Publication details: Money Manager โ CNBC Bajar – 13-07-2015
Responses, opinion and view from Kartik Jhaveri.
Question sent by Ripal Patel :-
Salary (self) – Rs. 35,000 p.m.
Salary (spouse) – Rs. 20,000 p.m.
Below are my investment details:
LIC (wife & son) – Rs. 45,000 p.a.
Kotak Income Sure Plan – Rs. 70,000 p.a.
Bajaj Money Back Plan – Rs. 15,000 p.a.
PPF – Rs. 15,000 p.a.
Following are my expenses:
Home loan EMI – Rs. 10,000
Home expense – Rs. 15,000 p.m.
Medical insurance – Rs. 14,000 p.m.
Other expenses (car and bike insurance + maintenance) – Rs. 20,000 p.a.
Please advice me on the following:
- Is my current investment right for me?
- A good pension/retirement plan
- A term plan
- Any other investment option
- We require about Rs. 4 crores after 25 years for retirement. So please suggest an investment plan for the same.
Advice given:
- I went through the above details, you have used insurance for investment purpose, wherein insurance is a risk management tool and should not be mixed with investment. The Kotak Income Sure Plan and Bajaj Money Back Plan can be surrendered, and instead you could invest into mutual funds which would help to acquire your future goal. Traditional life insurance plans will give you about 4-5% p.a which is not appropriate for you.
- You should make an SIP for your retirement/pension rather than going for insurance policies because that would fetch you better returns and would also help you with tax savings. As an example a saving of just Rs. 5,000 per month will accumulate to about Rs. 1.4 crores – that is wealth creation!
- Cheapest term plan is the best term plan. So choose accordingly.
- And as far as your future plan of accumulating Rs. 4 crores of investment in a span of ย 25 years is concerned, you need to do an SIP of Rs.17,000 with a 14% return, in the following asset allocation: 40%-Diversified funds, 40%-Midcap and 20%-Sectoral Funds.