Need to step up investment
Besides investing in line with his goals,
Bengalurubased Kumar should buy adequate insurance.
Navin Kumar is a consultant based in
Bengaluru and earns 2.5 lakh a month. This amount is supplemented by 8,000 a
month of rental income. He has two houses, one of which is self-occupied, and
is repaying two home loans of 28.27 lakh. He stays with his homemaker wife and
two children, aged 14 and 11. His portfolio, worth 1.65 crore, includes real
estate of 1.08 crore, cash worth 10 lakh, equity worth 11 lakh in the form of
mutual funds and stocks, and debt worth 36.64 lakh in the form of EPF, PPF, debt
scheme, gold and insurance value. His goals include building an emergency
corpus, saving for his children’s education and weddings, and retirement.
Financial Planner Pankaaj Maalde
suggests Kumar build his emergency corpus of 8.9 lakh, worth six months’
expenses, by allocating his cash and debt plan corpus. This should be invested
in a short duration debt fund. Next, Kumar wants to save 19 lakh for his older
child’s education in four years. He can amass this amount by allocating his
cash as well as insurance maturity and surrender value. These will help build
the required corpus without any need for fresh investment. For the second
child’s education in seven years, Kumar wants to amass 48 lakh and will have to
start an SIP of 40,000 in a hybrid equity fund. For the weddings of his kids in
11 and 14 years, Kumar has estimated a need of 31.5 lakh and 38.5 lakh,
respectively. However, he doesn’t have enough surplus for these goals and
should start investing after a rise in his income. For retirement in 12 years,
Kumar will need 4.8 crore. For this, he can assign his EPF, PPF, real estate,
stocks and mutual funds. In addition to these, he will have to start an SIP of 65,000
in a diversified equity fund. He should also continue investing 500 a year in the
PPF till he retires.
For life insurance, Kumar has five
traditional plans of 19.8 lakh, for which he is paying a monthly premium of 8,610.
Maalde suggests he surrender two plans and continue with the other three. Since
his life cover is inadequate, he should buy a 2.5 crore term plan for 3,750 a
month. For health insurance, Kumar has a 10 lakh family floater plan. Maalde
suggests he buy a top-up plan of 15 lakh
with a 5 lakh deductible, which will cost 1,000 a month. He is also advised to
buy 50 lakh accident disability plan for a monthly premium of 667.
