Markets
BSE See NSE See 39,434.94
311.98 (0.8%)
collapse Related Readings collapse

Financial Guidance

| 2/23/2012 9:30 PM Thursday

I am 29 yrs old, married and have a take-home salary Rs 50000. My monthly household expenses amount to Rs 22000, medical and life insurance premiums are Rs 6000 and Rs 15000 go towards as bank savings. I would like to invest the balance Rs 7000 in a monthly MF SIP. 

I'd like to build corpus of Rs 2.5 crore for my retirement, considering our son's education and daughter' wedding (we presently have no children). Considering my age, I believe that the asset allocation could be 60:30:10 in equity, debt and gold/ETF respectively.

The life and medical insurance policies we presently have are:

  1. Jeevan Anand, for a sum assured of Rs 1 lakh, with an annual premium of Rs 7892
  2. Jeevan Saral, for a sum assured of Rs 2.5 lakh, with an annual premium of Rs 12252
  3. Amulya Jeevan, for a sum assured of Rs 50 lakh, with an annual premium of Rs 12852
  4. Limited Endowment Assurance Policy, for a sum assured of Rs 6.5 lakh, with a yearly premium of Rs 25600
  5. Mediclaim Policies worth Rs 1.5 lakh each for my wife, my mother and me

Please suggest how I can build a corpus by investing in MFs (considering asset allocation) or direct equity. Also, please tell me by when I need to revise my asset allocation

- Kaushik

Answer -

It is very heartening to see that you are starting to save from a young age and are planning for your and your unborn children’s future well in advance. This is a rare quality – who can defeat the prepared? I have taken the liberty of suggesting graduation and wedding expense plans for two children, instead of one graduation plan and one wedding plan.

Keeping in mind your age and the fact that your children are yet to be born, you have quite a long time frame for your investments. Hence, you can afford to be a little more aggressive than the plan that you had suggested in the accumulation stage of your investments.

Age is not always the only criterion for deciding the asset allocation. There are thumb rules which suggest that one may deduct the investor’s age from 100 and the result can be the suitable equity allocation – in your case the resultant equity allocation would be 71 per cent. However, I am not in favour of such thumb rules, as allocation depends more on one’s risk profile and attitude. For example, an old and wealthy gentleman may prefer a lot of equity, and this may be right for his profile!

A graduation degree in a technical field should cost roughly Rs 1000000 in today’s terms. The inflated cost in 18 years should be around Rs 5500000 each for your children. Your daughter’s wedding should cost you another Rs 500000 in today’s terms. In 23 years, that would work out to approximately 19 lakh. Thus, the future value of your children’s goals adds up to Rs 148 lakh, apart from the goal of saving Rs 250 lakh for your retirement.

 Equity (Rs)Debt (Rs)Total SIP (Rs)
Education 4700 2000  6700 
Wedding 750  320  1070 
Retirement 2850  1220  4070 
  Rs 8300 Rs 3540 Rs 11840

 

Find More Articles on: DSIJ Magazine, Financial Guidance, Personal Finance, Mutual Funds, Insurance

«« First « Previous |1 2 | Last ››
news letter

More for the early bird.

Get the post-market reports and breakfast news right in your inbox. See latest »

DSIJ Mindshare

Torrent Power shines on the bourses

Vinayak Gangule / Article rating: 5.0

Torrent Power sparked in Tuesday’s trading session as it informed bourses that it has received an approval from Gujarat Electricity Regulatory Commission (GERC) for the power procurement arrangement of 278 MW between the company's UNOSUGEN Power Plant (capacity of 382.5 MW) and its Licensed Distribution Business for cities of Ahmedabad, Gandhinagar and Surat.

12345678910Last

Tiger Logistics topline to grow by 10%--buoyant over infra sector status to logistics sector

Tiger Logistics topline to grow by 10%--buoyant over infra sector status to logistics sector

Logistics sector will play a vital role in making the concept of ‘Make in India’ a success. This will be further aided by some of the recent steps taken by Government of India such as granting of infra sector status to logistics sector.

Best and worst Performing Sector Funds of Year 2017

Best and worst Performing Sector Funds of Year 2017

As the year-end has approached most of you are eager to know the mutual fund movers and shakers of the year 2017. Read on to find the performance of various sector dedicated funds.

Markets may start positive, but volatility likely due to F&O expiry

Markets may start positive, but volatility likely due to F&O expiry

The start of the F&O expiry day is likely to be in the green, but volatility may creep in with the progress of the session. The SGX Nifty suggests that the Nifty could open at 10,525 with gains of 32 points at the opening bell. 

Pidilite announces buyback of Rs 500 crore

Pidilite announces buyback of Rs 500 crore

The buyback offer comprises purchase of up to 50,00,000 equity shares. The buyback offer size comprises 0.975 per cent of the total paid-up equity capital of the company.

Bank Nifty drags markets to close in the red

Bank Nifty drags markets to close in the red

The late session fall in Bank Nifty changed the direction of the market, leading to a marginal fall in the benchmark indices. Bank Nifty yet again resisted at its multiple point downward sloping trendline level at 25733.

Six major underperforming MF schemes having higher expense ratios

Six major underperforming MF schemes having higher expense ratios

Mutual funds with a large size of assets under management (AUMs) are supposed to have lower expense ratios. However, there are schemes with large AUMs but having higher expense ratios and generating lower returns. 

Nifty Pharma supports market; Sun Pharma at bullish reversal

Nifty Pharma supports market; Sun Pharma at bullish reversal

Nifty Pharma index has come in as the healer in an otherwise sluggish market. Index has given a consolidation breakout at the 9420 level today and if the it sustains 9420, followed by 9628 on the upside, it has a long way to go.

Ten stocks close to their 52-week low

Ten stocks close to their 52-week low

Following stocks are close to their 52-week low as at 12.35 p.m. on December 27.

Ten stocks close to their 52-week high

Ten stocks close to their 52-week high

The markets on December 27 opened gap down. BSE Sensex is trading at 34,068.15, up by 57.54 points and the Nifty is trading at 10,539.45, up by 7.95 points.

Five stocks with selling interest

Five stocks with selling interest

Overall volumes in futures & options currently stand at 62.75 lakh contracts with a turnover of Rs. 5,19,204.72 crore.