Nikhil and Arpita on their investments.
Nikhil does not mind taking a risk with his investments but, once again, "within limits". He tends to zero in on diversified mutual funds or stocks. He likes to define himself as an "investor rather than a saver".
Arpita believes in riskless investments and defines herself as a "risk-averse saver". She gravitates towards insurance and Public Provident Fund.
Unfortunately, all their mutual fund investments are "advised" and handled by an agent because they do not have the patience to go through the number of funds available to find out which one is best suited to their needs. This is a dangerous trend since agents rely on commissions; hence, they promote funds that will benefit them, not the investor.
Mutual funds
They have invested in diversified equity funds. These are mutual funds that invest in shares of companies of various sectors.
One-time investment of Rs 20,000.
SBI Magnum Tax Gain. This is an Equity Linked Savings Scheme -- a diversified mutual fund with a tax benefit.
One-time investment of Rs 10,000.
Public Provident Fund
Nikhil does not have an account.
Aprita has invested around Rs 1,20,000 till date. This is only the principal amount invested and not the interest earned.
The immediate questions they want addressed relating to their investments are.
1. How much risk must they take with their investments?
2. Must they invest only in PPF or National Savings Certificate?
3. Should they consider shares?
4. What about mutual funds?
5. How much in each avenue?
Insurance
Nikhil pays a premium of Rs 5,225 per quarter for 25 years. On maturity (2030), he will get Rs 5,00,000 + bonus. It also gives a life cover of Rs 5,00,000.
Arpita pays an annual premium of Rs 18,800 towards three policies. For one, she had already paid a one-time premium some years ago.
Here is the year of maturity and how much she expects to get (sum assured and bonus).
2020: Rs 80,000
2020: Rs 40,000
2023: Rs 2,00,000
2025: Rs 4,00,000
They do not have individual mediclaim policies because their companies cover their health insurance.
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