Primary goals within reach
By linking their investments with goals and
securing their risks, Rawats will ensure a smooth journey.
Manish and Rashmi Rawat are both
working and live with their newborn child in their own house, in Greater Noida.
The couple brings in a combined monthly income of 1.5 lakh and after
considering expenses and investment, is left with a surplus of 37,917. They
have a portfolio of 1.02 crore and their goals include building an emergency
corpus, buying a car and another house, saving for their child’s education and
wedding, and their own retirement. Financial Planner Pankaaj Maalde suggests
they drop their goal of buying another house as their portfolio is already
skewed towards real estate and they currently don’t have enough surplus to
invest for this goal.
Maalde suggests that the couple first
build a contingency corpus of 2.46 lakh, which is equal to three months’
expenses, as well as a medical buffer of 2.5 lakh for Manish’s parents. For
this, they can allocate their cash and fixed deposit and invest it in a liquid
fund. For the child’s education goal in 18 years, the couple needs 1.3 crore.
For this, they will have to start an SIP of 18,000 in a diversified equity
fund. For the child’s wedding in 25 years, they have estimated a need of 80
lakh and will have to start an SIP of 5,000 in a diversified equity fund.
Finally, for retirement, the couple will need 9.6 crore in 25 years. For this,
they can assign their EPF, PPF and NPS corpuses, as well as the equity fund
corpus and one house. Besides allocating the existing resources, they will have
to start an SIP of 30,000 in a diversified equity fund. The couple also wants
to buy a car worth 15 lakh in present value after five years. Since they have a
surplus of 15,000, Maalde suggests they start an SIP in an equity savings fund
and review the situation after three years. If they can’t build the required
corpus, they can lower the goal value.
For life insurance, the couple has
two traditional plans of 43 lakh and Manish has a term plan of 1 crore. Maalde
suggests they surrender the two traditional plans and buy a 1 crore term plan
for Rashmi. This will cost 1,083 a month in premium. The couple has no health
insurance, so Maalde suggests they immediately buy a 10 lakh family floater
plan, which will cost 1,250 a month. Both Manish and Rashmi should also buy 25
lakh accident disability plans each, which will come for a monthly premium of 667.
