Financial Planning :: Business Line

  

 

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I am 38 years old and my wife is 36. Both of us are doctors and work in a hospital. We have two daughters aged 10 and 5. My mother, 64, is also dependent on me.

In five years, I plan to start my own practice. For this purpose, I intend taking a loan of Rs 20 lakh from a bank.

I have no life insurance cover, but our employer covers us under a group health policy for Rs 4 lakh.

We have no pension or EPF benefits.

Please go through our investment portfolio and suggest changes to meet our goals. I am ready to take risk on my investments. Our income is likely to increase by Rs 10,000 every year.

— Vinayak Dasgupta

It is always advisable to be reasonable with your expectations and targets. You also need to factor in inflation while sizing your goals.

With your current income, it may be quite challenging for you to reach your targeted corpus.

Although you are planning to continue practice till your health permits, it’s prudent to plan a retirement kitty once your income starts increasing.

EDUCATION

To achieve all your current goals you should save Rs 67,600 every month. With your current surplus you can start saving for your children’s education and at a later stage as your surplus increases consider saving for their respective marriages.

For your elder daughter’s education, you ought to save monthly a sum of Rs 31,200 for the next 8 years and it should earn 12 per cent returns. The same return is assumed for all goals.

For the younger daughter you need to save Rs 13,400 every month for the next 13 years to reach the goal.

INVESTMENT

Since you have not disclosed when you accumulated gold, we presume you would have done it gradually over the years.

You have said that you are ready to take market risk to achieve higher returns, but your current portfolio appears quite conservative. You should construct a portfolio based on your risk profile.

Since you have stated that you manage a monthly surplus of Rs 30,000 and that it is likely to increase by another Rs 10,000, construct a portfolio with 60 per cent in equity mutual funds. Invest a large chunk of this in two mid-cap schemes and 20 per cent in a large-cap fund. For debt, you can invest a part in PPF to avail tax benefit and the rest can be parked in an income fund.

Continue with your investments in the gold fund, which accounts for 10 per cent of your monthly investments currently. You can accumulate the gold purely for your daughter’s marriage.

You are under insured. Take a term insurance policy for Rs 1.5 crore to protect your goals.

(The author is CEO, myassetsconsolidation.com)