Hello Sir, My question -
Male, Age is 29, Salary of Rs. 22000/- p.m., my expenses 6-8k p.m. (Approx), Current Investments: Mutual Funds 2k monthly, 3k RD monthly for 3 Yrs, what is suitable Health/Life/Term Insurance? ROI option for same? or Other Investment options? I have my father who got his pension & he manages our household Expenses.
Ans: You are 29 years old, with a stable monthly salary of Rs 22,000 and low monthly expenses of Rs 6,000–8,000. Your father’s pension covers household needs, giving you flexibility for investments. Current savings of Rs 5,000 per month (Rs 2,000 in mutual funds and Rs 3,000 in a recurring deposit) is a good start.
Priorities and Recommendations
1. Health Insurance
Health insurance is crucial to safeguard against medical emergencies.
Coverage for Self: Opt for an individual health insurance policy with a sum insured of Rs 5–10 lakh. Look for plans offering cashless treatment, comprehensive coverage, and no claim bonus.
Coverage for Family: If you wish to extend coverage for your parents, consider a family floater plan with Rs 10–15 lakh coverage. However, check premiums and benefits before including senior members.
2. Life Insurance
Term Insurance: A term plan is the most cost-effective option. Choose coverage of Rs 50 lakh to Rs 1 crore to secure your family financially. Premiums for a non-smoker male at your age are low (approximately Rs 5,000–7,000 annually for Rs 1 crore coverage).
Avoid investment-linked insurance policies such as ULIPs or endowment plans, as they offer low returns and inadequate insurance coverage.
3. Building an Emergency Fund
Save at least 6–9 months of expenses in a highly liquid instrument like a savings account, short-term fixed deposit, or liquid mutual fund.
Given your expenses of Rs 6,000–8,000, aim for Rs 50,000–70,000 as an emergency fund.
4. Investment Strategy for Growth
You have significant surplus income after meeting expenses. Allocate it to high-growth investment instruments:
Increase Mutual Fund SIPs:
Increase SIPs to Rs 5,000–6,000 monthly.
Diversify across flexi-cap, mid-cap, and small-cap funds for long-term growth. Suggested categories include:
Flexi-Cap Fund: For diversification.
Mid-Cap Fund: For higher returns over a long horizon.
Small-Cap Fund: Allocate a smaller percentage (10–15%) for aggressive growth.
Recurring Deposit (RD):
RD is low-yield and taxed. Consider redirecting RD savings into mutual funds or a Public Provident Fund (PPF) for better long-term returns and tax benefits.
Public Provident Fund (PPF):
Invest in PPF for a secure, tax-free return (current rate: 7.1%). It’s an excellent long-term savings tool, especially for retirement.
5. Tax Planning
Leverage Section 80C: Maximise Rs 1.5 lakh yearly investment in tax-saving instruments like PPF, ELSS mutual funds, or 5-year tax-saving fixed deposits.
Opt for a health insurance policy to claim benefits under Section 80D (up to Rs 25,000 for self and Rs 50,000 for senior parents).
Suggested Allocation of Rs 10,000 Monthly Surplus
Mutual Funds: Rs 5,000
PPF: Rs 2,500
Emergency Fund: Rs 2,000 (till the fund reaches Rs 50,000–70,000, then redirect to other investments)
Health Insurance Premium: Rs 500–1,000
Final Insights
Prioritise health and term insurance immediately.
Focus on mutual funds and PPF for long-term wealth creation.
Avoid low-ROI options like recurring deposits once current tenure ends.
By maintaining discipline and increasing investment amounts annually, you can achieve financial independence while ensuring your family is protected.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
Question by shrikant on Jan 16, 2009Hindi
