Publication details: Money Manager – CNBC Bajar – 01-06-2016

Responses, opinion and view from Kartik Jhaveri.

Question sent by Bipin Shukla:-

My age 32 yrs. I am married and have one daughter.

My monthly salary is Rs. 40,000. My monthly expenses are about Rs. 10,000.

I have a PPF and Sukanya Samrdhi account in which I invest Rs. 5,000 each monthly.

I am currently doing an SIP of Rs. 1,000 in SBI mutual fund.

I have an RD account of Rs. 25,000 and an FD of Rs. 1 lakh.

I have an LIC Jeevan Anand policy for which I pay a yearly premium of Rs. 17,000. I do not have a health plan.

I have the following questions:

  1. I intend to purchase a home worth approximately Rs. 30 lakhs after a year in Anand city. Am I eligible for a home loan and how much?
  2. I want to create a corpus for my daughter’s education. How shall I plan for the same?
  3. I also want to know how can I plan for my retirement?

Advice given:

  1. Home loan eligibility depends on various factors such as income, age, working years left and so on.
  2. Considering your income, home loan tenure of 20 years and a ROI of 10%, you are eligible for a home loan of about Rs. 25 lakhs. However banks will cap the maximum loan amount to be disbursed at about 75-80% of the property value.
  3. For daughter’s education one must keep two things in mind – Growth and flexibility of funds. As education expenses are spiraling year on year hence is important to invest the money in growth assets like equity mutual funds via SIP. To start with, invest 25% of surplus towards SIP then going forward you can increase the amounts as per your needs. For instance an SIP of Rs. 7,500 for the next 20 years will help amass approximately Rs. 1 crore, assuming a growth rate of 14% p.a.
  4. When it comes to retirement starting early will stand you in good stead. Presuming you will retire at age of 60, you still have a good amount of time to amass your desired retirement corpus. You can invest 25% of surplus towards SIP. Going forward you can review your needs and accordingly increase your investments. For instance an SIP of Rs. 7,500 for the next 30 years will help amass approximately Rs. 4 crores, assuming a growth rate of 14% p.a.
  5. It is prudent to have life insurance of about Rs. 50 lakhs in the form a term plan v/s your Rs. 2-2.5 lakhs existing cover. You can consider surrendering the LIC policy or make it paid up. Divert the amount towards term plan premiums. Surplus, if any,  must be diverted towards wealth creating assets like equity mutual funds.
  6. It is also suggested to have a health cover of about Rs. 5-10 lakhs in the form of a family floater.
  7. Review your insurance needs on annual basis.


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