where to invest

POSTED BY Prafull ON April 6, 2012 9:31 am COMMENTS (18)

Hi!
Im having monthly income of Rs 30000, I have taken home loan of 7L in 2010, Im 30yrs old, having 2 childs (4yrs, 1yrs respectively). I have not invested anywhere yet. But now Im feeling it is a necessary task.
Pl suggest me where to invest, which give me high returns in short period. or should i go with term plan since i am single earning person for my home.
Since all investments gives returns about 8 -9 %, so another thinking is to clear home loan which is having 12.25% interest rate.
Pl guide me ASAP

18 replies on this article “where to invest”

  1. Prafull says:

    Thansks ashal, As said ealrlier, It was Rs 9000. Pl suggest investment for rest 50K

  2. Prafull says:

    I have only one money back policy of yearly prm 5500. and having home loan of 7L whose monthly prm 8400/-
    Last year 25K deducted as principle and 85K as interest. 1150pm PF deduction , 8500PM as conveayence.

    1. Dear Prafull, here is your section 80C 1L saving break up (for current year) –

      Home loan = 30000
      PF = 14400
      LIC Prem. = 5500

      Total investment = 50000 Rs. almost

      so you still have room for that 50K extra amount. By the way, how much tax did you pay last FY?

      Thanks

      Ashal

  3. Prafull says:

    Dear Ashal
    Thanks for ur support.
    In current situation Im paying Rs 9000 IT per year. Can u suggest me where to invest or in addition to term plan which policy I can buy (viz. money back/ pension plan/ child plan/ endowment plan etc.). or I should repay the Hous. loan amt.

    Ur suggesions are eye opener..

    1. Dear Prafull, can you provide the break up of your section 80C investments (max. limit 1L Rs.)?

      Thanks

      Ashal

  4. Prafull says:

    the plan is “super cash gain” UIN 116N102V01.
    Secondly as per your guidance I have opend a PPF account with SBI. Many Thanks for support

    1. Dear Prafull, please do note this policy is not worth of your money. It’s money drainer. Please purchase a pure term plan where your life ‘ll be covered for say 50L sum assured for not more than 5-10K Rs. depending upon the ins. co. you are dealing with & online or offline term plan. Please do note yopu ‘ll not get any money back at the end of the policy term but if some thing happens to you in between, your family ‘ll get 50L Rs.

      Please share your views.

      Thanks

      Ashal

  5. Prafull says:

    Initially thank you very much for your valuable replies.
    Now In this month Im opening PPF account in SBI.
    Secondly evaluating different term plan. If possible plz suggest best term plan for me.
    My LIC policy is not matured but I can withdraw it now. Plgive ur openion.
    I can repay 50,000 principle of home loan by this year, Is it better option? or i have to invest the same in somewhere else? where?
    Sorry for many questions but I cannot waste my money.

    1. Dear Prafull, please first of all create an emergency fund of 6-9 months of your total expenditure for home & home loan. Which is around 2L Rs. at least. over a period of next 1-2Y.

      Regarding Term Plan, based upon your own comfort level, you may opt any online plan from Aegon, Aviva, Bharti, ICICI Prulife, Kotak, Metlife, HDFC……. This is an indicative list only & not the order of preference.

      Out of those 50K Rs. I w’d ask you to keep 25K Rs. for your emergency funding & prepay only 25K Rs. in your home loan.

      Thanks

      Ashal

      1. Prafull says:

        Im planning to buy Bajaj’s Super CashGain insurance plan (plantinum plan)… is it correct plan for me? Yearly premium 30000. Plz help me….

        1. Dear Prafull, is it this plan you are talking about?

          http://www.bajajallianz.com/Corp/life/cash-gain.jsp

          Well, can you do tell me what ‘ll be your sum assured in this plan against a yly prem. of 30K?

          Thanks

          Ashal

          1. Prafull says:

            Dear Ashal
            Sales person tell me i can get returns as
            5th,10,15 year I wil get 60000. Premium has to paid till 15 years. At 20th year I will get 120000.
            1. 12 L Natural Death benifit and 3000/PM pension to my spouce till min10yrs and max 19yrs
            2. 15 L Natural Death benifit and 3000/PM pension to my spouce till min10yrs and max 19yrs
            3. 3 L for permanent desability and 1.5L for partial desability.

            If nothing will happen it returns me 600000 + 400000(as a bonus).
            Pls guide can I buy

          2. Prafull says:

            sum assured is 3L

  6. My two cents :
    12.25 rate of interest rate is way too high. Please try to get out of this

    Ulip Money Plus – I dont think it will provide you great returns. I would have surrendered it.

    PPF- Please go for one right now.

    Once you are through with your Home Loan, make sure you invest in couple of good equity diversified funds and stay invested for long term.

    Term plan – You should be going for it right now.

  7. Prafull says:

    Thanks Mr Krishna & Mr Ashal for prompt reply.
    1) I have taken home loan from DHFL bank with current interest rate 12.25%, loan is insured by ICICI..
    2) 5 years back I have invested 30000 in LICs ULIP Money plus, now policy is matured with current return 27500. Should I wait for withdraw?
    3) No PPF, No FD. Monthly PF deduction is 1250 by company.
    4) from 30000 per month I can only invest 5000 PM, because of expendeture on home and home loan emi.

    1. Dear Prafull, first of all please check with your home loan provider i.e. DHFL to reduce the current Interest rate from 12.25% to 11.25 or 11% or even lower (offered to new customer) by paying a one time conversion fee.

      Are you sure that the money plus ULIP has matured? Please check with LIC office for the same.

      Please purchase a Term cover of at least 60-65L Rs. at a cost of around 7-8K Rs. yly.

      First of all create an emergency fund of 6-9 months of your total expenditure for home & home loan. Which is around 2L Rs. at least. over a period of next 1-2Y.

      Thanks

      Ashal

  8. Dear Prafull, out of that 30K salary, What’s your saving rate? From which bank your current home loan is running? do you have any investments as on date say, PF, PPF, FDs?

    Please answer these questions?

    Thanks

    Ashal

  9. Krishna Kishore Appala says:

    Hi Prafull,

    It is never late to start investments.
    The following are the things you have to be done :

    1) Yes , you need to take an plain term insurance immediately as you are only the earner . It should be a summation of Home Loan balance + Monthly expenses of your family * 15 years (since your kids are only 4 at age you need atleast 15 years) + For your kids education + Some emergency fund.

    I think this will be some where at around 70-90 Lakhs and will come for around 7000 p.a premium.

    2) Next you have to divide your savings as Equity and Debt . Since you are 30 now ratio of your savings allocation has to be 70 : 30 respectively .

    For equity choose Mutual funds (more than 10-15 years for good returns) , Gold etf etc and for Debt choose PPF , RD’s etc.

    Make an Emergency fund of 6 months of your salary ready.

    Since you are at the start of investing, I am just giving an overview .

    Later you will get to know which Mutual funds to invest ?
    How diversification has to be done among them?
    How should we manage our portfolio ?
    How to create corpus for retirement and kids education after 15 years ?
    List goes a long way.

    3) And let the loan be paid regulary. Don’t stop investing to repay the loan amount.
    It will take some more years for that , and at the end you will miss the power of compounding.

    Just visit this site on regular basis , you will get answers for all the questions stated above.

    Happy Investing 🙂

    Regards
    Krishna Kishore Appala

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