Invest in gold for security
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Mukesh has just finished his undergraduate studies in engineering and joined his maiden job. He is aged 23 years and has high ambitions.
His family comprises parents and a younger sister. He wants to live life to its fullest and is not averse to taking undue risks.
He has plans to buy few electronic items and go on a foreign holiday. Marriage and retirement are being kept far away on the sidelines.
His expected earning for the first year is Rs 3.5 lakh. He does not have any idea of taxes or financial planning.
Financial goals
Going by Mr Mukesh’s immediate goals as priorities in spite of medium and long-term goals being assigned an importance at a later date, we find that the first two goals of electronic items worth Rs 50,000 and Rs 50,000 as holidaying expenses merit consideration.
Where is he now?
Presently, there is no saving in the hands of Mr Mukesh. His father has not saved any money in the names of his children.
Recommendation
Instead of borrowing money to buy electronic items and going on a holiday, it is suggested that every month salary be parked in the bank/liquid mutual fund schemes and utilised as and when the funds are available to meet the twin objectives.
Thereafter, the following action plan is proposed:
* Get a term assurance plan for Rs 10 lakh (premium Rs 1,500 per annum) for the longest available period.
* Invest Rs 10,000 as a systematic investment plan in two well performing diversified equity schemes.
* Invest Rs 5,000 as a systematic investment plan in gold exchange traded scheme.
* Keep the balance as liquid cash to meet contingencies; A few months after, a financial plan should be undertaken to analyse the financial requirement for far fetched goals.
Wishing Mr Mukesh an enjoyable job and the benefits that come with it.
(L. Ravindran, PhD, is a financial adviser and managing director of Wealthmax Enterprises Management Private Ltd.)
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