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High surplus to help goals
Aggressive saving and investment will ensure that
Bengaluru-based Vickram faces no hurdles.
Vickram, 36, stays with his home maker wife Rita,
34, and two daughters, aged eight and two, in Bengaluru. He gets a salary of
`3.4 lakh a month and, along with a rental income of `20,000, the total income
adds up to `3.6 lakh. His goals include saving for emergencies, kids' higher
education and weddings, retirement, and a house.
Financial Planner Pankaaj Maalde suggests he build
a contingency fund of `6.8 lakh by allocating his cash, fixed deposit, postal
scheme and NCD, which should be invested in an ultra short-term fund. To buy a
house worth `1.05 crore in three years, Vickram will have to sell his existing
house worth `55 lakh and take a loan of `50 lakh, which will result in an EMI
of `43,500 at 8.5% interest. This can be sourced from the surplus.
For his kids' education expenses of `20 lakh and
`30 lakh in 10 and 16 years, he should start SIPs of `8,500 and `5,000 in
equity funds. For their higher education, he will need `36 lakh and `54 lakh in
13 and 19 years and should start SIPs of `10,000 and `6,500 in equity funds.
For their weddings in 19 and 23 years, Vickram will need `79 lakh and `1.1
crore. He will need to start SIPs of `15,000 and `10,000 in equity funds to
meet the goals. For retirement in 24 years, he should assign his EPF, PPF,
stocks and mutual fund corpus. Besides these, he will need to start an SIP of
`56,000 in an equity fund for the given term.
As for insurance, Vickram has a term plan and a
traditional plan, but Maalde suggests he buy another term plan of `4 crore and
retain the traditional plan. Vickram's employer provides a health cover of `5
lakh, but he should buy a `25 lakh family floater plan. He should also buy a
critical illness plan of `50 lakh and an accident disability plan of `1 crore.
The additional premium for these plans can be sourced from the surplus.
