Financial Guidance

Q. I am a regular reader of Dalal Street Investment Journal. I am working in a private limited company with a net income of Rs 19,000/- per month. My investments are as follows:
a) LIC Money Back policy with annual premium of Rs 24,250
b) LIC Jeevan Tarang Policy (Whole Life) with annual premium of Rs 25,685
c) Fixed deposit of Rs 30,000 in a bank
d) Recurring deposit of Rs 1,000 p.m. in a bank.

I married 10 months back. Please suggest me a proper and healthy investment portfolio.

- Arunava Das, Kolkata

A. Arunava, congratulations on the bold step 10 months ago… Now, you need to become a little bolder on the savings front too. Your insurance policies are not what I consider investments. They are a protection for your surviving family if you die during the course of the policy. (By the way, since you have married recently you may need to relook at who the nominees in your insurance policies are.)  The Whole  Life Policy is good, though I think money back policies are too expensive for the policyholder. You have not provided me with the policy cover, but I guess it must be around Rs 10 lakh or so. You must accumulate another Rs 15 lakh or so – but next time please buy a pure term policy. Start a Systematic Investment Plan with your monthly savings. Let the mix be like this:

Franklin PE Ratio Dynamic Fund of Funds   40 per cent
Templeton India Short-term Income Plan      40 per cent
HDFC Equity Fund                                     20 per cent

What I have suggested is not an aggressive portfolio, nor very conservative. The accumulations in these accounts after a few years will be of use to you, either for the down payment of a house purchase or it could just accumulate for other uses. Save as much as you can even though a lot of your income is going away towards insurance premiums. Don’t forget to buy health insurance for yourselves, too.