Asset Current value (in Rs)
NSC 1.15 lakh
Mutual funds 66,000
Real estate 22 lakh
Cash in bank 1 lakh
Stocks 45,000
Total assets 25.26 lakh
The Tyagis' financial plan is replete with the usual fissures-in their early 30s, the couple is yet to start saving for retirement, has a very small life insurance cover, and has no investment in mutual funds.
The reason their plan has not been unhinged is because they have managed to tick some of the right boxes-they have invested in real estate at an early age and have a high combined monthly income. This is the reason that despite the plan's shortcomings, the Tyagis will be on course to meet all their financial goals with a little fine tuning. Ritu, 32, works with an NGO, while Deepak is a 33-year-old product technician who works for a buying agency.
The two bring in an impressive salary of Rs 1.45 lakh per month. Accounting for a monthly expense of Rs 35,000, a home loan EMI of Rs 29,000 for two real estate properties (a house each in Gurgaon and Noida), and an average monthly premium of Rs 8,230 for various insurance policies, they are still left with an investible surplus of Rs 72,770. However, as Ritu says, this surplus has been a recent development.
"In 2010, our salaries took a huge jump. Before that, we never had much to invest," she says. In 2004, the couple bought the flat in which they currently live in Gurgaon with the help of a loan of Rs 16 lakh. This, along with the car loan EMI, ate into most of their investible surplus. "Apart from our investments in real estate and stocks, all others have been done to save tax," says Ritu.
The Tyagis can still achieve all their goals, including building a corpus for retirement, saving for their four-year-old daughter's and their future child's education, and buying a house worth about Rs 1.1 crore. The key, according to financial planner Pankaaj Maalde, is to instil discipline in their investments and tweak the portfolio for better returns and protection.
As for protection, the Tyagis have a total insurance of only Rs 12.8 lakh, which is frightfully low. It doesn't even cover the Rs 19 lakh loan they have taken for their properties. "Both must get online term insurance plans to give them adequate cover. Ritu should buy a cover of Rs 25 lakh, and Deepak, Rs 50 lakh, which will cost them about Rs 11,000 annually. In return, they should surrender their LIC Jeevan Anand policy," says Maalde.
This endowment plan was taken in 2004 and it gives them a cover of only Rs 5 lakh for an annual premium of Rs 25,000. The couple has also taken a child Ulip, Aviva Young Scholar, which gives them a cover of Rs 4.8 lakh for an annual premium of Rs 60,000. Considering the high premium for such a low cover, the couple must review this policy after it completes five years.
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