Comfortably placed with a multinational company, Rakesh Shinde falls in the high-income bracket. A substantial monthly income leaves him with a large surplus. Unfortunately, this is not being converted into adequate investments. Though the Shindes' portfolio is not perfect, they are not unduly worried about the situation.
The couple believe that they will be able to channel their excess cash in the right direction to achieve their goals with the guidance of a professional planner. "Surplus cash is not a problem as it can always be invested in the right options," says Rakesh.
Apart from a high savings rate, the Shindes have a strong net worth at about Rs 1 crore. Rakesh Shinde, 41, lives with his wife, Vandana, also 41, in Mumbai. The couple have two daughters, Sara and Riddhi, aged seven and one, respectively. Rakesh takes home a monthly salary of Rs 1.9 lakh, while Vandana is a homemaker. The couple spends Rs 56,433 on household expenses every month. Another Rs 8,206 is incurred as insurance premium each month, leaving the couple with a whopping surplus of Rs 1.25 lakh. This is sufficient to take care of all the couple's goals.
The Shindes may not have been the smartest at using their surplus cash, but they deserve applause when it comes to getting adequate cover and building a contingency fund. Rakesh has done an excellent job when it comes to preparing himself and his family against exigencies. A life cover of Rs 3 crore—via term plans of Rs 2 crore and Rs 1 crore—will act as a strong shield to protect his family in case of any unforeseen misfortune.
Besides, health insurance is also in place with individual plans of Rs 3 lakh for himself and his wife. Rakesh has also bought a top-up plan of Rs 10 lakh. So, he doesn't need to buy any additional policies.
Apart from this, Rakesh has also amassed a sizeable contingency fund to take care of unexpected expenses. He has Rs 3.7 lakh in his savings bank account, which is more than sufficient for this purpose. Sumeet Vaid, CEO of Ffreedom Financial Planners, advises that only about Rs 70,000 be kept in the savings bank account while the rest can be invested in either a short-term debt fund or a sweep-in fixed deposit. However, as he falls in the highest income bracket, a debt fund will be more suitable for Rakesh.
Given his strong back-up, Rakesh can proceed towards planning for his goals. To achieve these, his current investments in mutual funds and gold can be divided proportionately for each goal. His top priority is to amass a corpus to fund his daughters' education. For Sara's education, he will need Rs 9 lakh in 11 years.
For this goal, Rakesh's debt fund investments that are currently worth Rs 3 lakh will contribute about Rs 8.23 lakh in 11 years' time. Apart from this, his gold investment of about Rs 10,000, is likely to grow to Rs 30,000 in the set time frame. On the other hand, for Riddhi's education, he will require Rs 13 lakh in 15 years. For this goal, his debt fund investments that are currently worth Rs 1.7 lakh are likely to grow to Rs 10 lakh by then.
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