Prasanna Bhalerao, 50, lives with his 45-year-old wife Ashwini and an 18-year-old son Tushar in their own home, in Pune. Prasanna, who is employed in the IT sector, takes home a monthly salary of Rs 1.6 lakh, while Ashwini is a home-maker. The couple also has a second home worth Rs 2 crore in Pune, from which they earn a rental income of Rs 36,000 a month.
The house they currently live in was bought for Rs 52 lakh in 2004 and is currently valued at Rs 75 lakh. Prasanna had taken a loan for this property and is currently paying an EMI of Rs 41,456. "I put in Rs 17 lakh of my own and took a home loan of Rs 35 lakh," he says.
In fact, nearly 69% of Bhaleraos' portfolio comprises real estate, while barely 6% is in equities. Another 18% is invested in debt instruments, 4% in gold and 3% is being held as cash. The tilt towards real estate is typical of most Indians who consider it a safe investment that yields high returns over time, while missing out on the fact that it scores low on liquidity.
"I did not plan to invest so much in real estate. It's just the appreciation of the property that has swelled up its contribution in my portfolio," says Prasanna.
The family also earns Rs 1,500 a month as interest on their fixed deposits, taking the total income to Rs 1.97 lakh. As for the outgo, the family spends Rs 43,000 as monthly household expenses, an insurance premium of Rs 13,651, besides an investment of Rs 27,750 in mutual fund SIPs and PPF.
After accounting for all these expenses and investments, the couple is left with a massive monthly surplus of Rs 71,643. Their portfolio may not be perfect, but the family will not have a tough time achieving their goals within the desired time frame.
Before we lay out a financial roadmap for the Bhaleraos, let us assess their insurance needs. Given their present income, Pankaaj Maalde of Apnapaisa.com has arrived at a life cover of Rs 1.5 crore for the family. Currently, they have six traditional life insurance policies that offer a combined cover of Rs 13 lakh.
Apart from this, they also have investments worth Rs 2.75 crore in real estate. Hence, they are sufficiently secure and do not need any additional cover. Of the six policies, five can be continued as the future premiums and maturity value are likely to be in line with inflation.
However, LIC Jeevan Saral, which has been bought for Tushar can be surrendered as he is a student and does not require life cover. The proceeds can be invested in equity funds instead.
After accounting for all these expenses and investments, the couple is left with a massive monthly surplus of Rs 71,643. Their portfolio may not be perfect, but the family will not have a tough time achieving their goals within the desired time frame.
Before we lay out a financial roadmap for the Bhaleraos, let us assess their insurance needs. Given their present income, Pankaaj Maalde of Apnapaisa.com has arrived at a life cover of Rs 1.5 crore for the family. Currently, they have six traditional life insurance policies that offer a combined cover of Rs 13 lakh.
Apart from this, they also have investments worth Rs 2.75 crore in real estate. Hence, they are sufficiently secure and do not need any additional cover. Of the six policies, five can be continued as the future premiums and maturity value are likely to be in line with inflation.
However, LIC Jeevan Saral, which has been bought for Tushar can be surrendered as he is a student and does not require life cover. The proceeds can be invested in equity funds instead.
Source:economictimes.indiatimes.com
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