Financial Planning – Case Study

Prashant and Srividya Nair are a salaried couple staying in the central suburbs of Mumbai. Prashant works as a programmer for an IT firm, while Srividya works in the administration department of an FMCG company. The family comprises of 6 members, Prashant & Srividya, their 2 kids and Prashant’s parents.

NameAge RelationshipHealth History
Prashant Nair38SelfHealthy
Dinesh Nair74FatherHigh BP.
Lakshmi Nair70MotherHigh BP, Diabetes

Their inflows, outflows & Networth details are given below.

Household expenses27500330000
Life insurance5333.3364000
Total Outflow32833.3394000
Self Occupied home4200000
Savings Account550000
PPF (both accounts)400000
EPF (both accounts)445000
Stocks & Mutual funds200000

Srividya has decided to discontinue working after 1 year to concentrate on her children’s education. Both the kids are going to school and grand parents take the responsibility of looking after them during the day, in the absence of Prashant & Srividya. Prashant would like to continue working in the IT industry and the family’s financial goals are enumerated below. Financial Planner India


Inspite of paying an annual premium of Rs. 64000, Prashant is covered for a sum assured of Rs. 12 lakhs while Srividya is covered for Rs. 400000. Prashant’s Employer provides group floater mediclaim cover of Rs. 300000 for the family of 4, excluding the parents. Parents are not covered by any form of medical insurance.


The following are the financial goals as enumerated by Prashant and Srividya in present value terms.

  1. Educational funding of Asha – Rs. 1 lakh each year from age 17 to 20 and Rs. 3 lakhs at her age of 21 years
  2. Educational funding of Vineet – Rs. 1 lakh each year from age 17 to 20 and Rs. 3 lakhs at his age of 21 years
  3. Marriage funding of Asha – Rs. 4 lakhs at her age of 26 years
  4. Marriage funding of Vineet at his age of 27 years
  5. Retirement in the year 2031 when Prashant turns 58 years old.

Sr.Financial GoalToday’s costApproximate YearInflation
No.Category:- Responsibilities No. of Years Adjusted Cost
Rs. to GoalRs.
1Daughters Education’
1.2Required at Age 17 YearsRs.100,000.00102021Rs.259,374
1.3Required at Age 18 yearsRs.100,000.00112022Rs.285,312
1.4Required at Age 19 yearsRs.100,000.00122023Rs.313,843
1.5Required at Age 20 yearsRs.100,000.00132024Rs.345,227
1.6Required at Age 21 yearsRs.300,000.00142025Rs.1,139,250
2Son’s Education
2.2Required at Age 17 YearsRs.100,000.00132024Rs.345,227
2.3Required at Age 18 yearsRs.100,000.00142025Rs.379,750
2.4Required at Age 19 yearsRs.100,000.00152026Rs.417,725
2.5Required at Age 20 yearsRs.100,000.00162027Rs.459,497
2.6Required at Age 21 yearsRs.300,000.00172028Rs.1,516,341
3Marriage of DaughterRs.400,000.00192029Rs.2,446,364
4Marriage of sonRs.400,000.00222032Rs.3,256,110
5Retirement at Age 58years
Expenses consideredRs.252,000.00202027Rs.1,070,458
Corpus required20Rs.22,953,250


  • General inflation (retirement) – 7.5%
  • Educational & Marriage inflation – 10%
  • Expected annual increase in salary – 5%
  • Returns on Equity & Equity mutual funds – 12%
  • Returns on PPF – 8%
  • Returns on EPF – 8.5%
  • Retirement corpus growth 1.87% (adjusted to inflation)



  1. The family should maintain a contingency fund of Rs. 83000 (rounded off). Rs. 15000 to maintained as cash at home and the rest in his savings account linked with FD.
  2. Considering Prashants parents health status and the fact that they don’t have any medical cover, Rs. 300000 to be maintained in a bank FD as a back up for their unforeseen medical expenses.

The above allocation can be managed from the savings account balance


1. Accident: Prashant should take an accident policy of 25 lakhs with a TTD (Total temporary benefit) of 7.5 lakhs. The premium will come to around Rs. 3500.

2. Health: Prashant and Srividya should take an individual cover of Rs. 5 lakhs each and Rs. 2 lakhs for their daughters, the premium for which will be approximately

Rs. 15500.

3. Life: As per the expense replacement method there is a shortfall of Rs. 80 lakhs of life insurance cover which should be covered by Term plan for a period of 25 years at an approximate cost of Rs. 20000 p.a.


  1. For Daughters educational requirement starting from 17th to 21st year of her age, SIP in Equity Diversified Mutual fund to be started for an amount of Rs. 6750
  2. For Son’s educational requirement starting from his 17th to 21st year an sip of Rs. 5750 to be started in a Diversified Equity mutual fund.
  3. Daughter’s Marriage requirement can be funded by starting an SIP of Rs. 3000 in a diversified MF.
  4. Son’s marriage can be funded by an SIP of Rs. 2500 in a Nifty Index MF.
  5. The retirement expenses at age 58 will be Rs. 10, 70,458 per year for which a corpus of Rs. 2, 29, 53,250 is required which can sustain till the age of 85 years.

A major part of the corpus can be easily funded by PF, PPF & Gratuity benefits which will altogether fetch Rs. 1, 59, 15,000 at retirement. The shortfall of Rs. 70, 38,000 can be achieved by starting an SIP of Rs. 7250 in an Index Mutual fund.


Total inflow855001026000
Household expenses27500330000
Life insurance700084000
Accident & Mediclaim1583.3319000
Total Outflow67166.7806000

The surpluses can be maintained in savings bank and can be used to fund the SIPs for next year when Srividya won’t be working.