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POSTED BY ON December 24, 2013 10:11 am COMMENTS (16)
Hi Manish,
Can you please help me in planning my savings? I do not have any savings apart from my PF, though I have been working since last 4 years. Till now I was busy with repaying education loan and other debts that I have taken in past for education and medication of my Mother.
Being the only earning member of the family saving was not possible for me in past, but when I gone through your blog I realised that its very necessary for future.
I have decided to start saving from Jan.. I am recently married, both of us are working and could save around max 40k per month.
Details-
1. I am 27 and my wife is 25 yr old, both of us do not have any insurance policy.
2. recently opened PPF account for both.
3. we have my father as dependant age-54.
4. started RD of Rs2000 Since Jan2013.
5. all debts will be cleared by Jan.
Future Aspirations:
1.savings for future + for child education.
2.buy a flat(max 50lac)
Could you please suggest how i should plan this for a better future?
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Dear Pavish, go ahead. Check the effectiveness of your planning after 2-3 years. Please purchase a large health cover for your father from day one.
Thanks
Ashal
Dear Pavish, please do not invest a single paisa as of now. First of all, invest your time in learning from other’s situations, problem. Read a lot of past discussion and articles here in Jagoinvestor. Within next 1-2 months, you ‘ll get enough inputs on your own, what to do, where to do, how to do, when to do?
Thanks
Ashal
Thanks everyone for suggesting these options.. After reading the various post on this site I have following options but I am still confused with-Term Insurance ( 25-30 year, 50 lack): 1.SBI eShield or 2.HDFC click2 Protect.
Health Insurance for my Father- Apollo Munich Easy Health Individual(3 lac)
why sum assured is not increasing every year as premium increases? I think 5 lac insurance will not be so effective as I will be paying much higher premium in future. (Is it worth to continue for life time?)
I have following options for monthly savings:
RD1= 3000 Rs to Pay all Insurance premium at year end.(2 50lac term Insurance+ 1 Health Insurance)
RD2= 12000 Rs
Equity Funds= 6000 Rs
Balance Funds= 4000 Rs
PPF1(my)= 2500 Rs
PPF2(my wife’s)= 2500 Rs
Waiting for your valuable suggestions/modifications!! Wish you a very Happy and Prosperous new Year ahead!!! 🙂
Pavish,
1. It really doesn’t matter which term insurance you buy, if you are skeptical and in favour of PSU then go for SBI (do check if they cover all the risks like death due to terrorist attack,war, natural calamity etc)
2.PPF works best when you invest upto the max limit (i.e. Rs 1,00,000).
I will suggest you to increase the contribution to PPF for both you and your wife.
Thanks,
Rahul
Dear Bhavesh,
I am not in favour of equity investment and believe salaried persons should stay away from it, till they get financial stability.
Could you please also elaborate the “long term”/”little bit risk”?
I believe that people should able to get money when they need it. Assuming if somedoby started investing in 2008, then the return are not very lucrative (considering 5 years as long term), will you advise the same person to stay in equity for more “long term”? if yes then how long should one wait?
Thanks,
Rahul
Dear Rahul,
I am not telling Pavish to invest his whole money in equities and not even to invest “RIGHT NOW”. Of-course its up-to him whether he wants to invest time and money in learning about equities or not. He will take some time to understand about markets, the same time which he may not get after his child is born.
Market has not given good returns since 2008 does not mean that it WILL not give in future also.
As Pavish said, they can both save 40K / month, putting 5K (direct or indirect) should not be an issue for him.
By “long term” I meant 15 years and by “little bit risk” it is relative to a person’s age, because younger the person, lesser the risk.
I just suggested 1 more option to maximise his returns (mostly for his child future) since he has already invested in PPF and RD.
Hi Bhavesh,
Why do you think that market will always give positive return?
Market has not performed from 2008 (i am talking about index), that doesnt make sense in your assumssion (“Market has not given good returns since 2008 does not mean that it WILL not give in future also.”)
It may remain at that level or may be at lower level for ages.
Somebody who require to spend some guaranteed amount of money to buy house should not bet in market.
again i don’t understand the concept of “little bit risk” – younger the person, lesser the risk. WHY?
As if young people don’t require any money! Losing money at any age is risk.
Thanks,
Rahul
Hello Rahul,
Why look at market index ? Why not look at individual stocks ?
A proper selection of good stocks does give good returns (that too by staying invested and not by trading). It might also go down, that depends on various factors and your luck too.
Also, according to me one should definitely have stocks in their portfolio if they want to beat inflation.
For understanding concept of risk : Its same as a child recovering from injuries vs. a person in his/her 60s recovering from injuries. Its faster in child’s case.
Young people do require money, but they can sacrifice more compared to those in their 60s who have health issues.
As I have mentioned before also, that my suggestion was mostly for Pavish’s child and not for his house.
Dear Bhavesh,
It is very easy to say that one should select good stock, just look at what happended to SBI/BHEL, aren’t these good companies?
Investing in equities is very risky and as of now i have not met any advisor who highlights this risk. They all say, long term/beat inflation/ good stock etc.
Thanks,
Rahul
Pavish asked for a suggestion. So I suggested him according to my experience and whatever has proven beneficial for me till date.
Just because future is unpredictable in equities, we should not stop investing our money in it. Tomorrow even PPF interest rates might fall to 7% and inflation go upto 12%, how will one minimize the loss ?
Of-course investing in equities is risky (its your experience till now), thats why Pavish will have to study about markets and decide.
We all have given our suggestions and let Pavish pick whichever is comfortable to him according to his risk appetite.
According to you what would be other investment options apart from debt assets and equities ? Real Estate ? or simply NO INVESTMENT AT ALL 🙂
Sometimes No investment works better than many of the investment products available 🙂
My concern is that, Indian stock market is yet to mature (except for few companies, there is serious issue of corporate governannce). Hence i get annoyed when one advise a newcomer to invest in equity…(just because he is young)…I am not against you…but want to highlight the general issue, before advising anybody to invest in equity , first we should tell them that they can loss almost all of their capital (doen’t matter what time frame they have in mind). It is very difficult to convince them about the risk involved in it…if equity gives money without risk then all those works for brokerage would have been in top 10 list of rich people in India.
People should invest money in those products which they understand and i am saying again equities are not for retail investor. If you put money in equity just to achieve your goal then you might not achieve them.
Thanks,
Rahul
Understood your concern.
Had you mentioned this concern in beginning, we would n’t have this healthy discussion :p 🙂
Thanks
Dear Rahul,
I am advising him to invest in equity since he is young and can take little bit risk at this stage. Staying invested in equities for long term will help him get better returns than other investment options which might be helpful for his children.
Dear Bhavesh,
Why are you advising him to invest in equity?
Thanks,
Rahul
Dear Pavish,
Its nice to know that you will clear all your loans and are willing to save more.
Since you are 27 now, I would suggest you to :
* Put certain amount of your money (you can start with 5-8K/month) in equities. Dont be scared of it.
* Buy a term insurance ASAP which can insure your family’s future
* Since your father is dependent on you, pay for his health insurance from your pocket to get tax exemption
* You have already started PPF, which is a good option
* Try to spend only on what is really needed instead of spending on unnecessary stuffs.
First of all Start a SIP of any comfortable amount with any good BlueChip fund (Large Cap Equity Fund).
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