‘There’s short-term worry, but growth story will continue’

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.
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Updated on Jan 23, 2011 10:42 PM IST
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Natarajan: We’ve championed the case of equities as the best investment for creating long-term wealth in 2011 and just two weeks into January 2011, worries around equities and stock markets have surfaced in a big way. The Nifty is down 11% from the peak of last year and 6.5% from January 1, till date, and this may not be the end of the correction. The question is...should you be worried?...

Halan: ...Market is simply saying that there are worries about inflation, bad governance, corruption and simply a dysfunctional government. The market is pricing all of that in and showing us where it is going. So short-term, yes there is a worry... Long-term, Indian growth story will continue.

Natarajan: Let’s welcome our first live guest:

Avinash Shukla, 26, information technology professional, Bangalore.

I have a take-home salary of Rs 40,000. I’m a married guy with dependent parents. My wife is a private schoolteacher and she earns Rs 15,000. We both together save Rs 20,000-25,000 per month.

Till now my portfolio has: (a) Rs 5,000 in Axis Bank Triple Advantage Fund-growth; (b) Ulip of HDFC SL-Crest with Rs 50,000 yearly premium (10 years plan); (c) R10,000 into PPF; (d) My regular monthly PF contributions of R2,900; (e) I have my company stocks worth Rs 8 lakh. I can sell one-fourth stocks per year from 2011 onwards. I have employer provided health insurance to me and my dependents up to Rs 5 lakh.

My questions are: (1) Suggest some good investment options to balance my portfolio. (2) I am confused about taking one proper life insurance and health insurance (family floater) plans. Do I need these plans?

My priorities are: (1) I have my younger sister who will be getting married in another three years. (2) To buy a house in Bangalore.

Halan: It’s always a good idea to have your own life cover and for your parents, simply because suppose you were to move from this company, these benefits don’t continue. You could take a small policy for yourself, but do take a separate cover for your parents. (For) Life cover, same thing goes. Take cover at least seven times of your annual income. At least a 30-year term you should take. Second, I have seen your portfolio, the Axis plan that you have is a balanced fund between equity debt and gold. (Your plan’s) performance has not been so good. Wait for a year, if it doesn’t gain speed, you will have to redeem.

You said you have got Rs 25,000 per month of fresh investments. Rs 25,000 year-on-year for 20 years at 12%, you have Rs 2 crore and 30 years by the time you are 56. At 12% you have Rs 7 crore, I am not counting in your increment, I am keeping that for the EMI that you would want to take.

Third, about your stock options in your company, not more than 20% of your portfolio should be in your stock options. It’s always a dangerous thing; don’t have all your investments in the same company.

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