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Family finance: Sankaran needs to hike investments and link them to goals

After considering expenses, Sankaran should invest the money instead of letting it idle and link it to his goals. His major goals include child’s education and retirement.

, ET Bureau|
Updated: Jan 14, 2019, 03.33 PM IST
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sankaran
By increasing investments and linking these to goals, Chennai-based Sankaran can have a smooth journey.
Sankaran UK is an IT professional and lives in a house inherited from his parents, in Chennai. His wife is a homemaker and the couple has a two-year-old child. He gets a monthly salary of Rs 83,000 and after considering expenses, insurance premium and investment, he is left with a surplus of Rs 23,940. He should invest this money instead of letting it idle and link it to his goals.

These include saving for a contingency fund, vacation, child’s education and wedding, and retirement. He also wants to start investing for another child, but Financial Planner Pankaaj Maalde suggests he put it off due to lack of investible surplus. Sankaran’s portfolio comprises equity worth Rs 2.89 lakh as stocks and Rs 1.04 lakh in the form of mutual funds; debt in the form of EPF (Rs 4.87 lakh) and fixed deposit (Rs 2 lakh); and cash of Rs 50,000.

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portfolio

Sankaran can build the emergency fund of Rs 3.18 lakh, which is equal to six months’ expenses, by allocating his cash and fixed deposit. This should be invested in a liquid or short-duration debt fund. He should try to increase this amount at the earliest. For his child’s education corpus of Rs 59 lakh in 16 years, he can start an SIP of Rs 10,000 in a diversified equity fund.

goals

For the kid’s wedding, he will need Rs 1.4 crore in 23 years. Though he needs to start an SIP of Rs 10,000, the low surplus means he can start an SIP of Rs 6,000 in a diversified equity fund and Rs 1,500 in the gold bond scheme. He can raise this amount after a rise in salary.

For retirement, Sankaran will need Rs 4.8 crore in 27 years and can assign his stocks, mutual funds and EPF corpus. He will also need to start an SIP of Rs 12,000 in a diversified equity fund. As for the goal of `5 lakh vacation in six years, Maalde suggests he allocate his insurance maturity value to this goal.

For life insurance, Sankaran has two traditional plans of Rs 30 lakh, one of which he has converted to a paid-up plan and has stopped paying the premium. He is advised to surrender it and continue with the other plan. He also has a term plan of Rs 1.5 crore and should continue with it.

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For health insurance, Sankaran has a Rs 3 lakh cover from his employer and has taken a Rs 2 lakh top-up plan. He should buy a family floater plan of Rs 10 lakh, which will cost Rs 1,167 a month and should give up the topup plan from his employer. He should also pick a Rs 25 lakh accident disability plan for a monthly premium of Rs 333.

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.
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