After considering investment of Rs 50,000, Singh is left with a surplus of Rs 2,750. His portfolio includes equity worth Rs 9.3 lakh in the form of stocks and mutual funds, debt of Rs 23.3 lakh as and NPS, and cash of Rs 3 lakh. His goals include building an emergency corpus, saving for his children’s education, and .
Financial Planner Pankaaj Maalde suggests he start by building an emergency corpus of Rs 3.2 lakh, which is equal to three months’ expenses. This can be funded by allocating the cash holding of Rs 3 lakh and investing it in an ultra short-term fund. He should increase this amount to six months’ worth of expenses at the earliest.
The next goal for Singh is accumulating a sum of Rs 24 lakh for his older child’s education in seven years. This can be done by assigning a portion of the mutual fund corpus and starting an SIP of Rs 19,000 in a balanced fund for the specified period. For the second child’s education after 12 years, Singh has estimated a need of Rs 34 lakh.
How to invest for goals
Maalde has again assigned a portion of his mutual fund corpus for this goal and an SIP of Rs 9,000 in a diversified equity fund for the given period. For retirement in 18 years, Singh will need Rs 4.7 crore and can allocate his stocks and mutual funds, as well as EPF and NPS corpuses. These are likely to yield Rs 3 crore. For the balance, he will have to start an SIP of Rs 23,000 in a diversified equity fund.
For life insurance, Singh has one traditional plan of Rs 10 lakh. Maalde suggests he close this and use the surrender value of Rs 3 lakh to repay his gold loan. Since his life cover is inadequate, he should buy a term plan of Rs 1.5 crore, which will cost him Rs 2,500 in monthly premium.
As for health insurance, Singh has a medical cover of Rs 7 lakh, and another Rs 30,000 is provided by his employer. Maalde suggests he continue with these and buy an accident disability plan of Rs 50 lakh at a cost of Rs 667 a month.
Financial Plan by Pankaaj Maalde Certified Financial Planner
Write to us for expert advice
Looking for a professional to analyse your investment portfolio? Write to us at firstname.lastname@example.org with ‘Family Finances’ as the subject. Our experts will study your portfolio and offer objective advice on where and how much you need to invest to reach your goals.