Retirement plans in India usually have only 3 objectives: House, vehicle and a regular pension. Once these are met, you believe you won’t need more in your retirement. But you are so wrong!

What about your medical bills? What if you wanted to travel somewhere? What if you were to entertain guests? What if your near and dear ones required financial help? You never thought about allocating money for all these, did you?

But now when you begin thinking along these lines, does your retirement plan generate enough to meet all these possible future expenses? Take out your calculator and follow these steps, noting down the figures in a notepad:

• Whether as regular investments, or a lump sum, what is the total amount that you would have deposited before you start withdrawing pension?
• What is the rate of interest your investment will be earning?

• What are the total taxes and charges you will be liable to pay when you begin withdrawing pension? Also check whether there are any obligations - how much you can withdraw, where you must reinvest, and so on.

Now calculate the actual return on your investment. Are you happy with the figure? Compare the pension plan with investing for the same duration in other financial products such as mutual funds, PPF, gold, real estate etc.

Unless the investment takes care of all your retirement needs, you won’t be happy in old age. So calculate well, and choose wisely.

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Do terms like Mutual Funds leave you confused? Does it seem it’s going to be too much of an effort to understand Mutual Funds? Many would see this as a hefty financial scoop to lay their hands on, making this topic a dreaded zone to venture in. However, the reality is that Mutual Funds are not just easy to understand but are also a great mode of investment!

How to invest in mutual funds?

• Be clear about the time period of your investment.
• Choose a fund based on your risk appetite. Greater the risk, greater would be the rewards or losses. Always inquire about the risk profile before investing.
• If you invest through an agent, you will be paying Entry Load up to Rs. 150. However, a direct application to the Mutual Fund doesn’t require any additional payment.
• Go through the list of charges - Expense ratio, Exit Load, Demat & Brokerage Charges etc. Calculate how much you will be paying in total.
• Verify what exemptions under IT Act you can avail, if any.

With the help of the above checklist, once you shortlist the Mutual Funds that suit your needs, go through their historical performance graph. Also, see the history of returns generated by the fund manager who would manage your portfolio. By now, you know where and how your investment will generate the maximum returns.
See, it wasn’t that hard. So, without any further ado, just dive in!

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You’ve heard from your friends and colleagues about the benefits of the Systematic Investment Plan. You were shocked when they mentioned the rates of return. And now you are roaring to invest in Mutual Funds. What’s the first question you ask: What can you tell me about Mutual Fund Investment Plans?

However, in effect, it’s a wrong question to ask!

Firstly, you need to understand how to shortlist a Mutual Fund as per your individual requirements. There’s no guarantee that investing in the same MF, as your colleagues, will generate the same amount of profits for you.

Follow these 4 steps:

1. Match your asset allocation to the Mutual Fund: How much risk can you take? What is your investment horizon? Don’t overstretch your finances in greed.

2. Check the consistency of past performance: Understand how good is the fund, or the fund manager with making profits over a long period of time. You don’t want some fund that makes great profits one year, and great losses in the next.

3. Calculate all costs of investment: While the rate of return may be attractive, fund costs might eat up most of your profit. Go through them carefully. Compare those with other funds in the same category.

4. Don’t put your eggs in one basket: If you diversify your investment in multiple funds, you can minimise the risk of your losses somewhat.
Now you can easily pick the mutual fund that fits your needs best.

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There is a system to how you make money. There are responsibilities at workplace that you take care of, and are rewarded for.

There is also a system to how you spend that money. You divide it in personal and domestic expenses, liabilities and savings.

If there’s a system to how you make money, and there is a system to how you spend it, why is there no system for how you invest it for your future?

The most common excuse is: “I don’t have a large enough amounts saved each month, to invest it somewhere.” But who said that small amounts can’t be invested? Haven’t you heard that you can start investing as much as Rs. 500 per month with Systematic Investment Planning (SIP)?

A Systematic Investment Plan is a planned, regular investment in Mutual Funds. You could invest a fixed amount every month, or every quarter, even annually. If you activate the auto-debit feature, then the small pre-determined sum will be withdrawn periodically from your bank account, without you having the hassle of remembering the date and issuing cheques.

For your investment, you are allotted units of the Mutual Fund, based on the prevailing Net Asset Value (NAV). You can track online, the total number of units accumulated in your account. On a daily basis, you can check the worth of your Mutual Fund investment based on current market rate, i.e. NAV.

Systematic Investment Planning is a proven mode to get maximum returns from a MF investment. Get on this system to brighten your financial future.

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Question: I am 45, I am overweight, I smoke and drink, work in a high-stress job and keep irregular hours, and do not have either a life or a health cover. Is it too late to buy them?

Answer: Life insurance companies categorize individuals under low and high risk category. Being overweight or a chain-smoker and a heavy drinker certainly puts you on a high-risk category as far as your life insurance in concerned. However, that does not mean, that you cannot acquire a life or a health cover.

Apart from the financial underwriting that largely decided how much of life cover can be given to an individual, all insurance companies have their own medical underwriting guidelines that help them to decide on the health profile of the individual. Some of the factors considered for placing a life on high or low risk health profile are height, weight, state of health, history of disease, amount of cover and the occupation. The insurer also carries out a series of medical tests to determine the health risks.

For all lives falling under the normal health category, the insurers cover the risk and the life protection is provided to the individual. However, the moment the risk appears to be high as per the insurer’s standards, the insurer resorts to asking higher premium from the individuals. This is called the ‘loading’, ‘rating’ or ‘extra-premium’, which the individual has to pay over and above the premium, which is paid by healthy-class of individuals.

In certain cases, the life protection is totally declined to the individual and the entire premium, is paid back to the individual. According to the defined benchmarks, the life of the individual is considered too risky and the insurer is reluctant to offer any level of protection to the individual.

However, that might not be the case always. The perceived medical factors like overweight should not be the reason for one to stay away from applying for life cover. Even a normal looking and healthy individual may be declined a protection if negative factors surface after the medical tests. Buying insurance when one is in the best of health is the right approach.

Disclose all material information about your health and let the insurer decide. Even if there is a ‘loading’ within manageable amount, go ahead and be insured. In case, the ‘loading’ is too high, lowering of the amount of life cover or even the term of the plan can be sought. In case of of health insurance, the insurer might as well ask you to undergo medical tests and submit reports. Also, the pre-existing diseases are never covered for the initial 2-4 years. Hence, company’s risk is reduced to that extent. It is certainly not too late for cutting down on weight and stop the use of tobacco for a better health, for you and your family.

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