by PrognoAdvisor, Financial Planning
01 Oct , 2018

I can save only Rs.4000 additionally. How can I marry of 2 daughters after 13 and 16 years from now?

Thomas John has 2 daughters 12 and 8 years old respectively. He is 41 years old and is working in Dubai as an accountant. His wife is teaching in a school. He has invested Rs.9 lakhs towards the marriage of his daughters which he expects after 13 and 16 years. According to his estimate the current cost of a marriage is about Rs.22 lakhs. He can save Rs.4000 only every month more since he has other commitments. He is paying premiums towards 2 Professional Education Plans from LIC International for the two kids.

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

Requirement Requirement                                         Elder Daughter
Younger Daughter

Cost of Higher Education in today's Value.

₹ 11,00,000
₹ 11,00,000
Cost after 13 years & 16 years assuming price change @ 8% p.a.
₹ 29,91,586
₹ 37,68,537
Resources Available
Elder Daughter
Younger Daughter
Assets set aside for the goal in today's value  
₹ 4,50,000
₹ 4,50,000
Monthly Savings that can be allocated to this goal
₹ 4,000
NIL
Suggested Asset Allocation
Assuming Conservative Risk Tolerance and Long-Time horizon the following asset allocation is suggested to deploy the assets allocated for the goal and to allocate the savings


Rate of Return expected annually from the suggested asset allocation           10.95%      10.95%

 Analysis

 Value of Assets set aside for the goals after 4 years & 6 years  ₹ 17,37,271
₹ 23,72,736
Value of Savings allocated for the goal after 4 years & 6 years
₹ 12,53,962
₹ 0
Total resources available at the time of goal
₹ 29,91,233
₹ 23,72,736
Shortage at the time of goal

₹ 13,95,801

Strategies
1 Take a personal loan for the amount equal to the shortage at the time of marriage of younger daughter. Assuming loan interest rate of 14%p.a for 5 year period the EMI will be Rs.32478
2 Or additionally save Rs.2981 every month towards the marriage of younger daughter
3 Or allocate assets worth about Rs.2.65 lacs towards the marriage of younger daughter
Where to Invest?

1.   Out of the Rs.4.5 lacs set aside towards elder daughter's marriage, invest Rs.1.51 lacs in diversified equity funds, Rs.1.51 lacs in dynamic bond funds, Rs.22500 in gold savings funds and Rs.1.12 lacs in co-operative bank fixed deposit

2.  Out of the Rs. 4000 monthly savings towards elder daughter's marriage, start SIP of Rs.1400 in

3.  diversified equity fund, SIP of Rs.1400 in a dynamic bond fund, SIP of Rs.200 in a gold savings fund and Rs.1000 in bank RD account

4. If you opt to additionally save or invest as per the strategies 2 & 3 then allocate that in above ratio

5.  Review the investments and SIPs once in every year


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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