Financial planning required

POSTED BY Dev ON May 14, 2013 3:41 pm COMMENTS (9)

I am 37 years old and married looking for financial planning for my future needs. Basically retirement,Child education.

My current take home pay : 70,000

Expenses : 40,000  

Contigency fund :  in the form of FD available.

        Rental income from 2nd flat : 8000 

        Health insurance – Covered by Employer

         LIC policy : 5 lac SA in Money back/Jeevan anand policy

current portfolio : 

FLATS : 57% 

FD : 19% 

GOLD : 25% 

Liablities – 0 .( Closed Home/Personal loan last month)

Now all my investment avenues pure FD,GOLD and Real estate.  For diversification of portfolio and build corpus for Retirement,Child education , i would like to invest in MF SIP

What will be the suitable portfolio for my case.

9 replies on this article “Financial planning required”

  1. Dear H M, it’s plain maths nothing else. @ 7 times cover, how much mly income can your family receive from a simple product bank FD & how much @ 15 times cover?

    Please do calculate with your own nos. & come here again. We ‘ll discuss it in detail.



  2. Dear Dev, first purchase the new term cover & then only close these old policies. Once close, this 2500 Rs. mly prem. can also be diverted to pure investment.

    Regarding Term plan, please opt online plans of Aegon Religare or Aviva or HDFC or KOTAK or Bharti.



  3. Dev says:

    Thanks for the replies,.

    1Cr. Rs. term cover. Which policy i need to choose. LIC is trust name and but the premium is too costly. Where as i can go for other private players offering online policy.

    And also another query , can i close the all the existing moneyback/Jeevan Anand policy which cost me 31K per year. and opt for term insurance.
    Please help me to select the term insurance,

  4. Dear Dev, 70K mly translates into 8.5L Rs. yly income. So 15 times of your yly income ‘ll be 1.3Crore Rs. Please adjust the value of 2nd house from it & purchase that much term cover. So you may opt roughly 1Cr. Rs. term cover. Regarding goals for retirement & Child related, please invest through SIPs in Eq MFs.

    Please start with 2 funds as of now.

    Franklin india Bluechip
    Quantum Long Term Eq.

    Please purchase adequate health cover for you & your family also.

    Out of the 10L Rs. FD, please switch at least 60% amount into Quantum Liquid fund if you don’t need the interest income. FDs are not tax friendly. Please read & use dear Pattu’s FD v/s debt fund comparator.



    1. H M says:

      Hi ashal,

      Sorry to interrupt & hi jack somebody else’s question. I had a doubt what you suggested above, why do we need 15 times yearly net income as a cover for term insurance.

      I was always under the impression that a 6-7 times the yearly net income should be good enough.

      Thanks & sorry for the inconvenience this might have for others.

  5. Dev says:

    My current value of 2nd home is around 25 lacs(approx).

    Free Financial Calculators ,

    Travel expense is eating nearly 14000 pm. If i retire hope the overall expenses will be comes around 20K.

    For long term investment do i need to go for Equity funds alone or Debt funds also should be there in portfolio.

    Because i have around 10L in FD already. so i believe that Debt part is sufficient and i am getting around 8k as monthly interest.

    1. 8K monthly on 25L property is decent I guess.

      Its a pity 14K is spent on travel. Its a necessary evil.

      Assuming you retire by 60 you will need to invest in 60% of what you can save in equity. Use EPF for debt part.

      Choose cumulative option for FDs. I guess you are in the 20% tax slab. You could consider shifting part of the 10L to debt funds for better post-tax returns.

  6. Dear Dev, what’s the current value of 2nd home which is earning you a rental income?



  7. 1. you will need pure term life insurance policy.

    Use this Child planner to know how much insurance you need. You can also use it for your childrens goals

    2. Even without liabilities your expenses are 40K out of 70K. Find out how much of this 40K will not be there when you are retired. Use a retirement planner and find out how much you need to save.
    My feeling is you need to reduce your expenses to accommodate all your goals.

    3. Focus on retirement. Childs education can be funded with a loan or by selling your second house (which is paying very very low rental income anyway)

    4. Start investing in a MF like Franklin India Blue Chip. Learn more about MFs and then you can add one more fund to this.

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