Thank you so much for your valuable suggestione. I will try to add a large car fund in my portfolio. I have one more question could you please help me with this as well? As im 33 years old, recently took a 2cr term insurance for family protection. As im a corporate employee current company provides a health insurance for me and spouse. Im paying extra amount for parents health insurance in the same company beacuse it will be applicable from day 1. Should i take separate health insurance for me and spouse and parents as well. Note: parents are dependent on me Thanks

Ans: It's great that you've taken a term insurance policy for family protection. As a corporate employee, your company-provided health insurance for you and your spouse is a good benefit. However, relying solely on employer-provided health insurance may not be sufficient for several reasons.

First, employer-provided health insurance is contingent on your employment. If you switch jobs or face job loss, you may lose coverage, which can be risky. It's wise to have a separate health insurance policy for yourself and your spouse to ensure continuous coverage, regardless of employment status.

Second, company health insurance policies often have coverage limits that may not be adequate for severe or prolonged illnesses. A separate health insurance policy can provide higher coverage and more comprehensive benefits, ensuring better financial protection during medical emergencies.

Moreover, it's advantageous to take separate health insurance while you are still healthy. Securing a policy now means you'll likely get better coverage and lower premiums, which will benefit you significantly during retirement when health issues are more common.

Regarding your parents, since they are dependent on you, it's prudent to have a dedicated health insurance policy for them. Employer-provided health insurance might have limitations on the coverage for dependents, especially for senior citizens, and could be insufficient for their healthcare needs.

In summary, having separate health insurance for yourself, your spouse, and your parents ensures continuous, comprehensive coverage and financial protection against medical expenses, both now and in retirement.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: You have done a good research job. If the features are same, then I suggest Star health policy of 1 Cr should be good for your family.

Here are few healthcare policies tailor-made for senior citizens:

1.Star senior citizen red carpet
2.Niva Bupa Senior First
3.Manipal Cigna Prime Senior
4.Care Senior Plan

You can select any one among these for your parents. Feel free to consult an insurance advisor if needed.

Ans: You are already doing a great job.

No loans. Strong income. Well-covered insurance. Good control on expenses. Solid base already built.

Let’s now assess your questions and guide you from a 360-degree perspective.

? Kids’ Education and Portfolio Adjustment

– Your goal is clear: children’s education and higher studies.

– You have fixed return instruments, which gives safety. But it also restricts long-term growth.

– For school education, fixed income is okay. But for higher studies, costs are rising fast.

– You need some growth assets to fight inflation.

– Continue Sukanya for daughter. It is safe and tax-free. Keep contributing till age 15.

– For son, consider opening a PPF account. Or else start a dedicated mutual fund.

– Since you already have LIC and ULIP, they are not efficient.

– Suggest surrendering LIC and ULIP. They give low returns and mix insurance with investment.

– Reinvest the amount in actively managed equity mutual funds.

– Use regular plans and invest through a certified financial planner.

– Regular plans give you ongoing guidance and support. Direct plans have no such help.

– Don’t invest in index funds. They lack downside protection and have no professional fund manager support.

– Actively managed funds offer better returns over the long term.

– They adapt to market conditions and provide better performance.

– Create two goal-based portfolios – one each for daughter and son.

– Allocate 60% to equity mutual funds and 40% to PPF or FD for stability.

– Rebalance every year based on market and goal progress.

? Health Insurance – Need for Mother

– Your current health cover of Rs 5L employer floater is good.

– But company insurance can stop anytime if you leave job or retire.

– You have personal family floater for Rs 5L – that’s a good step.

– But your mother is not covered under it.

– Consider buying a separate health cover for her.

– Individual senior citizen policy works better for her age.

– Include top-up cover of Rs 10L with Rs 5L base policy.

– Avoid adding mother into your floater. Premiums will rise sharply.

– Senior citizen plans may have waiting periods. So, start early while she is healthy.

– Include critical illness rider if available.

– This step will reduce risk of large out-of-pocket costs in future.

? Term Insurance and Health Cover – Need to Increase?

– You have Rs 2.6 Cr term cover and Rs 55L employer group term.

– For your income and family dependency, cover is quite good now.

– You may consider increasing cover to Rs 3 Cr for future-proofing.

– Check if the term policies cover disability or loss of income.

– Include accidental death and disability riders if not already covered.

– Regarding health insurance, Rs 5L family floater is base level.

– Add top-up policy of Rs 15L with Rs 5L deductible for enhanced protection.

– This is cheaper than increasing base cover and gives high protection.

– Especially important since you’ve mentioned possible health risks affecting work.

? Rental Income – Is It Advisable to Build Houses Above?

– Your area has good rental potential. Rs 12K per unit is decent.

– Since you have no loans and own the land, this can be explored.

– But construction involves cost, effort, risk, and time.

– Evaluate the cost of construction and expected rental returns.

– Also, check local regulations and approvals required.

– Ensure that post-tax rental yield justifies investment.

– Rental income is taxable. Also consider vacancy and maintenance.

– If you can manage it and have surplus funds, it can support your retirement.

– But don’t depend only on real estate for income.

– Real estate is not liquid and lacks flexibility.

– Focus on financial assets as your core strategy.

? Retirement Planning – Can You Retire in 10 Years?

– You are 40 now. Planning to work till 50 is a smart step.

– Retirement depends on your future expenses and existing corpus.

– Annual spending is Rs 5.5L now. That may rise to Rs 12L in 10-15 years.

– You have PF, PPF, FD, land, gold, etc., as base retirement assets.

– To retire in 10 years, you need enough income to meet rising expenses for next 30 years.

– Start building a separate retirement corpus now.

– Use SIP in actively managed mutual funds for long-term growth.

– Keep increasing SIP as salary grows.

– Don’t touch kids’ education fund for retirement.

– Use goal-based mutual fund investing strategy.

– Combine PPF, mutual funds and small FD laddering for steady withdrawals post-retirement.

– Regularly assess your progress every year with a certified financial planner.

– Do not plan retirement based on hope or rough numbers.

– Use customised strategy and risk-based allocation.

– Don’t count on land or gold as liquid retirement support.

? Tax Saving Strategy – Ways to Save More

– You can claim deductions under Section 80C.

– PF, PPF, Sukanya, life insurance, ULIP premiums are all part of 80C.

– Maximum limit is Rs 1.5L. You are already utilising it well.

– But LIC and ULIP are inefficient. Replace them with ELSS mutual funds.

– ELSS gives better returns and has lowest lock-in among 80C options.

– Invest in ELSS through regular plans via certified financial planner.

– You can claim health insurance under 80D.

– Rs 25,000 for self and family. Rs 50,000 for senior citizen parents.

– So, your health cover for mother will also give 80D benefit.

– Home loan interest under 24(b) is not applicable now since you have no loans.

– Use HRA if eligible. Use NPS for extra deduction of Rs 50,000 under 80CCD(1B) if retirement fund needs a boost.

– Avoid investing in products only for tax saving.

– Always align tax-saving with your goals.

? Mutual Fund Plan – Planning to Start

– You are right to consider mutual funds now.

– But avoid index funds. They simply copy the market. No active management.

– Index funds fall as much as market. No downside cushion.

– They also underperform during flat or volatile periods.

– Actively managed funds try to reduce loss in tough times and beat index in good times.

– Choose funds with long-term consistency and managed by experienced teams.

– Avoid direct plans. They offer no guidance or reviews.

– Invest through regular plans via certified financial planner.

– You get portfolio reviews, fund rebalancing, goal alignment and emotional support.

– For education, retirement, contingency and growth – use different mutual fund buckets.

– Keep SIPs disciplined. Don’t pause for short-term market fear.

– Follow a mix of large-cap, flexi-cap and hybrid funds.

– Increase SIPs every year as income grows.

– Use STP (Systematic Transfer Plan) to manage lump sum investments from FD or LIC proceeds.

? Finally

– You have built a strong foundation.

– No loans. Good insurance. Decent savings. Reasonable lifestyle.

– Next step is optimising the portfolio for future goals.

– Shift from low-yield products to goal-based mutual funds.

– Surrender LIC and ULIP. They don’t align with modern financial planning.

– Secure your mother with independent health cover.

– Strengthen your own health insurance with top-up plans.

– Rental income is an optional add-on, not a primary pillar.

– Start investing monthly in mutual funds through regular plan route.

– Consult a certified financial planner every year to stay on track.

– You are just 10 years away from freedom. Plan well. Monitor well. You can reach there.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment