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Sanjeev

Sanjeev Govila  |442 Answers  |Ask -

Financial Planner - Answered on Dec 06, 2023

Colonel Sanjeev Govila (retd) is the founder of Hum Fauji Initiatives, a financial planning company dedicated to armed forces officers and their families.
He has over 12 years of experience in financial planning and is a SEBI certified registered investment advisor; he is also accredited with AMFI and IRDA.... more
Narayanan Question by Narayanan on Nov 29, 2023Translate
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Hello Sir, I am a (46 Years Old) accountant in a small level proprietorship company. I am a BSc degree holder with a experience of Accounts and do upto finalization. I do not get a permenant job in my past experience (25Years) almost changed six companies due to different reasons (now working in a 7th company) Hence I decided to invest my current savings of (Rs. 25Lakhs) in a Income Policy from April 2024 (Monthly Payable). Whether it is good choice or not. Since this current job also not a stable one. I do not have any regular income. Also I am a single (unmarried). Need your suggession. Thanks In Advance. Narayanan

Ans: Income policies are generally considered to be low-risk investments, but they do not offer the potential for high returns. If you are comfortable with a lower return in exchange for stability, then an income policy may be a good option for you.

Currently there are some regular income policies present which offer lower rate of return (6% approx.) but the payouts are tax free.

If the monthly payouts are larger than the required amount by investing Rs. 25 Lakhs then you can also consider to invest surplus amount towards equity, only after analysing your risk profile.

I seriously think that, for you, it is a better idea to consult with a financial advisor before making any major investment decisions.
Asked on - Dec 07, 2023 | Answered on Dec 07, 2023
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Thank you Sir.
Ans: Thanks.
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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Dear Sir, Greetings, I do request you yoy to please guide me on : 1. Shall I invest lumpsum of Rs. 25 Lakh in HDFC Balance Advantage Fund for 3-5 Years? 2. Is it fine to invest in ICICI Guranteed Income for Tomorrow Plan in order to get fix income for 25-30 Years ? Are such type of Plan safe to invest in waiting for your Reply. neeraj Gupta
Ans: Dear Mr. Neeraj Gupta,

Greetings! I appreciate your interest in seeking financial advice for your investments. I'm happy to help you make an informed decision. Here are my thoughts on your queries:

HDFC Balanced Advantage Fund: This fund follows a dynamic asset allocation strategy, which means it can invest in a mix of equity and debt instruments based on market conditions. This makes it suitable for investors with a moderate risk appetite. Since you have a 3-5 year investment horizon, this fund could be a reasonable choice. However, lumpsum investments can expose you to short-term market volatility. Instead, you might want to consider a Systematic Investment Plan (SIP) to stagger your investments over a period and benefit from rupee-cost averaging.
ICICI Guaranteed Income for Tomorrow Plan: This plan is a non-linked, non-participating individual life insurance savings plan. It provides guaranteed income for a chosen period (25-30 years in your case) and life cover for the entire policy term. Such plans can be considered safe as they offer a fixed income and are not directly linked to market volatility. However, the returns may not be very high, and the benefits are subject to the insurer's claims-paying ability. Make sure to assess your risk tolerance, financial goals, and the credibility of the insurer before investing.
Risks associated with these strategies:

Market risk: The HDFC Balanced Advantage Fund is exposed to market fluctuations as it invests in equities and debt instruments. It could impact the fund's returns, particularly in the short term.
Inflation risk: The ICICI Guaranteed Income for Tomorrow Plan offers a fixed income, but over the long term, inflation could erode the purchasing power of your returns.
Liquidity risk: While the HDFC Balanced Advantage Fund provides relatively better liquidity, the ICICI plan may have surrender charges and other penalties if you need to access your funds before the policy term ends.
I hope this information helps you in making an informed decision. It's essential to diversify your investments across different asset classes to minimize risks and achieve your financial goals. Consult a professional financial advisor for personalized advice based on your risk tolerance, investment horizon, and financial goals.

Wishing you success in your investment journey!

Best regards,
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As part of a couple in our early 30s, along with our elderly parents, we have a combined annual income of Rs 1.08 crores. How can we collectively plan for both our retirement and the financial well-being of our parents in the long run?
Ans: Balancing your financial needs and that of your parents, while planning for retirement, requires a comprehensive strategy. Here's a roadmap to get you started:

1. Understand your financial situation:

Gather information about:

• Income: List down your combined annual income (Rs 1.08 crore) and any other sources of income like rental income or investments.
• Expenses: Track your monthly expenses for a few months to understand your spending habits.
• Debts: List down any outstanding debts like mortgages, car loans, etc., including your parents' debts if applicable.
• Retirement benefits: Check your eligibility and potential benefits from social security or employer-sponsored retirement plans.
• Parents' needs: Estimate your parents' current and future financial needs, including healthcare costs.

2. Set retirement goals:

• Desired retirement age: Decide when you and your partner wish to retire.
• Desired lifestyle: Determine the lifestyle you envision in retirement, considering travel, hobbies, and potential healthcare needs.
• Financial goals: Based on your desired lifestyle and life expectancy, calculate the estimated corpus (total sum) required for your retirement. Consider inflation while making these calculations.

3. Create a financial plan:

• Debt management: Prioritise paying off high-interest debts to free up future income for savings and investments.
• Budgeting: Create a budget that allocates funds for essential expenses, savings, and debt repayments. You can involve your parents in creating a budget for their expenses as well.
• Savings and investments: Explore various investment options like mutual funds, PPF (Public Provident Fund), or NPS (National Pension Scheme) based on your risk tolerance and investment horizon. Utilize tax-advantaged retirement accounts like 401(k)s or IRAs if available to you.
• Healthcare planning: Consider health insurance plans for yourselves and your parents to manage potential medical costs in the future.

4. Open communication and support:

• Discuss openly: Have open and honest conversations with your partner and parents about your financial situation, goals, and expectations. This fosters transparency and builds trust within the family.
• Seek professional guidance: Consulting a financial advisor can help you create a personalized plan considering your specific financial situation and retirement goals. They can also guide you on investment strategies and risk management.

Additional considerations:

• Government schemes: Explore government schemes for senior citizens like the Senior Citizen Savings Scheme (SCSS) or the Pradhan Mantri Jan Dhan Yojana (PMJDY) that may benefit your parents.
• Downsizing: Consider downsizing your living situation or exploring alternative housing options in retirement to potentially reduce living expenses.
• Part-time work: If feasible, consider continuing part-time work in retirement to supplement your income and maintain an active lifestyle.

Remember, this is a general framework, and it's crucial to tailor it to your specific circumstances. Consulting a financial advisor can provide personalised guidance and ensure your financial plan considers all the complexities involved.
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Patrick

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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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