Family finance: How Reddy should invest his idle surplus, secure risks

Mallesh Reddy lives in Bengaluru with his homemaker wife and two children, aged eight and five. His monthly salary is Rs 1.9 lakh and he gets a rental income of Rs 15,000 a month. He has two properties worth Rs 65 lakh and a plot of land worth Rs 10 lakh, but since these are in another city, he stays in a rented house, paying Rs 20,000 month as rent. He also has a home loan of Rs 5 lakh for which he is paying an EMI of Rs 20,000. His goals include building an emergency corpus, taking a vacation, saving for his children’s education and weddings, and his retirement.

Financial Planner Pankaaj Maalde suggests that Reddy first repay his Rs 5 lakh loan after selling land worth Rs 10 lakh. The remaining amount can be used to build an emergency corpus of Rs 4.56 lakh, which is equal to six months’ expenses. It should be invested in an ultra short-term fund. Reddy wants to take a Rs 7 lakh vacation in five years, for which he can start an SIP of Rs 10,000 in equity savings fund.

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For his kids’ education in 10 and 13 years, he will need Rs 1 crore and Rs 1 crore, respectively, and should start SIPs of Rs 43,000 and Rs 26,000 in diversified equity funds. For their weddings in 17 and 20 years, he will need Rs 50 lakh and Rs 50 lakh, respectively. For the older child, he should allocate 50% of the Sukanya corpus, and start an SIP of Rs 6,000 in a diversified equity fund and Rs 2,500 in the gold bond scheme. For the younger kid, he should assign the remaining 50% of Sukanya…

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