Case Study: Detailed Financial Plan for Building a Mega-Saving Corpus

At GoalFi, we always strive to create the best financial plans for our customers.

Here's a case study for one of our customers (names changed) to help her tide the saving pool and emerge victorious at the other end.

Client Priya, aged 34 and recently divorced with two children, Rahul, aged 14 and Ruhi, aged 9. Priya is working in a Mumbai-based firm. Being a single parent, she wants to ensure that the current financials and assets she has will take care of her future financial goals:

1. Buying a house in 2026 valued at Rs.1.2crore today

2. Fund for Rahul and Ruhi’s post-graduation education at age 22 costs 25.0 lakhs.

3. For Rahul and Ruhi’s wedding at 27 years of age, she wishes to have 10.0 lakhs equal to the value.

4. She wants to retire at age 55 and have a sufficient corpus to maintain her current lifestyle with a value of 1.0 lakh until her age 85.

5. She wishes to go on vacation every alternate year until age 74 with a budget of 5.0 lakhs in today’s value.

Before we look into how we can make this happen, let us understand her current financial situation.

The current monthly salary is Rs.2,95,000/- (After deductions). Her monthly expenses amount to Rs.2,24,000/- and she spares Rs.60,000/- towards her regular monthly investments.

Currently, the assets and liabilities she has:

1. Equity shares - Rs.23,92,000/-
2. Mutual Funds - Rs.22,04,000/-
3. NPS - Rs.21,87,000/-
4. PPF - Rs.6,59,000/-
5. ELSS - Rs.3,85,000/-
6. Fixed Deposits - Rs.9,00,000/-
7. Gold - Rs.10,75,000/-
8. Vehicle - Rs.4,50,000/-
9. Car Loan - Rs. 5,70,000/-

Steps involved in creating a financial plan for Urvashi

1. Emergency Fund, as a first step in financial planning, it is important to ensure that Priya has sufficient Emergency Funds in her bank account or deposits. Her current balance fulfils this goal. So, that is taken care of,
2. Life and Health Insurance Considering her situation, being a single parent. It is highly important to ensure she has sufficient life and critical illness coverage as well as adequate health insurance coverage. On carefully assessing her current cover of INR 1.5 crore against her financial goals and responsibilities, we recommended an additional life cover of INR 68 lakhs with the critical illness rider included for a term of 21 years until her retirement.?

She has reasonable coverage for her health insurance (INR 20 lakhs).

Once the base of financial health is addressed, we move towards her goals.

1. House Purchase in 2026, considering the time horizon of 3 years towards this goal, it is recommended to move 50% of the money held in equity shares to fixed deposit with 3-year tenure (to avoid market risk and ensuring on guaranteed returns) and continue with the SIP in debt MF assigning 50% of it towards this goal. By the end of the 2nd year, the balance amount in equity shares is moved to FD with 1 year tenure. This is again to avoid market risk as the goal is fast approaching. Thus, these accumulations in the FD and the debt Mutual Fund will be used as 30% - 35% of the home purchase down payment. The balance amount for the home will be financed through a home loan.
2. Rahul and Ruhi’s higher education, considering the rate of escalation in education cost, INR 25 lakhs today is likely to be 46 lakhs and 68 lakhs at their respective age of 22. This can be taken care of by allocating the current balance in equity mutual funds, continuing the SIP (80% of the existing one), and increasing it annually by 10%.
3. Wedding funds for Rahul and Ruhi, Priya’s budget of INR 10 lakhs today will likely become INR 21 lakhs and 29 lakhs at their respective age of 27. We recommend utilizing the balance of 20% of ongoing equity MF and increasing it by 15% annually.
4. Retirement at 55, with the existing contribution to the NPS account and balance in PPF, only 82% of Priya’s retirement corpus would be taken care of. To address the shortfall and accumulate the required corpus of INR 5.6 crore, an additional monthly saving of Rs.12,000/- would be required. But with the current surplus available, it is difficult to assign Rs.12,000/- hence it is recommended to start off with Rs.1050/- monthly and keep increasing it by 25% annually.
5. International vacation every alternate year, as the time horizon between any two holidays is only two years; saving monthly in a guaranteed return instrument is better. For the planned vacation next year, 20% of the funds available in FD and 30% from ELSS (lock-in period of 5 years over) can be utilized towards this, along with monthly savings of Rs.9,600/- in RD.

After addressing all the goals, there is still a surplus of Rs.7,330/- with the current cash flow. We recommend keeping saving it in a liquid fund or bank account, which can be used to supplement the emergency fund.

Want to read more such case studies?

Follow GoalFi.