Family Finance: Bengaluru-based Sahoo needs to revamp his insurance portfolio, streamline investments
Apr 10, 2017, 06.30 AM IST
His goals include saving for contingencies, child’s education and wedding, retirement, and building a house. However, he will have to put off the wedding and house goals for now due to lack of surplus.
Financial Planner Pankaaj Maalde suggests he put together his emergency corpus of Rs 2.6 lakh by allocating his cash, fixed deposit and insurance surrender value.
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*Due to lack of surplus, investment for this goal will begin only after a rise in income. Annual return assumed to be 13% for equity, 8% for debt. Inflation assumed to be 8%.
This amount should be invested in an ultra short term debt fund. He can then prepare for his child’s higher education in 15 years, for which he needs Rs 50 lakh. To meet this goal, Sahoo will have to start an SIP of Rs 8,500 in equity funds and no other resource has been allocated to this goal.
For retirement in 23 years, he will need Rs 3.5 crore. Maalde suggests he allocate his PPF and EPF corpuses, continuing to deposit Rs 1,000 in the former. He should also use the insurance maturity value and equity mutual fund corpus for this goal. In addition, he will need to start an SIP of Rs 12,500 in equity funds for the given term.
Since this doesn’t leave him with any surplus, he will have to put off the goal of his kid’s wedding till a rise in income. For this, he will need Rs 85 lakh in 22 years and needs to start an SIP of Rs 5,500 in equity funds.
Premiums are indicative and could vary for different insurers.
As for insurance, Maalde suggests Sahoo surrender two of his four traditional plans as well as the Ulip. He can retain two plans but must buy a term plan worth Rs 1 crore. He also needs to pick a health plan of Rs 10 lakh with a deductible of Rs 3 lakh. He must also buy a Rs 25 lakh critical illness plan and an accident disability plan of the same amount. The revamp will help bring down his total premium cost.
(Financial plan by Pankaaj Maalde Certified Financial Planner)
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