Need to put surplus to work
An early start to planning and high surplus will
help Pune-based Biraris achieve their goals with ease.
Kumar, 27, and Veta Birari, 28, are
both software developers, who live in their own house, in Pune. They get a
combined monthly salary of 1.36 lakh, of which they are left with a surplus of 57,930.
In order to achieve their goals, they will need to put this amount to work
instead of letting it idle in the bank. Their goals include building an
emergency corpus, saving for their future child’s education and wedding, buying
a car and building a retirement kitty. Since they have a meagre portfolio
comprising a self-occupied house worth 65 lakh and 1.35 lakh in the EPF, they
will have to make fresh investments to meet the goals.
Financial Planner Pankaaj Maalde
suggests that they start by putting in place a contingency corpus of 5.7 lakh,
which is equal to their six months’ expenses. Since they don’t have any
existing resource to allocate to this goal, they should save the entire surplus
of 38,000 for 15 months and invest this amount in an ultra short duration fund.
They should begin investing for the other goals only after building this
corpus.
Next, the couple wants to save for
their future child’s education and wedding in 18 and 25 years, respectively.
They have estimated a need of 85 lakh and 1.3 crore, respectively, for these
goals. They will have to start fresh SIPs of 11,000 and and 10,000 in
diversified equity funds for these. As for retirement in 33 years, the couple
will need 9.6 crore and will have to allocate their EPF corpus for this. In
addition, they will have to start an SIP of 17,000 a month in diversified
equity funds to be able to meet the goal.
Finally, the couple also wants to buy
a car worth 6 lakh in a year’s time. Since they don’t have the required funds
or resources to allocate to this goal, Maalde suggests they take a loan for five
years. At a rate of 9%, the EMI will come to 12,455, which can be sourced from
the surplus.
As for life insurance, Kumar has a
term plan of 60 lakh, but according to Maalde, he needs an additional cover of 1
crore, while Veta needs a 75 lakh cover. Both these term plans will come for a
premium of 1,833 a month. As for health insurance, Kumar has a 3 lakh cover
provided by his employer. However, he needs to buy an independent family
floater plan of 10 lakh as well as a 5 lakh medical plan for his mother. Both
these policies will cost him 2,500 a month in terms of premium. In addition to
these, both Kumar and Veta need to buy accident disability plans of 25 lakh
each, which will cost them 667 a month.
