Financial Planner Pankaaj Maalde suggests he begin by rescheduling his home loan since he is paying a big EMI and a high interest rate. He can do so by increasing the tenure to 20 years, which will bring down the EMI from Rs 25,000 to Rs 16,700. The saved amount can be used to meet a goal.
To set up an emergency fund of Rs 2.8 lakh, Chavan can allocate his cash holding of Rs 1 lakh. For the remaining amount, he can save the surplus for a year before beginning investment for the other goals. In order to buy a car, he wants to amass Rs 2 lakh in three years. For this, he can start an SIP in an MIP scheme for the first year and in an arbitrage fund for the second year. As for his child’s education in 16 years, he will need Rs 51 lakh and can start an SIP of Rs 8,000 in an equity fund for the given term. For her wedding in 23 years, he should start an SIP of Rs 5,000 in an equity fund and Rs 1,500 in the gold bond scheme to amass Rs 88 lakh. Finally, for retirement, he needs Rs 5.7 crore in 27 years. To achieve this, he should allocate his PPF, EPF and mutual fund corpuses. For the remaining amount, he should start an SIP of Rs 11,000 in an equity fund for the specified term.
Chavan has one term plan and two traditional plans to cover his life. Maalde advises him to continue with the traditional plans and buy a term plan of Rs 50 lakh. Chavan has covered his family’s medical needs by buying a family floater plan of Rs 7.25 lakh. Maalde suggests he raise this amount to Rs 10 lakh. He should also buy critical illness and accident disability plans of Rs 25 lakh each.
How to invest for goals
All investments will begin after a year when the contingency corpus has been built. Annual return assumed to be 13% for equity, 8% for debt. Inflation assumed to be 8%.
Premiums are indicative and could vary for different insurers.
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Family Finance: Pune-based Chavan should reschedule home loan to meet financial goals – Economic Times}