Money: Ask Express

You are indeed under-insured. A rule of thumb for people at your age would be 10 times gross income. By that reckoning,the insurance should be between Rs 25- 30 lakhs. Also,if there are any loans,even that needs to be covered. Hence,theinsurance requirements will go up by that amount. You can avail of a simple term insurance,which is a low-cost way to cover the risk. You can buy a term insurance online which is relatively cheaper.

Im retiring in another 1.5 years. I will be receiving Rs 30 lakhs approximately as my retirement proceeds. I am curious to know where I could put in this money. I know I still have time,but advice on this will help me prepare for it.

Sanjeev Mahapatra,Kolkata

A lot depends on what you have done till now regarding your retirement. We also need to look at the asset allocation in your case till now,in terms of how much investments you have in equity assets,debt instruments,property etc. We need to look at what your expenses would be at retirement and whether you have some cashflows like rentals,pension etc. In the light of all these,you will need to decide the investments to be done. A ball park 35-40 per cent can be in equity oriented assets,even in retirement,to enable your corpus to beat inflation.

Im concerned about my 2 year old daughters future. Im investing in a SIP of Rs 2,000 pm,since last 3 months. What else should I do?

Sheetal Pandey,Delhi

Investing through SIPs for your daughters education is a sensible decision. You will need to estimate the amount you will need for your daughters education when she is 18. Then you need to find out how much to invest. Suppose you need Rs10 lakhs when your daughter turns 18,you will need to invest Rs 2,125 pm till then,assuming a 10 per cent pa returns. You could also invest through PPF,which is a 15 year tenure investment plan and will neatly dovetail into your daughters requirements. It is advisable to write down your financial goals related to your daughter and then plan accordingly.

Is investment in physical gold a good idea? I have heard that Gold ETF is more efficient,but my wife insists on physical gold.

Satish Gujaral,Mumbai

If it is from an investment standpoint,investment in physical gold is not a good idea. Gold investment in physical form has several problems the risk of purity,the insurance charges to be paid,the mark-up to be paid over the price of gold even if it is in a bar form etc. ETF neatly addresses these problems. You would get the returns of gold movement,without the attendant problems. For investment purposes Gold ETF is the correct way to go forward.

I have never invested in Mutual Funds. My colleagues have been doing it and have been suggesting that I do it too. What funds can I invest in?

Mridul Ranganath,Bangalore

If you are new to MF investments,and would not like to take too much risk and would just like to start off,you could look at index funds,large cap funds and balanced funds. Also,you could look at investing in MFs,it is a good idea to invest on a monthly basis,instead of lumpsum investments. You can align your financial goals with your mutual fund investments. You could invest in Franklin Index Fund Nifty,HDFC Top 200 fund,Fidelity Equity Fund,DSP Balanced Fund,HDFC Prudence Fund just to name a few.

Suresh Sadagopan

Ladder7 Financial Advisories

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