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    Family finance: Awasthis need to increase their investments to reach money goals

    Synopsis

    Ghaziabad-based Awasthis will need to speed up their investments in synch with their goals. Their money goals include building an emergency corpus, taking a vacation, buying a house, saving for a child's education and wedding and their own retirement.

    couple-money-gettyGetty Images
    The couple have a portfolio of Rs 35.3 lakh and an outstanding home loan of Rs 12 lakh.
    Piyush Awasthi lives with his wife, a teacher, and six-year old child in his own house, in Ghaziabad. The couple brings in a monthly income of Rs 85,735 and after considering expenses and investment, is left with a surplus of Rs 14,110.

    They have a portfolio of Rs 35.3 lakh and their outstanding home loan of Rs 12 lakh results in an EMI of Rs 23,000. Their financial goals include building an emergency corpus, taking a vacation, buying a house, saving for their child’s education and wedding, and their own retirement.

    Portfolio
    Portfolio

    Cash flow
    cashflow

    The financial planning team of Fincart suggests that the couple first build a contingency corpus of Rs 3.04 lakh, equal to six months’ expenses. For this, they can allocate their cash and stocks, and start an SIP of Rs 2,761 in a liquid fund. They want to buy a new house worth Rs 53.5 lakh in five years, for which they can sell their current house to make a 70% down payment of Rs 37.4 lakh.

    For the remaining sum, they can take a loan for which the EMI will be Rs 13,936 and can be sourced from the surplus. Next, the couple wants to take a vacation worth Rs 5.6 lakh in six years. Fincart suggests they start an SIP of Rs 5,818 in an arbitrage fund to meet the goal.

    For the child’s education goal in 12 years, the couple needs Rs 94.1 lakh and can allocate their mutual funds and insurance value to it. Besides, they will have to start an SIP of Rs 28,023 in an equity fund. However, due to lack of surplus, they can start with Rs 18,000 for now. They can increase the amount after a rise in salary and completion of vacation and emergency goals.

    Finally, for retirement, the couple has estimated a need of Rs 3.2 crore in 26 years. For this, they can assign their EPF, PPF and NPS corpuses and these will help amass the required amount without any fresh investment.

    How to invest for goals
    goals investing

    For life insurance, the couple has two traditional plans of Rs 8 lakh and a term plan of Rs 50 lakh. Fincart suggests they surrender the two traditional plans and, since Rs 50 lakh is inadequate insurance for Piyush, he should buy a Rs 1.7 crore term plan instead. This will cost Rs 2,125 a month in premium.

    For health insurance, Piyush has a Rs 3 lakh cover provided by his employer. Since he has no independent health plan, Fincart advises him to buy a Rs 5 lakh family floater plan and a Rs 20 lakh top-up plan, with a deductible of Rs 5 lakh. These plans will come for a premium of Rs 1,360 a month.

    Insurance portfolio
    insurance

    Financial plan by FINCART

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