The Thomases reduced debt and restructured their insurance kitty to squeeze out funds for higher equity exposure.
BEFORE THE CHECK-UP:
WHAT WE SAID:
ACTION TAKEN AFTER OUR PRESCRIPTION
FINANCIAL HEALTH NOW
Handsome salaries. Near-perfect asset allocation. Everything seemed right with their finances. Until we calculated their debt. Total EMI was 30% of the Thomases’ income. And a sizeable chunk financed depreciating assets.
In an era when affordability is determined by EMIs, the temptation to stretch your credit worth is great. But don’t take loans on a whim. The amount consumed in servicing a loan could be invested. However, credit which helps create assets is not a liability — like home loans.
The Thomases acted fast. Within five months they have reduced their debt burden and set right their insurance kitty. Result: higher investible surplus, rightly channelled into equities.