Family finances: Singh can easily achieve his post-retirement goals, build wealth

R. Singh retired at 60 and lives with his 56-year-old wife in Delhi. Apart from his detached house, Singh owns two other properties, with a combined value of Rs.5.5 crore. His total income from rent and other sources is Rs.1.25 lakh per month. Apart from real estate, his portfolio includes cash of Rs.6 lakh, stocks in the form of stocks and mutual funds worth Rs.30.6 lakh, and debt in the form of fixed deposits, PPF , bonds and insurance value amounting to Rs.88.9 lakh. . His goals include building an emergency corpus, saving for a vacation, buying a car, and building wealth in the next few years.

According to Fincart, all of these goals are achievable with the current retirement corpus since there are no debts, debts and the couple live in their own home. Singh can start by building up an emergency corpus of Rs.5.6 lakh, which is equivalent to his household expenses for six months. To achieve this, he can allocate his treasury of Rs.6 lakh. This amount should be invested in a low duration fund.

Then, Singh wants to go on vacation with his wife in two years, for which he needs Rs.7.86 lakh. This may come from his fixed deposit of Rs.42 lakh and Rs.6.9 lakh is expected to be reallocated to a bond fund to reach the required amount in two years. He also wants to buy a car worth Rs.16.6 lakh in three years time and this can also be achieved by dipping into the fixed deposit. A sum of Rs.13.2 lakh is expected to be invested in an income fund to achieve the specified amount in three years. Finally, Singh wants his wealth to reach Rs.2.68 crore in 10 years. It does this by allocating its stocks, mutual funds, fixed deposit, bonds, PPF and insurance value to the target, reallocating the fixed deposit and insurance value to a mix of balanced, flexi-cap funds and short term.

For life insurance, Singh does not need a term plan as he has enough wealth to insure his dependent wife. He has a traditional plan and three Ulips, for which he pays a hefty premium of Rs.58,543 per month. Fincart suggests that he continue with the traditional plan and ditch the expensive Ulips. For health insurance, Singh has Rs.10 lakh medical coverage for himself and Rs.10 lakh plan for his wife. Moreover, it has a Rs.20 lakh recharge plan. These blankets should be sufficient for the time being, but if he wishes, Singh can keep a buffer amount of Rs.5 lakh for emergency medical needs.

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