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Vinayak Yadav is a sales and marketing executive working with a private firm for the last two years. He stays with his parents in Mumbai

Written by Express News Service | Published: April 29, 2013 12:12:37 am

Name: Vinayak Yadav

Resides in Malad,Mumbai

Profession: Sales and marketing executive

Annual income

(Rs 2.76 lakh)

Status & goals

Vinayak Yadav is a sales and marketing executive working with a private firm for the last two years. He stays with his parents in Mumbai. Even with modest income,he has invested in fixed deposits,endowment plans and gold. His primary goal is to purchase a flat in three years and accumulate enough fund to secure his retirement. He also wants to create a corpus for his marriage.


A comprehensive financial plan securing purchase of flat,retirement and marriage fund.

Net monthly surplus

Rs 13,020

Current Investments

Fixed Deposits: Rs 80,000

EPF: Rs 40,000

Gold: Rs 80,000


Emergency fund: Has adequate emergency fund in the form of fixed deposits.

Life insurance: Total life coverage of Rs 5 lakh with annual premium of Rs 24,500 in single traditional policy

Health Insurance: No coverage

Investments: Exposure to debt and gold

Liabilities: NIL


Emergency fund Amount in fixed deposits is sufficient to meet up to three months of monthly expenses.

Express tip It is recommended that Vinayak maintain at least three months of emergency expenses as a buffer to face uncertainties in life.

Life Insurance: Considering need based approach,Vinayak requires life cover of Rs 50 lakh. Buying a term plan for 35 years at young age will cost him about Rs 60,00 annually. It is recommended that he surrender his traditional insurance policy which will release a cash flow of Rs 2,000 per month for buying adequate coverage in the form of life,health and disability insurance with balance going towards achievement of financial goals.

Express tip Adequate life insurance coverage is essential to ensure replacement income to dependents.

Health Insurance Vinayak should take an individual health insurance plan for at least Rs 5 lakh which will cost him about Rs 5,000 annually.

Express tip With rising medical costs,health insurance protection is highly recommended.

Accident Insurance A personal accident policy of Rs 25 lakh is recommended for Vinayak costing approximately Rs 3,000 annually.

Express tip Disability Insurance ensures regular income in case of permanent / partial disability due to accident.

Planning for Goals

Buying a Flat (2016)

Vinayak needs to arrange for 15 per cent down-payment amount of Rs 6.99 lakh. With no existing investment besides the fixed deposit,he needs to save Rs 16,000 per month in a recurring deposit. The current cash flows are not sufficient to meet this goal. So,he should postpone this goal till marriage or reduce the quantum of the goal and go for a lower value property.

Rate of return assumed: 9% in recurring deposit.

Express tip It is important to have achievable and realistic financial goals,besides being specific,measurable and time-bound (SMART).

Marriage Fund (2017)

Vinayak need to save Rs 12,500 per month in a recurring deposit to achieve his dream figure of marriage fund which will exhaust his entire current investible surplus. He should channelise his entire investible surplus towards recurring deposits. The corpus created will be used for his marriage and surplus,if any,can later be used for buying the flat.

Rate of return assumed: 9% in recurring deposit.

Express tip Equity exposure should be avoided for short-term goals. It is prudent to accumulate and park money in debt assets.

Retirement Planning (2047)

EPF will provide Rs 38.50 lakh at retirement leaving a shortfall of Rs 1.64 crore. For this,he should invest Rs 3,000 in diversified equity funds. Since there is no room for investment at present,he should delay this goal by three years after which the monthly investment required will be Rs 3,500.

Rate of return assumed: 12% in equity funds

Express tip Diversified Equity Mutual Funds provide high returns over long-term and the increasing tenor reduces the risk correspondingly.


Being single and without liabilities,Vinayak should work towards creating a corpus for his marriage and postpone other two goals as of now. He should review his financial plan after marriage since his cash flow position,financial goals and insurance needs will change to a great extent. Increased income in the future and or having an earning spouse will make it possible for him to achieve all his goals which show gap at present.

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