Need to speed up investment
Pune-based
Chhabras need to cut their debt and focus on goal-linked investing strategy.
Manish
Chhabra, 39, and his wife Prachi, 35, are both sala ried and bring in a monthly
income of `1.58 lakh. They have two daughters, aged 11 and two, and stay in
their own house. Their goals include saving for emergencies, kids' education
and weddings, as well as their retirement. After household expenses, kids'
education expense, insurance premium, loan EMIs and dependant contribution,
they are left with a surplus of `38,417.
The
couple has life and health covers from Manish's employer and one independent
traditional plan. Financial Planner Pankaaj Maalde suggests he buy `2 crore
term plan for himself and `1 crore for Prachi, besides a `10 lakh family
floater plan. He should also pick `50 lakh critical illness and accident
disability plans for himself and `25 lakh each for Prachi. The new policies
will cost an additional `6,750, which can be funded from the surplus. He should
also surrender the traditional plan.
The
couple also has three loans--home, car, personal--worth `30.9 lakh and Maalde
suggests they get rid of the last two worth `2.95 lakh by using the surrender
value of his traditional plan. They must also increase the term of the `28 lakh
home loan, which will cut the EMI to `24,750 from `31,500. These two steps will
create an additional surplus of `15,000.
They can
now build the emergency corpus of `3.36 lakh by allocating cash, insurance
proceeds and gold ETF. Manish should also build a `3 lakh medical buffer for
his parents when his salary rises. For the kids' education and weddings, they
should start investing via SIPs in equity and balanced mutual funds as
suggested.
Finally,
for retirement, they can allocate their stocks, mutual fund and EPF corpuses.
They should also start fresh SIPs worth `25,000 in equity funds, but due to
lack of surplus, can begin with `15,000. They should increase this amount as
soon as there is a rise in salary.
