Family Finance: Salaried Umesh should start saving early to achieve his goals with ease
, ET Bureau|
Oct 02, 2017, 06.30 AM IST
Umesh is an engineer and stays in Pune with his wife, who plans to start working from next year. Umesh began working last year and brings in a salary of Rs 45,000. After expenses and investment, he is left with a surplus of Rs 20,083.
Despite the low surplus, he has begun saving, investing and planning for the future, which will stand him in good stead. His goals include saving for emergencies, buying a car and a house, and retirement.
Financial Planner Pankaaj Maalde suggests that Umesh begin by building an emergency corpus of Rs 1.38 lakh, which is equal to his six months’ expenses. He can do so by allocating his cash worth Rs 1.6 lakh, which should be invested in an ultra short-term fund. He also wants to buy a house worth Rs 55 lakh in three years, for which he wants to make a 25% down payment, which amounts to Rs 13.75 lakh.
To build this amount, he can assign his fixed deposit worth Rs 1.2 lakh and the Rs 5 lakh he will receive from his parents for the purpose. This can be invested in an equity savings fund for three years.
Besides this, he will have to start an SIP of Rs 14,000 in a monthly income fund for two years and, in the third year, shift the corpus to a recurring deposit. For the remaining Rs 41.25 lakh, he will have to take a loan, and at 8.5% interest, the EMI will come to Rs 31,700. This can be sourced from the surplus, saving on rent of Rs 8,000, and rise in income.
For retirement in 33 years, he will need Rs 4.4 crore. For this goal, he can assign his equity fund corpus of Rs 20,000 and EPF corpus of Rs 60,000. Besides this, he will need to start an SIP of Rs 7,000 in a diversified equity fund for the specified period.
How to invest for goals
Annual return assumed to be 12% for equity. Inflation assumed to be 7%.
As for life insurance, Umesh has no cover as of now and should purchase an online term plan of Rs 65 lakh, which will cost him Rs 500 a month. Umesh is covered by his employer for Rs 1 lakh and has a family floater plan of Rs 5 lakh. Maalde suggests he raise this amount to Rs 10 lakh, which will cost him Rs 2,500 a month. He is also advised to buy an accident disability plan of Rs 25 lakh, which will cost him Rs 333 a month. All these plans will take care of his insurance needs.
Insurance portfolio
Premiums are indicative and could vary for different insurers.
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 etwealth@timesgroup.com 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.
Despite the low surplus, he has begun saving, investing and planning for the future, which will stand him in good stead. His goals include saving for emergencies, buying a car and a house, and retirement.
Financial Planner Pankaaj Maalde suggests that Umesh begin by building an emergency corpus of Rs 1.38 lakh, which is equal to his six months’ expenses. He can do so by allocating his cash worth Rs 1.6 lakh, which should be invested in an ultra short-term fund. He also wants to buy a house worth Rs 55 lakh in three years, for which he wants to make a 25% down payment, which amounts to Rs 13.75 lakh.
To build this amount, he can assign his fixed deposit worth Rs 1.2 lakh and the Rs 5 lakh he will receive from his parents for the purpose. This can be invested in an equity savings fund for three years.
Besides this, he will have to start an SIP of Rs 14,000 in a monthly income fund for two years and, in the third year, shift the corpus to a recurring deposit. For the remaining Rs 41.25 lakh, he will have to take a loan, and at 8.5% interest, the EMI will come to Rs 31,700. This can be sourced from the surplus, saving on rent of Rs 8,000, and rise in income.
For retirement in 33 years, he will need Rs 4.4 crore. For this goal, he can assign his equity fund corpus of Rs 20,000 and EPF corpus of Rs 60,000. Besides this, he will need to start an SIP of Rs 7,000 in a diversified equity fund for the specified period.
How to invest for goals
Annual return assumed to be 12% for equity. Inflation assumed to be 7%.
As for life insurance, Umesh has no cover as of now and should purchase an online term plan of Rs 65 lakh, which will cost him Rs 500 a month. Umesh is covered by his employer for Rs 1 lakh and has a family floater plan of Rs 5 lakh. Maalde suggests he raise this amount to Rs 10 lakh, which will cost him Rs 2,500 a month. He is also advised to buy an accident disability plan of Rs 25 lakh, which will cost him Rs 333 a month. All these plans will take care of his insurance needs.
Insurance portfolio
Premiums are indicative and could vary for different insurers.
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 etwealth@timesgroup.com 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.
