Subir (72) retired from the army 10 years with the rank of Brigadier. His wife, Gita, a homemaker, is 67 years old. He receives a comfortable pension from the army. He has also been an avid stock investor ever since he inherited his father's portfolio 30 years ago and has grown it to a substantial level. In keeping with his army ethos, he has also been quite bold with his stocks, keeping half of his holdings in mid and small caps. He wants to donate the bulk of his money to a trust he has set up for helping retired armymen since his children are financially independent and well settled.
What they have:
- Income: 75,000 a month
- Monthly Expenses: 50,000
- 50 lakhs in debt funds, 80 lakhs in direct equity (stocks)
- Own House
What they want:
- Setting up a philanthropic trust for helping retired armymen
- Funding their retirement
What they should do:
- Emergency Fund: Being retired from the services, Subir's pension is fixed and guaranteed for his life. He has a substantial level of liquid investments, of which he can redeem 6 months' expenses and place them in a savings bank account for emergencies.
- Health Insurance: As a retired armed forces member, Subir's medical expenses and treatment will be covered by military hospitals across the country. Hence he wouldn't need any additional health insurance cover. Some of these benefits me also be available to Gita. Given her age and consequent high premium cost, it may be better to set aside additional funds to cover her health cost rather than buying health insurance separately.
- Life Insurance: He is already retired and his children are financially stable. Hence, he wouldn't need a life cover.
- Investment Portfolio: Subir has been an avid stock investor and have managed his stock portfolio quite well. Considering his age and his goal of setting up a trust, he can slowly switch from the volatile equity portfolio to debt over a period of time. This will also enable Subir to provide a stable corpus for his trust. He can also claim benefits under Section 80 G for his charitable donations provided the conditions mentioned therein are met.
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