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Family finance: Kunjirs need to hike investments, equity exposure to achieve goals

Pune-based Kunjirs will have to raise their equity exposure and also stagger some of the goals for now, suggests the financial planner.

, ET Bureau|
Aug 12, 2019, 06.30 AM IST
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For retirement in 26 years, Kunjirs will have to start an SIP of Rs 5,000 in a diversified equity fund.
Rohan and Pragati Kunjir, 34 and 35 years, stay with their two kids, aged eight and six, in their own house, in Pune. They get a combined monthly salary of Rs 1.47 lakh and have bought another house as an investment. This will increase to Rs 1.54 lakh soon after they start getting rent from one of their houses. They have also taken two home loans of Rs 70 lakh and a personal loan of Rs 35,000.

Their portfolio includes real estate of Rs 95 lakh, cash worth Rs 2 lakh, equity worth Rs 90,000 in the form of mutual funds, and debt worth Rs 10 lakh in the form of EPF and fixed deposit. Their goals include building an emergency corpus, saving for their children’s education and weddings, and their own retirement.

Portfolio

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Cash flow

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Financial Planner Pankaaj Maalde suggests Kunjirs repay their costly personal loan with a part of cash holding. They should also reschedule one of their home loans to extend the term so that the EMI reduces by about Rs 10,000. These steps will help raise their investible surplus by Rs 15,000, which can be used to meet goals. The couple can start by building their emergency corpus of Rs 3.6 lakh, worth three months’ expenses, by allocating their cash, fixed deposit and insurance surrender value. This should be invested in an ultra-short duration debt fund.

How to invest for goals

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Next, Kunjirs want to save Rs 29.5 lakh and Rs 34 lakh for their children’s education in 10 and 12 years, respectively. For these goals, the couple will have to start SIPs of Rs 13,000 and Rs 11,000 in diversified equity funds, respectively. For the weddings of their kids in 17 and 19 years, the couple will need Rs 47 lakh and Rs 54 lakh, respectively.

However, they don’t have enough surplus and should start investing after a rise in income. For retirement in 26 years, the couple will need Rs 5.5 crore. For this, they can assign one of their houses, EPF and NPS corpuses, and equity funds. Besides, they will have to start an SIP of Rs 5,000 in a diversified equity fund.

Insurance portfolio

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For life insurance, Kunjirs have Rs 80 lakh of insurance from their employers, besides Rs 55 lakh of a single premium term plan. They also have a traditional plan of Rs 5 lakh, which should be surrendered. The couple should buy two term plans of Rs 50 lakh each for Rs 1,500 a month. For health insurance, Kunjirs have Rs 6.5 lakh insurance from their employers. They should buy a Rs 10 lakh family floater plan for Rs 1,833 a month, and Rs 25 lakh accident disability plans for both at Rs 667 a month.

Financial plan by Pankaaj Maalde Certified Financial Planner

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Looking for a professional to analyse your investment portfolio? Write to us at etwealth@timesgroup.com with ‘Family Finances’ as the subject. Our experts will study your portfolio and offer objective advice on where and how much you need to invest to reach your goals.
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