Family Finance: Why salaried Sabharwals can achieve their financial goals easily

Ashish and Aanchal Sabharwal are both employed and bring in a combined salary of Rs 1.44 lakh a month. The couple stays with their infant child in their parents’ house in Delhi. Their goals include building an emergency corpus, taking a vacation, buying a house and a car, saving for the child’s education and wedding, and their retirement.

Their portfolio is not too big, but the early start and high surplus mean that they will not face much problem reaching all their goals.

The financial planning team of Fincart suggests that Sabharwals build the emergency corpus of Rs 2.06 lakh by assigning their cash and investing the amount in an ultra short-term fund.


Next, they want to take a vacation worth Rs 10 lakh in four years. They will have to build this corpus by starting an SIP of Rs 17,911 in a hybrid fund. For the car worth Rs 9.3 lakh they want to buy in five years, they will have to allocate their mutual fund corpus and stocks, as well as insurance value. Besides these, they will need to start an SIP of Rs 9,225 in a balanced fund.

Portfolio

Cash flow

The couple also wants to buy a house worth Rs 93.6 lakh in five years, and make a down payment of Rs 28.1 lakh. For this, they can assign their cash, fixed deposit and insurance value, which is likely to yield Rs 21.8 lakh. For the remaining amount, they can start an SIP of Rs 8,323 in a hybrid fund.

For the balance, they will have to take a home loan, which will result in an EMI of Rs 56,285 at 8.3% interest. This can be furnished by the rise in salary and redirecting the SIPs for car and vacation.

How to invest for goals

For the child’s education in 17 years, the couple wants to save Rs 75.8 lakh, and for the wedding in 25 years, they want Rs 85.8 lakh. These goals can be met by starting SIPs of Rs 12,148 and Rs 5,042 in equity funds.

For retirement in 28 years, they need Rs 5.1 crore and will have to allocate their EPF, PPF and NPS corpuses. They should also start an SIP of Rs 11,252 in an equity fund and continue investing in the PPF and NPS.

For life insurance, Sabharwals have two traditional plans worth Rs 9.7 lakh and Fincart suggests they surrender both. Instead, Ashish should buy a term plan worth Rs 2 crore at Rs 1,849 a month. As for health insurance, the couple has a Rs 3 lakh family floater plan from the employer. Fincart suggests they buy a family floater plan of Rs 5 lakh and supplement it with a top-up plan of Rs 20 lakh at a premium of Rs 1,301 a month.

Insurance portfolio

Financial plan by FINCART

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