Most people ask the LIC Agents when they have to take up LIFE INSURANCE POLICY and invariably the agents recommend policies wherein they get maximum commission.
I strongly feel that LIC is only for risk cover and first one should take up insurance policies without any bonus/money back schemes wherin one pays mimimum premium. Article by Devang Shah is reproduced for GOA NET readers My monthly salary is Rs 19,000. With this, I have to take care of my parents, wife and baby. How must I manage my money? Where can I invest to save on tax? - Salim Sayyed Dear Salim, I have answered your queries under various heads. Insurance My first concern would be that, if you are bread earner, you must consider covering your life. God forbid, but should something happen to you, your family will be in a soup. A simple term cover does not cost much and will provide at least some relief to your dependents. Do understand that pure term cover does not return any money if you outlive the policy period. But it will cost you very little. For instance, a Rs 10 lakh (Rs 1 million) cover for 20 years for a 35-year old might come for under Rs 500 per month. So you just have to pay a few hundreds a month. Should something happen to you, your family will get the money and they can invest it for their future. Liquidity Secondly, you need to keep money aside for emergencies. You could consider a bank fixed deposit or even a liquid fund such as the HDFC Liquid fund. Liquid funds are known as ultra short-term debt funds or cash funds that invest in fixed return instruments of very short maturities. Their main aim is to preserve the principal and earn a modest return. So, the money you invest will eventually be returned to you with a little something added. I am very aware that no amount of money is enough for emergencies. However, for practical purposes, a few month's expenses could be a good place to start. Tax saving You have not mentioned anything concerning your investments or savings. So I am assuming you are only starting out now to build your wealth. If that is the case, you might not want to take very big risks. The Public Provident Fund is not a bad place to get a decent return of 8% per annum and also save taxes. But it locks up your money for 15 years. The National Savings Certificate is for six years and also offers 8% per annum. But, since the interest is taxed on maturity, the post-tax return is less than the above. Pension plans of insurance companies also saves taxes but are more complex to evaluate and choose. They could also be expensive sometimes. Investing You may want to start out by gradually investing in mutual funds. Over the long term, equity gives the best return. And, for those who are not stock market savvy, the best route is by investing in a mutual fund where the fund manager does the investing on your behalf. For starters, you could invest in floating rate funds such as Templeton Floating Rate Fund. These are funds that invest in instruments with a floating interest rate as against a fixed interest rate. This will help you understand how mutual funds work. When the stock market drops, you will then be prepared to invest in a diversified equity mutual fund. Manoj Raikar _____________________________________________ Do not post admin requests to the list. Goanet mailing list (Goanet@goanet.org) Help/Unsubscribe/Update your Subscription: %(user_optionsurl)s This email sent to %(user_address)s
