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Please ask your questions HERE and rediffGURU Milind Vadjikar, Association of Mutual Funds in India (AMFI)-registered MF distributor and Pension Fund Regulatory and Development Authority (PFRDA)-registered retirement financial planning advisor, will answer them.
Murali: Greetings I am wondering whether to pay Rs 50,000 Health insurance premium for an insurance of Rs 500,000 or keep Rs 10 lakh FD which I have funds and no other requirement against it. Pl give your valuable advise.
It is okay if you are quite sure that the 10 Lakh sum kept aside for medical emergencies, if any, will not be consumed for some other need.
This is what typically happens and then you may encounter health criticality without funds for it.
You may shop around online and also check with government general insurance companies.
Hopefully GST council expedites its decision to eliminate or reduce GST applicable on health insurance.
In my view, it is better to have a health insurance cover and deploy your funds to generate optimal returns.
Ultimately it is your choice/preference.
Anonymous: Can I retire at age of 50 years? My savings are cash in Bank around Rs 2 Cr with nominal FD returns, Have Physical Gold about 3 Kg (Purchase price 1.8 Cr), Have Ornament Gold about 2.3 Kg (Purchase price 1.2 Cr), Have Unlisted NSE stock worth 1 Cr, Have Pre IPO Opportunities Fund worth Rs 80 Lakh, Have two apartments worth 3 Cr and 1.5 Cr with combined rental of Rs 1Lakh per month, Have residential plot worth 1.5 Cr, Have one house abroad worth 6 Cr and rental 2 Lakh per month, Have cash in Offshore Bank in dollars i.e. worth Rs 12 Cr with nominal FD returns, Have Insurance schemes worth Rs 20 Lakh and Lastly have a house worth Rs 18 Cr in which we currently reside.
Our Expenses: We have no Loans/Debts; Our Average Monthly Expenses are Rs 8 Lakh, Health Insurance Rs 1.5 Lakh per annum, Total College Education abroad for 2 kids for next 6 years estimated to be Rs 6 CR on an average 1CR per year, Old Aged Parents Expenses Rs 2 Lakh per month.
Just summarising your assets available for generating retirement income:
1. Domestic FD: 2 Cr
2. Gold (3 Kg) valued at: ~2.64 Cr
3. Jewellery valued at: ~2 Cr
4. Flat1: 3 Cr
5. Flat2: 1.5 Cr
6. Land: 1.5 Cr
7. Overseas House: 6 Cr
8. Overseas FD: 12 Cr
9. Self-occupied property: 18 Cr
10. Stock & AIF: 1.8 Cr
Total: 50.44 Cr
(Gold price considered: 88 K per 10 gm)
However we can subtract assets at serial no. 3, 7 and 9 from this and we get a corpus of 24.44 Cr. The 44 L may be kept aside for transaction costs, taxes etc.
It is advisable that you sell the flats in India offering low rental yield and also physical gold and the land property.
Now the corpus of 24 Cr may be split into two parts:
20 Cr may be invested in MFs for SWP at 5% yielding post tax income of around 7.3 L per month.
4 Cr may be used to buy immediate annuity from a life insurance company. Assuming 6% annuity rate you may expect a post-tax monthly income of 1.4 L.
So your post tax monthly income may be:
7.3+1.4+2* = 10.7 L as desired.
*Rental from overseas House
Since the kid's higher education is not finding place here I suggest you work for few more years, while putting this retirement income plan in place, for funding their higher education.
Yeswanth: What are the best Mutual funds companies to invest? I am 28 years old I am ready to take risk as well please suggest me best plans for mutual fund investing? Which platform is best for investing mutual fund (ex: Upstox, etc) suggest best one?
Mutual fund scheme may be recommended based on your financial goal (corpus to be acquired), risk appetite, financial profile and time horizon.
Almost all brokerage firms and fintech companies have apps for mutual fund investment however I would recommend MF Central or mycams/Kfinkart.
Anonymous: Dear PF Expert, My question is regarding the impact of partial withdrawal money from my EPF corpus. I quit my job in Feb 2023 (2 years ago) to work as a freelancer, after more than 18 years of service in the industry. To meet certain financial needs, I would like to make a partial withdrawal from my PF corpus. My questions:
1) How will this impact my EPS pension after I turn 58 years ? Since the Pensionable salary is dependent only on the average salary in the last 5 years of service and not on the outstanding corpus, the fact that I have withdrawn before retirement age of 58 shouldn't matter. Is my understanding correct? Also, since my average Basic for the last 5 years of service was more than Rs. 15000 and I had 18 yeas of service, I should ideally get a monthly pension of 15000 * 18/70 = Rs.3857 (approx.) Please confirm if my understanding and calculation is correct (Of course, this is assuming that the formula will hold good when I eventually turn 58 to receive the pension)
2)If this is the only partial withdrawal that I would ever make, can I assume that the corpus that would be available for lumpsum withdrawal after I turn 58 would be: [Current Corpus - Partial Withdrawn Amount] * (1.0825) * 1 (EPF interest of 8.25 % and I have only one more year of interest accrual out of
3) Please respond so that I can make an informed decision about my partial withdrawal
Answers to your queries are as given below:
1. EPF partial withdrawal will have No impact on EPS.
The estimated monthly EPS pension seems okay.
2. Your assumption about net EPF corpus available to you after 58 is correct, in principal.
Deepesh: I am 35 years old & investing for 15-20 year in the following mutual funds : (1) Nippon India Large Cap Fund -4000 (2) Canara Robeco Emerging Equities -4000 (3) Parag Parikh Flexi Cap Fund -4000 (4) Motilal Oswal Elss Tax Saver Fund -4000 (5) Kotak Small Cap Fund -4000 [Monthly SIP] & (1) Mirae Asset Large Cap Fund -1.5 lac (2) SBI Focused Equity Fund -1.5 [lumsum]. Investing 5000 in PPF & 10000 in NPS monthly, increasing every year. My goal is to build corpus for my house, children edu. marriage (2-3Cr) and retirement purpose (5-6Cr) etc. Please review my portfolio. how many fund strictly should be added or exit from my portfolio?
Your lump sum (3 L), monthly sip (20 K) and PPF (5 K/pm) may grow into a sum of 2 Cr in 20 years from now onwards, which goes towards your first goal.
While the NPS monthly contribution (10 K) towards retirement goal is significantly lower to fulfill target (5-6 Cr).
You may take either of following steps to enhance chances of building desired retirement corpus (5-6 Cr) by 60 years.
Monthly contribution to NPS should be increased to 60 K.
Start another monthly sip for 40 K for 25 years towards retirement goal fulfillment.
Returns assumed from various investments:
Mutual funds: 10%
PPF: 7%
NPS: 8%
These are purposely considered to be on moderate side.
Coming to your portfolio, I am assuming you are okay with an aggressive risk profile for 15-20 year horizon.
You may have following fund types and allocation:
- Flexicap type mutual fund: 25%
- Large cap type mutual fund: 25%
- Multicap type mutual fund: 25%
- ELSS or Value Fund: 25%
You already have 3 of the 4 fund types mentioned above. You may continue with them but review their performance annually.
For the multi-cap fund type you may select any fund from the top quartile in this category.
For the 40 K sip recommended for your retirement planning, you may continue with above fund types with 20% allocation and add one thematic fund from new technology sector for balance 20%.
Reiterating that this recommendation is assuming aggressive risk profile.
If your risk appetite is different then you may consult an MFD for suitable changes.
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