Need to raise investment
Hyderabad-based Setty should also trim his
insurance portfolio to secure his finances adequately.
Gopal Setty stays
with his homemaker wife, five-year-old child and parents, in a rented house, in
Hyderabad. He works for a private firm and earns 82,000 a month. Combined with
a rental income of 12,000, his total income comes to 94,000. Setty has two houses
and two plots of land, with a combined worth of 60 lakh. He has also taken a
home loan of 12.5 lakh, for which he is paying an EMI of 10,300. His portfolio,
worth 86.96 lakh, includes real estate of 60 lakh, cash worth 10.5 lakh, equity
worth 10.96 lakh in the form of mutual funds, stocks and insurance fund value,
and debt worth 5.5 lakh in the form of EPF, fixed deposit and insurance
surrender value. His goals include building an emergency corpus, buying a car,
saving for his child’s education and for his own retirement
.
Financial Planner Pankaaj Maalde
suggests Setty build his emergency corpus of 4.68 lakh, which is worth six
months’ expenses, by allocating a portion of his cash (2.5 lakh), fixed deposit
of 1 lakh and insurance surrender value of 1.5 lakh. This should be invested in
a short duration debt fund. Next, Setty wants to buy a car worth 9.8 lakh in
three years. He can allocate the remaining cash and invest it in a debt fund.
For his child’s education in 13 years, Setty wants to amass 1.2 crore and can
assign his stocks and mutual funds to this goal. He will also have to start an
SIP of 22,000 in a diversified equity fund. For the wedding of his child in 20
years, he needs 77 lakh. He will have to start an SIP of 6,000 in a diversified
equity fund and 1,000 in the gold bond scheme. Finally, for retirement in 21
years, Setty will need 3.4 crore. For this, he can assign his EPF and real
estate, and start an SIP of 3,000 in a diversified equity fund.
For life insurance, Kumar has a 50
lakh term plan, one traditional plan of 5 lakh, and a Ulip of 20 lakh. Maalde
suggests he surrender the traditional plan and stop paying the premium for the
Ulip. This will free up 17,575 of premium to meet other goals. Since Setty’s
life cover is inadequate, he should end the current term plan and buy a 1 crore
term plan, which will cost 2,250 a month. For health insurance, Setty has a 3
lakh plan from his employer. Maalde suggests he buy a 10 lakh family floater
policy, which will cost 1,500 a month. He is also advised to buy 25 lakh
accident disability plan for a monthly premium of 333.
