Family Finances: Kolkata-based Pandas need to start planning early to meet financial goals

Abinash Panda, a bank employee, is only 26, while his homemaker wife, Ankita, is 23, and the couple is expecting a child soon. Panda’s parents are also financially dependent on him. He gets a monthly salary of Rs 50,000, of which Rs 43,104 flows out as household expenses, insurance premium (Rs 5,104), contribution to parents (Rs 5,000) and investment (Rs 3,000). This leaves him with Rs 6,896 as investible surplus.

This amount can be increased to Rs 8,583 by revamping the insurance portfolio. Financial Planner Pankaaj Maalde suggests he surrender three of his four traditional plans and buy a term plan worth Rs 1.25 crore for 35 years, which will cost around Rs 12,000 a year. He should also purchase a family floater plan of Rs 10 lakh after the birth of his child, besides critical illness and accident disability plans of Rs 25 lakh each for himself. This will reduce his premium amount by Rs 1,687, and after adding his existing investment of Rs 3,000, the surplus will increase to Rs 11,583.

Panda’s portfolio has Rs 80,000 in equity funds, Rs 6.25 lakh in fixed deposit, Rs 3.58 lakh in EPF and Rs 10,000 as cash. His goals include saving for emergencies, future child’s education and wedding, retirement and buying a car. Maalde suggests he build the contingency corpus of Rs 5.3 lakh by assigning his fixed deposit. The corpus includes Rs 3 lakh as a medical buffer for his parents, while the remaining amount is equal to six months of his expenses.

For the child’s education, he can amass Rs 40 lakh by starting SIPs of Rs 5,000 in equity funds. Finally, for retirement, he will need Rs 6.63 crore in 33 years, for which he can assign his EPF and equity fund corpus. He will also need to start an SIP of Rs 6,000 in equity funds. Due to lack of surplus at the moment, Panda cannot save for the child’s wedding and purchase of car in four years. He should wait for a rise in salary before planning for these goals.

Panda’s portfolio


Cash flow