Express Clinic

Profession: President in an engineering co and Priya is an officer in a PSU Bank

Net annual income

Rs 36 lakh

Status amp; goals

Rajesh and Priya have been disciplined throughout their life in saving and investing. Now when their lifes major goals are nearing,they want to be sure that they make no mistake in their finances. Daughter Asmi is currently working after her graduation. She is looking forward to doing her MBA from a premier institute. Younger daughter Ankita is doing her graduation and intends to do her Phd. Rajeshs father is ailing and needs full-time care

Needed

A financial road map which can help Rajesh and Priya plan for secure future of both their daughters and their own retirement.

Net monthly surplus

Rs 1,70,000

Current Investments:

SB Balance : R 80,000

F D : R 10 lakh

PPF : R 28 lakh

EPF : R 44 lakh

Equity MF : R 12 lakh

Stocks : R 10 lakh

Gold : R 16 lakh

Property : R 1.2 crore

Findings

Emergency fund: They have sufficient amount in their bank in form of savings bank balance and FD to take care of any emergencies

Health Insurance: They are well covered by their employer on the health front. They might need some additional funds to take care of their father in case of his condition worsening.

Insurance: Rajesh and Priya have small insurances compared to their income. They have been lucky that nothing untoward happened so far. At present,they have created sufficient assets to meet their current and future goals.

Investments: They have been saving and investing about 40 of their combined incomes right since the beginning of their career. The results are showing now. They have a net worth of R 2 crore plus and are comfortably set.

Retirement: They have several long term assets in their portfolio. PPF,EPF,equity mutual funds and stocks all have been taken with an intention of providing for retirement.

Liabilities: They are totally debt-free.

Recommendations

Emergency fund: They have sufficient funds for emergencies. As the current FD may be utilised for another goal,they can make different FDs from their monthly surplus to keep a fund of R 4-5 lakh at all times.

Express Tip: Emergency funds helps continue the investments smoothly even in times of distress.

Health Insurance: They both have good health facilities from their employers. They can consider creating a corpus of about R 5 to 7 lakh for healthcare for Rajeshs father. They can do so by starting a recurring deposit of R 50,000 per month for a year. Later the accumulated funds can be moved to a debt MF for better liquidity.

Express Tip: Employers providing good healthcare facilities is a big support and should be considered to be an important criterion of job contracts.

Life Insurance: They have created assets sufficient to meet all goals in absence of either of them. Hence,there is no requirement for additional life insurance. They can afford to pay the premiums of the existing policies for the entire tenure without compromising on their cash flow.

Express Tip: If there are sufficient assets created to meet all goals,life insurance is not required.

Child Goals amp; Holiday Home: They can sell their second flat in the nearby Mumbai suburb,which will fetch R 1.2 crore. This can be used to meet the education and wedding goals of both the daughters. Till the funds are actually required,they can be parked in debt MFs with R 25 lakh each for their education and R 15 lakh each for their weddings. The balance R 40 lakh along with the FD of R 10 lakh can be used to purchase the holiday home.

Retirement: They already have assets and investments which will give them their entire corpus of R 5 crore. PPF without further investments should give R 70.5 lakh,EPF R 2.78 crore,life insurance policies R 57 lakh,mutual fund and stocks R 85.71 lakh. They will have much more wealth created by continuing their MF SIP of R 25,000 and further adding to it.

Express Tip: All long-term products should be aligned to the retirement planning goal.

Conclusion

The Bharnes diligent savings over the years have helped them create assets enough to meet all their goals. They will create wealth for their next generation and leave them with a handsome inheritance. This is the kind of result that anyone who is disci-plined and patient,can look forward to.