Stagger goals, secure risks
Since buying a house is a priority for Pune-based
Vermas, they should push back other goals for now.
Himanshu and Prerna Verma are both
employed in Pune and get a combined monthly salary of 1.85 lakh. Their
portfolio is worth 36.5 lakh and comprises 50,000 cash, equity worth 5.54 lakh,
and debt in the form of fixed deposit (18.5 lakh), EPF (7 lakh), PPF (1.8
lakh), recurring deposit (1.7 lakh), debt fund of 50,000 and insurance
surrender value (1 lakh). Their goals include building an emergency corpus,
buying a house, saving for their future child’s education and wedding, and
retirement.
Financial Planner Pankaaj Maalde
suggests that Vermas bring down their monthly expenses by slashing the vacation
and fitness spends to invest more for their goals. They can then focus on their
emergency corpus of 4.8 lakh, which is equal to three months’ expenses. They
should allocate their cash and insurance surrender value for the goal. For the
remaining 3.3 lakh, they can invest the surplus of 25,000 for a year before
starting investment for other goals. This should be invested in an ultra-short
duration fund.
To buy a house worth 1.2 crore in
three years, they will have to amass a 20% down payment of 24 lakh by
allocating their fixed deposit, recurring deposit, EPF and debt funds. For the
remaining 96 lakh, they will have to take a home loan, and at 9% for 25 years,
the EMI will come to 80,563, which can be sourced from the surplus. For
retirement, they will need 12.5 crore in 29 years, and can assign their stocks,
mutual funds, EPF and PPF. Besides, they will have to raise their SIPs from 17,000
to 25,000 in a diversified equity fund, and put in 500 a year in the PPF. For
their future child’s education in 18 years, they need 58 lakh, and will have to
start an SIP of 6,000 in a diversified equity fund. For the child’s wedding in
25 years, they will need 1.8 crore, and will have to start an SIP of 9,000 in a
diversified equity fund and 1,500 in the gold bond scheme. However, they will
have to put off the kid’s investments till a rise in income.
For life insurance, Verma has a term
plan of 1.5 crore and two traditional plans. His life cover is adequate, but he
should surrender the traditional plans. For health insurance, he has a 3 lakh
family floater plan, but should raise this to 10 lakh at 1,500 a month. He
should also buy a 50 lakh accident disability plan for himself and 25 lakh for
his wife, at a premium of 1,000 a month.
