Kaushal and Babita Singh are both employed and get a combined monthly salary of Rs 3.42 lakh. They stay with their children aged 20 and 24 and their portfolio is worth Rs 3.7 crore.
It comprises Rs 2.3 crore in real estate in the form of two houses and two plots of land, Rs 12.3 lakh in cash, equity worth Rs 2.32 lakh, and debt in the form of fixed deposit (Rs 85 lakh), PPF (Rs 19 lakh), EPF (Rs 7 lakh), recurring deposit (Rs 4.5 lakh), debt scheme of Rs 2 lakh and insurance value of Rs 24.3 lakh.
They have taken a home loan, for which they are paying an EMI of Rs 25,000. Their goals include building an emergency corpus, buying a house, and saving for an annual vacation, kids’ weddings and retirement.
The financial planning team of Fincart suggests that Singhs build their emergency corpus of Rs 8.6 lakh by allocating their cash and a portion of their fixed deposit. This should be invested in an ultra-short duration fund. Next, they want to save Rs 86.9 lakh and Rs 85.1 lakh for their children’s weddings in five and six years, respectively.
To achieve the former goal, they can allocate a portion of their fixed deposit and it will help fund the goal without any need for fresh investment. For the latter, they will need to allocate their mutual fund corpus, cash and a part of fixed deposit. Besides, they will need to start an SIP of Rs 15,395 in a hybrid fund.
How to invest for goals
To buy a house worth Rs 1.06 crore in six years, they will have to allocate one of their houses and a plot of land. Besides these, they will need to start an SIP of Rs 44,216 in an equity fund. For retirement, they will need Rs 2.2 crore in nine years, and can assign their real estate, PPF, EPF, debt scheme corpus and insurance maturity value.
This will fully fund their goal and they don’t need to make any fresh investment. For the Rs 4 lakh annual vacation they want to take, the couple will have to start an SIP of Rs 32,293 in an arbitrage fund.
For life insurance, the couple have three traditional plans. Fincart suggests that both of them buy a Rs 1 crore term plan each, which will cost them Rs 5,318 a month in premium. They should also continue with their traditional plans as a debt component of their portfolio.
For health insurance, the couple has no plan and Fincart advises them to buy a family floater plan at the earliest. They can buy a Rs 5 lakh family floater plan, along with a Rs 20 lakh top-up plan. These two will come for a monthly premium of Rs 2,608.[“source=economictimes.indiatimes”]