Express Clinic

Dhananjay Yadav works with the Indian Army and has recently got married. The subsidised benefits in defence help him in keeping his expenses low

Written by Express News Service | Published: May 14, 2012 3:21 am

Name: Dhananjay Yadav

Reside in: Ambala,Chandigarh

Profession: defence services

Net annual income

(Rs 3 lakh)

Status & goals

Dhananjay Yadav (30) works with the Indian Army and has recently got married. The subsidised benefits in defence help him in keeping his expenses low. He plans to have two children in the next 4-5 years. With not so high salary and desire to leave army after another 15 years of service,he wants to ensure that his

children achieve the desired level of education


A financial plan which can help him create a corpus for his children’s education and his retirement

Net monthly surplus

Rs 16,000

Current Investments:

PPF : Rs 1,20,000

EPF : Rs 75,000

Cash : Rs 75,000


Emergency fund: Dhananjay maintains Rs 75,000 in his savings account.

Health Insurance: Family,including children up to 18 years,covered for unlimited expenses through Indian Army.

Life Insurance: Covered for Rs 20 lakh.

Existing Investments: Being in army,he generally takes advice from his colleagues. He has never been approached by any financial advisor and so lacks awareness on investment options other than FD & PPF.

Liabilities: Nil


Emergency Fund:

Since Dhananjay is able to cover most emergencies through benefits from his employer and is maintaining enough funds for any immediate requirement,no enhancement is needed.

Express Tip: Emergency fund helps in avoiding forced borrowings.

Life Insurance:

Dhananjay’s insurance need is R 47.51 lakh. There is a shortfall of R 27.51 lakh which can be met through a term plan. As he plans to leave army in future,it’s recommended that he should review his cover at that point again.

Express Tip: Since insurance need changes with change in goals,one should review it periodically and enhance it if required.

Health Insurance:

Since his family is covered for unlimited amount through army,no additional health insurance is recommended at present. However,Dhananjay should check benefits after leaving the service and act accordingly.

Express Tip: Health cost increases as you grow older in age. Continuing adequate coverage from younger age will ensure that you reap maximum benefits when most required.

1st Child education:

Use PPF investment maturing in 2025 by extending it for another five years. This will give him a corpus of R 22.88 lakh at desired age. For remaining corpus,a monthly investment of R 7,852 is recommended in balanced and large cap mutual funds scheme.

Return assumed 12% p.a.

Express Tip: With benefit of tax deduction and tax free interest along with maturity,PPF is an ideal tool to include in education planning.

2nd Child Education:

A monthly investment of R 10,600 is recommended in equity mutual fund schemes. Considering the present surplus,only R 8,000 can be invested at this stage. As and when salary increases,surpluses can be deployed for this goal.

Return assumed 12% p.a.

Express Tip: Equity asset class has its risk return characteristics. First time investors should understand it before making any investment.

Starting a Business: To achieve the desired corpus,a monthly investment of R 3,000 is needed. This is only possible on future salary increments.

Express Tip: If you have liabilities,your ability to save reduces which sometimes affect your entrepreneurship skills.

Retirement Planning:

Dhananjay will start receiving a pension of R 15,000 after completing 15 years of service. His EPF at this stage will give him approximately R 23 lakh which further invested in equities will meet the retirement goal comfortably. Care should be taken to retain this money only for retirement.

Return assumed: 12% p.a.

Express Tip: Your existing lifestyle decides your needs at retirement. Low expenses in the initial years ensure reaching the goal with limited resources.


Reaching your financial goals hinges on your existing financial situation. Higher expenses initially reduce your ability to save thus limiting resources to allocate for long term. By keeping your liabilities low,you can ensure a wise allocation to your goals with increased appetite to take risk

For all the latest News Archive News, download Indian Express App