Publication details: Money Manager – CNBC Bajar – 30-03-2016
Responses, opinion and view from Kartik Jhaveri.
Question sent by Nayan S Budgude:-
My age is 31 years and I work in the private sector as an IT Engineer.
Salary – Rs. 19,000 ; Home expenses – ย Rs. 9,000 ; Savings – Rs. 8,000 as RD ; Miscellaneous expenses – Rs. 1,000.
We are a family of 5 members, my wife, mother, 2 daughters and myself. One daughter is 2.5 years old and the other is 6 months old.
Goal : Funds for daughters higher education.
Investment Scenario :
Health insurance – Provided by company.
Emergency Funds – NIL.
Recently purchased HDFC Super Income Plan for myself and my wife. Total premium is Rs. 72,000 p.a. LIC policy premium is Rs. 21,700 p.a.
RD of Rs. 8,000.
Atal Pension Yojna for myself and wife. Premiums are Rs. 525 and Rs. 577 respectively.
Sukanya Samriddhi Yojna ย – Total premium Rs. 2,000 p.m. for both of my daughters.
After 6 months I am going to receive my FD maturity amount of Rs. 2,00,000. Kindly suggest where should I invest this amount which can be helpful to pay Rs. 2,000 of premium per month.
Also kindly advice me on how I can achieve my financial goals.
Advice given:
- Starting investments early and maintaining a disciplined approach, are key factors for long term wealth creation.
- Equity mutual funds have the potential to generate long term wealth. Hence starting an SIP in them will help you achieve your financial goals.
- You could look to divert your savings towards equity mutual fund investments and ear mark this towards your daughterโs higher education.
- For instance an SIP of Rs. 10,000, for the next 10 years, will amass approximately Rs. 25 lakhs. This is assuming a growth rate of 14% p.a.
- Also it is important to review your insurance requirements. Insurance is a risk management tool and must not be considered as an investment avenue. You may want to consider restructuring your traditional policies as the premiums are draining your resources. You could look to either surrendering them or making them paid up depending on the time elapsed and the T&C of the policies.
- Opt for term plan for your insurance requirements. It provides a substantial amount life cover at a low premium.
- For your health insurance requirements, it is recommended to opt for a standalone medical cover in the form of a family floater policy. This will ensure that you are not left stranded in case of a sudden job loss / change.
- The FD maturity amount of Rs. 2 lakhs, can be parked in a liquid mutual funds. Liquid schemes provide ample liquidity. Hence you can withdraw the money to service your expenses or use it as an emergency fund.
- If you do not need the entire money to meet any financial obligations, you can considering deploying about Rs. 1 lakh towards equity mutual funds, and ear mark it towards daughterโs higher education.