Focus on main goals
for now
Delhi-based
Kumar will need to increase his investments and revamp the insurance portfolio.
IT
consultant Mohan Kumar is 32, with a monthly salary of `1.08 lakh and a small
portfolio of `1.8 lakh. He lives with his wife in his parents' house and the
couple is planning a kid after a year. After expenses and investment, he is
left with a surplus of `30,002. His goals include saving for emergencies, a
car, a house, child's education and wedding, retirement, and vacation. However,
he will have to forgo his goals of vacation and car purchase for now.
Financial
Planner Pankaaj Maalde suggests he begin by building an emergency corpus of
`3.6 lakh. For this, he can allocate his cash, insurance value and gold.
Besides these, he will need to save `15,000 for one year to build the required
amount. Next, Kumar wants to save for his future child's goals. He will need
`80 lakh and `1.3 crore after 19 and 26 years.For these, he will have to start
SIPs of `10,000 and `8,000 in equity funds and gold bonds.
For
retirement, he needs `6.6 crore in 28 years, and will have to assign his EPF
and equity fund corpus. He will also have to start an SIP of `15,000 a month in
equity funds. Finally, to buy a house worth `72.5 lakh in five years, he will
have to amass a down payment of `23.2 lakh. To do so, he should start an SIP of
`40,000 a month in an equity fund for four years and in an arbitrage fund for
the last year. He will have to start investing for this goal after one year,
when he has repaid the personal loan and saves on the EMI of `26,653. He will
also save `15,000 after building the contingency fund. For the remaining
amount, he will have to take a loan, which will result in an EMI of around
`40,000 and this can be sourced from the surplus.
Kumar
will have to boost his existing term plan of `1 crore with another `50 lakh
plan.He should continue with his traditional plans and forgo the Ulips. He has
a health cover of `5 lakh, but is advised to raise it to `10 lakh after the
child next year. Kumar should also buy critical illness (`25 lakh) and accident
disability (`50 lakh) plans for himself (see table).
