Retirement goal:
1. With average life expectancy of 90 years one has to manage 30 years of retired life
2. When 35 years is one's average professional/ job carrier.
3. Simple arithmetic says that with the habit of investing Rs. 5,000.00 p.m.
at early age of 25 years for a period of 35 years one can manage a corpus of 3.24 crore at a reasonable return of 12% CAGR
4. Due to deferring such habit the corpus suffers a lot
Corpus becomes 95 Lakhs in 25 years
Corpus becomes 25 Lakhs in 15 years
5. Alternatively when the percentage changes from 12% to 8% the change in corpus also becomes remarkable:
Corpus becomes 1.15 crore in 35 years
Corpus becomes 0.48 Lakhs in 25 years
Corpus becomes 0.17 Lakhs in 15 years
So to balance:
1. One has to chose equity based portfolio
2. Has to start early
3. Needs to stay long
Residential Accommodation Planning:
To manage the down payment one may consider good Multicap Fund when the time horizon is 5 years and above. For a lesser period the choice should be Hybrid Fund.
1. Location should be given high priority in recent time demands of relocation for job responsibility.
2. EMI should not exceed 30% of current income.
3. Down payment requires 20% of purchase price.
To manage the down payment one may consider good Multi Cap Fund when the time horizon is 5 years and above. For a lesser period the choice should be Hybrid Fund.
Income Generation Planning:
1. Priority should be protection of capital and one should avoid the greed of high return and choosing risky investment ideas of unregulated private place.
Check that any commitment above 2% higher than 10 years G-Sec. is an indicator of default risk.
2. It is always preferable to understand the product which is chosen. Merely thinking that suggestions of bank managers can be accepted wholehearted may be proofed to be not so with the passage of time.
3. Special attention Should be given to liquidity position. Parking money to bank instead of keeping asset in the form of Land, non rent yielding property and jewellary is quite good decision.
4. Senior Citizens Savings Scheme becomes lucrative since the announcement of Govt. Post October 1.
5. After parking sufficient in the above assets one may choose short duration Debt Fund and using SWP option rather divided option is preferable it will also help managing taxability since after 3 years the bond taxation is 20% after adjusting indexation.
6. Parking money in Hybrid Fund may be another choose here this will offer low taxation rate of 10%
Child Education Planning:
1. This goals differs from all other goal and it is fixed time oriented goal no postponement is allowed here.
2. Child ULIPS is hardly able to achieve to meet investment objective, moreover it diverts part of ones investment to term cover which is otherwise available at much lessor cost.
3. 5 years lock in period also hinders one from switching to profitable solutions in such a situation, when it fails to deliver expected return.
4. Inflation in Educational industry is quite considerable. Engineering degree used to cost Rs. 5-8 Lakhs five-six years ago now becomes Rs. 12-18 Lakhs.
5. Parents aspiring to send child abroad must also is required to consider the impact of rupee depreciation.
Planning for purchase of Car:
1. Cost of car is Rs. 6 Lakhs
2. Fuel cost Running per day 50 km means 4 liter/day costs nearly Rs. 350/day i.e Rs. 10,000.00 p.m.
3. Annual Insurance cost Rs. 20,000.00
4. Annual Maintenance cost Rs. 10,000.00
5. That means annual cost 25% of original cost
6. So to chose a car one should keep in mind the choise should be matched with the real commuting need.
7. Deferring the need of car may make sense than incurring loans.
8. And making a corpus with SIP to build
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