Family finance: Money goals are within reach for this Hyderabad-based couple

P. Vamsee Krishna is a software engineer, who stays with his homemaker wife and two children, aged 10 and 12, in Hyderabad. He lives in his own house and brings in Rs 1.42 lakh a month, which includes an income from a post office scheme. His portfolio includes real estate worth Rs 80 lakh, equity worth Rs 17.8 lakh in the form of mutual funds and stocks, debt worth Rs 26.8 lakh, gold worth Rs 1 lakh, and Rs 10 lakh in cash. After household expenses, home loan EMI, insurance premium, investments, and kids’ education, he is left with a surplus of Rs 24,996. His goals include building an emergency corpus, taking a vacation, saving for children’s education and weddings, and retirement.

Financial Planner Pankaaj Maalde suggests he start by building an emergency corpus of Rs 4.14 lakh, which is equal to six months’ expenses. He can do so by allocating a portion of his cash and fixed deposit to the goal. This should be invested in a liquid fund. Next, he wants to take a vacation worth Rs 6.5 lakh in five years. He can do so by allocating a portion of cash and insurance maturity amount to the goal. Krishna also wants to save for his children’s education goals, which are six and eight years away. For these, he will need Rs 30 lakh and Rs 34.3 lakh, respectively. To achieve the former goal, he can allocate a portion of stocks, mutual funds and post office scheme corpus, and continue with an SIP of Rs 12,000 in a balanced advantage fund. For the latter goal, he will have to start an SIP of Rs 23,000 in a hybrid equity fund.

Portfolio

Cash flow

For the kids’ weddings in 13 and 15 years, he has estimated a need of Rs 48 lakh and Rs 55 lakh, respectively. For the former, he can allocate a portion of his mutual funds, and start SIPs of Rs 12,000 in an equity fund and the gold bond scheme. For the latter, he can again allocate his mutual fund corpus and start SIPs of Rs 10,500 in an equity fund and the gold bond scheme. For retirement in 21 years, he will need Rs 4.9 crore, and can allocate his stocks, real estate, EPF, PPF and NPS corpus. He will also have to start an SIP of Rs 15,000 in an equity fund.

How to invest for goals

For life insurance, he has two traditional plans and a term plan of Rs 1 crore, for which he is paying a premium of Rs 2,047. Maalde suggests he continue with these plans, and also buy a Rs 50 lakh term plan for Rs 541 a month. For health, he has Rs 20 lakh of insurance and a Rs 50 lakh accidental disability plan. Maalde suggests he continue with all of these plans.

Insurance portfolio

Financial plan by Pankaaj Maalde Certified Financial Planner

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