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Best options for Life Insurance And Retirement Planning

Hi im santhosh age 29. Wife age 25 not working... & having 1yr old son... My monthly income is Rs25000... My expense around 17000rs.. my savings is 8k. I have only lic money back policy 2k per month.... so my savings is 6k totally.... 50k having in Savings acc. How to invest in what(FD, RD, MF, SHARES)?.. I have no idea.. Tel me best options to invest..for better life(son educt, marrige, retirement etc).. Thank u

Nov 30, 2014 by Santhosh, Chennai  |   Mutual Fund

We can provide some general guidance based on the limited information we have from you:-

1. Since your wife is not working, the sum assured of your money back policy may not be enough to meet the income needs of your young family and the future aspirations of your son, in the event of an untimely death. Please read our article, How much life insurance is adequate. If you determine that you need additional life insurance, you should buy a term policy to ensure that you have sufficient cover. The premium of a term policy is only a fraction of the money back policy for the same sum assured. You can buy term policy from LIC or other life insurance companies. As regards your money back policy, you should reinvest the money back received from the policy in high yielding assets like equity mutual funds to get higher overall return on your investment.

2. Since you are young, your asset allocation should be weighted towards equities. You should invest your balance savings in good diversified equity mutual funds with a long investment horizon through a monthly systematic investment plan. You should gradually increase your monthly SIP as your income and savings increase over time. Top diversified equity funds have given nearly 20% compounded annual returns over a 15 to 20 year time horizon. If you invest 3,000 in monthly SIPs and assuming you get 20% annualized return on your investment, you will be able to accumulate nearly 1 crore over a 20 year investment horizon.

These are general guidelines only. To develop a financial plan for yourself, you should consult with a financial advisor and discuss your financial situation, short term and long term financial goals. Also discuss the various investment options to meet your financial goals with your financial advisor to select the best investment option for you. You can search for financial advisors near you on our website.

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