Early start will help goals
Disciplined savings and planned investment will help the Pune couple
reach their goals with ease.
Umesh is an engineer
and stays in Pune with his wife, who plans to start working from next year.
Umesh began work ing last year and brings in a salary of `45,000. After
expenses and investment, he is left with a surplus of `20,083.Despite the low
surplus, he has begun saving, investing and planning for the future, which will
stand him in good stead. His goals include saving for emergencies, buying a car
and a house, and retirement.
Financial Planner
Pankaaj Maalde suggests that Umesh begin by building an emergency corpus of
`1.38 lakh, which is equal to his six months' expenses. He can do so by
allocating his cash worth `1.6 lakh, which should be invested in an ultra
shortterm fund. He also wants to buy a house worth `55 lakh in three years, for
which he wants to make a 25% down payment, which amounts to `13.75 lakh. To
build this amount, he can assign his fixed deposit worth `1.2 lakh and the `5
lakh he will receive from his parents for the purpose. This can be invested in
an equity savings fund for three years. Besides this, he will have to start an
SIP of `14,000 in a monthly income fund for two years and, in the third year, shift
the corpus to a recurring deposit. For the remaining `41.25 lakh, he will have
to take a loan, and at 8.5% interest, the EMI will come to `31,700. This can be
sourced from the surplus, saving on rent of `8,000, and rise in income.
For retirement in 33
years, he will need `4.4 crore. For this goal, he can assign his equity fund
corpus of `20,000 and EPF corpus of `60,000. Besides this, he will need to
start an SIP of `7,000 in a diversified equity fund for the specified period.
As for life
insurance, Umesh has no cover as of now and should purchase an online term plan
of `65 lakh, which will cost him `500 a month. Umesh is covered by his employer
for `1 lakh and has a family floater plan of `5 lakh. Maalde suggests he raise
this amount to `10 lakh, which will cost him `2,500 a month. He is also advised
to buy an accident disability plan of `25 lakh, which will cost him `333 a
month. All these plans will take care of his insurance needs.
