Family finance: Dharampuria needs insurance to secure risks

Mumbai-based Jignesh Dharampuria bring in a monthly salary of Rs 1.4 lakh and lives in his own house with his homemaker wife and two children, aged 5 and 8. He has taken two loans, a home loan worth Rs 6.7 lakh and a personal loan of Rs 60,000, for which he is paying a combined EMI of Rs 24,263. He also has another house bought as an investment. Besides real estate worth Rs 1.75 crore, his portfolio comprises cash of Rs 5.1 lakh, equity worth Rs 5.27 lakh in the form of mutual funds, and debt worth Rs 6.07 lakh in the form of EPF corpus and debt funds. His goals include building an emergency corpus, saving for his kids’ education and weddings, and for his retirement.
The financial planning team from Fincart suggests that Dharampuria first repay his expensive personal loan using his cash holding and free the EMI of Rs 9,263 for his goals. Next, he needs an emergency corpus of Rs 4.5 lakh, for which he can allocate his cash, and this should be invested in a low duration fund.


How to invest for goals

For his first child’s education in 10 years, he need Rs 64.8 lakh. To meet this goal, he can allocate his debt and equity funds, and in addition start an SIP of Rs 14,597 in a diversified equity fund. For his second child’s education in 13 years, he needs Rs 86.3 lakh. For this, he will have to start an SIP of Rs 24,119 in a diversified equity fund for the specified time. For his older child’s wedding in 16 years, Dharampuria has estimated a need of Rs 38.1 lakh, and for his younger kid’s wedding in 19 years, he will need Rs 45.3 lakh. To meet these goals, he will need to start SIPs of Rs 6,981 and Rs 5,603, respectively, in diversified equity funds. However, due to lack of surplus, he can start with Rs 1,500 each for both goals.

Cash Flow

For retirement in 20 years, he will need Rs 4.01 crore, and can assign his other house and EPF corpus to the goal. Besides, he will have to start an SIP of Rs 2,784 in a diversified equity fund to meet the goal.

Insurance Portfolio

For life insurance, Dharampuria has a term plan worth Rs 68 lakh from his employer. He will need to buy an independent term plan of Rs 1.5 crore to secure his risks. This will cost him Rs 3,224 in monthly premium. For health insurance, he has a family floater plan worth Rs 4 lakh provided by his employer. Fincart suggests he buy a family floater plan of his own worth Rs 5 lakh and a Rs 20 lakh top-up plan, both of which will cost him Rs 1,583 in premium every month.
Financial plan by FINCART

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