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    Family Finance: Why Das needs to include equity in his portfolio

    Synopsis

    Looking for a professional to analyse your investment portfolio? Write to us and we will offer objective advice on where and how much you need to invest.

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    Chandan & Aparna Das, 41 & 37, an IT professional, Kolkata have a portfolio skewed heavily towards real estate.
    Chandan Das, 41, is an IT professional and stays with his wife, Aparna, and two children, aged 11 and 7, in Kolkata.

    While Aparna is a homemaker, Chandan brings in a salary of Rs 1.5 lakh a month.

    Combined with a rental income of Rs 15,000, the total income comes to Rs 1.65 lakh.

    Chandan has a portfolio skewed heavily towards real estate since he has bought three properties and a plot of land, besides the house he stays in.

    Portfolio
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    Cash flow
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    All these add up to Rs 1.4 crore, with the only other investments being in the EPF (Rs 33 lakh) and PPF (Rs 6.5 lakh). The financial planning team of Fincart suggests that he begin by setting up an emergency corpus worth Rs 3.6 lakh.

    Since no resource can be allocated to this goal, the Fincart team suggests that Chandan start an SIP of Rs 28,962 in an arbitrage fund for a year to build the corpus. Next, Chandan wants to save Rs 24 lakh for his daughter's education in seven years. For this goal, he can assign one of his properties worth Rs 20 lakh and doesn't need to start any fresh investment for it. For the son's higher education expenses in 12 years, he will need Rs 47.3 lakh, and can assign his properties worth Rs 20 lakh and Rs 35 lakh. He doesn't need to make any fresh investments for this goal as well.

    How to invest for goals
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    Annual return assumed to be 12% for equity. Inflation assumed to be 7%.

    For his children's weddings, he will need Rs 25.7 lakh and Rs 33.7 lakh in 14 and 18 years, respectively. For these goals, Chandan can again assign his real estate acquisitions: plot of land and third property worth Rs 25 lakh. He should, however, consider moving to equity for better returns and higher tax efficiency. Finally, for retirement, Chandan will need Rs 3.5 crore in 18 years. He can allocate the EPF and PPF corpuses, as well as one of the properties. He will also have to start an SIP of Rs 7,069 in a diversified equity fund to achieve the goal.

    Insurance portfolio
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    Premiums are indicative and could vary for different insurers.

    As for insurance, Chandan has two term plans worth Rs 1 crore, but will need another term plan worth Rs 1.4 crore for himself. This will cost him Rs 3,500 a month in premium, in addition to the existing life covers. As for health insurance, he also has a medical plan worth Rs 14 lakh provided by his company. However, Fincart suggests that he buy a Rs 20 lakh family floater plan and a top-up plan of Rs 5 lakh. These will cost him Rs 1,884 a month in premium. He should retain the plan provided by his employer for his parents' medical needs. This will take care of the insurance needs of his family and doesn't need to buy any more covers as of now.


    Financial plan by FINCART

    Write To Us For Expert Advice
    Looking for a professional to analyse your investment portfolio? Write to us at etwealth@timesgroup.com with ‘Family Finances’ as the subject. Our experts will study your portfolio and offer objective advice on where and how much you need to invest to reach your goals.






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