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, senior anchor, 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.
Deepak Raj, 30, married, a mariner from Chennai:
My annual income is about R25 lakh. I own a house worth R70 lakh and I don’t get any income out of it. I also have an SBI Ulip II policy (30% equity and 70% funds) for which I have been paying an annual premium of R1.2 lakh since 2007. Lastly I bought land (15,300 sq ft) for about R14 lakh on East Coast Road — about 100 km from Chennai towards Pondicherry. I have a housing loan and the EMI for the next 15 years is about R12,000. I also have a car loan for the next three years and the EMI is R6,400 INR. I am planning to work on ship for another 10 years and thereafter I will opt for a shore-based job which will yield me about R10-12 lakh/year. I am married and want to plan my future savings so I am comfortable when I retire at the age of 55-60 years.
Halan: You have got very good medical cover from your company and you do have your independent health cover as well so that’s very good. Your real estate seems to be fine — you got your own property and you bought some lovely land. The only part left is the life cover which you need, being the only breadwinner for this family. Your income and spending suggests that you should have a life cover of almost R3-4 crore, but I recommend a R1 crore pure term policy , which you should buy online to save the agent commision. You can buy this policy from ICICI Prudential, which has a good plan. Your today is pretty much taken care of, let’s look at tomorrow. My guess is that you get (to save) R1 lakh every month. If you put this R1 lakh in a product that grows at 10%, when you are 50, you have a portfolio of R12 crore. If you are familiar with stocks, do some stock-picking on your own. But if you don’t have knowledge about stocks, stay with mutual funds.
Gaurav Tayal, 28, software engineer from Mumbai, with a homemaker-wife:
My income is R50,000 per month and expenses are around R26,000. I need your help in financial planning. My goals are a) to buy a house worth R40 lakh as early as possible, b) to buy a car worthR5 lakh in the next one year, c) to retire at 50. My portfolio consistst of equity investment - R4 lakh, sweep-in fixed deposit (at 7.5%) - R4 lakh, public provident fund (PPF) and employees’ provident fund (EPF) — R3.5 lakh, health insurance - R 3 lakh (family floater provided by employer), life insurance - R12.5 lakh.
Halan: You have the money, you are saving half of your income and as you continue increasing your income, what you need to remember is that whenever that increment comes in, in terms of job change or you get a bumper increment, save the same amount in percentages. So, if you are saving half your income , keep saving half of it as you get up that income ladder. The money is there, you just need to structure it a little bit. Looking at the portfolio again growing at 10 per cent, with the current assets, at 50, there is enoug money to retire. You are already saving for the downpayment on the house. There is no option for you but to take a home loan and that’s OK; you are leveraging future income to buy that house today. The car could be an issue, but you can do one thing; all of us who are in salaried jobs. We get these sweet little quarterly payments, refunds or mediclaims. Collect all that and before you know you have the downpayment for that car.