Invest more to meet goals
Deepak and Kavita Wagh live with their one-year-old child in a rent ed house in Mumbai. They are both employed and bring in a combined salary of `1.05 lakh a month. After considering expenses and investment, they are left with a surplus of `18,534. Their portfolio has `1.25 lakh of mutual fund corpus, `8 lakh of fixed deposit and `5 lakh of EPF. The goals include saving for contingencies, child's education and wedding, retirement, buying a house and a car, and taking a vacation. They will have to put off the last two goals till a rise in income, but can achieve the remaining ones with planned investment.
Financial Planner Pankaaj Maalde suggests they
begin by repaying the two expensive loans worth `2.4 lakh by using their fixed
deposit. This will help save the two EMIs of `14,400 for other goals. The
couple can build the emergency fund of `1.7 lakh by allocating cash and a
portion of the fixed deposit. Next, they want to buy a house worth `73.5 lakh
in five years, for which they can accumulate a down payment of `22 lakh by
shifting their FD of `4 lakh to a balanced fund and starting an SIP of `20,500
in a similar fund. For the remaining amount, they can take a loan, which will
result in an EMI of `44,700. This can be funded from the surplus, saving on
rent and rise in income.
For the child's education and wedding, they need
`55 lakh and `63.5 lakh in 17 and 24 years. This can be achieved by starting
SIPs of `7,500 and `4,000 in equity funds.For their retirement corpus of `4.2
crore in 22 years, they can allocate their EPF and mutual fund corpus, besides
starting an SIP of `13,000 in an equity fund.
The couple has two traditional life insurance plans
and Maalde suggests they close these, saving a monthly premium of `13,233.They
should buy term plans worth `75 lakh (Deepak) and `1 crore (Kavita) instead.
They should also pick a family floater plan of `10 lakh, as well as critical
illness and accident disability plans of `25 lakh each for both.
