Retirement Fund & Legacy Planning

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Q & A Forum › Category: Financial Planning › Retirement Fund & Legacy Planning
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barima asked 5 years ago
Hi Srikanth Ji, I am back again for your help. Hope you doing well. I will be in the possession of Rs 2.6 crores in August this year, returns of my investment few years back. Would appreciate you advising me, where and how to invest as legacy planning for my children & grand children. I am 67 years of age and already have over Rs.65 Lakhs invested in equity and equity related product. Have enough source of income from house rental to take care of day to day needs & other expenses. My Investment goal is legacy planning, long time wealth preservation & generation. Your advice will be much appreciated. Regards Mohammed
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Sreekanth Staff answered 5 years ago
Dear Mohammed ji, Based on our previous discussions, may I know if you have employed any fee-only service provider?
barima replied 5 years ago

Hi Srikanth Ji, just realized that my response to your question did not go thru. Was wondering all along why there was no response. Sorry about it.

I did contact all the fee-based FP. One was not helpful the other two were but then I thought I need to find someone locally to discuss things on one on one level. Eventually I found one and accepted his service.
Presently, I invested Rs. 40L with Icici Prudence mutual funds Financial & Banking and is doing good. The other investment of Rs.25K is with ASK PMS.

Now, as I said in my earlier email I need your advice to invest 2.6cr expected from FDs in August 2019. I need your input on this please.

Thanks & regards
Mohammed

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Sreekanth Staff answered 5 years ago
Dear Mohammed ji, May I know if the one selected by you is a fee only advisor or just a mutual fund agent? Has he/she suggested to invested Rs 40 lakh in one Fund only? Or is that decision taken by you yourself? In case, you have opted for a fee only advisor, suggest you to get a comprehensive Financial planning done which includes legacy planning (for this Rs 2.6 cr corpus). I can provide suggestions that's not an issue, but one to one in person, can be a better way to go about it, considering the huge corpus that is involved here!
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Sreekanth Staff answered 5 years ago
Dear Mohammed ji, Based on your Pvt comment; I believe that you should have taken advice from a fee-only planner. Investing Rs 40 lakh in one Scheme and that too a sector oriented fund is very high risk. Have you opted for Dividend option of this scheme? (though you are not dependent on this corpus, you may be taking undue risk here..) Personally, I am not a great fan of PMS plans, be it of Karvy or ASK..they very rarely work in the interest of client (this is my personal opinion..). Regarding investment of Rs 2.6 cr for legacy planning; May I know if  your children are well settled? Are you grandchildren minors? What is the main objective? (wealth accumulation for them??)    
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Sreekanth Staff answered 5 years ago
Dear Mohammed ji, Based on your Pvt reply; 1 - Dividend option of a equity MF scheme is not a prudent choice. You could have opted for a growth plan. The banking/Fin sector is in lot of trouble, but we can also view this as a contrarian bet, can be a high risk - high reward game :) 2 - You may kindly advise to all your children to have adequate life and health cover. Also, you make sure that they and yourself have properly written WILLs. 3 - You may allocate based on your own priorities the corpus amount to your grand children. Can pick investment avenues like Aggressive Hybrid Funds, large cap index funds and multi-cap funds.  Related articles :        
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Sreekanth Staff answered 5 years ago
Dear Mohammed ji, May I know the name of your ULIP plan? And what is the fund name/type that you have invested in? What is your investment objective for picking this one?    
barima replied 5 years ago

Thanks Sreekanth Ji for your response. Here are the details you looking for:

Product Name: Canara HSBC OBC Life Insurance Platinum Plus Plan
Premium: 5,00,000.00
Frequency: Yearly
Premium Period: 10 years

The objective was to provide substantial corpus for wife who is the nominee in the insurance plan.

She was not a nominee in any of my previous investments. My three children were.

After dissolving all my previous investments totaling Rs. 65,00,000,00 I just made two investments that I discussed with you in my previous emails. Wife is now the nominee in both these investments.

My FD’s that I discussed with you (regarding legacy planning) earlier totaling Rs. 2,60,00,000.00, my three children are nominees in these.

Thanks for your support again.

Regards
Mohammed

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Sreekanth Staff answered 5 years ago
Hi, Kindly note the returns from an ULIP plan is dependent on the type of Fund you have chosen. You can find this information in your Policy bond (certificate). Nevertheless, you may discontinue paying future premiums. But, yes,as mentioned by you, you will get the accumulated corpus after 5th policy year only, after adjusting for some nominal charges. The Insurer will pay nominal interest (around 4%) on the corpus. You may invest the future premiums in a right product as per your risk profile and investment objective. In case, you have claimed any tax deduction on ULIP premium payment, such tax benefit gets revoked on discontinuation. If you have an ULIP and terminate (or discontinue) it before making contributions for 5 years, benefits of tax savings have to be forgone. Meaning, the aggregate (total) of tax deductions availed earlier in respect of the plan will have to be considered as the ‘income’. You need to add this to your Taxable Income. Read : 8 ways you could lose your Income Tax Benefits
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Sreekanth Staff answered 5 years ago
Dear Mohammed ji, Any specific reason or strategy for shortlisting these schemes?    
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barima answered 5 years ago
Hi Sreekanth Ji, Thanks for your response. I was researching online Smallcap funds that I understand are very volatile but in long run can fetch good returns. Have some surplus funds available for investment. I looked at some of these funds at Value Research & other blogs and picked up the ones as listed in my earlier message. Before going ahead with them I thought will seek your recommendation. Best Regards Mohammed
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Sreekanth Staff answered 5 years ago
Dear Mohammed ji, You may add one multi-cap fund + mid-cap fund for this goal.  Mid-cap examples : HDFC Mid-cap opp or Franklin Prima Fund etc.,    
barima replied 5 years ago

Thank you sir, your support is much appreciated.

Regards
Mohammed

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