Goal-Planning Case Study: Just married!
Case Study: How does a mid-career professional with a salary of 45K monthly save for a house, her kids, a car & her silver honeymoon & her retirement?
Reena is a 27-year old creative professional from Noida. She got married last month, heartiest congratulations!
She was referred to Kuvera by an older relative for financial planning. She went through our easy goal planning tool to create her financial plan.
As a first step, Reena set up her profile with simple yes or no answers.
By interpreting her responses, our deep-learning contextual goal planning engine intelligently recommended financial goals that she might want to plan for.
Reena and her husband want to plan for three specific goals: buying a house, retirement, and to recreate their honeymoon after 25 years (very romantic). Two of the goals were recommended by our contextual goal planning engine, the third (“Exotic Vacation”) they could find by clicking “Show More”.
Let’s add the goals one by one.
Goal 1: Retirement, in 33 years.
Reena’s monthly household expense is Rs 45,000. Based on this information, our retirement planning calculator suggested Reena and her husband would need an estimated Rs 2.5 crores to maintain their current lifestyle during retirement. Investing Rs 5,300 per month till retirement helps achieve this goal.
At this point Reena reached out to our customer support with a question. She was worried that their retirement target will change if their expenses grew faster than the 5% they have allowed for. Thankfully, the goals you add in Kuvera can be edited or updated as circumstances change. So you always have the best estimate of your retirement requirements. When you change or update a goal midway we reassess the best investments required to achieve that goal, ensuring the likelihood of you achieving them remains high.
See how waiting just for 5 years, increases the monthly investment amount to Rs 7,600 or close to 50% higher. Another Tip : Invest early.
Read more about what happy retirees get right here.
Lets add Goal 2 now: Buy a house, in 10 years.
Reena likes a flat in Greater Noida that is currently selling for around 95 lakhs. She would like to purchase something similar in 10 years to live in with a 50% down payment. We recommended that she round up the numbers and also that she leave inflation at 5% regardless of the recent returns of the property market.
Note that for short term goals, waiting for 5 years increases the monthly investment amount required by more than 200%.
Add Goal 3: Relive honeymoon, in 25 years.
Reena had a great honeymoon in Europe. Though this was funded by her parents and in-laws, she and her husband would like to relive the same trip again in 25 years. We suggested she could add a custom goal or just add it as an “Exotic Vacation”.
BTW, this is a great idea. We should all start adding it in our list of financial goals 🙂
Finally, we summarize their goals and recommend investment options:
We combine all your goals and show you a single investment plan to attain all your goals. Our unified portfolio approach has two distinct advantages:
1. Easy to track – you only need to track one portfolio. You can choose as many or as few goals as you want to track. Your investments are then intelligently assigned to your goals and you can track their progress as you make newer investments.
2. Lower investment amount – A single SIP for multiple goals is less than the sum of SIPs needed for each goal. The amount you invest for your near term goals continue to get invested towards your longer term goals when the near term goal is achieved. This reduces the overall SIP amount needed to achieve all your goals.
For Reena, the sum of individual SIPs is Rs 45,300 per month. But once we use our optimized single portfolio approach, the same goals can be achieved with a SIP of Rs 40,400 per month.
Reena and her husband have another option. They can start an IMT for Rs 24,900 today and increase the monthly investment amount every year by 10% to achieve the same goals. This way they could start smaller and invest more as their income increase. That’s smarter. Learn more about IMT here.
And that’s it! In a few minutes, Reena was able to craft an actionable financial plan for her newly married life. With all their current goals planned for and a unified investment amount to save every month, Reena and her husband are happy knowing what they need to save.
You can too!
Names have been changed to protect privacy.