These investments will help them secure a comfortable
retirement in 28 years.
The Goyals also want to buy a car and
go on a vacation, but since they will exhaust their surplus, they can plan for
these two goals once they are through with their personal and furniture loans.
It should not be too much of a problem to meet these targets in the coming
years.
Financial plan by Pankaaj Maalde, Head,
Financial Planning, Apnapaisa.com
