How to make a financially STRONG future

POSTED BY Nitin ON November 22, 2012 1:34 pm COMMENTS (12)

I was searching for someone who guide me to make my future more financially strong. I am very glad to know about you and this forum, hence sharing my queries. Below is my requirement:

1. One good term insurance with cover of 1 Crore rupees.
2. Lumpsum 25 lac rupees in hand after 20 years for my child education.
3. Rs. 50K per month as a pension after 20 years.

Please guide me HOW & WHERE to invest now to make above things happen.Annual Income: 10 lac per annum. I shall be grateful for your early & prompt response.Many thanks for your good works and sharing expert knowledges.

12 replies on this article “How to make a financially STRONG future”

  1. Nitin says:

    Dear All,

    Thanks all for your suggestions.

    One more question regarding my 5 years old LIC Jeevan Anand policy (total 9 policy) : Till date I paid around 4.30 lacs rupees for these policies. So now I have to options:
    1. Make it PAID-up polices and get the return after maturity period (10-15 years).

    2. Surrender all, will get 2.5 lacs only and book a loss of around 1.8 lacs and invest this amount as a lumpsum in some SIP.

    What is your suggestion on this? Which option is good for long term?

  2. says:

    My question is for Krishna Kishore. As you said “A little investment of Rs 1500/- (yearly increase of 10%) in any one of these Equity Mutual Fund like Quantum Long term equity, HDFC Top 200, Franklin India Bluechip, ICICI Prudential Discover (all Growth options).
    With much possible return of 12% you can earn 25L in 20 years.”.

    Can you please explain me calculation. do you mean 1500 as SIP then still i m not getting your calculation of Rs. 25L in 20 years. Looking forward to hear from you soon.

    Thanks & Regards,
    Gaurav Shah

  3. vaibhav says:

    Hello Nitin,
    I can answer your question, but I will ask you to read the policy document. You will get all the answers……By the way, as you have paid only one premium, best option is SURRENDER and forget……No second thought…….difficult to digest but no way….



  4. SANDIP GUMTYA says:

    When I approached SBI to open PPF for my father (age -62 yrs,retired) they refused to open siting a reason that only people who are working can open that.Is it true?Is there any extra benefit for senior citizen in PPF?

  5. Nitin says:

    Thank you Vaibhav for your answers.

    That mean if I stop paying poilcy after 3 years and also don’t surrender it i.e make them a Paid-up policies, then after policy term I will get 100% of paid-premium (without any deduction) + proportional bonus (in any) + proportional insurance.

    Please correct me if anything in above statement is not right.

  6. vaibhav says:


    Answer to your queries:
    1. Surrender Value means : Value that u will get immidately if you surrender. If premiums are paid atleast for 3 years,you will get atleast 30% of premiums paid, excluding first premium(How much, only LIC can tell). If you have paid only one premium, you will get nothing.
    Paidup Value means: Value that you will get at the end of the original policy period. It will be premiums paid+ bonus(If any). Insurance remains in force in proportion premiums paid.
    2. Pl visit


  7. Nitin says:

    Thank you Manish.

    (1) Just want to understand difference of surrender & Paid-up (sorry my knowledge is limited).
    My understanding:

    Surrender mean: 30% of permium paid is return back after locking period (3 years).
    Paid-up means: 100% of paid-premium + some propotional bonus (over the paid premium only) will be return back only after policy term.
    What about the insurance part incase of paid-up policy?

    (2) If I invest suppose 1 lacs rupees yearly in PPF account, how much approximate amount I will get back after 15 years? (Sorry I don’ know how to calculate).

    Please answer about two questions.

    Thank you.

  8. Nitin says:

    Dear Krishna Kishore Appala,

    If I surrender 5 year policy (LIC Jeevan Anand), it will give loss for 2-3 lacs rupees. Is it worth to surrender it?

    If yes, then where to invest this amount to recover loss + a good return in next 15 years?

    Also, Is their any kind of risk/concern to take ONLINE term insurance?

    Thanks for your time.

    1. There is no risk in taking a term plan online .

      Regarding loss on surrender , the other option is to continue it , but is that option in long ter, going to be a good option ? I would say in that case just make it PAID UP Policy !

  9. Krishna Kishore Appala says:

    Hi Nitin

    Please surrender 5 yr ULIPs.
    As in case of 5 yr, you can get back some fair amount.
    And in case of 1 yr, you will get nothing, but its your call to to pay min for another 2 yrs & get back only 40% approx of total amount. Or consider this first premium as a lesson learnt.

    Please always note that ULIPs are the BEST way to generate money, For Banks or Insurance companies, but NOT the best way for our Investors.

    Link for calculators

    Yes i mean to invest through monthy SIP in Equity funds as i mentioned above.

    Select one good fund for ur child education
    And two good funds for ur retirement.

    Use Current value , Future value, SIP calculators to arrive to a decent figure.

    Krishna Kishore Appala

  10. Nitin says:

    Dear Krishna Kishore Appala,

    A very good answer, thanks a lot for your suggestions.

    However, I have some queries:

    1. I did some investment in some LIC ulip polices, some of them 1 year old and some of them are 5 year old. So should I cancel/surrender them or make them paid-up policies?

    2. Can you please share ‘jago investor calculators ‘ link (sorry I don;t know about it).

    3. Do you mean to say invest some amount monthly in some MF till 20 years?
    Can you please suggest the amount need to invest monthly for this?


  11. Krishna Kishore Appala says:

    Hi Nitin

    1. Choose a good Pure Term plan like Kotak e-preffered / HDFC click 2 life / Aviva etc or if you can pay higher go with LIC offline plans. But only TERM insurance, a big NO to any other ULIPs.

    2. A little investment of Rs 1500/- (yearly increase of 10%) in any one of these Equity Mutual Fund like Quantum Long term equity, HDFC Top 200, Franklin India Bluechip, ICICI Prudential Discover (all Growth options).
    With much possible return of 12% you can earn 25L in 20 years.

    But important point to consider , Time Value of Money. Your 25L will not have same purchasing power right now.
    With a inflation of 8% , present value of 25L after 20 years is just nearly to 5.5 Lakhs.
    You decide whether your child can complete his/her education in present days with 5.5L. Clearly NO, we need more.
    So increase the amount according (use jago investor calculators for help to final the amount).

    3. There are some pension funds available, but let me tell you there are much more better products than these, which will generate much more inflation adjusted returns than normal products (i would say Junk products) . Please invest in any Equity Mutual Fund which I stated above (in Growth option only). Calculate your retirement amount needed.
    Do monthly SIP in them.

    At your retirement you can opt for Dividend option. This income will fulfil your monthly requirement of 50k. This will do the perfect job with very decent returns.

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