Pratik and doyel want to be good parents to the child they plan to have, and good children to their parents. They also want a comfortable nest egg for the years after retirement. How many changes should they make to get it right?
Goals
- Year 2011 House (investment) Rs 10 lakh*
- Year 2011 House (living) Rs 12 lakh
- Year 2030 Children’S education Rs 1.02 crore
- Year 2037 Retirement Rs 14.61 crore
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Diagnosis
Some changes need to be made to goals, as otherwise they will not be achieved at targetted budget or time-frame. Retirement for Pratik needs to be put back by a few years to reach expected monthly income of Rs 1 lakh
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How to reach
- Start SIPs into equity mutual funds up to 60 per cent of monthly savings
- Invest up to Rs 70,000 into individual PPF accounts
- Medical insurance should be taken in both names, if not already done so
- No further investment in real estate as it is a relatively more illiquid asset
*Goal amounts adjusted with inflation assumed at 6 per cent per annum
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Pratik Das and Doyel Ghosh are both Hyderabad-based software engineers whose jobs take them all over the world. But their hearts are in the right place. Though both swear by eating out at fancy restaurants, when it comes to their hilsa, they prefer to buy it and cook it at home.
Doyel is now in the US on an assignment and the couple is now looking to strike a balance between their lives and careers. Either Pratik will join her in the near future or Doyel will return to India in a year’s time. These things have to be factored in when planning their future.
Initially, after their marriage in 2007, they never gave a serious thought to financial planning. But, with their decision to have a child in a couple of years, that has changed. “Suddenly we realised that it necessary to plan our financial goals, and that savings are required to meet our child’s future needs and expenses in the foreseeable future,” says Pratik.
Their friends helped them inculcate the two fundamental principles of financial planning: ‘put away a part of the salary into savings every month after meeting average monthly expenses’ and ‘the earlier you start the faster you will achieve your goals.’
Currently almost all their investments are in bank FDs since Pratik sold off whatever equity investments he had, to meet marriage and other expenses. “Even though I have not been investing in equities, I have been tracking the markets. I think it is the right time for us to start, as we have a long time horizon to meet our chief goals of childrens’ education, marriage and our retirement.”
We chalk out a financial plan for them.
anaghpal AT outlookindia DOT com