Raise equity exposure
Sunil S. and Kaveri live with their two children, aged 11 and six, in Belgaum, Karnataka. While Kaveri is a homemaker, Sunil works in a bank and brings in a salary of `54,000 a month. After expenses and investment, he is left with a surplus of `6,596. His portfolio is heavily skewed towards real estate with `47.5 lakh of property, including two houses and a plot, `14.75 lakh of debt in the form of fixed deposit and EPF, and `98,000 in mutual funds. His goals include saving for contingencies, kids' education and weddings, retirement, a house and vacation. However, Financial Planner Pankaaj Maalde suggests he put off the goals of kids' weddings, house and vacation till a further rise in income.
Sunil is also advised to repay his car loan worth
`4.5 lakh with his fixed deposit. He can then build his contingency corpus of
`2.16 lakh by allocating `16,000 of cash and `2 lakh of fixed deposit. This
amount should be invested in an ultra short-term debt fund.Next, he wants to
save `16 lakh for his son's education in seven years, for which he can allocate
his fixed deposit and start an SIP of `11,500 in a balanced fund. For the
daughter's education expense of `22.5 lakh in 12 years, he should assign his
mutual fund and start an SIP of `6,000 in an equity fund.
For retirement in 21 years, Sunil will need `2.44
crore and he can allocate his NPS corpus as well as his house and plot to it.
He will not require any further investment for this goal. For his kids'
weddings, he will need to start SIPs of `6,500 and `4,000 in equity funds, but
since he doesn't have enough surplus, he will have to put off these goals.
As for insurance, Sunil has three traditional
plans. He is advised to retain two and surrender one. He should also buy an
online term plan of `1 crore at `1,500 a month. Sunil also has `3 lakh of
health insurance provided by his employer, but should pick a family floater
plan worth `10 lakh. He should buy `25 lakh each of critical illness and
accident disability insurance at the earliest.
