Need to speed up planning
The Bengaluru-based couple will have to
put off some of their goals till a further rise in income.
Vijay K., 35, and Suganya, 31, live with their
two-year-old child in Bengaluru. Vijay brings in a sal ary of `85,000 a month
and manages to save `15,892 after monthly expenses and investment of `10,000.
The portfolio is meagre, comprising `3 lakh in cash, `1.1 lakh as EPF corpus,
`40,000 in the Sukanya scheme and `65,500 in mutual funds. The goals include
saving for contingencies, child's education and wedding, retirement, buying a
house and a car. Financial Planner Pankaaj Maalde suggests they put off the last
two goals till a sufficient rise in income.
The couple can begin by repaying the expensive gold
loan worth `2.4 lakh by using cash and surrender value of insurance plans.They
can continue with the other interestfree loan taken from relatives. The couple
can then start building the emergency fund of `1.5 lakh by allocating the
remaining cash.
Next, they want to save for the child's edu cation
and wedding, for which they will need `68 lakh and `1.17 crore in 16 and 23
years, respectively. While the former goal can be achieved by starting an SIP
of `10,500 in an equity fund, the latter will have to be put off till a further
rise in income.
For their retirement corpus of `5.3 crore in 25
years, they can allocate their EPF and mutual fund corpus, besides starting an
SIP of `21,000 in a diversified equity fund for the specified period.
As for life insurance, the couple has three
traditional plans and Maalde suggests that they close these, which will help
save a monthly premium of `3,000. Instead, Vijay should buy a term plan of `1.5
crore for 25 years, which will cost `1,250 a month. Since Suganya is not
working, no term plan has been suggested for her.
They should also pick a family floater plan of `10
lakh, while retaining the employer's health plan for Vijay's parents. Vijay
should also buy critical illness and accident disability plans of `25 lakh
each, which will cost `1,000 a month.
