1. Let's start with a few Must DO'S:-
a) Ensure that you have an Online Term Insurance Plan for the maximum allowed period in place covering at least 15 years of your annual income, and which you should keep reviewing to buy new ones if your income increases, in tandem with your investment.
b) Buy an Online Individual Basic Health Plan if you are single, or a Family Floater Plan if you are married or expecting to get married.
c) For your dependent parents, instead of including them in your policy, buy them a separate suitable health plan, if possible, or include them in your company's Group Health Plan if allowed.
2. And now the Essential DON'TS:-
a) Don't invest in any product you don't understand.
b) Don't overcrowd your portfolio with thematic, sectoral and similar funds.
c) Don't plan your future based on low-yield debt investments which you will outlive.
d) Don't ignore tax planning by leaving it for the end of a financial year.
e) Don't dip into your retirement corpus before you retire.
f) Don't let short-term market views override your long-term conviction.
3. Finally the CLUTTER-FREE Strategy (with illustrated example):-
a) Buy an online Term Insurance Policy (TIP) of 50 lakhs sum assured for 30 years, whose annual premium would roughly be of 12,000, i.e. 1,000 per month.
b) Simultaneously invest 60,000, i.e. 5,000 per month, for 30 years, in a SIP of a Balanced mutual fund which would roughly give 12% CAGR.
c) Your corpus will be around 1.55 crores after 30 years upon your survival (i.e. your SIP corpus).
d) Upon unfortunate non-survival during your investment journey, say after 5, 10, 15, 20 or 25 years, your family will get around 54 lakh, 61 lakh, 74 lakh, 96 lakh, or 1.35 crores respectively (i.e. your TIP benefit + your SIP corpus).
e) TIP + SIP strategy scores due to flexibility in deciding your insurance cover, liquidity in corpus withdrawal, savings in insurance mortality and fund management charges and higher premature death benefits.
f) You can even opt for a tax-saving (ELSS) fund instead of a Balanced fund, to avail Sec 80C tax benefits on both TIP premium and SIP investment, till your earning age.
g) With slightly higher risk, you can add a long-term midcap fund SIP (or just increase your balanced fund SIP if comfortable with it) when your annual earnings stabilize to fulfill other long-term goals.
4. For retirement income upon your survival after 30 years, a regular income stream can be generated through STP of the accumulated MF corpus, suiting your monthly expenses at that time, preferably not more than 5% of your corpus annually, while letting the MF corpus continue to grow by the power of compounding.
a) Ensure that you have an Online Term Insurance Plan for the maximum allowed period in place covering at least 15 years of your annual income, and which you should keep reviewing to buy new ones if your income increases, in tandem with your investment.
b) Buy an Online Individual Basic Health Plan if you are single, or a Family Floater Plan if you are married or expecting to get married.
c) For your dependent parents, instead of including them in your policy, buy them a separate suitable health plan, if possible, or include them in your company's Group Health Plan if allowed.
2. And now the Essential DON'TS:-
a) Don't invest in any product you don't understand.
b) Don't overcrowd your portfolio with thematic, sectoral and similar funds.
c) Don't plan your future based on low-yield debt investments which you will outlive.
d) Don't ignore tax planning by leaving it for the end of a financial year.
e) Don't dip into your retirement corpus before you retire.
f) Don't let short-term market views override your long-term conviction.
3. Finally the CLUTTER-FREE Strategy (with illustrated example):-
a) Buy an online Term Insurance Policy (TIP) of 50 lakhs sum assured for 30 years, whose annual premium would roughly be of 12,000, i.e. 1,000 per month.
b) Simultaneously invest 60,000, i.e. 5,000 per month, for 30 years, in a SIP of a Balanced mutual fund which would roughly give 12% CAGR.
c) Your corpus will be around 1.55 crores after 30 years upon your survival (i.e. your SIP corpus).
d) Upon unfortunate non-survival during your investment journey, say after 5, 10, 15, 20 or 25 years, your family will get around 54 lakh, 61 lakh, 74 lakh, 96 lakh, or 1.35 crores respectively (i.e. your TIP benefit + your SIP corpus).
e) TIP + SIP strategy scores due to flexibility in deciding your insurance cover, liquidity in corpus withdrawal, savings in insurance mortality and fund management charges and higher premature death benefits.
f) You can even opt for a tax-saving (ELSS) fund instead of a Balanced fund, to avail Sec 80C tax benefits on both TIP premium and SIP investment, till your earning age.
g) With slightly higher risk, you can add a long-term midcap fund SIP (or just increase your balanced fund SIP if comfortable with it) when your annual earnings stabilize to fulfill other long-term goals.
4. For retirement income upon your survival after 30 years, a regular income stream can be generated through STP of the accumulated MF corpus, suiting your monthly expenses at that time, preferably not more than 5% of your corpus annually, while letting the MF corpus continue to grow by the power of compounding.