Family Finance: Why Mumbai-based Sharmas should be able to achieve financial goals easily

Anuj, 35, and Ruchi, 31, stay with their newborn child in Mumbai and bring in a combined salary of Rs 2.44 lakh. After expenses and investment, they are left with a surplus of Rs 1.17 lakh. Their goals include saving for emergencies, vacation, house, child’s education and wedding, and retirement.

Financial Planner Pankaaj Maalde suggests they build an emergency corpus of Rs 11.35 lakh by allocating the fixed deposit. This should be invested in arbitrage and ultra short-term funds. For vacation in three years, they need Rs 5 lakh and can amass it by starting an SIP of Rs 12,500 in an equity arbitrage fund.

To accumulate Rs 25 lakh in five years for the down payment of a new house, they will have to start an SIP of Rs 43,500 in an equity savings fund for three years and then shift to an arbitrage fund.

Portfolio


Cashflow


For their child’s education in 18 years, they need Rs 1 crore and can build this fund by starting an SIP of Rs 15,000 in an equity fund. For the child’s wedding in 25 years, they will need Rs 2.5 crore and to achieve the goal, they will have to start an SIP of Rs 20,000 in equity funds and gold bonds.

For retirement in 26 years, they will need Rs 8 crore and should assign their EPF, stocks and equity funds. They should also start an SIP of Rs 20,000 in a diversified equity fund.

How to invest for goals

Annual return assumed to be 12% for equity. Inflation assumed to be 7%.
As for insurance, Anuj has a term plan of Rs 1 crore, but Maalde suggests that he buy another term plan of Rs 1 crore and a Rs 50 lakh plan for his wife. These additional covers will cost Rs 1,325 a month and can be sourced from the surplus. As for health insurance, the couple has a Rs 7 lakh cover from their employers and a Rs 10 lakh family floater plan of their own.

Maalde suggests that they raise this amount to Rs 15 lakh and include their newborn child in the cover. Anuj should also buy a critical illness plan of Rs 50 lakh and an accident disability plan of Rs 1 crore, which will cost Rs 1,000 a month.
Insurance portfolio

Premiums are indicative and could vary for different insurers.

Financial plan by Pankaaj Maalde Certified Financial Planner

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