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Family finance: Timely start to help Hyderabad-based Vinayak meet money goals

                                    

                                                           

Hyderabad-based Vidyut Vinayak is a 31-year-old programmer who earns Rs 2.2 lakh a month. He lives with his wife, who will start working soon. They live in their own house worth Rs 67.5 lakh, for which Vinayak has taken a loan of Rs 53.7 lakh and is paying an EMI of Rs 37,232. He also has a car loan for which he is paying an EMI of Rs 10,385. Vinayak is left with a surplus of Rs 91,955 every month and Hyderabad-based Vidyut Vinayak is a 31-year-old programmer who earns Rs 2.2 lakh a month His goals include building an emergency corpus, home renovation, saving for his future children’s education and weddings, and his retirement.

Financial Planner Pankaaj Maalde suggests that Vinayak start by repaying his car loan of Rs 4.3 lakh with the cash in bank. He should then build an emergency corpus of Rs 3.5 lakh, which is equal to three months’ expenses, and a medical buffer of Rs 4 lakh for his parents. He can do so by investing his remaining cash and fixed deposit in a liquid  fund. For home renovation in a year, Vinayak will need Rs 8 lakh and can save the surplus of Rs 60,000 in a liquid fund for this period.

To amass Rs 67.5 lakh for his future child’s education in 19 years, he will have to start an SIP of Rs 10,000 in a diversified equity fund. For the second child’s education in 22 years, he has estimated a need of Rs 83 lakh and can build the corpus by starting an SIP of Rs 7,500 in a diversified equity fund. For the first child’s wedding in 26 years, he needs Rs 1.08 crore and can build it by starting an SIP of Rs 6,000 in a diversified equity fund and Rs 1,500 in the gold bond scheme.

Similarly, for the second child’s wedding, he needs Rs 1.3 crore in 29 years. He will have to start an SIP of Rs 5,000 in a diversified equity fund and Rs 1,500 in the gold bond scheme to achieve this goal. Finally, for his retirement in 29 years, Vinayak will need Rs 10 crore, and will have to allocate his EPF, PPF, NPS, stocks and mutual funds for this goal. He will also have to start an SIP of Rs 15,000 in a diversified equity fund and continue investing Rs 500 a year in the PPF.

For life insurance, Vinayak has one traditional plan of Rs 1.2 lakh and Maalde suggests he continue with it. He also needs to buy a term plan of Rs 2.5 crore at Rs 1,834 a month.For health insurance, he has a Rs 15 lakh plan provided by his employer. He should buy a family floater plan of Rs 10 lakh for a monthly premium of Rs 1,167. He should also pick an accidental disability plan of Rs 50 lakh for Rs 667 a month.

 

 

Financial Plan published in ET Wealth on 08.06.20

Family finance: Why salaried Bhatia doesn't need life insurance and can meet goals easily

Deepak Bhatia, 56, lives with his 52-year-old homemaker wife and 23-year-old daughter, while one son is married and settled abroad. He gets a monthly salary of Rs 2 lakh, and along with rental income and annual bonus, his monthly income comes to Rs 2.7 lakh. His portfolio includes property worth Rs 2.7 crore (self-occupied house and two other properties), cash of Rs 10 lakh, debt worth Rs 60 lakh in the form of gold and fixed deposit, and equity worth Rs 95 lakh in the form of stocks and mutual funds.

He has no liabilities and his net worth is Rs 4.3 crore. After considering household expenses and insurance premium, he is left with a surplus of Rs 1.6 lakh a month. Bhatia’s goals include building an emergency corpus, saving for his daughter’s education and wedding, and his own retirement in another four years.

Financial Planner Pankaaj Maalde suggests that Bhatia start by building an emergency fund of Rs 6 lakh, which is equal to six months’ expenses, by allocating a portion of his cash and investing it equally in liquid and arbitrage funds.

To fund his daughter’s education in a year, Bhatia has estimated a need of Rs 80 lakh. For this, he can allocate his cash and fixed deposit, and invest the surplus of Rs 1.6 lakh in a liquid fund for a year. For the daughter’s wedding in another five years, he can assign his gold and start an SIP of Rs 1.6 lakh in a balanced fund after a year when the education goal is complete.

For his retirement in another four years, Bhatia will need Rs 3.65 crore considering his current household expenses of Rs 1 lakh a month to last him till his wife is 80 years old. To meet this goal, he will need to allocate both his properties bought as investment as well as stocks and mutual funds. These are likely to grow to the specified amount in the given period and no fresh investment is required for this goal.

Bhatia has no life insurance and, according to Maalde, he doesn’t need any as per the need-based theory. He has no liabilities and has enough assets to secure his wife and daughter after him. Since his wife is a homemaker, she too does not need any life insurance. As far as health insurance is concerned, Bhatia has a Rs 25 lakh family floater plan, for which he is paying an annual premium of Rs 47,000. Maalde suggests that he continue with this plan and does not need to buy any more health insur ..

Financial Plan published in ET Wealth on 27.04.20

Sanjeev Sharma, 40, lives with his homemaker wife, 14-year-old child and mother, in his own house, in Gurugram. He gets a monthly salary of Rs 1.5 lakh, and his portfolio includes property worth Rs 80.5 lakh (includes a plot of land), cash of Rs 2 lakh, debt worth Rs 1.1 crore in the form of debt funds, EPF, PPF, NSC, POMIS, NPS, gold, fixed deposit and insurance maturity value. His equity worth Rs 69.2 lakh is in the form of stocks and mutual funds. He also has a home loan of nearly Rs 10 lakh, for which he is paying an EMI of Rs 30,980. His goals include building an emergency corpus, taking a vacation, saving for his child’s education and wedding, and retirement.

Financial Planner Pankaaj Maalde suggests that Sharma build an emergency fund of Rs 5.1 lakh, which is equal to six months’ expenses, and a medical buffer of Rs 10 lakh for his mother. He can allocate his cash of Rs 2 lakh, fixed deposit of Rs 3.2 lakh and NSC corpus of Rs 10.2 lakh for this goal. He should invest the entire amount in a liquid or arbitrage fund.

To fund his child’s education in four years, Sharma has estimated a need for Rs 52.5 lakh. For this, he can allocate his debt funds and no fresh investment is needed. For the child’s higher education in seven years, he will need Rs 96 lakh. For this, he can allocate a portion of his equity funds and insurance maturity value. He will also have to start an SIP of Rs 50,000 in a hybrid equity fund. For the child’s wedding in 11 years, Sharma wants Rs 75 lakh and can assign his gold and equity funds Besides, he needs to start an SIP of Rs 6,500 in the gold bond scheme. For his retirement in 20 years, he will need Rs 3.5 crore. He will have to allocate his stocks, equity funds, EPF, PPF, NPS corpuses, and plot of land. He will also have to start an SIP of Rs 10,000 in a diversified equity fund. As for the vacation worth Rs 10 lakh in four years, he can use his post office scheme corpus to meet the goal.

Sharma has no life insurance and is advised to buy a `1.5 crore term plan for Rs 1,667 a month. For health insurance, he has a Rs 5 lakh plan from his employer and a Rs 3 lakh independent family floater plan, besides a Rs 5 lakh plan for his mother. He should continue with the latter and increase the family floater plan to Rs 10 lakh, which will cost Rs 2,083 a month. He should also buy an accident disability plan of Rs 50 lakh for Rs 666 a month.

https://economictimes.indiatimes.com/wealth/plan/family-finance-why-sharma-will-reach-his-financial-goals-with-ease/articleshow/75376617.cms

Financial Plan published in ET Wealth on 13.04.20

Kumars need to stagger some of their money goals till income increases

Manish Kumar, 38, lives with his homemaker wife, three-year-old child and mother, in his own house, in Ahmedabad. He gets a monthly salary of Rs 1.1 lakh, and his portfolio includes property worth Rs 80 lakh, cash of Rs 4 lakh, and debt worth Rs 20 lakh in the form of EPF and insurance surrender value. He also has a home loan and car loan for which he is paying EMIs of Rs 53,542. His goals include building an emergency corpus, saving for his children’s (including another child in future) education and weddings, and retirement.

Financial Planner Pankaaj Maalde suggests that before starting investment, Kumar repay his car loan with a portion of his cash and insurance surrender value. He should also move to a lower interest rate for his home loan to bring down the EMI to Rs 40,220. He can then build a contingency corpus of Rs 4.9 lakh, which is equal to six months’ expenses. He can allocate his cash of Rs 3 lakh and start saving for the remaining Rs 1.9 lakh from his surplus before investing for other goals. This will take a year and the entire amount should be put in a liquid fund.

To fund his child’s education in 15 years, Kumar has estimated a need Rs 41.5 lakh. For this, he can start an SIP of Rs 8,000 in a diversified equity fund. For the child’s wedding in 22 years, Kumar will need Rs 53 lakh and will have to start an SIP of Rs 4,000 in a diversified equity fund. However, due to lack of surplus, he will have to put off investment till a rise in his income. For his retirement in 22 years, he will need Rs 3.6 crore. He will have to allocate his EPF corpus of Rs 15 lakh  for this goal. He will also have to start an SIP of Rs 15,000 in a diversified equity fund, and invest Rs 5,000 in the NPS. Kumar also wants to start saving for the education and wedding of another child, for which he will need Rs 54 lakh and Rs 70 lakh, when the child is 18 and 25 years, respectively. However, due to lack of surplus, he can invest after a rise in income.

For life insurance, Kumar has two traditional plans worth Rs 6 lakh. Maalde advises him to surrender these and buy a term plan of Rs 1.5 crore, which will cost him Rs 1,333 a month. For health insurance, he has a Rs 2 lakh plan from his employer and Maalde suggests he buy an independent family floater plan of Rs 10 lakh, which will cost him Rs 1,167 a month. He should also buy an accident disability plan of Rs 25 lakh for Rs 333 a month.

Financial Plan published in ET Wealth on 23.03.20

Family finance: Aggressive investment will help Bhardwaj achieve all money goals with ease

Kuldeep Bhardwaj, 33, lives with his homemaker wife and two children, aged 4 and 1, in a rented house, in Noida. He gets a monthly salary of Rs 1.86 lakh and his portfolio includes cash of Rs 2 lakh, debt worth Rs 38.8 lakh in the form of fixed deposits, PPF and EPF, and equity worth Rs 50.4 lakh in the form of mutual funds and stocks.

His goals include building an emergency corpus, buying a house, taking a vacation, saving for children’s education and weddings, and retirement.

Financial Planner Pankaaj Maalde suggests that Bhardwaj begin by building a contingency corpus of Rs 5.8 lakh, which is equal to six months’ expenses. He can allocate his cash of Rs 2 lakh and fixed deposit of the same amount for this.

For the remaining amount, he should save till the corpus is amassed before starting investment for other goals. To take a vacation worth Rs 10 lakh in 10 years, he should start an SIP of Rs 5,000 in a diversified equity fund. In order to buy a house worth Rs 2 crore in 15 years, he should start an SIP of Rs 41,500 in a diversified equity fund.

For the older kid’s wedding in 21 years, Bhardwaj will need Rs 1.4 crore. He should start an SIP of Rs 6,500 in a diversified equity fund and Rs 1,500 in the gold bond scheme. For the younger child’s wedding in 24 years, he needs Rs 1.7 crore and should start an SIP of Rs 4,500 in a diversified equity fund and Rs 1,500 in the gold bond scheme.

For retirement, he will need Rs 10.3 crore in 27 years. He will have to allocate his stocks, EPF and PPF to meet this goal. He should also continue investing Rs 500 in the PPF and Rs 12,000 in a diversified equity fund.

Bhardwaj has a term plan of Rs 1 crore along with a Rs 50 lakh accident disability plan. He is advised to buy another Rs 1 crore of term plan for a premium of Rs 2,250 a month. For health insurance, he has a Rs 6 lakh plan and an independent family floater plan of Rs 15 lakh. Maalde advises him to continue the same and not buy any more insurance.

Financial Plan published in ET Wealth on 16.03.20

On track to meet all goals

Aggressive saving by Pune-based Patil means that he will be able to meet his primary goals with ease.

Ram Patil is a software engineer, who lives with his homemaker wife and two children, aged five and one, in a rented house, in Pune. He gets a monthly salary of 75,000 and his net worth is 57.07 lakh. His portfolio includes cash of 1 lakh, debt worth 35.8 lakh in the form of fixed deposits, PPF and EPF, and equity worth 20.2 lakh in the form of mutual funds and stocks. After considering household expenses, insurance premium and investment, he is left with a surplus of 1,833. His goals include building an emergency corpus, buying a house, saving for children’s education, buying a car, and retirement.

Financial Planner Pankaaj Maalde suggests that Patil begin by building a contingency corpus of 3.4 lakh, which is equal to six months’ expenses. He can allocate his cash holding of 1 lakh for this goal and invest it in a liquid fund. For the remaining amount, he will have to save till the corpus is built. He should start his home loan EMI only after the emergency fund is ready. To buy a house worth 55 lakh in two years, he should make a down payment of 25 lakh by using his fixed deposit. For the remaining 30 lakh, he should take a home loan for 25 years, and at 8%, his EMI will be 23,350, which can be sourced from the surplus.

To fund his older child’s education in 13 years, Patil has estimated a need 48 lakh. For this, he can allocate 25% of his mutual fund corpus and start an SIP of 7,500 in a diversified equity fund. For the younger child’s education in 17 years, Patil will need 63 lakh. For this, he can allocate another 25% of his mutual fund corpus and start an SIP of 4,500 in a diversified equity fund. For retirement, Patil will need 4.5 crore in 26 years. He will have to allocate his stocks, mutual funds, EPF and PPF to meet this goal. He should also continue investing 500 in the PPF and 6,000 in a diversified equity fund.

Patil has a term life insurance of 80 lakh, for which he is paying a monthly premium of 917. He does not need any more life cover and Maalde suggests he continue with this. For health insurance, he has a 3 lakh plan provided by his employer and Maalde advises him to buy another 10 lakh family floater plan. This will cost him 1,167 a month in premium. He should also buy a 25 lakh accident disability plan for himself, which will cost him 333 a month in premium.

Financial Plan published in ET Wealth on 02.03.20

High savings to help goals

Aggressive investment by Mumbai-based Shuklas will ensure that they meet all their goals with ease.

Chirag Shukla, 38, stays with his wife, 36, two children, aged 10 and seven, and his mother, in Mumbai. While his wife earns 15,000 a month, he also gets a monthly rental income of 38,000. He has property worth 2.9 crore, which includes a self-occupied house worth 1.6 crore. He has no loans and his net worth is ₹3.5 crore. This includes cash of 16 lakh, debt including 28 lakh of EPF and 22,000 in a post office scheme, and equity worth 11.3 lakh in the form of stocks and mutual funds. His goals include building an emergency corpus and a medical buffer for his mother, taking a vacation, buying a bigger house, saving for his children’s education and weddings, and for his retirement.

Financial Planner Pankaaj Maalde suggests that Shukla begin by building a contingency corpus of 5.6 lakh, equal to six months’ expenses, and 2.5 lakh of medical buffer. He can allocate a portion of his cash and invest it in a liquid fund. Next, Shukla wants to buy a house worth 2.5 crore in a year’s time. He can sell two of his existing properties to meet this goal. To fund an 8 lakh vacation in a year’s time, he can use the remaining cash.

To fund his children’s education in eight and 11 years, he will need 51.5 lakh and 63 lakh, respectively. For these goals, he can start SIPs of 35,000 in a hybrid equity fund and 23,500 in a diversified equity fund. For the kids’ weddings in 15 and 18 years, Shukla will need 1.3 crore and 1.6 crore, respectively. For the former, he can start an SIP of 29,000 in a diversified equity fund and 3,000 in the gold bond scheme, while for the latter, he can start an SIP of 24,000 in a diversified equity fund and 3,000 in the gold bond scheme. For retirement, Shukla will need 9.6 crore in 22 years. He can assign his stocks, mutual funds, EPF and property, besides starting an SIP of 40,000 in a diversified equity fund to meet the goal.

For life insurance, Shukla has one traditional plan and one term plan of 1 crore. Maalde suggests he continue with the former and buy another term plan of 1 crore for 1,000 a month. For health insurance, Shukla has a 4 lakh family floater plan, besides a 3 lakh plan provided by his company. Maalde suggests he upgrade to a 5 lakh plan and buy a 15 lakh top-up plan with a 5 lakh deductible. This will cost him 1,917 a month. He should also buy a 50 lakh accident disability plan for 667 a month.

Financial Plan published in ET Wealth on 03.02.20

Adequate funds for all goals

Kolkata-based Das needs to align his investments with goals to be able to reach them with ease.

Sambit Das is a 50-year-old engineer, who stays with his wife, a homemaker, in Kolkata. He has no children but makes financial contribution to his parents. He stays in his own house worth 60 lakh and has also bought land worth 40 lakh. However, he has no loans or any other liabilities. After considering household expenses of 56,250, a contribution of 30,000 to his parents, insurance premium of 4,450 and investment of 55,000, he is left with a surplus of 54,300 a month. His portfolio of 1.4 crore includes real estate, equity worth 13.1 lakh in the form of mutual funds and stocks, debt of 27 lakh in the form of PPF and EPF, and cash of 5.5 lakh. His goals include building an emergency corpus as well as a medical buffer, taking an annual foreign vacation and saving for retirement.

Financial Planner Pankaaj Maalde suggests that Das begin by building a contingency corpus of 5.5 lakh, which is equal to six months’ expenses. He can do so by allocating his cash and investing the amount in a liquid fund. Maalde also suggests that he build a medical buffer of 5 lakh for his parents and can do so by allocating 20,000 from his surplus till the corpus is amassed.

Since Das doesn’t have any children, he doesn’t have any kid-related goals. His other goals include building an adequate retirement corpus and enough funds to take a 10 lakh foreign vacation every year after retiring. This amounts to a corpus of 3.75 crore. He can assign his stocks, mutual funds, PPF and EPF corpuses, and real estate to these goals. Besides, he should start an SIP of 75,000 in a diversified equity fund and 5,000 in a gold bond scheme. He should also continue to put in 5,000 in the PPF till retirement. Both his goals will be met but he will be able to take a vacation every alternate year.

For life insurance, Das has three traditional plans of 27.5 lakh, for which he is paying a monthly premium of 2,867. Maalde suggests he continue with these and recommends a term plan of 50 lakh. This will cost him 1,300 a month in premium. As for health insurance, Das has a family floater plan of 17 lakh, for which he is paying 1,583 a month. Maalde suggests he continue with the plan, but advises him to buy a 25 lakh accident disability plan for himself, which will cost him only 333 a month in premium. This will take care of all his insurance needs.

Financial Plan published in ET Wealth on 30.12.2019

Link goals with investment

Hyderabad-based Prabhakaran will have to stagger his primary goals to achieve them with ease.

Pradeep Prabhakaran is a software engineer who stays with his homemaker wife and a six-month-old child in a rented house in Hyderabad. He brings in a monthly income of 74,000 and after considering expenses and investment, is left with a surplus of 8,709. His portfolio of 28 lakh includes equity worth 12.69 lakh in the form of stocks and mutual funds, debt of 12.69 lakh in the form of EPF, fixed deposit and debt funds, and cash of 2.65 lakh. His goals include building an emergency corpus, buying a house, saving for the child’s education and wedding, and his own retirement.

Maalde suggests that Prabhakaran first build a contingency corpus of 3.54 lakh, which is equal to six months’ expenses, by allocating 2.3 lakh of cash. For the remaining amount, he should save the surplus amount before buying property. This should be invested in a liquid or an ultra short term fund. To buy a house worth 35 lakh in a year, he wants to make a down payment of 7 lakh. This can be funded by allocating his fixed deposit, debt fund and remaining cash. For the remaining 28 lakh, he can take a loan, which at 8% for 30 years, will result in an EMI of 20,545. For the child’s education goal in 18 years, he needs 69 lakh and can build the amount by allocating his stocks worth 9.6 lakh. For the child’s wedding in 25 years, he wants to amass 54 lakh and will have to start an SIP of 3,000 in a diversified equity fund. Since he doesn’t have enough surplus currently, he can do so after a rise in income. Finally, for retirement, he needs 5.5 crore in 27 years. For this, he will have to assign his EPF and equity fund. Besides this, he will have to start an SIP of 15,000 in a diversified equity fund. This can be sourced from the surplus since he will save on rent after buying property.

For life insurance, he has a Ulip worth 25 lakh for which he has paid a single premium. Maalde suggests he stop paying the premium for the plan, and instead buy a 1 crore term plan, which will cost him 1,000 a month. As for health insurance, Prabhakaran has a 4 lakh family floater plan provided by his employer and has taken another 4 lakh plan, for which he is paying 458 a month. Maalde suggests he buy an independent 10 lakh family floater plan, which will cost 1,250 a month. He should also buy a 25 lakh accident disability plan for himself, which will come for a monthly premium of 333.