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ME Planning: The Gupta’s

, March 7, 2013, 0 Comments

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Kamal is a Marketing Manager with an IT company based in Noida while his wife is a homemaker. They reside in theirparental home and maintain a simple lifestyle. Kamal has predominantly invested in traditional products like fixed deposits, NSCs, LIC, PPF etc. Since his father lost heavily in stock market, Kamal find equity a risky option and has completely avoided investing in stocks or equity mutual funds. The family wants to ensure quality education and decent marriage for their daughter along with securing their retirement.

Cash Flow

Financial Goal

Current Investments
Findings & Recommendations

Contingency Fund – Adequate emergency fund in the form of fixed deposits is maintained which can cover up to 3 months of expenses.
Life Insurance – Existing total life coverage is Rs. 80 lakh with annual premium of Rs. 65,000 spreading across Term Plan, ULIPs and Traditional Insurance Policies which is adequate.
Health Insurance – Guptas are dependent on Company-provided Health Cover of Rs. 3 lakh. It is recommended that they go for a Personal Comprehensive Risk Cover of atleast Rs. 10 lakh.
Accident Insurance – A Personal Accident Policy is recommended for the Guptas costing approx. Rs. 6,000 per annum. It is important to have disability protection along with life and health insurance as permanent / partial disability can be disastrous.
Kashish’s Graduation (2027 to 2029) – Guptas will need Rs. 22.78 lakh to fund Kashish’s Graduation. With PPF fetching Rs. 5.30 lakh, they should start investing Rs. 4,000 per month in diversified equity mutual funds to fill the gap.
Kashish’s Post-Graduation (2030 to 2031) – The future value of this goal would be Rs. 50.54 lakh with Existing NSC investment providing Rs. 4.45 lakh. For the balance, they should start investing Rs. 7,000 per month in diversified equity mutual funds.
Kashish’s Marriage (2035) – Guptas need to invest Rs. 2,600 per month in diversified equity mutual funds to achieve this goal.
Retirement Planning (2037) – EPF will contribute Rs. 16.17 lakh leaving a shortfall of Rs. 2.56 crore.  For this, the Guptas should invest in real estate with an EMI of Rs. 10,000 and Rs. 3,600 in diversified equity mutual funds. As extra investible surplus is available, the exposure to real estate or mutual funds can also be incresed which will help in attaining the goal earlier.


Gupta’s enjoy a positive cash flow scenario thanks to the parental house and their simple lifestyle. Exposure to equity market through mutual funds route is not that risky in the long run, and is rather recommended to ensure better inflation-adjusted returns. So Gupta’s should come out from past perceptions and take exposure in diversified equity mutual funds.Gupta’s can achieve all their financial goals easily. However, they need to review their plan annually to incorporate changes in their personal life (like having the second baby) and/or professional life (like job change).



About author
Dr Naveen J Sirohi is a Ph.D. in Commerce from CCS University and a Certified Financial Planner. Currently he is Assistant Professor (Finance) in the Department of Management at BCIPS, New Delhi. He has more than 10 year of experience including HDFC Bank and Corporation Bank. His domain expertise include Personal Finance, Financial Management, Risk Analysis & Insurance Planning, Retirement Planning, Taxation, Security Analysis & Portfolio Management and Financial Statement Analysis. Dr. Naveen also runs a Consultancy firm, PRUDENT ADVICE, providing Financial Planning services assisting clients achieve financial freedom. ...more