by PrognoAdvisor, Financial Planning
01 Oct , 2018

I don’t know if I can afford to buy a Rs.10 lakhs worth car?

Sandesh Aggarwal wanted to buy a car worth Rs.10 lakhs in today’s value after 5 years. He is 29 years old and is working as a QA engineer in Ahmedabad. His wife is working as a customer service executive. He has some savings in bank and has got a couple of insurance plans. There is nothing he can set aside for this goal now. But he is willing to save Rs.12000 per month. He has invested in stock earlier but does not have any investments in stocks now.

Sandesh’s situation was analysed and provided him strategies and advice to achieve his goal as given below:






Cost of buying a car in today's Value


₹ 10,00,000

Cost after 5 years assuming price change @ 8% p.a.

₹ 14,69,328

Resources Available





Assets set aside for the goal in today's value


Monthly Savings that can be allocated to this goal

₹ 12,000

Suggested Asset Allocation




Assuming Conservative Risk Tolerance and Short time horizon the following asset allocation

is suggested todeploy the assets allocated for the goal and to allocate the savings

Rate of Return expected annually from the suggested asset allocation









Value of Assets set aside for the goal after 5 years


₹ 0

Value of Savings allocated for the goal after 5 years


₹ 8,86,162

Total resources available at the time of goal


₹ 8,86,162

Shortage at the time of goal




₹ 5,83,166








Take a car loan for the amount equal to the shortage. Assuming a home


Loan interest rate of 12%p.a for 5 year period the EMI will be Rs.12972

Where to Invest?







Out of the Rs. 12000 monthly savings, start SIP of Rs.2400 in diversified equity fund,


SIP of Rs.3600 in a dynamic bond fund and Rs.6000 in cooperative bank RD account


Review the investments and SIPs once in every year


Prognoadvisor, the leading Online Financial Planning company, can help you solve your financial concerns and issues through its well-defined analysis and planning process.

The above case study is for illustrative purpose only and is not a recommendation or advice for a similar situation you might face since there are many other factors which will require a different approach to your situation.

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