Software professionals, Manjunatha G.T. and Gayathri C.M., stay with their three-year-old child in a rented house, in Bengaluru. They bring a combined income of Rs 1.44 lakh and are currently not investing the high surplus of Rs 81,625.
Their goals include saving for emergencies, buying a car and a house, taking a vacation, saving for child's education and wedding, and retirement.
Despite the long list, they will be able to achieve these given the reasonable size of goals and adequate time for investing.
Portfolio
Cash flow
Financial Planner Pankaaj Maalde suggests they first build an emergency corpus of Rs 4 lakh by assigning their cash of Rs 3.7 lakh and investing it in an ultra short-term fund. To buy a car worth Rs 8 lakh in two years, they can assign their fixed deposit, putting it in an arbitrage fund after maturity. As for a vacation worth Rs 2 lakh in three years, they can start an SIP of Rs 8,000 in an ultra short-term fund.
How to invest for goals
Annual return assumed to be 12% for equity. Inflation assumed to be 7%.
The couple also wants to buy a house worth Rs 51.5 lakh in eight years without taking a loan. For this, they will have to start an SIP of Rs 35,000 in a balanced fund. For their kid's education in 15 years, the couple needs Rs 55 lakh and should start an SIP of Rs 11,000 in a diversified equity fund.
To accumulate Rs 88.5 lakh for the child's wedding in 22 years, they should start an SIP of Rs 8,000 in an equity fund and Rs 2,000 in the gold bond scheme. Finally, for retirement, they couple will need Rs 8 crore in 27 years, for which they can assign their stocks, EPF corpus and Ulips. They will also need to start an SIP of Rs 12,000 in an equity fund.
Insurance portfolio
Premiums are indicative and could vary for different insurers.
For life insurance, the couple has two Ulips and Maalde suggests they review these after five years. They will also have to buy term plans of Rs 1 crore (Manjunatha) and Rs 50 lakh (Gayathri), which will cost them Rs 1,500 a month in premium. For health, the couple has Rs 8 lakh of cover provided by their employers.
They should also buy a Rs 10 lakh family floater plan at a cost of Rs 1,667 a month. Manjunatha should also pick a critical illness plan of Rs 25 lakh and an accident disability plan of Rs 50 lakh for himself. These will cost him Rs 1,167 a month in premium.
Financial plan by Pankaaj Maalde Certified Financial Planner
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