Creation of Prosperity with Peace & Serenity

Creation of Prosperity with Peace & Serenity 

Joseph E. Menezes
Director, Fortune Life Wealth Management Solutions Private Limited 

Nadeem Ahmed, a salaried executive of 31 years, approached us in June 2006 for financial guidance. He was still single and had many challenges to meet. The only good thing he had done was buying a ready flat in Mumbai's suburbs. He disclosed to us all his financial and personal information and reposed absolute faith in our expertise. 

1st Edition of his Financial Planning,June 2006: 

Single, aged 31 years. Monthly take-home salary Rs. 60,000. Housing loan liability Rs 25 lakh. Loan EMI Rs 23,000. Home and personal expenses Rs 12,000 and Net saving capacity Rs 25,000


Marriage of Self: 

He was advised to get married before the end of year 2007 since he was late in life because financial planning and family panning was to be done side-by-side. The target amount for marriage was Rs 6 lakh and the available corpus was only Rs 1.50 lakh. He was advised to save monthly Rs 25,000 (entire savings) in an Ultra Short Term Debt Fund for the next 18 months. Fortunately, he got married on December 26, 2017 to Sabha Khan, a working woman with take-home salary of Rs 40,000. This gave a boost to his saving capacity in the 2nd Edition of Financial Planning. The couple was advised about the importance of bearing children early since they were late in life and they had the clarity of having two children. Sabha wanted to quit her job after the birth of the first child. 



2nd Edition of Financial Planning,January 2008: 

Married, age 33 years. Collective take-home income of the couple Rs 1 lakh. Loan EMI Rs 23,000. Family expenses Rs 22,000 and saving capacity Rs 45,000..

Income-Protection Solution: 

Life and health insurance should be bought when someone is young and healthy; because the same may not be granted when they need it the most. We implemented term insurance of Rs 40 lakh on the life of Nadeem and a health insurance through a Family Floater Policy of Rs 10 lakh with collective annual premium of Rs 60,000/-.

Emergency Fund: 

Advised to invest monthly Rs 10,000 in Ultra Short-Term Debt Fund to provide for the emergency expenses and to meet the annual cost of premium expenses of life and health insurance. Indicative returns from Ultra Short Term Fund is 6% p.a. tax-effective! Advised to invest additional savings in Emergency Fund to meet child-birth expenses.

Liability Hedging Fund: 

Though the housing loan was obtained for the term of 25 years, we advised prepayment of the entire housing loan within the next 8 years. We advised investment of monthly Rs. 15,000 in a Hybrid Equity Fund to collect around Rs 20 lakh with an indicative return of 10% p.a. The entire outstanding loan amount was prepaid in December 2015 from the redemption proceeds. 

3rd Edition of Financial Planning,January 2016: Take-home income Rs 85,000. Family expenses Rs. 35,000. Saving capacity Rs50,000. Girl-child Sadiah born on September 13, 2008 and boy-child Rayyan born on April 27, 2012.

Educational Planning Sadiah: Present age 8 years. Advised to invest monthly Rs 20,000 in Large-Cap Fund to accumulate Rs 45lakh by the age of 18 years for her professional education.

Educational Planning Rayyan: 

Present age 4 years. Advised to invest monthly Rs 15,000 in Multi-Cap Fund to accumulate Rs 55 Llakh by the age of 18 years for his professional education.

Retirement Solution: Present age 41 years. Advised to invest monthly Rs 15,000 in Large and Mid-Cap funds to accumulate Rs 1.80 crore in order to provide monthly pension income of Rs 1.20 lakh from his age of 61 years. Additional liquidity shall be available during the post-retirement period to meet hospital or house renovation expenses. Monthly savings should be increased after the accomplishment of educational planning of both children.

Luxury Goal – Dream Holidays & Car: Advised to invest monthly Rs 10,000 in Multi-Cap Fund to accumulate corpus for a dream car and dream holidays from time to time. This is not a time-bound or basic goal; hence, the client is free to use his discretion as and when needed. 

 Financial Planning is not a one-time exercise, but a continuous process based on subjective and objective changes such as income and expenditure, interest rates and taxation. Time-bound financial goals can be achieved if the planning is done with utmost clarity and if the client is willing to fit into the discipline of regular savings in good and bad market conditions by remaining unperturbed by daily market volatility. Nadeem is an excellent example of achieving financial success because of his immense faith in our professional advice and self-imposed discipline of regular investments. Health and Wealth Management is a divine process governed by faith and discipline.

The Author has experience of 29 years in guiding the clients to financial success through most suitable tailor-made financial solutions based on the risk profile and time horizon of the financial goals of the clients. The return on the financial solution is tax-effective and superior; also the investors enjoy easy liquidity and flexibility of investments based on the increase and decrease in saving capacity.

The writer is director, Fortune Life Wealth Management Solutions Private Limited.