Snehasis and Moumita Banerjee stay with their six-year-old child and Snehasis’s parents in their own house, in Kolkata. While Snehasis is salaried, Moumita is self-employed and together they bring in Rs 1.25 lakh a month. They have two properties worth Rs 1.03 crore and an outstanding home loan of Rs 29 lakh. Their portfolio comprises equity worth Rs 1.04 lakh in the form of mutual funds, debt worth Rs 16.55 lakh in the form of PPF, EPF and NPS, jewellery worth Rs 10 lakh and Rs 5 lakh in cash. After all their expenses, the couple is left with a surplus of Rs 34,848. Their goals include building an emergency corpus, buying a car, saving for their child’s education and wedding, and their own retirement. For now, they will have to put off the car goal till a rise in income.
Financial Planner Pankaaj Maalde suggests they start by building an emergency corpus of Rs 5.2 lakh, equal to six months’ expenses, by allocating their cash. This should be invested in a liquid fund. Next, they want to save Rs 45 lakh for their child’s education in 12 years. For this, they can start an SIP of Rs 14,000 in diversified equity funds. For the child’s wedding in 19 years, they will need Rs 54 lakh, and will need to start an SIP of Rs 6,000 in diversified equity funds and Rs 1,500 in the gold bond scheme.
How to invest for goals
For retirement in 25 years, the couple will need Rs 6.37 crore and can allocate their PPF, EPF and NPS corpus, along with their equity mutual fund corpus and one of their properties. They should also continue to contribute Rs 5,000 a month to the NPS and Rs 500 to the PPF annually to reach the goal.
For life insurance, Snehasis’s employer has provided a Rs 1 crore group cover, for which he is contributing Rs 6,000 annually. According to Maalde, as per the need-based theory, Snehasis will need to buy an independent term plan of Rs 75 lakh for himself. This will cost him an additional Rs 833 a month in premium.
For health insurance, Snehasis’s employer provides a Rs 19 lakh cover which includes all his family members, and for which Snehasis is paying an annual premium of Rs 78,000. Maalde suggests that Snehasis reduce his employer’s cover to Rs 10 lakh and with the money he saves in premium, he should buy an independent family floater plan of Rs 10 lakh for himself, his wife and child. Maalde also recommends that Snehasis buy a Rs 50 lakh accident disability plan for himself, which will cost him Rs 667 in monthly premium.
Financial plan by Pankaaj Maalde Certified Financial Planner
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