Ajit and Mugdha Singh are IT professionals and get a salary of Rs 1.65 lakh per month. He lives in Thane with his one-year-old child. He has a house of Rs 90 lakh, for which he has taken a loan of Rs 66.5 lakh and is paying an EMI of Rs 50,000. His other investments include equity of Rs 16.2 lakh in the form of mutual funds and stocks, Rs 16 lakh in debt and Rs 2 lakh in cash as EPF, PPF, Pomis and Sukanya scheme. His goals include building an emergency fund, saving for his child’s education and marriage, buying a car and a house, and retirement. For now, the couple will have to give up on their goals of buying a car and a house due to lack of investable surplus.

portfolio

cash flow

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Financial planner Pankaj Malde has calculated an emergency corpus of Rs 3.67 lakh for the couple, which is equivalent to three months’ expenses. For this they have to allocate their cash and save the remaining Rs 1.67 lakh before starting their investment. It should be invested in an ultra short-term or arbitrage fund, and should be mobilized for six months’ expenses at the earliest.

how to invest for goals

The couple wants to save Rs 79 lakh for their child’s education in 17 years. For this, he will have to start an SIP of Rs 12,000 in a diversified equity mutual fund. For the marriage of the child in 24 years, they will need Rs 76 lakh and for this they can allocate their Sukanya Yojana amount. He will have to continue investing Rs 5,000 per month in Sukanya Yojana and Rs 2,000 in diversified equity funds to reach the target. For retirement in 18 years, they will need Rs 4.4 crore, and they can allocate their stocks, mutual funds, EPF and PPF. They will have to continue investing Rs 500 annually in PPF, besides starting an SIP of Rs 15,000 in diversified equity fund and Rs 8,000 in NPS. Malde also advises them to shift from stocks to diversified equity funds.

insurance portfolio

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They have four traditional plans for life insurance. Malde suggests they surrender two of these and another scheme maturing this year can be used to raise the contingency fund. He will have to buy a term plan of Rs 1.5 crore for Ajit and Rs 1 crore for Mugdha at Rs 2,500 per month. For health, both have a plan of Rs 22 lakh from their employers. Malde suggests that they confirm that the plans will continue until retirement or quitting, and that if not, they should purchase a new plan. They should also opt for an accidental disability plan of Rs 25 lakh at the rate of Rs 500 per month for each.

Financial Planning by Pankaj Malde Certified Financial Planner

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