Solve the Problem for CFP || must try question

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 Ms. Sahanubhuti, aged 34 years, is working in Mumbai. She is the sole guardian of her only daughter Shambhavi, aged 12 years, pursuant to the death of her husband Manohar, who died intestate, had no siblings and whose parents had predeceased. She is currently residing in a rented house. Her daughter is studying in the 6th Standard. She has approached you, a CFPCM practitioner, for preparing her Financial Plan. She has shared the following financial information with you: 

 Salary Income (2017-2018): Annual (Rs. lakh) 

Basic Salary : 12.00 

HRA : 7.20 

Conveyance Allowance : 3.00 

Special Pay : 8.98 

Variable Salary : 8.00 

Employee’s Provident Fund : 1.44 

Employer’s Provident Fund : 1.44 

Regular Outgoings Monthly (Rs.) Basic Household Expenses : 40,000 

Services availed : 12,500 

School Fees : 12,500 

House Rent : 35,000 Power,

 Telecom & Fuel : 12,500 

Car Loan EMI : 25,585 

Other Monthly & Annual cash outflows SIP – Equity Mutual Fund (Index Fund) : 15,000 

(Monthly) SIP – Balanced Mutual Fund : 10,000

 (Monthly) Life Insurance Premium1 : 54,324

 Health Insurance Premium2 : 27,631 

Assets Market Value (Rs. lakh) as on 31st March, 2017 Equity Mutual Fund portfolio : 32.45 

Balanced MF scheme investment : 12.79 

Debt MF portfolio : 5.98 

Demat Account - Shares : 21.92 

Provident Fund : 9.93 

Public Provident Fund (PPF) A/c.3 : 6.59 

 Gold & Diamond Jewellery : 15.75 Car4 : 7.50 

Bank (Salary Account) : 2.82 

Savings Bank account – Sahanubhuti 5 : 33.26


Goals: 

 You, in consultation with Sahanubhuti, have identified the following financial goals for her family and the preliminary Roadmap to achieve them: 

1. Send her daughter to a Boarding School – Immediately – Outlay Rs. 2.40 lakh p.a. (present cost) – for 6 years – To be met on year to year basis – education costs are escalating at 10% p.a. 

2. Buy a house – Outlay of Rs. 1.20 crore – Look for a ready-to-occupy house immediately by availing a loan at 60% of value of house. 

3. Invest suitably for the Higher Education of Shambhavi – for 5 years - higher education starts after 6 years – present cost Rs. 8 lakh p.a. – such costs are escalating at 10% p.a. 

4. To invest monthly for Shambhavi’s wedding when she completes 25 years of age. The estimated present cost of marriage is Rs. 25 lakh, and cost escalation for marriage is 7% p.a. 

5. Retirement Corpus at age 60 years – Corpus to sustain an inflation-linked income stream for a postretirement life of 25 years. 

6. A World Tour – after 11 years – Outlay of Rs. 12 lakh at current prices, cost escalation of 8% p.a. is expected. 

7. A suitable Estate Planning to cover all her physical and financial assets.

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