Family finance: High savings will help the Saxenas meet money goals

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Sameer and Veena Saxena are government employees and bring in a combined salary of Rs.2.3 lakh. They have two children aged 22 and 18 years, with the elder child currently studying abroad. They stay in government accommodation in Lucknow and pay a nominal rent. They also have a Rs.55 lakh house and another ancestral property worth Rs.2 crore, from which they are getting a combined rent of Rs.22,000. They currently have three loans worth Rs.38 lakh for child’s education, home and car, and are paying EMIs worth Rs.47,800. Besides property, their portfolio comprises cash of Rs.7 lakh, equity in the form of stocks and mutual funds worth Rs.63 lakh, and debt worth Rs.3.2 crore in the form of PPF, GPF, gold, fixed deposit and debt funds. Their goals include building an emergency corpus, buying a car and a house, taking a vacation, saving for children’s education and weddings, and their own retirement.

Financial planner Anup Bansal from Scripbox suggests that Saxenas first build an emergency corpus of Rs.8.9 lakh by allocating their cash and a portion of fixed deposit, which should be invested in a liquid fund. Next, they want to take a vacation worth Rs.11.2 lakh in two years, for which they can assign a portion of their fixed deposit and reinvest it in a liquid fund. In three years, they want to buy a car worth Rs.29.7 lakh, for which they can use the sale proceeds from their current car and a portion of fixed deposit, which should be reinvested in a debt fund. In three years, they will also need Rs.1.19 crore for their younger child’s education. For this they can allocate their debt and equity funds and a portion of their stocks and GPF.

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For kids’ weddings in five and eight years, they need Rs.53.5 lakh and Rs.95.6 lakh, respectively. For the first child, they can use a portion of stocks, and for the second child, they can use stocks, gold, PPF and GPF. Finally, for retirement in five years, they will require a corpus of Rs.10 crore, but the goal can be met with the pension that both shall receive. No fresh investment is needed for any goal, and the surplus of Rs.75,733 can be used for wealth creation. For life insurance, Sameer has a term plan of Rs.2 crore and Veena of Rs.1 crore, for which they are paying Rs.6,667 a month. As per Bansal, they don’t need any more life cover. They also don’t need any health insurance as their medical expenses are being covered by the government.

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