I have gone through your blog and am really impressed with your suggestions regarding financial planning.
I have few questions and would seek guidance from you for same:-
I AM 28 years of age , single. I work with a Software company in bangalore .
I spend 15000 pm for my daily expenses .
Current salary- 10.5 lakhs per annum Take home salary- 65000 pm
Booked House worth 34 lakhs by paying 4.5 lakhs now,.This will be completed after 3 years. Right now i am staying in rented place,. Taken a house loan of 29 lakhs for 20 years
Credit card- 55,000 Personal loan -25000 Builder Payment(due in 6 months)-150,000 PreEmi for Bank from Oct- 2000(this exponetially will grow to 28000 as construction progresses till 3 years)
My goals are:
1.House Loan –Want to preclose in 10 years.
2.Car Goal - (in 2 yrs)2013
3.Marriage Goal -(1 year) next year end 2012
5.Child (future)-Education and marriage
I have read lot of blogs/ watched Tv shows , they seem to suggest these ways :-
1.Get Term Insurance(10 times of salary)- i.e 1 crore. Have ICICI or Kotak here? Should i invest immediately
2.Buy Medical insurance for family- My company already has cover of 3 lakhs, but since i will be getting maried, do i need to invest??
3.Invest in PPF- how much for a year?
5, Invest in Infra bonds- Should I??
Please suggest, how do I plan my investment.
asked Sep 30 '11 at 04:46 by mscrmguru 16●1●1●3
First, nice to know that you are preparing youself at the right time for your future. Age is on your side and you can plan great things from here.
Now coming to your financial plan, please read below mentioned points carefully.
You must get atleast insurance with sum assured 10 times yearly salary + all pending liabilities (personal/home loan etc). You can buy this when you are of 30 years. As most of the policies have a maximum period of 30 years, buying at 30 will make sure you are atleast covered till 60 years age. A person has most of the liabilities since this age only, as after that kids become independent.
You should get atleast a cover of 1.5 to 2 crore as per your profile.
When you get married, buy a family floater medical insurance immediately with good sum assured (more than 5 lakhs would be good). Companies like Apollo Munich and Max Bupa have good policies, which even cover maternity expenses too, but after a period.
As you will own your house in next few years, it will be advisable to cover your home against natural calamities and some disasters. This will make sure that you get an amount to re-construct your home after any incident.
Personal Accident insurance:
This will give you cover against an accident which causes permanent/temporary partial or fully disability. Term insurance, Medical insurance, Critical illness riders will fail to pay you anything here.
Anytime there cane be a need of some emergency amount. So I would advise you to keep at-least 2-3 lacs (depending on your location and life style) in liquid assets. If needed, you should be able to withdraw these fund on a very short notice like in a day or two. It may not generate great returns, but amount should be pretty safe and quickly withdraw-able.
Once you have all insurances mentioned above, you and your family will be covered against most of the disasters in life.
If you are paying more interest on any loan than what you can earn on your investments, first try to clear that loan.
Short term goals:
Builder payments, buying car, marriage expense, honeymoon travel cost are short term money requirements which will come up in next 3-4 years. You should start saving for these right now. Your focus should be more on short term debt based investment rather than equity or any investment with long term lock-in.
Long term goals:
Children education, their marriage and your retirement are some of the long term goals. Once you free from your short term goals (saved enough towards that), you can start playing long term game.
For debt/safe portions: you should go with EPF, PPF and NPS (New Pension System)-G/C class. For equity portion: Diversified equity mutual fund SIP and NPS (E class) are good options. You can read more about some of the best funds here: Best equity mutual funds
Term insurance, medical insurance, EPF, PPF, NPS will also help you in tax saving once direct tax code is applied from next financial year.
One personal advice: Plan for 1-2 small and one long trip every year, this make sure that energy and fun are back in life. I myself have worked for more than 8 years in software development and know how important is to get a break in life!
Having said all this, please do your own research as well, before following the above plan. As all financial websites say: We are not liable for any financial or any other kind of loss :)
We would also advise you to consult a certified financial planner in details. He may charge you some fees, but will take care of all your queries and give you confidence.
Do share this page with your friends and colleagues on FB/LinkedIn/Twitter, But only if you liked it!
answered Sep 30 '11 at 18:35 by pankaj 4.7k●3●17