Regular saving is the best way to meet your long-term goals.
Abhishek Rao, 39, lives in Saudi Arabia with his wife, Sushma Yadav, 34, and their two daughters, aged seven and one. He has been working in that country for the past 10 years and earns a handsome salary. His parents live in their own house in Chandigarh, which is debt-free. His cash flows are certain and all his expenses are calculated for. He only needs to create an emergency fund for his aging parents, who are financially dependent on him for medical expenses.
About four years ago, Abhishek started investing in mutual funds through systematic investment plans (SIPs), but it lacked planning and a clear-cut financial goal. After paying off his house loan, Abhishek invested ₹10 lakh in fixed deposits (FDs) and bought two LIC insurance policies, which assure a sum of ₹2 lakh and ₹3 lakh in 2022 and 2023, respectively.
Abhishek wants to save for his daughters’ college education and for his retirement. Ten years from now, he also wishes to move into a bigger house once he returns to India, so that he can live comfortably with his parents and family.
When Abhishek approached us, he had a low asset base and lived away from India most of the year. The only good thing was that he had linear cash flows and no debt. We, therefore, listed down the family’s goals in monetary terms: How much would they spend on their daughters’ education and marriage as of today. What will be the inflation cost in the foreseeable future? When would they need the funds for the daughters and their retirement?
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Esta historia es de la edición August 2018 de Outlook Money.
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