Need suggestions on financial planning

POSTED BY Prasad ON June 27, 2012 6:40 pm COMMENTS (6)

I am now 32 years old, with a family of 2 dependents. My current financial status is as follows:

Annual income: ~ Rs.7.5 lakhs
Savings in ELSS MFs – Rs.1 lakh (Rs.8k per month)
Insurance: Rs.50 lakh Term plan for self
Negligible amounts in terms of PPF savings
Gold worth Rs.3 lakhs

I will be continuing to invest in the ELSS funds until the end of this financial year, and then take a call based on how ELSS schemes will be treated in the new DTC. I am already in the process of taking up a health insurance plan for my family.

My immediate goals:
1. Buy a house/flat by 2014
2. Build a contingency fund for emergencies

As of now, I can invest an additional Rs.5k per month for these purposes. I can increase it to Rs.10k by April 2013. How should I go about doing the same? Ideally, I would like to have the down payment for housing loan ready by June 2014.

6 replies on this article “Need suggestions on financial planning”

  1. Prasad says:

    It will be the same 2+1.

  2. Prasad says:

    Dependents are spouse and kid (1 year old). And your explanation about insurance coverage makes a lot of sense. I’ll definitely look into that.

    1. Dear Prasad, glad to know that I was able to help you. Regarding the family size, ‘ll it remain 2+1 or ‘ll it be 2+2? Please clarify.



  3. Prasad says:

    Hi Ashal,
    Thanks for taking the time to reply.
    Regarding your queries, I am planning to buy a house costing around 30-35 lakhs. As of now, my liabilities include a personal loan (EMI Rs.9000) that I will be repaying until June 2013. No emergency funds as of now. Reasons sound lame, but basically I was trying to make ends meet these past couple of years that I have been employed.
    Regarding the term plan, my current policy is for 50 lakhs + addtional 50 lakhs accident benefit rider. Do I really need to take another 1 crore policy? I was thinking of taking another term plan for 50 lakhs, but after another 3 years only, My current policy was taken 2 years back, and covers me until age 60. If I take another policy at 35 years age, it will cover me until 65 years age. Is my idea flawed?
    Please do reply.

    1. Dear Prasad, May i know the details of the dependents – spouse & kid or spouse & parent? Please clarify.

      Why I’m asking to go for a higher term cover of 1C + existing 50L = 1.5C????

      Sample this – Your current age is 32, around age 35, you ‘ll go for a home loan. By that time, the house in question ‘ll be around 40-45L Rs. if not more. So the loan value ‘ll be around 30-35L Rs. at least. So the actual cover for family ‘ll be only 1.5-0.35 = 1.15C only. Add the financial liabilities due to increase in all expenses (please add the impact of inflation also). One more important point, right now your age is 32 but if you opt a new term cover at age 35, the possible prem. ‘ll be higher.

      If your financial liabilities ‘ll be over till age 58-60, no need to go for age 65 cover.



  4. Dear Prasad, May I knoe the cost of the house you are looking for? Also how much emergency fund do you have right now? Any loan liabilities as of now? For an annual income of 7.5L Rs. the term cover of 50L Rs. is insufficient. Please purchase another term cover of at least 10 million Rs. to cover your current as well as future liabilities also.



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