Invest in line with goals
The Kolkata-based
couple needs to speed up investment and revamp their insurance portfolio.
S Prakash is salaried and lives with
his wife, a teacher, and 24-year-old son, in his parents’ house in Kolkata. The
couple brings in a monthly income of 1.9 lakh. Their portfolio is worth 1.3
crore, inlcuding 9.5 lakh in cash, debt in the form of EPF (30 lakh), PPF (25
lakh), post office scheme (20 lakh) and NPS (5 lakh), while equity includes
stocks (4 lakh) and mutual funds (41.5 lakh). Their goals include building an
emergency corpus, taking a vacation, saving for their son’s wedding, and retirement.
Financial Planner Pankaaj Maalde
suggests that the couple build a contingency corpus of 2.9 lakh, equal to three
months’ expenses, and a medical buffer of 6.5 lakh for Prakash’s parents. For
this, they can allocate their cash and invest it in a liquid or short-duration
debt fund. They also want to take a vacation worth 7 lakh in two years. For
this, they can allocate the maturity value of their two traditional insurance
plans and also start an SIP of 15,000 in an arbitrage fund. Next, the couple wants
to save 71 lakh for their son’s wedding in five years. Maalde suggests they
allocate the PPF amount of 25 lakh. They also need to start an SIP of 45,000 in
a balanced advantage fund for four years and review it after two years.
For retirement, the couple has
estimated a need of 4.6 crore in 12 years, and can assign their EPF, NPS,
stocks and mutual funds. They will also have to start an SIP of 30,000 in a
diversified equity fund, besides continuing to invest 12,500 in the PPF for the
specified duration. Maalde also suggests that they use 20 lakh of their postal
scheme funds to repay the education loan, reducing the EMI later.
For life insurance, the couple has
two traditional plans of 1 lakh each. Maalde suggests they retain the two as a
debt component of their portfolio. Prakash should, however, buy a 1 crore term
plan for himself, and ₹50 lakh for his wife, for 12 years.
These will cost the couple 3,125 a month in premium.
For health insurance, Prakash has a 7
lakh cover provided by his employer. He also has a 3.5 lakh medical plan for
himself. Maalde suggests he buy a 10 lakh family floater plan for himself and
his wife, which will cost 1,500 in monthly premium. Besides this, he should buy
a 50 lakh accident disability plan for himself and 25 lakh plan for his wife,
and both these will cost 1,000 a month.
