Need to step up investment
The Bengaluru-based
couple will need to raise equity exposure and align investment with their
goals.
Harish V, 32, is a financial analyst
and lives with his homemaker wife in Bengaluru. He gets a monthly salary of 1
lakh, and along with the rent of 5,000, his total income comes to 1.05 lakh.
Harish has bought a house worth 60 lakh, for which the outstanding loan is 20
lakh, and he is paying an EMI of 19,500. Harish’s portfolio comprises equity
worth 1.5 lakh in the form of mutual funds; debt in the form of EPF (3 lakh),
PPF (95,000), fixed deposit (1.8 lakh) and recurring deposit (80,000); and cash
of 1 lakh. After considering household
expenses, insurance premium, loan EMI and investments, Harish is left with a
surplus of ₹8,730. His goals include building an
emergency corpus, saving for future child’s education and wedding, buying a
house and a car, taking a foreign vacation, and retirement. According to
Financial Planner Pankaaj Maalde, lack of investible surplus means he will have
to put off the goals of house and vacation.
Harish can start by building the
emergency fund of 4.2 lakh by allocating his cash, fixed deposit, recurring
deposit, and insurance value. This should be invested in a liquid or
short-duration debt fund. For his future child’s education corpus of 34 lakh in
18 years, he can start an SIP of 5,000 in a diversified equity fund. For the
kid’s education, Harish will need 54 lakh in 25 years and can start an SIP of 2,500
in a diversified equity fund and 1,000 in the gold bond scheme. For retirement,
Harish will need 6.4 crore in 28 years and can assign his stocks, and EPF and
PPF corpuses. He will also need to start an SIP of 20,000 in a diversified
equity fund, and continue to invest 500 a year in the PPF. As for the goal of
buying a car worth 12 lakh in five years, Maalde suggests he allocate his chit
fund corpus of 5 lakh in an equity savings fund and start a monthly SIP of 7,000
in the same fund.
For life insurance, Harish has two
traditional plans of 13 lakh. Maalde suggests he surrender both the plans and
buy a term plan of 2 crore, which will come for a premium of 2,000 a month. For
health insurance, Harish has a 2.5 lakh cover from his employer and has bought
a 2 lakh plan for his parents. Maalde suggests he buy a family floater plan of 10
lakh, which will cost 1,000 in monthly premium. In addition, he should pick a 50
lakh accident disability plan, which will come for a monthly premium of 583.
