Right time to forge
ahead
Pune-based
Pramod Chavan should increase his investments to realise all his financial
goals.
Pramod
Chavan lives with his wife and two-year-old daughter in his own house in Pune.
He is an engi neer and earns `79,000 a month, of which `3,996 is left as
surplus.His goals include saving for contingencies, child's education and
wedding, a new car and retirement.
Financial
Planner Pankaaj Maalde suggests he begin by rescheduling his home loan since he
is paying a big EMI and a high interest rate. He can do so by increasing the
tenure to 20 years, which will bring down the EMI from `25,000 to `16,700. The
saved amount can be used to meet a goal.
To set up
an emergency fund of `2.8 lakh, Chavan can allocate his cash holding of `1
lakh. For the remaining amount, he can save the surplus for a year before
beginning investment for the other goals. In order to buy a car, he wants to
amass `2 lakh in three years. For this, he can start an SIP in an MIP scheme
for the first year and in an arbitrage fund for the second year. As for his
child's education in 16 years, he will need `51 lakh and can start an SIP of `8,000
in an equity fund for the given term. For her wedding in 23 years, he should
start an SIP of `5,000 in an equity fund and `1,500 in the gold bond scheme to
amass `88 lakh. Finally, for retirement, he needs `5.7 crore in 27 years. To
achieve this, he should allocate his PPF, EPF and mutual fund corpuses. For the
remaining amount, he should start an SIP of `11,000 in an equity fund for the
specified term.
Chavan
has one term plan and two traditional plans to cover his life. Maalde advises
him to continue with the traditional plans and buy a term plan of `50 lakh.
Chavan has covered his family's medical needs by buying a family floater plan
of `7.25 lakh. Maalde suggests he raise this amount to `10 lakh. He should also
buy critical illness and accident disability plans of `25 lakh each.
