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Pooja Gupta, 28, is an IT consultant, and stays with her parents in Mumbai. Of her monthly income of Rs 60,000, she spends Rs 32,500 on household expenses, Rs 3,583 as insurance premium, and Rs 16,000 as investment, leaving her with a surplus of Rs 7,917.
Her portfolio comprises Rs 2 lakh in debt, Rs 2.5 lakh in equity and Rs 10,000 as cash. Her goals include saving for emergencies, her own wedding, buying a house, future child’s education and wedding, and her retirement.
Financial Planner Pankaaj Maalde suggests she start by building her contingency corpus of Rs 1.06 lakh.
PORTFOLIO CASH FLOW For this, she can allocate her cash, fixed deposit and debt fund corpus. This amount should be invested in an ultra short-term fund. Next, Gupta wants to save Rs 5 lakh for her own wedding in 18 months.
However, Maalde suggests she bring down this amount to Rs 3.5 lakh. To achieve the goal, she will have to start an SIP of Rs 18,000 in an ultra short-term fund for the specified time. While Gupta wants to buy a house worth Rs 40 lakh after a year, she doesn’t have the surplus to invest for it and will have to put off the planning till after her wedding. She also wants to plan for her future child’s education and wedding. She has estimated a need of Rs 1.5 crore and Rs 3 crore, respectively, for these goals in about 20 and 27 years.
How to invest for goals * Due to lack of surplus, investment for these goals can be started after marriage. Annual return assumed to be 12% for equity. Inflation assumed to be 7%.
For the former, she will need to start an SIP of Rs 15,500 in equity funds, and for the latter, Rs 17,000 in equity funds and gold bond scheme. However, both these goals will have to be put on hold due to lack of investible surplus and can be considered after marriage. As for retirement in 32 years, she will need about of Rs 5.15 crore. For this, she will have to allocate her PPF and EPF corpuses, stocks and equity fund corpus. Besides these, she will have to start an SIP of Rs 6 ,000 in an equity fund to be able to reach the goal.
Insurance portfolio Premiums are indicative and could vary for different insurers.
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As for Gupta’s insurance portfolio, she has one traditional plan worth Rs 20 lakh and Maalde advises she surrender this because of low returns that will not beat inflation. Instead, she should buy a Rs 1 crore term plan at a cost of Rs 1,000 a month. For health insurance, she has a Rs 1 lakh cover, which is too low and Maalde suggests she purchase a Rs 10 lakh plan at the next renewal, at a premium of Rs 1,000 a month. She should also pick a Rs 25 lakh critical illness plan and Rs 25 lakh accident disability plan at Rs 1,000 a month.
Financial plan by Pankaaj Maalde, Certified Financial Planner.
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