Request for suggestion in financial planning/insurance

POSTED BY Indian_Engineer ON March 18, 2012 6:41 am COMMENTS (11)

Hello experts,

I request you suggestion on the investment I have already done.

 

Life insurance:

1. Jeevan Anand – 10lacs-20 yrs

2. Endowment plus – 2lacs – 20yrs

3. LIC Endowment policy -5 lacs-33yrs (I have opted 5lacs critical insurance rider)

4. ICICI click to protect – 20lacs-30 yrs (Thanks to Jagoinvestor!)

 

Health/general insurance:

1. Jeevan Arogya LIC – 3 lacs

2. ICICI Health Insurance- 4 lacs( this cover is with my elder sister, so I can get any tax benefit, I am planing to split it into two separate policy)

3. company paid insurance -3lacs

4. Personal accident – 5lacs-national insurance (thanks to Jagoinvestor!)

I have PPF and NPS (Tier I) account.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Future insurance plans——

1. Split the health insurance separately between my sister and me.

2. Increase accidental/ disability cover.

Financial Goals———

1. Need a investment return of 20 lacs in 2020 to buy own  Flat.

2. Need a investment return of 30 lacs in 2030(+-5)  (future children education).

3. Need a investment of return 2 Cr in 2048 (God knows what will happen then, it is too far) as retirement.

………………………………………………………………………………..

Situation Now-

Age -27, single (May be getting married later part of this year)

Total yearly insurance premium – 65k

PPF investment planned- 1lac per yr.

Extra expendable income after this 70k~1lac.

I have tried little bit in Mutual Fund Mkt, return is not impressive in 2 yrs :(.

Kindly suggest. I have benefitted to a large extent from jagoinvestor.

Please bear in mind that LIC policies I would not like to change, kindly advise about my new investments. Also advise if you there is a need to have more insurance cover.

11 replies on this article “Request for suggestion in financial planning/insurance”

  1. Dear Indian Engineer, I’m sorry to say but I do not think that You have learn a bit from jagoinvestor or in more harsh words you are still a sleeping investor. You are still counting your insurance in low prem. low sum assured policies from LIC & not on high sum assured Term cover. Also you can’t write the right name of policies you are having? There is no policy from Icici Pru as named Click to Protect.

    Also I’m unable to understand the logic of paying prem. for investment oriented health policies & no plain health policy is there.

    Please update with your views. I’m sorry if you feel my reply too harsh for you but I want to help you out so taking liberty to say the truth to you.

    Thanks

    Ashal

    1. Indian_Engineer says:

      Ohh yes the ICICI policy name is : ICICI Pru iCare RP Option I .

      So, the portfolio looks like this;

      ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
      Life insurance:

      1. Jeevan Anand – 10lacs-20 yrs

      2. Endowment plus – 2lacs – 20yrs

      3. LIC Endowment policy -5 lacs-33yrs (I have opted 5lacs critical insurance rider)

      4. ICICI Pru iCare RP Option I – 20lacs-30 yrs (Thanks to Jagoinvestor!)

      ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

      Health/general insurance:

      1. Jeevan Arogya LIC – 3 lacs

      2. ICICI Health Insurance- 4 lacs( this cover is with my elder sister, so I can get any tax benefit, I am planing to split it into two separate policy)

      3. company paid insurance -3lacs

      4. Personal accident – 5lacs-national insurance (thanks to Jagoinvestor!)

      I have PPF and NPS (Tier I) account.
      ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

      Now if you ask for logic.

      I still feel,

      LIC Jeevan Anand, 10 lacs 20 years(premium-35000/year) — will give me;

      after 20 years — 7 lacs premium + 8.2 lacs

      [(assuming LIC gives INR 41 per thousand sum assured) ~~( this is the rate since 2006 to 2011, and it is 43 per thousand sun assured in 2011)~~ u can check LIC website (http://www.licindia.in/bonus_info.htm) ]

      My IRR calculation showing 7% IRR, am I wrong?

      May be in my dreams I have this IRR? 🙂

      ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
      The logic behind the Endowment is almost similar, so I am not writing now~

      Kindly advise.

      1. Dear Indian Engineer, for the reply given by you – please consider this situation – you dump all your existing life insurance policies, purchased a new cover of 50L from IPru I care RP. The prem. for this policy ‘ll be very cheap for the combined prem. you are paying for your existing policies. Now do invest the remaining amount out of 65K meant for present policies.

        Please do calculations & post your nos. here for discussion.

        Thanks

        Ashal

  2. Engineer,
    You already hold enough ELSS funds. i would not suggest adding one more.
    CRMF and PruICICI tax should be fine.

    Gold Fund : Sorry sir. Idont invest in gold. I think it is already over priced.

    FMCG Fund. You are right. Eveyrbody will use these items. Buy by selecting FMCG fund
    you fund manager would be forced to invest only in FMCG stocks. Even if the are going to be out of favor for few more years.

    Leave the fund manager do his duty.IF FMCG are to do well, he will increase investment in them.

  3. Engineer Sir,

    I dont understand the logic of investing in both( Growth and Dividend ) option. For me this is messy, its difficult to track. When you intention is to build wealth, periodic dividend is of no use.
    Not sure if i am making sense…..

    you get 5k dividend, you dont need it right now, you could have gone for growth option.Even now you can get them converted to growth option…

    Couple of New Funds in your portfolio again a not a good sign. Axis MF and Birla Equity Plan.

    Over all i see over diversification in Tax saving funds…..

    This is how generally a MF portfolio should be.
    2 – Good Equity Diversified fund (HDFC top 200 / Franklin India Blue chip. )
    1- (Mid cap Fund)
    2- ELSS Mutual funds – For now nothing much can be done. as it has 3 years lock in period.

    Stay away from sectoral and themactic funds.

    Regarding : 20 K need – you can invest into mutual funds. Have 10 years time frame. Dont go for dividend option. Perodically, if you get chance to invest in FD’s at high interest rates, invest in your parents name.

    1. Indian_Engineer says:

      Dear wealthucreate,

      One thing I have noticed in FMCG funds, their return sometimes comparable with gold ETF.
      It is interesting to see two sectors pharmacy and FMCG (tobacco is a part of this)
      never let investors down!

      What is your observation? People will never stop taking medicine and smoker will never stop smoking~~~ do these simplification work?

      Just curious!

      Could you suggest ELSS for coming year. Preferably growth?

  4. TheZionView says:

    If you have decided that you will not part with low return policy no comments as you have decided to live with it even after reading jagoinvestor blog

    Now you said you have about 70-1L extra to invest. If you can let us what are the mutual funds you are invested already and in what mode did you invest in them?

    When you say MF 2 year return is not impressive i really doubt if you have educated yourself well by reading jagoinvestor blog. Equity is a long term investment product coming to conclusion after 2 years is not going to help.

    1. Indian_Engineer says:

      Fund Name ——— number of units——–>current price———–avg cost price

      ICICIPRUDENTIALFMCGFUND-GROWTH—114.682—–>80.02——79.81
      SBIMAGNUMSECTORFUNDSUMBRELLA-FMCG—151.607—–>33.71——34.68
      AXISLONGTERMEQUITYGROWTHPLAN—740.302—–>12.29——12.4795
      BIRLAEQUITYPLAN-TAXPLANGROWTH—651.997—–>12.44——13.13
      CRMF-EquityTaxSaverDividendFund—561.66—–>20.51——17.26
      CRMF-EquityTaxSaverGrowthFund—279.07—–>21.9——25.91
      ICICIPRUDENTIALTAXPLAN-GROWTH—67.799—–>141.75——136.04
      ICICIPRUDENTIALTAXPLAN-DIVIDEND—526.056—–>18.07——17.29
      RELIANCETAXSAVERFUND-DIVIDENDPLAN—689.392—–>14——14.8774
      RELIANCETAXSAVERFUND-GROWTHPLAN—339.326—–>18.01——21.1489
      SBIMAGNUMTAXGAINSCHEME-DIVIDEND—271.666—–>40.77——35.69

      Kindly advise.

      1. TheZionView says:

        Its clear that what ever investment you made were not thought out. I believe you were advised to buy these by agent or broker. If so first thing you should do is to fire him.

        Best root of investment in MF is in SIP mode and complete diversification can be achieved with just 4 funds.

        1- Large Cap fund
        1-Large &Mid Cap fund
        1- Multicap fund
        1- Mid Cap Fund

  5. Engineer Sir,

    Couple of basic questions :

    What is your monthly income or in other words, you can let know how much money is left at the end of the month.

    You are clear on your stand that you dont want to compromise on existing LIC policy. In war, stepping back is not failure. Similarly in journey of wealthcreation, you end up getting into wrong product.

    You have two option, off load your mistakes and get better from here. I see a good amount of money is going towards product that will give you less returns.

    Give more details and i am sure we can come out with win win situation.

    1. Indian_Engineer says:

      I understand your point, but I wont play in back-foot.

      Every month generally I shall be left with 20K as expendable money. Moreover Annual bonus is also there.

      On yearly basis;
      After 65k insurance (which I have now), 1lac in PPF. I should be left with 60k ~ 1lac in a year.

      What ever wealth creation need to be done, please focus on this 60k~1lac.

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