R. Singh has retired at 60 and lives with his 56-year-old wife in Delhi. Besides his self-occupied house, Singh has 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 a month. Besides real estate, his portfolio comprises cash of Rs.6 lakh, equity 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 wealth creation in the next few years.


According to Fincart, all these goals are achievable with the current retirement corpus since there are no debts, liabilities and the couple lives in their own house. Singh can start by building an emergency corpus of Rs.5.6 lakh, which is equal to his six months’ household expenses. To meet this goal, he can allocate his cash holding of Rs.6 lakh. This amount should be invested in a low duration fund.


Next, Singh wants to go on a vacation with his wife in two years, for which he needs Rs.7.86 lakh. This can be sourced from his fixed deposit of Rs.42 lakh and Rs.6.9 lakh should be reallocated to a bond fund to grow to the required amount in two years. He also wants to buy a car worth Rs.16.6 lakh in three years’ time and this goal can also be achieved by dipping into the fixed deposit. A sum of Rs.13.2 lakh should be invested in an income fund to grow to the specified amount in three years. Finally, Singh wants his wealth to grow to Rs.2.68 crore in 10 years. For this, he can assign his stocks, mutual funds, fixed deposit, bonds, PPF and insurance value to the goal, reallocating the fixed deposit and insurance value to a mix of balanced, flexi-cap and low duration funds.


For life insurance, Singh doesn’t need a term plan as he has enough wealth to secure his dependant wife. He does have one traditional plan and three Ulips, for which he is paying a heavy premium of Rs.58,543 a month. Fincart suggests that he continue with the traditional plan and discontinue the expensive Ulips. For health insurance, Singh has a Rs.10 lakh medical cover for himself and a Rs.10 lakh plan for his wife. In addition, he has a Rs.20 lakh top-up plan. These covers should be sufficient for now, but if he wants, Singh can keep a Rs.5 lakh buffer amount for emergency medical requirements.


Financial plan by FINCART

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