Express Money: Ask Us

I completed my studies in June 2011. Now I have started a business and my yearly income from the business is R 5 lakh. I can't quote my monthly income because it is high or low at any time period. I maintain a PPF account, a mutual fund around R 5,000 per month, post R 1,000 per month, life insurance and infrastructure bond from last two years. Please help me on my financial planning.

óRavi Shah, Mumbai

The financial plan will depend on what your objectives are. The objectives should be timed. For example, you may want to build a corpus of R 10 lakh in next six years.

Moreover, the other important factor in financial planning is your risk appetite. It means how much risk can you take. For example, equity investment will give you maximum returns in long term but there will be short term fluctuation in returns. Can you bear the short-term fluctuation?

In my view, since you are young, you can go for sound, equity-based mutual funds or balanced funds. Start a systematic investment plan in mutual funds with your savings.

Do not take many insurance plans as the returns are extremely low (about 4 per cent to 6 per cent). Take a term insurance which will cost you a very small premium with very high protection amount. But there will be no return if nothing happens to you. The savings from this premium can be used for systematic investment plan in mutual funds.

I am a senior citizen aged 74 years. My wife and I are taking full benefit of Sec 80C of the Income Tax Act in our respective individual IT file by way of PPF. I want to deposit some extra amount in my minor grandson's PPF a/c. I don't want to claim any IT benefit for this transaction. At present my grandson's IT file is clubbed with my son's IT file. My son also don't want to claim any benefit as he is already availing benefit under Sec 80C.

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