I am a 30-year-old male working for a US-based investment bank in Mumbai.
My current investments:
Cash and fixed deposits (including parents’): Rs 21 lakh
Stock and mutual funds: Rs 4 lakh
Premium of life insurance policies: Rs 42, 059
Medical coverage (including employer’s): Rs 22.5 lakh
Current residence valuation: Rs 1 crore
I am being transferred to London, and my salary will be £45,000 a year. I plan to shift with my parents to US in a year’s time.
Short-term goals:
a) Wedding
b) Purchasing a 2-bedroom hall kitchen flat of Rs 40-60 lakh
Long-term goals: Plan to retire at 55 years
Assuming a monthly expense of Rs 50,000 for your household needs, there seems to be a large amount in bank accounts. This needs to be reallocated for earning higher returns.
Contingency Planning: Keep aside an amount equivalent to three months of your expenses in liquid funds.
Marriage: Assuming marriage in one year, set aside 5 lakh and invest in liquid mutual funds.
Purchase of house property: If the house will be purchased in 2013, you will need around Rs 76 lakh, (considering an inflation rate of 6 per cent and the present cost of flat Rs 60 lakh. To meet this goal, we have allocated Rs 6.5 lakh from funds in the bank.
Assuming you take a loan of Rs 40 lakh in 2013, we suggest a systematic investment plan (SIP) of Rs 71,000 in a portfolio with 20 per cent in equity and 80 per cent in debt. Reduce the equity exposure to 5 per cent and hike debt to 95 per cent in the final year. The corpus would be around 36 lakh.
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Risk planning: Insurance requirements will increase post marriage because of dependents and life goals.
Retirement: Assuming the equity and mutual funds return at the rate of 14 per cent a year, you will need to invest Rs 26,000 in 80 per cent equity and 20 per cent debt until the retirement age of 55. You would have accumulated a corpus of Rs 5.8 crore that will be required in 2035.
The writer is founder & CEO, Ffreedom Financial Planners. Send your queries to yourmoney@bsmail.in