Need Expert advice

POSTED BY Debojyoti Das ON February 1, 2013 8:27 pm COMMENTS (15)

Hello folks,
I have few questions on my Financial situation and require your inputs on the same. (Little Background: Aged 30 yrs, male, married and kid of one daughter of 1.2 yrs and a single earner.) Current Investment: 1. Term Insurance=50,00,000, 2. LIC Jeevan Anand=10614/-PA till 2023 (SA=1.5 Lakh), 3. LIC Jeevan Ankur=8814/-PA till 2030 (SA=2 Lakh), ICICI Pru Life stage wealth=50000/- PA till 2017 (SA=5 Lakh), PPF=100000 till date. Future milestone: House=50 L in 01-02yr, Children education=30 L in 15yr, Retirement=01 Crore in 20 yr. I just started with 02 mutual fund (HDFC top 200 and HDFC equity) of Rs. 1500/- every month for 12 months.

1. How I should invest moving forward? 2. What should be my time frame for those investments? 3. How i will build corpus amount down the line after 02yrs, 05yrs, 10yrs, 15yrs and 20yrs. Please provide me a balanced portfolio. Please guide.

 


15 replies on this article “Need Expert advice”

  1. Debojyoti Das says:

    Great Ashal, solved all my queries. Will start with the action now. Thanks again for answering all my questions. I wish to talk to you in future in coming days over phone/email/forum as I am getting into it and it is fun as well. Hope coming days brings glory to all of us.

    Cheers!!!
    debojyoti

    1. Dear Debojyoti, phone call to me from you ‘ll burn a whol;e in your pocket as I’m out of India as on date & ISD bills for you ‘ll not be cheap. 🙂

      Yes you may contact me over personal e-mails to discuss whatever you want to in personal finance.

      Thanks

      Ashal

  2. Dear Debojyoti, My personal take ‘ll be to opt for 2 Eq. funds & PPF. The limit of 1L Rs. in PPF for a Eq. debt ratio of 70-30 means, 2.5L Rs. in Eq. funds & 1L Rs. in PPF yly. that’s the point above which you may opt debt funds.

    Thanks

    Ashal

  3. Debojyoti Das says:

    Hi Ashal,
    Hats off to you for prompt reply. Thank you for your suggestion on equity funds. I will do so accordingly. To answer your question on debt funds, NO, i took PPF as 25K per annum, though kept a door open if I have enough cash-in-flow, certainly, will include that in PPF. So should i mean your suggestion to be 30% in total as PPF amount, rather than putting it in debt MF, please clarify. If yes, then, my current portfolio would become as below:
    Equity MF exposure –
    1. HDFC T-200 = 3500/- per month (42000 PA)
    2. Quantum long term equity fund = 3500/- per month (42000 PA)
    ULIPS and others:
    3. ICICI pru = 50000/- per annum
    4. LIC -1 = 11000/- per annum
    5. LIC-2 = 9000/- per annum
    6. PPF = 100000/- per annum.
    Please let me know, if I can increase equity exposure a bit more in due course of time to a % of 10% every year.

    best regards
    debojyoti

  4. Dear Debojyoti, Please opt one more fund from Eq. only Quantum Long Term Eq. fund. So HT200 & QLTEF ‘ll be your 2 Eq. funds. Regarding debt funds, have you exhausted your PF & PPF limits?

    Please clarify.

    Thanks

    Ashal

  5. Debojyoti Das says:

    Thank you Ashal so much for reply. Indeed, you are very true on stating that need for term insurance is much needed now, rather than during post 55yrs (an real eye-opener). I will take the remaining of 1Cr term plan ASAP. Thank you once again.

    In regards to MF, i just inquired today and found out from HDFC AMC branch that the MF has not yet started due to documentation error. I am visiting this Saturday to AMC company and do the needful. Meanwhile I want to change the duration of SIP and fund as well as told by FFC that both HDFC top 200 and HDFC equity funds are identical. My idea is to start with the SIP of Rs.10000 for 2-3 funds and increase it in due course of time in 5-10% for minimum period (10-15 yrs) for asset generation. I am setting the exposure ratio to be 70:30 (equity:debt) to start with. Please direct me with the Best funds. I am considering HDFC Top 200 as fixed. Can you please advice for the rest of 02-03 funds.
    P.S: [I am considering a minimum of 02 funds under each Equity and Debt category due to the fact that i can change fund and incur minimum loss if not doing well. Correct me if my assumption is wrong.]
    Thank you always Ashal for the huge help you are providing to millions like me…..
    best regards
    debojyoti

  6. Dear Debojyoti, your basic understanding regarding term cover is wrong. Todat when you are young, financial liabilities are too many & assets & wealth is near zero, at this point of time, your Term cover should be the highest. By the age 55-60, your assets & wealth ‘ll be very high, financial liabilities ‘ll be almost over & the risk of financial loss for your family ‘ll be minimum. So At that age, you should not have a big cover. For yet to be completed liabilities, you may run a cover otherwise, by the age of 55 or may be 60, you do not need a cover at all.

    Regarding MF, I’m ready to discuss but from where should we start?

    Thanks

    Ashal

  7. Debojyoti Das says:

    dear Ashal Sir,
    Thank you for your reply. Indeed you opened my eyes in regards to term plan as per my current life style. No one knows what will happen tomorrow and therefore, we need to take term plan. I was assuming that I need a longer duration for my term plan like AEGON religare which insures me till 75yrs of my age. Also, the reason of deffering the term plan is the life expectancy. The life expectancy decreases with age. Companies offer Term plan for 20-25yrs only, and therefore, I was assuming to have that during my 34th age so that i can get cover till 70yrs. (not sure now if my decision is correct). also, your crude calculation is right on point of having an insurance of 1.5 cr. as of today. Meanwhile pls provide input on MF diversification to have a better portfolio for my life. I will do a thorough search as well in the forum to get ideas. Thanks always for reading and providing feedback.
    regards
    debojyoti

  8. Dear Debojyoti, what’s your current income, expenses, loan liabilities? How did you come to the figure of 50L Rs. for your term cover? Was it any calculation or just your comfort number?

    Thanks

    Ashal

    1. Debojyoti Das says:

      dear Ashal,
      Thanks for your reply. Current income is 10L per annum, expense is 50K per month which includes Car loan and all above premium mentioned. Therefore, saving would be approx 20K per month. In regards to the term cover, I never did any calculation, to start with, i went with a number of 50L. Though, I feel it is less with my current life-style. I was thinking to have Term insurance for another 50L by next 04 yrs, as per my age so that I have a figure of 1 crore. My Thoughts on inv plan for a sal of 10L yearly whose monthly exp.are 50K (will try to reduce as much as possible) would be to park the balance saving per month (approx 20K+) for next 1-2 yrs in bank FD and fetch 8-9% interest so that I can generate a corpus of approx 5,00,000 by Dec-2014 (for House purchase) which is my next short term goal. For my long term goal like Daughter education, marriage and Retirement, requesting you to kindly provide a plan where I can invest those money in equity.May be I will start little while from now, however, I will know where i am investing. I am not using any Demat a/c or not went to any Fund house, therefore, from HDFC, I did purchased these two mentioned mutual fund as i am spending in equity. Pleas guide on diversifying the investments. Thanks always.

      1. Dear DD,

        Please write your questions and issues to Ashal directly. It is best that you listen to him (rather than from both of us) as he has more experience in such matters.

        If you have any doubts regarding the calculators in my website or any feedback you are welcome to write to the email address there.

        1. Debojyoti Das says:

          Sure Sir, Thank you so much. I will check you calculators and come back to you for furher questions on this.

      2. Dear Debojyoti, I’m glad to know that you know your future pretty well that nothing is going to happen in next 4Y. That’s the reason you are ready to postpone your term cover purchase for next 4Y.

        @ 10L yly income & it ‘ll increase for sure in next few years, a total cover of 1Cr. is not sufficient & then add the possible home loan after 2-3-4 years here on wards. You are fairly under insured. With a very crude calculation, you should have a term cover of at least 1.5Cr. as of now.

        To calculate exact need of term cover, please use the life insurance need calculator at the site of dear FFC.

        http://freefincal.wordpress.com/insurance-calculator-for-the-young/

        there is one more calculator there in the site, please check on your own & decide how much is too much for your term cover.

        Once your exact need of term cover is finalized, please purchase it immediately. I’ll wait for your reply here on wards.

        Thanks

        Ashal

  9. 1. How old are your polices? You have too many of them and paying too much premium towards them

    2. Please recheck if 50 L is enough term insurance for your family expenses and your childs future in the event of your death

    you could use

    http://freefincal.wordpress.com/comprehensive-child-planner/

    3. 50L in two 2 years is unlikely unless you have most of the money ready now itself!
    Other two goals are possible but,

    4. Please use the retirement calculators in above site to check your retirement corpus.
    1 cr sounds a little arbitrary that too 20 years from now. You might need more.

    5. HDFC Top 200 and Equity are identical funds. You could just choose one of them. Why only for 12 months. You could invest in them longer. Choice of additional funds can be made later but first

    6. Your investments will depend heavily on the decision about your insurance policies.

    7. Hope you have enough contingency money to take care of about 6-12 months expenses and enough individual mediclaim for family in addition to what your employer provides.

    8. You have already mentioned the time frame of the investments. As said before the decision made on the insurance polices and how much you can invest each month will determine achievability of your goals

    1. Debojyoti Das says:

      Dear Sir,
      Thank you so much for your email. Much appreciated. I would answer to your clarifications sequentially. Please guide.
      1. How old are your polices? You have…. [DD: Initially stated with a plan to save tax, policy premium ending year is mentioned in my post. I am intending to keep the LIC policy till maturity and want to check ICICI pru after 5 yrs, thats on 2015 as this is Norm from gov. ]
      2. Please recheck if 50 L is … [DD: Thank you so much for sharing all your calculators, belive me you made many people’s life easy with those calculators who are financial illeterates like me. I will do more research on all your calculators, however, with the current life-style numbers in input, the calc. is showing a huge number to be invested and i feel it is highly impossible for any one with a sal of 10L yrly and 50K monthly expense.]
      3. 50L in two 2 years is unlikely… [DD: I have around 8L by now and is parked in Bank F/D, I am planning to save next 02 yrs. all left out amount in Bank F/D to generate a substancial income. Remaining amount I will go for loan e.g, 35L.]
      Other two goals are possible but,
      4. Please use the retirement… [DD: will come back to you with more question, it would be helpful if i can directly contact you. is that I can use the email the website where all the calculators are present?]
      1 cr sounds a little arbitrary that …[DD: By using the calculator, it seems, 02 crore is less with my current life style.]
      5. HDFC Top 200 and Equity are identical funds. You could… [DD: Also, I am not using any Demat a/c or not went to any Fund house, therefore, from HDFC, I did purchased these two mentioned mutual fund as i am spending in equity. I will surely give a thought on diversifying the investments, please guide.]
      6. Your investments will depend … [DD: mentioned above]
      7. Hope you have enough contingency money ….. [DD: Around 08L money saved includes contingency money as well.]
      8. You have already mentioned the time frame ….[DD: My Thoughts on inv plan for a sal of 10L yearly whose monthly exp.are 50K (will try to reduce as much as possible) would be to park the balance saving per month (approx 20K+) for next 1-2 yrs in bank FD and fetch 8-9% interest so that I can generate a corpus of approx 5,00,000 by Dec-2014 (for House purchase) which is my next short term goal. For my long term goal like Daughter education, marriage and Retirement, requesting you to kindly provide a plan where I can invest those money in equity.May be I will start little while from now, however, I will know where i am investing.]

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