Financial Planning

POSTED BY Gotu ON July 17, 2012 8:45 pm COMMENTS (13)

Hello all,
I am 26 yrs. single, having gross monthly income around 40K(Excluding PF/Income tax/etc).
Recently I have purchased a flat for self and moved most of my savings and investments towards the same. Also have taken a home loan from HDFC of Rs. 1250000/- from HDFC, ROI 10.5%, EMI 12580 for 20 yrs. I have taken 3 lakh rupees on loan(no interest) from relatives.

Salary a/c (Normal Saving a/c with ICICI): Rs. 8,000/-
SBI Savings Plus A/c: 18000/-. This a/c is with autosweep facility and is primarily for Emergency fund.
NSC/Tax saver FD/Infra Bonds/etc : Rs. 1,95,000/-
MFs(All invested 3 months back):
1.Franklin India Bluechip Fund (G): Rs.1500/-
2. HDFC Growth Fund(G):Rs. 3000/-
3. IDFC Premier Equity Fund –Plan A(G):Rs. 6000/-

1.LIC Jeevan Anand : Paid 4 annual premiums of Rs. 14026/- each, Policy term 15yrs
2. LIC Jeevan Astha :Paid single premium Rs, 25000/- on 3 Jan 2009, Policy term 10 yrs.
3. LIC Jeevan Saral: Paid 4 annual premiums of Rs. 6000/- each, Policy term 15 yrs.
4. LIC Market Plus I: Paid single premium Rs. 25,000/- on 31 Dec 2009
5. LIC Samridhi Plus : Paid single premium Rs. 30,000/- on 31 Mar 2011.
6. Health Insurance: Mediclaim Policy with max. medical expenses limit of Rs. 250000/- provided by employer.

1.Gradually Increase emergency fund to sufficient level
2. Short term requirement of Rs. 150000/- by next year
3. Need 5,00,000/- after 10 yrs
4. Need 10,00,000/- after 15 yrs.
5. Need 20,00,000/- after 20-25 yrs.
6. Need 2 crores after retirement (after 36 yrs.). Accordig to my calculations, this can be merely achieved by increase in PF by 6% each year and 8% annual returns.

Now my Plan is,
1.Immidiately take online term insurance of Rs. 5000000/- each from Bharati AXA and AVIVA. I have chosen thsese companies from reading Jagoinvestor blogs,search on internet, my own comfort level,premium amount,policy term,etc. I know premium may increase due to XYZ reasons after medical tests and I am ready to accept that.(By the way I never drink nor smoke and physically fit).
2. Surrender LIC Jeevan Anand, LIC Jeevan Astha, LIC Samridhi Plus immediately. LIC Jeevan Saral, I will pay 1 more premium and then surrender to get max. surrender benefits. LIC Market Plus I, lets wait till Dec. 12 sothat there will be no more deductions.
3. Prepay home loan within 10 yrs. (Additional prepayment of Rs. 60000/- each year will achieve the same.)
4. Make SIP towards above funds to achieve the goals 3,4 and 5 (Million dollar question how much amount)
5. Open a PPF a/c . This will be used only to ensure proper equity-debt balance. Also it will be useful in later yrs.
Oops….its very long question. Sorry to ask you so much to read. Thanks in advance and request to comment and correct me if required.

13 replies on this article “Financial Planning”

  1. vaibhav says:

    Dear Ashal and all,

    I have surrendered jeevan anand and jeevan aastha and will soon receive Rs. 35000 and Rs. 22500 repectively.
    I have also taken a Aviva i life insurance with SA 50L.
    Will start SIPs in above mentioned funds soon.
    Kindly put your views.



  2. vaibhav says:

    Hello All,

    I sincerely request to others as well, to express your views.

    I know we have many great analysts who can give me important guidelines.

    Thanks in advance.



  3. vaibhav says:

    Dear Ashal,

    Franklin India Bluechip ;from Large CAP : Ok
    Quantum Long Term. Eq., from Diversified equity : Ok.

    I would like to keep one more fund from Small and Mid Cap (probably IDFC Premier Equity Plan A).

    Pl. let me know ur views. And also interseted to know how much % should I allocate in each of these funds.



    1. Dear Vaibhav, my take ‘ll be to allocate 50-30-20 in the three funds.



  4. vaibhav says:

    Hello Ashal,

    Thanks for immidiate responses on this thread and your continuous interest in helping me out.

    1. LIC Jeevan Anand: I will get Rs. 15000/- approx. on immidiate surrender
    Policy doc. says, Min. surrender value=30% of premiums paid excluding first prem + cash value of any existing vested guaranteed additions

    2. LIC Jeevan Anand: I will get Rs. 22500/- approx. on immidiate surrender
    Policy doc. says Guaranteed surrender value after 1 year=90% of the single premium

    3. LIC Jeevan Saral: I will get Rs. 27000/- approx. if I pay 1 more premium and surrender
    Policy doc. says Special surrender value, if 4 or more years premium have bben paid is 90% of the maturity sum assuered + loyalty additions, if any

    4. LIC Market Plus I: I will get NAV X units I have, after dec. 12. Current Investment value is slightly above 22k.

    5. LIC Jeevan Samridhi: I will get NAV X units I have, on immidiate surrender.
    In case of LIC Samridhi Plus, one can surrender policy before 5 years and if its a single premium policy (as in my case) , there will not be any discontinuance charge….:). As stated in documents, monetary value payable will be equal to the NAV on the date of application for surrender multiplied by the no. of units in the policyholder’s fund value as on the date.

    I know in worst case surrender value could be less than I expect. But I have made up my mind and take it as a amount paid to learn how to loose money. in ur words, lets cut the finger today instead of hand after yrs…..I don’t have micro plans to invest this money as I am looking at it as a whole.

    keep Posting. Thanks again.


    1. Dear Vaibhav, exact surrender amount from all policies is not available but I’m getting a sense that it’s almost equal to 1.5L Rs. or near there. So one of your goal to accumulate 1.5L Rs. in 1Y is achieved.

      Interestingly, you ‘ll save now the prem. of all these surrender plans & ‘ll divert these prem. towards pure investment.

      Franklin India Bluechip
      Quantum Long Term. Eq.

      above are the 2 funds where I want you to invest this saved prem. on mly basis.

      Please update with your views.



  5. Dear Vaibhav, how much surrender amount ‘ll you get from the policies?



  6. vaibhav says:

    Ok, Thanks.
    1. Emergency fund:OK
    2. Term Plan: My take; LIC 5L and 1cr from Aviva as it provides max. policy term equal to 35 yrs.

    Now pl. guide about fund selection and rest of the things.


  7. Dear Vaibhav, my take on Emergency fund – OK.

    Regarding Term Plan – Opt any 1 insurer from the 2 mentioned by you & go for 1Cr. single cover from it. if you are splitting for claim settlement related worries, purchase another term plan of LIC, Anmol Jeevan -1 for 5L Rs. Sum assured only.



  8. vaibhav says:

    It should be 5 times monthly income(Again my own comfort level). Hence right now it sholud be 2L. But as I am single right now and parents can provide immidiate risk cover if required, hence I am not much worried about emergency fund part right now, but should raise gradually to 2L or more in coming yrs. But this surely will not be the immidiate move.

    Thanks again. Pl. continue with more and more questions/suggestions.


  9. Dear Vaibhav, please define your sufficient level of emergency fund?



  10. vaibhav says:

    Dear Ashal,
    Thanks for the reply.

    Well ideally this loan will be paid from my earlier tax saving investments(mentioned above).
    Its maturity value will be more than 3L , hence I can do the same. Also its not necessary to pay that amount immidiately. Hence I can wait till the lock in period.
    Can you please comment on my overall plan, fund selection, Term insurance selection etc.?
    Thanks again.


  11. Dear Vaibhav, glad to know that you are going to correct your past financial mistakes & at the same time, very much clear to accept the suggestions.

    Before commenting on any of your goal, may I know from where you w’d pay back that 3L Rs. loan to your relative?



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