Queries
Neha, Bangalore
I would like to invest in mutual funds.
However, I am not sure of the amount that
I can invest every month. Can one invest
different amounts each month and none in
some months, yet continue investing?
Assuming that you are planning to invest in equities,
you have the option of making a lump sum investment
in a mutual fund, or opt for a systematic investment
plan (SIP). The advantage of investing through SIP
every month would help you to take the benefit of
acquisition costs during your investment period and
mitigate the risks of market volatility. In the current
scenario, the market is gripped with volatility, and one
can spread the SIP investment a few number of times in
a month. For SIP investment, you can opt for different
investible amounts starting as low as `500 per month.
If you have not opted for SIP, and are doing a lump sum
investment every month, you can opt not to invest in
certain months. You can always restart your investment
after a break.
Anuj Kumar
I am a 38 years old and I work for a
private company. I am the sole earning
member of the family with an annual
income of `7.5 lakh approximately.
I have a three-year-old son and my
wife is not working. What type of plan
should I take which provides me life
coverage, and at the same time takes
care of financial needs of my family in
case of my death?
B Gopkumar
CEO, Reliance Smartmoney.com
Vivek Kumar
I am 30 years old earning an annual income of
`20 lakh. I plan to retire when I turn 50. I want
a retirement plan that ensures me a corpus of
`2 crore. How should I plan my retirement to
achieve the same keeping in mind an annual
inflation rate of 7- 10 per cent?
A corpus of `2 crore will give you an annual pension
of `14 lakh (at 7 per cent rate of annuity), which may
not be sufficient for you 20 years down the line when
you reach age 50, especially with an assumed inflation
rate of 7 per cent. Thus, the inflation-adjusted target
pension amount dwindles down to around `3-4 lakh
per annum. Assuming you spend `10 lakh, 50 per cent
of your income, on household expenditure at 7 per
cent inflation, you will require around `40 lakh per
annum for running your household without making
any lifestyle compromises. This means you need a
retirement corpus of around `6 crore. You may find it
a daunting task at this point of time. Start small and
keep increasing your savings towards retirement cor-
pus every year as your income increases. Some
of the retirement plans offered by life insurers do
offer the facility of increasing contribution to take
care of inflation. For retirement planning, you may
opt for a mix of National Pension Scheme, unit linked
based retirement plans by life insurers and Public
Provident Fund.
V Viswanand
Senior Director & COO, Max Life Insurance
14
Outlook Money July 2018 www.outlookmoney.com
The first step about financial planning is
to secure your family’s future. In your case,
it becomes even more important as you
are the sole bread earner. You should buy
a term plan covering about 10-15 times
your annual income and start with health
cover, a family floater, of minimum `5 lakh.
Also, this is the best time to start planning
for higher education of your child – you
may buy a regular premium payment
unit linked children insurance plan for 15
years to ensure that, irrespective of the
uncertainties of life, your child’s future
is not compromised. An insurance plan
for child has in-built features keeping
in view their education needs, which is
unlike any other financial instrument. It
is also never too early to start planning
for those retirement years – think beyond
the mandatory Employees’ Provident
Fund. You may consider National Pension
Scheme.
V Viswanand
Senior Director & COO, Max Life Insurance