Ankit Shaw is only 24 years old and wants to start financial planning with his current monthly salary of Rs 40,000. Since he stays with his parents in Kolkata, he doesn’t incur high expenses and can focus on investing for his goals. He is left with a surplus of Rs 23,333 after household expenses of Rs 13,667 and investment of Rs 3,000 in mutual fund SIPs. His sparse portfolio comprises Rs 2.65 lakh in cash, Rs 2.51 lakh in mutual funds and Rs 30,000 in stocks. His goals include saving for emergencies, retirement, buying a car, sponsoring a vacation for his parents and starting a business. According to the financial planning team from Fincart, it will not be difficult to achieve these.
Shaw can build the emergency corpus of Rs 41,000 by allocating his cash and investing it in an ultra short-term fund. Shaw wants to buy a car worth Rs 8.2 lakh in four year’s time, and will have to allocate his remaining cash, stocks and mutual funds to this goal. He will also have to start an SIP of Rs 1,851 in an equity-oriented hybrid fund. This will enable him to buy the car without taking a loan. Shaw also wants to sponsor a vacation worth Rs 2.2 lakh for his parents in five years. Since there is no other resource that can be allocated to this goal, he will have to start an SIP of Rs 2,856 in an equity-oriented hybrid fund to achieve this.
Shaw also wants to start his own business in five years, for which he will need Rs 20 lakh. Fincart suggests he push the goal to nine years and start investing Rs 10,200 in an SIP of an equity fund to be able to accumulate the sum. For his retirement in 36 years, Shaw will need Rs 4.3 crore. To amass this amount, he will have to start an SIP of Rs 6,234 in an equity fund. However, since this corpus amount is based on his current expenses, the goal value may change once he gets married and his lifestyle expenses rise. He can review his plan at a later date and make changes accordingly.
Shaw doesn’t have any life insurance and doesn’t need one at this stage because he doesn’t have any liabilities. However, he can buy a Rs 1.5 crore plan when he marries or takes loans. As for a health plan, he can pick a Rs 5 lakh basic plan with a top-up of Rs 20 lakh, which will cost him only Rs 594 a month. For his parents, he can buy a similar cover at a monthly premium of Rs 3,020. He can upgrade his plan when he gets married and has children.
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Financial Plan by Pankaaj Maalde Certified Financial Planner