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    Family Finance: Government employee Kumar should focus on main money goals for now


    The couple's goals include building an emergency corpus, buying a house, saving for their children’s education and weddings, and for their own retirement.

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    A rise in income or slashing of goal values will help reach all the milestones with ease.
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    Bipin Kumar and Jyoti Sharma stay with their two children, aged four and one, in Delhi. They get a combined monthly income of Rs 1.1 lakh and being government employees, they have been provided free accommodation. Their portfolio worth Rs 34.04 lakh comprises equity worth Rs 3.3 lakh, debt of Rs 32.04 lakh, and cash of Rs 20,000. After considering household expenses, EMI for a Rs 1.5 lakh personal loan, and investment of Rs 35,000, they are left with a surplus of Rs 14,000 a month. Their goals include building an emergency corpus, buying a house, saving for their children’s education and weddings, and for their own retirement.

    The financial planning team of Fincart suggests that they start by repaying their expensive personal loan of Rs 1.5 lakh by using a part of their fixed deposit. They can then focus on building a contingency corpus of Rs 2.44 lakh, which is equal to their four months’ household expenses, including the loan EMI. They can do so by allocating their cash, a part of fixed deposit and and debt funds and investing this amount in a liquid fund.


    Cash flow

    Next, the couple wants to buy a house worth Rs 80 lakh in the next five years. They can provide a 50% down payment of Rs 40 lakh by allocating their remaining fixed deposit and starting an SIP of Rs 36,349 in a debt fund. After five years, they can take a loan for the remaining amount and, at 8.5% for 20 years, they will have to furnish an EMI of Rs 34,713. The SIP amount can be used for paying the EMI.

    They also want to save for the education of their children in 13 and 16 years, requiring Rs 86.3 lakh and Rs 1.1 crore for the goals. Since they do not have adequate investible surplus, they can start investing for the older child’s goal. They can allocate the Sukanya Samriddhi corpus, stocks and mutual funds for this goal, and will also have to start an SIP of Rs 16,753 in an equity fund. To start investment for all other goals, they will have to wait for a rise in income.

    How to invest for goals

    As far as their insurance portfolio is concerned, the couple has neither any life cover nor health plans. Fincart suggests that Kumar buy a term plan of Rs 1.5 crore for himself, which will cost him Rs 2,287 in monthly premium. For health insurance, they can buy a family floater plan of Rs 5 lakh and a top-up plan of Rs 20 lakh with a Rs 5 lakh deductible. Both these plans will come for a monthly premium of Rs 1,848, which can be sourced from the surplus.

    Insurance portfolio

    Financial plan by FINCART

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