Jeff (40) is working with a financial services company for the last 15 years. He is married to Annie (36) and has two kids – Aaron (14 years) and Jason (8 years). Annie is a stay-at-home spouse and is not earning currently. Jeff is planning to look for alternative earnings and simultaneously has some investments in the market. His real estate investment (including plots) today is Rs.2.0 cr. (excluding his occupied house, which is also owned by him). He has also invested in equity mutual funds to the tune of Rs. 15 lakh and has stock options of Rs. 5 lakhs. In addition, his current FD investment is Rs. 5 lakhs. This FD can be renewed every 5 years two times. His take-home salary is Rs. 40 lakh p.a. and he saves 40% of his salary. He has also taken three endowment policies (premium p.a. of Rs. 50,000 for the last 5 years) with a total sum insured of 50 lakhs with a yield of 6% p.a. The endowment policies will cover Jeff’s life till the age of 65. Jeff has put his money in various asset classes, but he is not sure of his investment decisions. He needs help from a financial adviser to make his investments better. Assume the return on equity mutual fund is 13% p.a. and on a balanced mutual fund is 10%. He has the following goals in the coming years, and he has also made sure a certain amount is required to achieve these goals in terms of today’s value.

Goal Year when money is required Cost (in today’s date) Emergency Fund 2022 500000 Elder son-Higher education 2026 3500000 Younger son-Higher education 2031 3500000 Elder Son-marriage 2037 3000000 Younger son-marriage 2044 3000000 Assume the inflation rate to be 5% and higher education costs would increase by 8% p.a. You can state your assumptions if any.

You are required to:

i. Identify the strong and weak points of the financial planning of Jeff’s family.

ii. Think as an advisor and help the couple to make goal-based financial planning.

You can work on any of the three goals.