Financial Plan published in Economic Times Wealth on 22nd May '2017

No big hurdles to main goals

      The Pune-based couple will benefit from the early start and disciplined savings.

      Vicky and Sonali Jadhav bring in a combined salary of `84,000.

After considering household expenses, loan EMIs, insurance premium and investments, they are left with a surplus of `24,419. The couple has already bought a house worth `43.6 lakh, and has savings in the EPF (`3.9 lakh), PPF (`50,000), fixed deposit (`1 lakh) and equity funds (`25,000). Financial Planner Pankaaj Maalde suggests they use these and make fresh investments in equity funds to reach their goals. These currently include building an emergency corpus, saving for their future child's education, a vacation and retirement.

They should start by creating an emergency corpus equal to three months' expenses, though they should raise the amount to six months' expenses at the earliest. They can do this by allocating their cash holding (`75,000) and fixed deposit. This should be invested in an ultra short-term debt fund.

For their future child's education expenses in 19 years, they will need `80 lakh. For this, they should start an SIP of `10,000 in equity funds to arrive at the required sum. As for their retirement, they have estimated a need of `6.8 crore in 29 years. For this, they should assign their EPF, PPF and equity fund corpus. Besides these, they will need to invest `1,000 a year in the PPF and start an SIP of `13,000 in a diversified equity fund. This will help them amass the given sum in the specified period. As for the vacation worth `5 lakh in two years, they will have to put off the goal for now due to lack of surplus.

The couple currently has one traditional life insurance plan worth `5 lakh. Maalde suggests they surrender this and instead buy a term plan of `1 crore for Vicky and `50 lakh for Sonali. For health insurance, in addition to their employer's `5 lakh cover, they should buy a family floater plan of `10 lakh.Both these plans will cost them `15,000 a year each. Besides, Vicky should purchase critical illness and accident disability insurance plans, which will cost `1,000 a month.The premiums for all these plans can be sourced from the surplus and will take care of all their insurance needs for now.