Financial Planning


Dear All,
I got job one year back. My Age: 33years Dependents: Wife and one son (3years) My Gross Salary: 32000PM and take home salary: 26000 PM.
My Goals:
1. Child Primary Education.- From Savings
2. Child Higher 2021- Investing in Mutual Funds & PPF
3. Purchase Land in 2years-From Savings
4. Retirement in 2037- Investing in Mutual Funds & PPF
1. Monthly Chit at Relative-2000 PM- gets min 18% return-Believable
2. Monthly Chit at Friend-3000PM-gets min 11% return-Believable
Mutual Funds from Nov 2012:
1. HDFC Equity-1000PM
2. Canara Rebocco Equity Tax savings-1000PM
3. ICICI Pru Focused Bluechip Equity Retail-1000PM
4. Quantum LongTerm Equity -1000PM
1. ICICI Pru-Term Insurance for 20Lakhs
2. Kotak-Term Insurance for 27Lakhs
3. ICICI ULIP-Life Stage Assurance-SA 75000-Premium 1250 PM-Will be completed 3years in Nov 2012 and so want to discontinue. Please advice to continue or not.
3.LIC Bheema Gold-SA 1Lakh-Premium 2000 Halfyearly- Discontinued from this year
4.LIC endowment-SA 1 Lakh-Premium 1200 Yearly- Continuing
5 Employer Group Insurance-SA 3Lakhs-Premium-315 PM
5. ICICI Child Policy-SA 4Lakhs- Premium 20370 yearly- Paid only one premium- Want to discontinue and forego 20370 already paid as per the advice of this forum.
1.PPF account opened in May 2012
2.Bank FD-60000
3.Bank balance-20000
4.Gold ornaments-2.5 Lakhs
5.Loan for purchasing Fridge (0% Interest)-1280 PM- another 2months to pay.
6. Medical expenses will be beared by employer (PSU)
7. EPF -3680 PM
7.I have no other assets and liabilites
As my employer (BSNL) is in huge loss, I have little fear of job security in longrun though it is PSU.
Please advice any changes and additions or deletions to be made as per my goals. I will provide any other data if required.
Thank You
R Siva Prasad

11 replies on this article “Financial Planning”

  1. Hi JGM,

    I will pay 2500×20 months=50000
    I will get 54000 at the end of 20th month.

    If I lift in 10th month, then I will get 52000 and I have to pay 3000 for remaining months.

    Thank You
    R Siva Prasad

  2. Siva -Can you list down how much money you pay in Chits and how much you get back in one cycle?

  3. Dear Ashal,

    Can you please tell why you are not comfort with chits? I will change my view on chits, if Iam convinced. I feel it gives returns more than debt instruments. And one more reason is, I could not avoid my friend. But I have to think.

    How to divide 6000, for primary education and Higher Education?

    Out of 11000, if 6000 is for first two goals, then remaining 5000 will for retirement.

    Can you please advise also where to invest? Is there any hope that market will rise even after one year?

    Thank You
    R Siva Prasad

  4. Dear Ashal,

    I will continue chits till I purchase Land. After that I have to pay loans.
    But Good News is that Yesterday My wife is selected as teaching staff in a school for 4000 PM and My son also gets concession (Same School) in School Fee. So I need only 14000 yearly for his primary education. And after discussion with my wife, she will not give money to me, but agreed that she will take care of my second goal i.e. purchase of Land.
    So fortunately, My first goal needs only 14000 Yearly and Second Goal (Land) is deleted from my Goal List.

    It seems I have to take one termplan for my wife also.

    Ashal, I hope now I can achieve goals, if I Planned properly. Please advice.

    Thank You
    R Siva Prasad

    1. Dear Siva, personally I’m not at all comfortable with Chit funds. So it’s your personal choice to continue with the same.

      Regarding ongoing education expenses, the same ‘ll rise over the period due to inflation. So do those 2L & 4L figures. After inflation adjustment, the 2L figure ‘ll be around 5L Rs. & that 4L figure ‘ll be around 13L Rs. @ 10% inflation rate. A total of around 6K Rs. you need to invest on mly basis earning 12% yly for these 2 education related expenses.

      Please update with your views.



  5. Dear Ashal
    Actually I have no idea about how much I need . I will save whatever I can. I mean I can not adjust now for future and viceversa.
    But after your reply, I did some mental exercise and arrived the following

    My Goals:
    1. Child Primary Education.- 25000 Yearly upto 2022
    2. Child Higher 2021- 2 Lakhs in 2023 and 4 Lakhs in 2025
    3. Purchase Land in 2-3years-2-3 Lakhs. Is it better to take Personal Loan and Gold Loan for this? Because it is very short period.
    4. Retirement in 2037- 15000 PM at present rates.

    Out of Take Home 26000, 1000 is for all insurances and 14000 is for House expenses (including every thing-tours, gifts to relatives, furniture etc.,). Remained is 11000 only for longterm. My salary will increase @10% per annum

    Please tell me for any other data requirement, if required.

    Waiting for your reply.
    Thank You
    R Siva Prasad

    1. Dear Siva, out of that investible surplus of 11K Rs. you are putting 5K Rs. or almost 50% money into Chit funds. Is it ok to you? Only you can answer.

      Your current cashflow position is not allowing to go for that land. Please shelve the plans right now. Even if I assume from Pl & gold Loan, you can manage to purchase, from where ‘ll you pay back those PLs & Gold Loans? Please answer.



  6. Dear Ashal,

    First of all thank you for reply.

    Total Coverage presently Iam having is nearly 52 Lakhs and premium Iam paying 7500 yearly ( for 47 Lakhs). I tried for Aviva but in Aurangabad, Aviva has no online policies.

    Iam planning to take Accidental Policy for 20 Lakhs and doing little bit research on that and probably Bajaj allianz will be finalised.

    In future, as my salary will increase, I will take one combined Term policy to cover total 70 Lakhs at least in addition to Accidental Policy (20 Lakhs).
    This is my planning. Please tell your views.

    Thank You
    R Siva Prasad

    1. Dear Siva, please purchase that cover as & when you are comfortable or insurer is available in your city. By the way, IPRU & Kotak are available in your city so you may check there for your requirement. The reason is after 2-3 years, your age ‘ll be on higher side & so do the prem. due to higher risk associated with your life.

      Now please do provide a ball park figure for each of your goal if it happen today.



  7. 1. Mutual Funds are from Nov 2011
    2. I may get assets (approx-18 Lakhs) from my father after 12 years
    3. I can take risk
    4. Iam not interested in purchasing home, instead I will purchase land for growth.

    Please consider above also.

    R Siva Prasad

    1. Dear Siva, first of all please purchase a new online Term cover of at least 75L Rs. the prem. ‘ll be lower than the 2 term covers (if they are offline) you are running at present.

      Please update with your views on the same.



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