Family Finances: Rohit Joshi's skewed portfolio may hurt important goals

By Amit Kumar, ET Bureau | 15 Jul, 2013, 08.35AM IST

Prioritising goals is as important as working towards them. If you don't follow this tenet of financial planning, the achievement of one important goal is likely to come at the cost of sacrificing the others.

When Rohit Joshi, a senior manager in an education company, contacted us to help him with his finances, his portfolio was massively skewed towards real estate. The usual suspects— expensive insurance, low equity investment and no contingency fund—were there too.

We concluded that given his income, a house would result in a struggle to build corpuses for his future child's education and marriage. His daughter was born a few months after the plan, and in light of this development, the financial review will help them rectify their mistakes.

The original plan

Rohit, 29, lives with his wife Neha, 24, and 10-month-old Niral in their own house in Vadodara. When the Joshis approached ET Wealth for advice a year ago, it was easy to see why.

Rohit had a monthly income of Rs 52,725, and after accounting for all their expenses, the Joshis were left with a handsome surplus of Rs 24,306. At that time, they were supposed to pay Rs 6.45 lakh for a piece of land bought in Ujjain a few months ago.

The couple had been lazy about life insurance too. They had a total cover of Rs 76 lakh— from two traditional insurance plans, three Ulips and one online term plan—and shelled out about Rs 43,000 per year for this. They did better at health insurance with a cover of Rs 3 lakh each from ICICI Lombard.

Their goals included making a down payment for the land in three years, saving Rs 37 lakh and Rs 55 lakh for their child's education and marriage, respectively, and amassing Rs 6.57 crore in 30 years for their retirement.