Our life
begin with goals. I may not recollect my #LifeGoals of my toddler days, but I
do remember my goals beginning the age of 10. I had a dream of earning money
and gifting my parents, aunts a lot of things, I used to note my wishes down in
a diary about my wish-list. When I grew older, I realised, to fulfill those
desires, I must earn my own. So, my full attention went towards making my
academic efforts towards a career building process. I told myself, every page I
am reading is adding towards my #LifeGoals of getting a decent job and
saving-up. People of my age may not be as money minded I was back then, but if
I look back, it was nothing but having a goal and planning towards it knowingly
or unknowingly.
Cut to
2018. I am sorted with my financial planning, and revisit my portfolio and
contingency plans on regular intervals. However, I realise, with sound
understanding about various financial and other asset classes, only my
contingency fund and term insurance plan I am satisfied about. I started
working 10 years back, but I am yet to plan for a Europe trip, a house of my
own and my dream car. I wonder, though I kept saving and investing a sizable
portion of my salary each year, I never bucketed them under heads. So, now, my
savings may allow me to withdraw from any investments and execute some of my
plans but I don’t feel comfortable.
So to not
make the mistake I committed, here is what you can do. As you start earning,
divide your monthly income* under few heads - first priority should be buying adequate Life Insurance, a health
insurance and start creating a contingency fund.
All our
goals can be bucketed broadly under 4 categories.
1.
Short-term goals
2.
Medium-term goals
3.
Long-term goals
4.
Post retirement planning
Short-term goals
Depending
on your age the goals can vary. To keep it short and crisp, I am assuming you
have just started working, and about 21-25 year old, your short-term goal, may
be buying a Mac-book, International trip with friends and paying off education
loan etc. To attain this goals, you may consider a bank fixed deposits, bond
funds, debt-oriented hybrid funds etc, it has certain amount of stability with
limited return on investment, main aim of these investments is to accumulate and block the
amount for the goals.
Medium-term goals
For a 21-25
year old, medium term could be 4-7 years. In this span, one may like to save-up for
the down payment of housing loan, kitty for marriage expenses, honeymoon abroad
and buying the first car. I am of an opinion that saving-up the installments is much better than buying on EMI. One may consider buying Hybrid mutual Funds in SIP, which
will have upto 30% debt exposure to cushion equity market volatility. You may
also consider large-cap equity funds if you have better risk appetite. These
investments are likely to give much higher return compared to fixed instrument.
One may see 10-12% upside on the capital invested. Monthly SIP is highly
recommended in this scenario
Long-term goal
Typically
over 7 years is considered long term in financial asset classes. For the goals
like Child-birth, Children education, upgrading lifestyle, house and cars,
medical expenses are highest at this phase. One may consider buying #ULIPs or
equity mutual funds to substantiate the take-home salary or cushion as a second
income.Fo this phase, one may consider buying aggressive portfolio of 100%
equity linked products. Mutual Funds and ULIP both allows this. A sizable
portion, atleast 10-15% of your income should be allotted in this category.
Most of the Open-ended equity mutual funds and ULIPs allows the flexibility of
partial withdrawal. Hence, the long-term investment can go on parallel with
withdrawal benefits.
Retirement planning
Last, but
the most important of all goals, we may call it as an Ultra long-term plan. Though many
big companies provide PF facility for the employees, which accumulates alongside through the employment tenure, the low return may not be
lucrative enough to completely depend on this for entire retired life. With
inflation at high levels and growing living standards, we must plan start
planning early for retirement.
ULIP comes
as the best option for this category. With IRDA’s initiative, #ULIP products have capped the
fund management charges at 1.35%, (lower than direct mutual Funds) and with
mortality charges the products are capped at 2.25%. (lower than regular funds)
The new wave of the ULIP products are investor friendly and for long-term
commitment, when you have 15-20 years goal, you should consider this product in
your portfolio. ULIP is nothing but insurance-cum-investment product. With
stringent norms and zeal of the dynamic insurance companies, it has become a lucrtive investment product, which also provide insurance. With a long term disciplined
investment, it helps create a sizable portfolio to take care of the
post-retired life. You may consider shifting the corpus in an annuity plan or
simply take interest payout on a senior citizen deposits. Life likely to be
much more easy. Its #InvestBefikar
Few key
features of this product you must know –
1.
The investment amount is eligible for 80C
investments
2.
It has low lock-in of 5 years (you must not
withdraw at that point until you have a dire need)
3.
The Insurance cover in this product is atleast
10 times the annual premium
4.
Incase of death of the policyholder, he/she
shall get Fund value or the sum assured which ever is the higher
5.
ULIPs have choice of fixed income and equity
funds under them to choose from
6.
You need to pay a fraction of service tax
upfront on each premium
7.
Maturity amount is tax-free
8.
Post 5 year lock-in period partial/ complete
withdrawal is possible (may be with surrender charges and penalties)
9.
It can be bought online as well as offline
The
importance of goal based planning became all the important for me, after
attending the bloggers meet recently organised by Bajaj Allianz Life Insurance. With a few quiz and games, it opened up the unexplored part of
planning, which I wrote above as a note for my readers. The event organised by
the Bajaj Allianz Life Insurance reiterated their commitment to create wealth
for their investors along with the life insurance. They realise and advocate
goal based planning to promote #InvestBefikar with #ULIPs. Really liked their investment
orientation for goals of life and not vice versa.
To
conclude, the moving dart board at the #BajajAllianzLifeInsurance bloggers meet,
reminded me, life keeps moving. You can throw the dart at the right place only
with planning and practice.
