Name: Mukesh & Rashi Gupta Reside in: Hyderabad Profession: Mukesh works in a pharma co & Rashi is a faculty at a business school Net annual income (Rs 11.85 lakh) Status & goals Mukesh,30 and Rashi,29 have recently got married. They want to proactively manage their finances to make their future more comfortable,for which they are also ready to compromise their current lifestyle. They dont want to take any impulsive decisions and are looking for a structured route for achieving their goals. They dont have kids but want to immediately start providing for their future to reduce the burden going forward. Buying a car,a house and a comfortable retired life are some of their goals. Needed A structured route for achieving their goals. They need to build a corpus to buy a car,house and have a comfortable retired life Net monthly surplus Rs 61,750 Current Investments EPF : Rs 2 Lakh PPF : Rs 4 lakh Bank FD : Rs 2.50 lakh Mutual funds : Rs 1 lakh Findings Emergency fund: The liquidity is intact but no funds allocated expressly. Life insurance: Neither of them have any insurance cover Health Insurance: Both are dependent on employer-provided insurance Investments: They are more concerned about the safety of capital,so having minimal equity exposure Liabilities: The couple is debt free Recommendations Emergency Fund: They need to break fixed deposit,put R1.11 lakh in savings account. Express Tip: One should always maintain 3-6 months of monthly expenses in liquid form to manage health/ job loss related emergencies. Life Insurance: It is advisable for both Mukesh and Rashi to buy separate life insurance covers. They should buy R1.5 crore sum assured separately. The premium outgo for online term plans would be R17,865 and R16,517 respectively. Express Tip: Buying online term plans proves to be quite cost efficient. Health Insurance: Mukesh should buy a floater health insurance policy of at least R 5 lakh sum assured,which should cover both of them.This coverage should be over and above the employer provided health insurance. The total premium outgo will be R13,000. Express Tip: To provide oneself with comprehensive and complete coverage go for separate health policy. Accident Insurance: Both Mukesh and Rashi should buy a comprehensive accidental insurance policy of at least R1 crore sum assured. The premium for this would be around R12,000 each. Express Tip: Personal accident policy covers uncertainty related to disability. Car: They should start investing R 8,600 per month in balanced mutual funds for this goal. They should stick to this time frame and dont get allured to a car loan. Rate of return assumed @10 per cent. Express Tip: Avoid taking debt just to purchase a depreciating asset. Home loan down payment: Allocate current mutual fund investments and balance left in fixed deposit to this goal,also start investing R 9,500 per month in multi cap equity oriented mutual funds for this goal. Rate of return @13p er cent. Express Tip: Taking a personal loan for down payment proves to be bad for finances in the long run. Better to plan and save. Retirement Planning: They should allocate provident fund savings towards retirement goal,and should not withdraw in between. Also start investing R12,200 per month with the asset allocation of 80:20 in favour of equity and debt. Use mid cap equity funds,PPF and EPF as investment tools for achieving this target. Rate of return assumed@ 14 per cent in equity funds,8.5 per cent in PPF. Express Tip: EPF is a great accumulation tool with compulsory savings and also gives tax free returns. Child education: Start saving R6,400 in the ratio of 80:20 in equity and debt to achieve this goal preferably in mutual funds and PPF. Rate of return assumed@14 per cent in equity funds and 8.5 per cent in PPF. Express Tip: Early planning always pays in terms of less investment required for allocation towards long term goals. Conclusion Both partners are equally responsible to ensure a better financial future. When goals are clear and finances are well directed towards them and that too in the early stage of life,goal achievement becomes more certain.
