Small investor, big goals

Prashant (33) is married and has two-year-old twin girls. He stays with his parents in a rented house, for which he pays Rs 12,000 monthly. He works as a principal analyst and has a monthly take-home salary of Rs 50,000. His wife is a home-maker. The family's total monthly expenditure, including rent, amounts to Rs 40,000. Prashant is not keen on buying his own house, but would like to create a sufficient corpus for his retirement, daughters' higher education and their weddings. The family has been able to accumulate a corpus of Rs 23 lakh in his savings bank account and seeks our guidance in drawing up a financial road map. Emergency fund An emergency corpus acts as a cushion in difficult times and should be equivalent to at least six months of expenses. Prashant should maintain an emergency corpus of Rs 2.4 lakh in a combination of sweep-in fixed deposits and liquid funds. A sweep-in fixed deposit and liquid fund will help him earn higher returns than a savings bank account, without compromising on liquidity. Sweep-in deposits are automatically liquidated when the balance in your savings account falls below a certain threshold. For building his emergency fund, he may use a part of the corpus accumulated in his bank account. Action: Create an emergency corpus of Rs 2.4 lakh. Health insurance The family is covered under a family-floater plan of Rs 5 lakh, provided by Prashant's employer. Prashant must buy a personal health cover in addition to the one provided by his employer, since employer-provided health cover extends to employees for only as long as t

This article was originally published on October 13, 2021, and last updated on August 31, 2022.