Well Begun is Half Done | Value Research Planning the financial course for a young married person who is looking forward to meeting well-defined goals
The Plan

Well Begun is Half Done

Planning the financial course for a young married person who is looking forward to meeting well-defined goals

I am 33 years of age and live with my wife and a three year old daughter on rent. My monthly income is ₹80,000, out of which I spend half and save rest. I invest into mutual funds and own shares of L&T. Apart from these, I have invested into bank FD, bank RD, L&T finance bonds, EPF, PPF and my wife's jewelry. I wish to plan for my daughter's education and marriage and my own retirement. My short term goal is to buy a car and take foreign trips every four to five years with my family. I have bought HDFC Life Click2Protect to insure my life and enjoy health cover provided by my employer. I wish to achieve all my goals timely and efficiently. Kindly let me know what do i need to change in my portfolio.
- Vikas Sharma

What he should do

Emergency fund: He must create an emergency fund of at least six-month expenses. We usually recommend an emergency fund for three-month expenses but as he has a child, we are more conservative.

Health insurance: Vikas and his family are insured by his employer as of now. He needs a personal health insurance as well. The employer will insure them only till Vikas is working with the company. Going by his needs, a family floater policy, covering him, his wife and his daughter, would be suitable. Apollo Munich Easy Health and ICICI Lombard Complete Health Insurance Plan are our recommended policies.

Life insurance: Vikas is adequately insured. He has wisely selected a good, pure term policy. He should continue with this policy and never fall prey to mixed complicated products.

Investments: Vikas has almost 50 per cent of his investments in debt. This is not desired as he has a long time to reach the goals. His near-term goal of buying a car and going on a foreign tour in the next four years can be funded out of his equity investments. As these two goals are just around the corner, Vikas must start to freeze equity returns generated so far by switching to debt-income mutual funds. To avail taxation benefits, he must stay invested for at least three years. Otherwise, any short-term capital gains arising would be added to his income and taxed as per the applicable tax slab. He should continue with the PPF. Vikas is also investing in direct equity, which should be done only if understandsit. Otherwise, he should invest through SIPs in mutual funds. Going by his current standard of living, if he wishes to maintain the same standard of living after retirement, he will require ₹7.2 crore. The time of retirement considered is 80 years of age. If he lives longer, he will need to save more.


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