Family finance: Rathods need to align investments with their money goals to achieve them

Keval and Bhoomi Rathod are both working in Mumbai, getting a combined monthly salary of Rs 4.34 lakh. They live in their own house with their two children, aged two and eight. Their goals include building an emergency corpus, taking a vacation, saving for their children’s education and weddings, and for their own retirement. They will need to put off the goal of vacation till an increase in investible surplus.

Financial Planner Pankaaj Maalde has calculated an emergency corpus of Rs 8.7 lakh, which is equal to three months’ expenses. They will have to allocate their cash of Rs 4.5 lakh and invest it in an ultra short-term or money market fund. They should save the remaining amount before starting investing for their goals.

Portfolio

Cash flow

For their older child’s education, they need Rs 79 lakh in 10 years. They can allocate half of equity fund corpus and continue with SIPs of Rs 32,000 in diversified equity funds. For the younger child’s education, they need Rs 1.1 crore in 16 years. They can assign the remaining half of equity fund corpus and start an SIP of Rs 18,000 in a diversified equity fund. For the wedding of their older child in 17 years, they need Rs 80 lakh. They can allocate half of their gold and Sukanya scheme corpus, and continue investing Rs 2,500 a month in Sukanya scheme, start a fresh SIP of Rs 8,500 in a diversified equity fund and Rs 2,500 in gold ETF/gold bond scheme.

How to invest for goals

For the younger child’s wedding, they need Rs 1.2 crore in 23 years. They will have to continue investing Rs 2,500 a month in Sukanya scheme, start a fresh SIP of Rs 6,500 in a diversified equity fund and Rs 2,500 in gold ETF/gold bond scheme. For retirement in 21 years, Rathods will needs Rs 9.1 crore, and can assign their stocks, mutual funds, PPF, EPF and NPS. They will also have to invest Rs 50,000 in diversified equity funds, Rs 5,000 in US ETF/funds, Rs 5,000 in the NPS, Rs 5,000 in gold ETF/bond, and Rs 1,000 per year in the PPF.

For life insurance, Rathods have term plans worth Rs 3.35 crore and a traditional plan worth Rs 45 lakh. Maalde suggests they continue with these. For health, Keval has a Rs 3 lakh plan from his employer, Rs 8.5 lakh family floater plan and a Rs 20 lakh top-up plan. For his parents, Keval has a Rs 5 lakh plan. Maalde suggests they continue with all these plans and buy a Rs 50 lakh accidental disability plan for Keval, which will cost Rs 667 a month.

Insurance portfolio

Financial plan by Pankaaj Maalde Certified Financial Planner

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