April 18, 2011 3:45:09 am
Dr Sandip Bartakke (36),a pediatric oncologist,is associated with two hospitals in Pune and works as a consultant in other hospitals. His wife Dr Anjali Bartakke (35) is a pediatrician,currently attached to a multi specialty hospital in Pune,as a consultant. Their only kid Aditya is five years old.
Sandip though a doctor,has a fairly good knowledge of finance and understands market conditions. Sandip wants to set up a clinic for his wife. He wants to fulfill the obligations of his sons education and marriage. He already has a loan component for his second house and wants to minimise additional liability for the clinic purchase. He is also concerned about the corpus needed for his retirement at the age of 60. With Sandip,what started off as insurance advisory ended up with a comprehensive financial planning.
STOCKS Rs 2,75,000
Best of Express Premium
MF Rs 7,20,000
POST OFFICE MIS
NSC Rs 20,000
PPF Rs 5,50,000
PROPERTY (2) Rs 1,14,00,000
TOTAL INVESTMENTS Rs 1,35,65,000
HOME LOAN Rs 25,00,000
NET Rs 1,10,65,000
Monthly cash flow income
RENT Rs 18,000
PO MIS INTEREST INCOME
HOUSE HOLD Rs 25,000
HOME LOAN EMI Rs 25,000
INSURANCE PREMIUM Rs 8,583
INCOME TAX Rs 17,547
TOTAL Rs 76,130
NET SURPLUS Rs. 49203
CLINIC PURCHASE (2014)
Current Cost Rs 20 lakh
Future Cost Rs 30 lakh
SONS HIGHER EDUCATION (2024)
Current Cost Rs 5 lakh
Future Cost Rs 19 lakh
Sons MARRIAGE (2034)
Current Cost Rs 5 lakh
Future Cost Rs 49 lakh
RETIREMENT PLANNING (2035)
Current monthly expenses
Retirement Corpus required
Rs 3 crore
(Current inflation- 8%; Post retirement inflation 5%)
Bank balance Rs1.5 lakh
Has Rs 3 lakh insurance cover,a floater policy for the family provided by one of the hospitals
Sandip has a cover for Rs 15 lakh for a premium of Rs 65,000 and Anjali has a cover for Rs 10 lakh for a premium of Rs 42,000. Both are traditional policies.
Paying a very high premium for both the traditional policies of LIC
Direct equity and MFs not in line with the objectives
Rs 1 lakh instead of Rs 1.5 lakh
Emergency fund is maintained for meeting your financial emergencies like medical expenses,home repairs and others. Ideally one should be maintaining between three to six months of living expenses.
Sons education and marriage Rs 91,200 (p.a.) investment required.
This could be met by investing an amount of Rs 7,600 p.m. in a diversified equity fund (Expected ROI – 12 %)
Education cost has become a major target to be achieved these years because of soaring costs. It would be ideal to plan ahead appropriately to beat the rising inflation rate.
Rs 10 lakh family floater cover instead of Rs 3 lakh which will amount to an outflow of Rs 9,000. This could be met from the additional cash inflow.
Increasing cost of health management is the main reason for planning your health cover. A medical emergency may eat away your hard earned money.
Life Insurance Rs 60 lakh
Buy a term insurance of Rs 60 lakh (for self) at a cost of Rs 20,000 and of Rs 30 lakh (for Anjali) at a cost of Rs 10,200 (insurance cover arrived at based on HLV method)
A life insurance policy is taken to take care of your financial dependents in your absence to maintain the same style of living when there wont be any additional source of income.
This will be met out of the existing investments in stocks,MFs,post office MIS,to the extent of Rs 21 lakh (ROI-12%)
The additional cash inflow from surrendering the existing life insurance policies and buying a term insurance will amount to Rs 76,800 per annum (Rs 1,07,000 less Rs 30,200).
This amount will also be invested in a diversified equity fund (expected ROI- 12%) to augment it to Rs 1 lakh in 3 years. The balance requirement will be met by taking a loan. This ensures minimum additional liability to meet this goal.
A complete understanding of objectives will help in reworking strategies for proper asset allocation.
To meet this requirement it is recommended to invest a monthly amount of Rs 28,000 in an index fund.
Retirement becomes a nightmare if proper planning is not done. To meet the post retirement expenses,it is good to invest in equity until retirement and in debt thereafter. This will minimize the risk during post retirement.
For expert guidance on your financial planning email us your details at firstname.lastname@example.org
Insurance should never be mixed with investment. Using the appropriate investment vehicles for proper asset allocation will help you meet the goals comfortably. It is just not enough to understand the market conditions. A disciplined way of investing in the market for long term will compound your money.
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