Hitesh and Shweta Siroya, 39 and 37 years, bring in a combined monthly income of Rs 1 lakh. They stay in their own house in Pune with their two children, aged 11 and three. Their portfolio, worth Rs 92.2 lakh, comprises Rs 60 lakh of real estate, Rs 2 lakh cash, equity worth Rs 19.6 lakh and debt worth Rs 10.6 lakh in the form of PPF, EPF, fixed deposit, debt funds and gold. Their goals include building an emergency corpus, saving for kids’ education and weddings, buying a car, taking a vacation and creating a retirement corpus.
Financial Planner Pankaaj Maalde suggests they build the emergency corpus of Rs 4.2 lakh, which is equal to six months’ expenses, by allocating their cash, fixed deposit and debt fund corpus. This should be invested in an ultra short-duration fund.
For the education expenses of their first child in seven years, they need Rs 16 lakh and can build this by starting an SIP of Rs 13,000 in a hybrid fund. For the second child’s education in 15 years, they need Rs 40 lakh and can build the corpus by allocating 40% of their mutual fund corpus to the goal. As for the kids’ weddings in 14 and 22 years, they will need Rs 26 lakh and Rs 66.5 lakh, respectively.
The couple can split their gold investment of Rs 2.4 lakh equally for the two goals. In addition, they will have to start an SIP of Rs 5,000 in a diversified equity fund and Rs 500 in the gold bond scheme for the first child’s goal. For the second kid, they will have to start an SIP of Rs 4,500 in a diversified equity fund and Rs 500 in the gold bond scheme.
How to invest for goals
For retirement, the couple will need Rs 2.7 crore in 21 years, and can assign their PPF, EPF, stocks and equity fund corpus. Besides, they will have to continue the SIP of Rs 5,000 in a diversified equity fund and Rs 500 a year in the PPF. They will have to forgo their car and vacation goals for now due to lack of surplus.
For life insurance, Hitesh has two term plans and two Ulips worth Rs 1.8 crore. Maalde suggests he continue with the term plans and stop paying the premiums for the Ulips. He can review the plans after a couple of years. As for health insurance, he has a Rs 3 lakh family floater plan provided by his employer.
Maalde advises him to retain it, but also buy an independent family floater plan of Rs 10 lakh. This will cost him Rs 1,667 a month in premium. Besides, he should buy a Rs 25 lakh accident disability plan for himself, which will come for Rs 333 monthly premium.
Financial plan by Pankaaj Maalde Certified Financial Planner
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