Advice on Retirement Goal and Financial Planning

Q & A Forum › Category: Financial Planning › Advice on Retirement and financial planning

kmadhavadas asked 9 years ago

Good Afternoon Sreekanth, My Name is Madhava das & I am a NRI living in Abu Dhabi from Kerala State. I have communicated with you on April 2016, this mail is a continuation of that. As per my earlier mails, my expected age of retirement was set as 55. I have an important point to mention which is “ Due to some unforeseen circumstances, I have to get settled in India by June or July 2017”. After communicating with you in April 2016, a little bit of realignment is done on my investments in Mutual funds. Following are my MF investments as of now. Main purpose of this mail is to find out how best I can do financial planning taking the point highlighted in yellow into account so that I can have a comfortable way forward.

ICICI- (old ICICI Super has been reinvested as ICICI Pru Elite Life II) Rs. 200000/= for the next 4 years excluding the one year premium that I have paid already. If I have to get loyalty additions, I have to stay for 5 more years, but I can withdraw it any time after 5th With this, I have an insurance coverage of Rs.2000000/=

SBI Life(SBI Smart Wealth Builder) -Rs.100000/= for the next 4 years excluding the one year payment that is already done. More or less it is like ICICI. This is in my Wife’s name & there is an insurance coverage of Rs.1000000/=.

Balaj Allianz- Rs.150000/= (will mature in April 2018 ). A partial withdrawal of Rs.100000/= done & reinvested in Bajaj Allianz Future Gain Size 2).

Balaj Allianz (Future Gain Size 2) – Rs.100000/= for the next 4 years excluding the one year payment which is done already. This is in my Wife’s name & there is an insurance coverage of Rs.1000000/=

UTI – Rs.278000/= (one time investment started on April 2009). Current value is 578000/= I have another small investment of (Rs.50000/= one time investment started in May 2016)
A monthly SIP of Rs.10000/= in UTI MNC fund (G) started 6 months ago

I do have income sources during my retirement which is nothing but interest from FDs which will give me a handsome amount on a monthly basis after TDS @ 10%. ( I have updated my bank accounts with PAN.) I do have some investments in real estate & gold too. As far as I can think of, with Rs.50000/= a month, I can live comfortably as I have my own house. From the above MF investments, I believe I can claim for tax deductions, please correct me if I am wrong. Appreciate your general guidance & advice on letting me know what would be the best that I can do within the framework of law to save on taxes. Regards Madhava das

3 Answers

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Sreekanth Staff answered 9 years ago

Dear Madhava Ji, Nice to see your message again after a brief gap. Trust all is well with you! Above investments except UTI MNC fund, others are insurance based (ULIPs). They are not mutual funds. Investments in UTI MNC fund can not be claimed as tax deduction. It is a decent fund to invest!

kmadhavadas replied 9 years ago

Thanks a lot Sreekanth. Can contributions to ULIPs be claimed for tax deductions? Please let me know

Sreekanth Staff replied 9 years ago

Yes, you can claim..
May I know your primary objective for your investing in these ULIPs? Are you planning to discontinue them after 5 years?

kmadhavadas replied 9 years ago

My basic objective behind investing in these ULIPs is wealth building & Insurance coverage. These ULIPs have an option to exit after 5 years, from 6th year onwards, there are loyalty additions. Your suggestions are welcome.

Sreekanth Staff replied 9 years ago

Personally, I suggest to buy a term insurance plan for life cover and Mutual Funds for long-term wealth building.

kmadhavadas replied 9 years ago

Thank you so much Sreekanth. I have a query about ULIPs & MFs. Both carries market risks. Both are tax savers & long term investments. As an added advantage, former carries insurance coverage (of course a bit of cost is involved) where as the latter is a pure investment scheme. Please correct me if I am wrong. Any special reason for buying term insurance plan for life cover. Appreciate your comments & suggestions.

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Sreekanth Staff answered 9 years ago

Most of the ULIPs' Costs are greater than MF Schemes'. For insurance sake, you have to still stick to ULIPs, in case if they do not perform well or do not give you expected returns. Term insurance plans are cheaper and MFs are more transparent, have high liquidity, well managed, you have plenty of options... Also, you need to analyze the life cover you have through ULIPs is sufficient or not and at what cost?? Kindly read: http://www.relakhs.com/term-insurance-plan-a-waste-of-money/ http://www.relakhs.com/insurance-importance-life-health-accident-covers/ http://www.relakhs.com/best-online-term-insurance-plans-india/

kmadhavadas replied 9 years ago

Thanks a lot for the excellent & detailed explanation. I saw your note that states this is for a 30 year old non-smoker male for Rs.1 crore. As I am a 52 year old fellow, which would be the most suitable me. What would be the minimum/maximum coverage that I am going to get. Appreciate your response

Sreekanth Staff replied 9 years ago

Kindly use the premium calculator(s) which are available with almost all insurance providers, on their respective websites.
Kindly note that life cover is required if you have dependents and/or have financial commitments/liabilities.

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Sreekanth Staff answered 9 years ago

Hi Madhava Ji, I am doing good thank you. How about you? As your follow-on query is related to this thread, kindly note that I am copy/pasting your query here itself as below; " Good Morning Sreekanth,
It has been a while since we have communicated each other. Hope everything is going good. This has reference to my earlier communication regarding the title mentioned.
I am back in India since 24th April 2017 as mentioned by me earlier. I have FDs (most of them maturing in 2018 december, august, october,january etc). In addition, I have an FCNR USD which is matured on 17th Jun 2017. Will I be able to renew my USD FCNR FD now for another year? Does it make sense in continuing with USD FCNR taking the downward trend of USD against INR into account?
As far as I know, I can maintain my NRI status until October 23rd 2017 without any hassle. Is this correct. If at all I go and make use of RNOR facility would it be good for me? Would there be a need to convert all my FDs into foreign currency if I opt for RNOR? Please let me know.
Regards,
Madhavadas " My Suggestions : You may check your residential status with a calculator, kindly read : https://www.relakhs.com/residential-status-calculator-nri-taxation/ Kindly go through below article on RNOR ... Article - 1 Article - 2 Looks like, till maturity date you can continue with your deposits as they are irrespective of your Residential status. To be frank, I am not an expert on NRI taxation matters, you may consult a CA in this regard.