On track to meet all goals
Hyderabad-based
Krishna should align investments with his goals to achieve them in a phased
manner.
P Vamsee Krishna stays with his
homemaker wife and two children, aged 10 and eight, in his own house, in
Hyderabad. He is a software engineer, who brings in a salary of 1.05 lakh a
month. Besides his own house, for which he has taken a home loan and a top-up
loan, he also has a plot of land. He is servicing the home loan and a gold loan
with EMIs of 19,200. His goals include building an emergency corpus, saving for
kids’ education and weddings, retirement, and taking a vacation.
Financial Planner Pankaaj Maalde
suggests Krishna start by repaying his top-up loan of 1.6 lakh with a portion
of his fixed deposit, which will free up the EMI of 2,200. Next, he can build
the emergency corpus of 3.6 lakh, equal to three months’ expenses, by
allocating his cash and remaining fixed deposit. This should be invested in an
ultra-short duration fund.
Krishna also wants to save 26 lakh
and 30 lakh for his children’s education in eight and 10 years, respectively.
To achieve the former, he will have to start an SIP of 17,500 in an
equity-oriented hybrid fund. For the latter, he can allocate his stocks and
half of his mutual fund corpus. He will also have to start an SIP of 6,000 in a
diversified equity fund. For the kids’ weddings in 15 and 17 years, he will
need 27.5 lakh and 1.5 crore, respectively. He should assign one-fourth of his
mutual fund corpus to each goal. In addition, he should start an SIP of 3,000
in a diversified equity fund and 1,000 in the gold bond scheme for the former,
and 2,000 in a diversified equity fund and 1,000 in the gold bond scheme for
the latter.
For retirement, he will need 4 crore
in 23 years, and can assign his real estate, PPF and EPF corpuses. In addition,
he will have to start an SIP of 5,000 in a diversified equity fund. As for the 4
lakh vacation he wants to take in four years, Krishna should assign his
recurring deposit and continue investing 3,000 in it. Besides, he should start
an SIP of 4,000 in an equity savings scheme for three years.
For life insurance, Krishna has a
term plan of 1 crore and two traditional plans. Maalde suggests he retain all
the plans. He also doesn’t need any more life cover. For health insurance, he
has a family floater plan of 5 lakh. He should buy a top-up plan of 15 lakh
with a deductible of 5 lakh at 833 a month. He should also pick a 25 lakh
accident disability plan, which will come for a monthly premium of 333.
