Financial Planning: Malhar Majumder

Readers' Corner

I changed my profession this year and as a result, had to take a cut in my pay by 40 per cent. Today, I earn Rs 35,000 in hand every month. I have been investing in three large cap funds (via SIP of Rs 5,000 each) and three Ulips till last year. Though I would like to continue with the SIP in mutual funds, I don't think I can put money in Ulips (premium of Rs 30,000 each). My goals are to buy a house in three years and go on an international trip by 2014. How do I continue investing to meet my goals without any interruptions? Are there any cheaper avenues to invest than Ulips? I am 35 and married.
You have taken a cut of 40 per cent in pay very recently. So, I believe you have also curtailed your expenses. It is good that in spite of the current hardship, you are continuing with your SIP investments.

Under these circumstances, the first thing you should do is to opt for a pure term insurance of around Rs 50 lakh. At your age, the cost would come to around Rs 10,000 a year. Also, review your family health cover and ensure that it is enough to cover you in case of an emergency.

Your other two goals of buying a house and going on a foreign trip should only be considered once your professional life reaches your planned level of achievement.

I am 26 and have been working for two years. I earn Rs 45,000 a month. I do not have any dependents. My monthly expenses are Rs 15,000-20,000. The rest is saved, though I am yet to start investing the money. I want to buy a car in six months. The equated monthly instalments (EMI) is expected to be Rs 8,000-9,000. How can I achieve this goal? I also want to start investing the money that I save every month. What are my best options?
You have been saving around Rs 25,000 a month for two years. So you must be having around Rs 6 lakh at your disposal (25,000x24 months). Check your bank account and ensure that you have the funds. In case you plan to buy a car, you have the option of going for a loan on paying cash, as you are having a substantial sum at the bank (around Rs 6 lakh). Even if you buy it on EMI, you would still have around Rs 15, 000 a month in savings (after EMI). So, it is time for you to invest in a balanced manner. I suggest you first buy a health cover of at least Rs 5 lakh sum assured. As for the remaining surplus, you may put 30 per cent into the New Pension Scheme. This will help create a pension flow once you retire. The remaining 70 per cent may be put in mutual funds (60 per cent of that in equity-based funds, 20 per cent in gold-based funds and the rest 20 per cent in bonds).

Also, you could park 50 per cent of the money currently in your savings account in short-term bond funds for better return.

Today, the director of Gliese Consulting Malhar Majumder answers your questions