Start investing on priority
Thane-based Kawathekars should put their money
to work immediately if they want to reach their goals.
Nilesh Kawathekar, a doctor, and his wife, Ashwini, a lecturer, stay in
Thane in their own house. The couple has a combined monthly income of 1.8 lakh,
besides 17,000 as rental income from another house bought as an investment.
After considering household expenses of 70,667, home loan EMI of 40,000 and
insurance premium of 7,791, they are left with a surplus of 78,542. The couple
is not making any investments, letting 4 lakh idle in the bank. Their portfolio
comprises two houses worth 70 lakh, insurance proceeds worth 60,000 and 4 lakh
in cash. Their goals include saving for emergencies, future child’s education,
buying a car and a house, and retirement.
Financial Planner Pankaaj Maalde suggests the couple build their
emergency corpus of 3.54 lakh, which is equal to three months’ expenses, by
allocating their cash. This should be invested in an ultra short-term fund. The
Kawathekars want to buy another house worth 84 lakh in five years and can use
their existing house, which will be worth 35 lakh by then, to fund this
purchase. They can make a down payment of 19.6 lakh by starting an SIP of 25,000
in a balanced fund for three years and then reviewing the investment. For the
remaining 29.4 lakh, the couple can take a loan, which will result in an EMI of
25,514 and can be sourced from the surplus. The couple also wants to save for
their future child’s education, which will cost 67.5 lakh in 19 years. To meet
this goal, they can start an SIP of 10,000 in an equity fund. For retirement,
they will need 10 crore in 23 years as they want to retire at 55 years. They
can allocate their house worth 45 lakh to this goal and will also have to start
an SIP of 40,000 in an equity fund. The couple also wants to buy a car worth 10
lakh in two years, but Maalde suggests they put off this goal for now due to
lack of surplus.
As for life insurance, Nilesh has a term plan of 1 crore and a Ulip.
Maalde suggests he surrender the Ulip and buy 50 lakh more of term plan for
himself and 75 lakh for his wife. These will cost him 2,203 a month. As for
medical cover, the couple has a 5 lakh family floater plan, but Maalde suggests
he raise this to 10 lakh at a cost of 1,667. Nilesh should also pick a 25 lakh
critical illness plan and 25 lakh accident disability plan for himself and the
latter for his wife as well. These will come for 1,333 monthly premium.
