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'Life insurance will prevent financial distress'

india Updated: Nov 21, 2010 23:49 IST

Hindustan Times
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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.

Mitesh Kaul, 35 and Anchal Kaul,33: My monthly income is Rs 3 lakh. I spend on the latest gizmos. I am also very fond of travelling and like to spend lavishly during my trips. My wife also likes travelling, but she doesn't like my spending sprees and thinks I am wasting money We have made decent investments, but my wife thinks it's not enough. Could you please suggest a middle path so that I can sustain my current lifestyle without putting off my wife?

Halan: Are you saving anything?

Mitesh Kaul: We are saving about 8-10%

Halan: And this is going into financial products?

Mitesh Kaul: Financial products -- mutual funds, SIP's (systematic investment plans) etc...

Halan: And this is an addition to your PF (provident fund)? Mitesh Kaul: Yes

Halan: If you are saving 34% of your income and spending the rest, it's not such a big issue, simply because there always has to be a fine line between spending and saving. So just to make her happy, increase this 10% (saving) to 15% this year and target slightly higher next year. Also remember, as your income grows, keep on funnelling more and more into that savings. Use insurance very sensibly to build those nest eggs. Medical insurance will prevent a sudden want of cash in an emergency. Life insurance will prevent financial distress.

Arvind Menon, 29, IT professional from Bangalore: I am divorced and the only son of my parents. My father owns 20 cents of land in Kerala. My monthly salary is Rs 50,000 and I do not have any loans now. I have a SBI Smart ULIP Policy for which I pay a premium of Rs 75,000 per year. I also have 3 LIC policies (sum assured of Rs 5 lakh, Rs 1 lakh and Rs 1 lakh). I pay a sum of close to Rs 30,000 per year for these LIC policies. There is also a PF contribution of Rs 24,000 per year through my employer. I am planning to buy an apartment of Rs 35 lakh in Bangalore. Can you suggest any improvements I can make in my investments? Can you also suggest a few charity organisations which I can contribute (preferably on-line) for?

Halan: Out of the list of Mint 50, take two large cap funds. Once you are used to investing through the mutual fund route, add a mid-cap for that return kicker. The list is out here and I think if you just look at the list, you may be able to choose on your own. You are the first person to ask about charity. Giveindia.org is one of the portals that will take money from you and allow you to choose from 200 NGO (non-governmental organisations). It's worth your while to actually go to the website and you do an online transaction to fund the NGO of your choice.