I want your guidance regarding my personal finance.
I have just joined a PSB. My Annaul salary is around 4.2 Lacs per annum. I have set a target of saving 12-13 k per month of which I wish to invest in as:
NPS contribution(mandatory)–3.3 k
MF–3 k. Of which i have just started with an SIP of 1k of SBI MF Magnum Taxgain
I plan to go through SIP of AXIS long term equity Gain (1K)
And Birla Sunlife Tax Plan 1 k. These two being your top two choices of ELSS 2016.
One of my senior told me one method of opening a new RD every month of 1 yr term. I have started with 500 Rs per month RD keeping in mind the 12th-month contribution of 6k(12 RD’s).
I plan to take E LIC policy of 35 yrs with 75 lacs SA. The annual premium comes out to be nearly 14 k.
Kindly guide me whether I am on right track or not.
I have kept the six principles suggested by you in mind.
- Life and Helth Insurance
- Home Loan
- Infrastructure Bonds
Hello sir I got your reply i would like to know I need 20lacs after 20years n at least 75lacs on retirement. I have Medicalims have surrendered 3 of my Lic policy n have left with 1jeevan anand which have just started I can cancel that as well so would like to know how may I proceed further now , in Sip which funds to pick up n is ppf a good option?
Whether basic things done like life, health, and accidental insurance buying and creating an emergency fund and all?
Ajinkya-I saw your investments without any specific roadmap. Take the reverse gear. Think why you have to invest and accumulate wealth. This creates awareness about your future financial goals. Then set these future financial goals. Once all these are firm in your mind, go ahead with the products which match. Simply investment the surplus and going for tax saving instruments is a typical style of all Indians. Stay away from such practices. Do it systematically knowing of why you are investing and how much is your return expectation. The priority must be as follow.
- Create an emergency fund of at least 6 months of your committed expenses.
- Buy a term plan of around 15-20 times of your yearly income.
- Buy health insurance (even though your employer offering this facility)
- Buy accidental insurance to the tune of around 10 times of your yearly income.
- List the financial goals.
- Prioritize them to achieve.
- Start investing by choosing products.
- While choosing products, think of tax saving too.
Thanks Mr Basu for your valuable guidance.My financial goals are few and mostly derived from insecurity and past experiences.Also i don’t wish to set materialistic and non-value adding goals like foreign vacation,car,etc.1. Emergency fund as suggested by you–That’s why i asked you whether RD is good option or not. Since being a banker i get a 1% extra interest on bank deposits.2. I have zeroed in on LIC E TERM plan. Want to know whether separate accidental insurance is necessary or pure vanilla term insurance will suffice.3. Heath insurance – I do have a family history of Diabetes,BP,Asthma4. Funds for retirement future child education are priorities.Also i wish t have a good chunk of liquid funds to fight inflation.5.Home( i do have one ancestral home and a micro family hence do not wish to invest in this too)Also wish to add that i read your article regarding Marriage expenses. I was deeply inspired by that post and wish to go through only court registered marriage. The marriage expense amount provisioned by two families(in laws and mine) plus my savings to be invested in FD or other instruments in the name of my would be.Kindly suggest rectifications and improvements.
Ajinkya-1) Go ahead. 2) Go ahead, yes you have to buy separate accidental insurance from general insurance companies. 3) Buy health insurance at the earliest. 4) Use online calculators to arrive at monthly investment required for retirement and kid’s education cost. If they are long term then equity is a must. 5) That’s great. You search in our “Old Article” tab about the articles you need to read. I really impressed with the decision of marriage and managing the expenses. Now, while investing in products to reach goal, think of products which are tax effecient.
Thanks Mr Basu for your guidance.While taking my first step in financial planning i have encountered one specific problem regarding E LIC TERM PLAN.I have just joined a PSB in MAY 2015. Prior to that i did MBA and prepared competitive exams. This is to mention that my last year income was nill as i was financially dependent on my family. I have drawn six months salary till now. My current CTC is 3.84 lacs in FY 2015-2016 with 4 months to go.After filling the complete form of LIC E TERM PLAN for 75 Lacs Term- 35 yrs it showed my salary is not sufficient for this much cover.I took 20% range for deciding my cover. My current age is 27 with no major ailments. I even tried with the minimum range of 25 Lacs still it showed the same results.Meanwhile one of the agent of LIC suggested me the same LIC plan for 17869 Rs per annum while Online E term costs around 12 k per annum.Kindly suggest me the future course of action.Regards
Ajinkya-The agent is pushing for offline plan. Don’t heed, because they fill some false income details and make sure that you get insurance. But at the end it is you or your family members to suffer. If LIC is not accepting your income stream as right eligibility, then try with private insurers.
Yes i have done all the things that u suggested the only question is where should I invest sip,ppf or lic? To meet long term goals