Align goals to investments
Despite a portfolio skewed heavily towards realty, Noida-based Jhas will have a smooth financial run.
Abhishek and Richa Jha live with
their four-year-old child in their own house, in Noida. Both are employed and
bring in a combined monthly income of 2.67 lakh. Besides the self-occupied
house, the couple has a plot of land and four other properties, two of which
are jointly owned with Abhishek’s brother. These properties are worth 1.94
crore, and Abhishek has taken five home loans, two with his brother. He is
paying EMIs worth 1.11 lakh for these loans. He also has a car loan worth 12
lakh, for which he is paying an EMI of 19,243. The couple’s portfolio includes 3.5
lakh of cash, 22 lakh as debt in the form of PPF (2 lakh), NPS (15 lakh) and
fixed deposits (5 lakh). The equity component is worth 6.4 lakh and is invested
in mutual funds.
The couple’s goals include saving for
emergencies, child’s education and wedding, and their own retirement. Financial
Planner Pankaaj Maalde suggests they build the emergency corpus of 6.9 lakh,
which is equal to three months’ expenses, by assigning their cash and fixed
deposit amount. This should be invested in an ultra short-term fund.
As for the child’s goals, the couple
wants to save 84 lakh for higher education in 14 years, and 2 crore for the
wedding in 21 years. For education, they can assign a portion of their mutual
fund corpus and continue with the SIP of 19,000 in a diversified equity fund.
For wedding, they can again allocate a part of their mutual fund corpus and
continue with the SIP of 19,000 in a diversified equity fund.
For retirement, the couple will need 10.25
crore in 27 years, and will have to allocate all their properties, as well as
the PPF and NPS corpuses. These are likely to yield the desired amount in the
given period and no additional resources will have to be allocated to this
goal.
As for life insurance, Abhishek has a
term plan worth 2 crore and a traditional plan of 16 lakh. Maalde suggests that
he surrender the traditional plan and that Richa also buy a term plan worth 1
crore. This will cost 1,000 a month in premium. As for health insurance, the
couple has a 25 lakh family floater plan. This is adequate for their needs and
they should continue with it. However, Maalde suggests that Abhishek buy a 25
lakh critical illness plan and a 50 lakh accident disability plan. Both these
will cost him 2,583 in monthly premium.
