Early start to ease journey
Abhishek Tewari is a marketing analyst based in Mumbai and brings in a salary of `65,000 a month. After household ex penses of `18,250, rent of `12,250, and an investment of `18,000, he is left with a surplus of `16,500. His portfolio currently comprises `1.18 lakh in mutual funds, debt in the form of PPF (`65,000) and EPF (`1.65 lakh) and `20,000 in cash. His goals include building an emergency fund, saving for his wedding, taking a vacation, buying a house and saving for retirement.
According to Financial Planner Pankaaj Maalde,
Tewari should first build a contingency corpus worth three months of expenses,
which amounts to `99,000. He can allocate his cash holding and save the surplus
for five months to build the required corpus.This should be invested in an
ultra shortterm debt fund.
Next, Tewari is planning to get married in 18
months and wants to accumulate `2.5 lakh. He can do this either by starting an
SIP of `15,000 in an ultra short-term debt fund or investing in a recurring
deposit. For retirement in 33 years, Tewari will need `11.2 crore and can
assign his PPF, EPF and mutual fund corpus to the goal. He will also have to
start an SIP of `15,000 in an equity fund to be able to reach the goal.
Tewari also wants to buy a car worth `10 lakh by
next year. Maalde suggests he lower the value of this goal or buy a second-hand
car and avoid taking a loan for it. He can start saving for the goal after his
wedding when he will have a surplus of `15,000. He should also put off the goal
of buying a house worth `1 crore for three years and plan as per his financial
situation at the time.
As for insurance, Tewari doesn't have any cover and
Maalde suggests he buy a `1 crore term plan for 35 years, which will cost him
`10,000 a year. He should also pick a health plan worth `5 lakh at `7,000 a
year. Finally, he must also buy critical illness and accident disability plans
worth `25 lakh each at around `8,500 a year.
