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‘You need to make financial products work for you’

business Updated: May 01, 2011 20:58 IST

Mint, Hindustan Times and NDTV, bring you a personal finance show, “Let’s Talk Money”. The weekly call-in show, anchored by Monika Halan, editor, Mint Money, and Manisha Natarajan, editor and senior anchor, special programmes, NDTV, aims to answer viewers’ questions about money-related issues. Here are edited excerpts from the show that aired over the weekend on NDTV Profit and NDTV 24x7.

Shelly Khedka, 42, self-employed, Mumbai: Where do I ask my most basic doubts about money management from an Indian perspective? What are the basic and user-friendly money management/financial planning skills and where do I learn the same, so that I am not inundated with financial jargon, which confuse me?

Halan: There are simple thumb rules you can use. First, you need to make the financial products work for you and not the other way round. You will have to figure out what you need. How do you do that? Most people keep money in the savings deposit for an emergency, especially medical emergency. The first product to buy a simple plain vanilla health cover that covers your hospitalisation. The second product for families is simple-term life cover that is about seven to 10 times your annual income. For investments, you need to maximise the PPF (public provident fund) saving and you have your basic risk-free portfolio working for you. Now you fix the savings target. Figure out, after all your commitments are over, what are big potatoes, like how can I save about R20,000 a month.

Ali Zeeshan, 20, student, Ranchi: What will happen to health insurance once dad retires from his office after four years? I also need some money for my MBA after a year-and-a-half. Please advice me how do I meet expenses with these earnings without going for an education loan.

Natarajan: You should not be dipping into any savings of your parents at all. Education loans come so easy from the PSU banks, and you are looking at R70,000 corpus for 18 months. That’s not long enough a period for equity funds, so you look at dynamic funds.