Q.) I'm a 45 year old NRI, willing to come back to India, how much should be my corpus? I want to have a regular income of Rs.1.25 lakh per month and would need funds for my daughter's higher education and marriage along with annual vacations.
Currently I have corpus of Rs. 4.65 crore, with long term debt fund of 1 crore, short term debt fund 1.25 crore, equity fund 60 lakh, balance fund 60 lakh, liquid fund 1.2 crore, along with this I have term policy of 50 lakh and health insurance of 10 lacs. Please suggest accordingly. -S.Chatterjee
Answer: After adjusting your goals to inflation, you will need a corpus of approximately Rs 5.5 crore to meet your objectives. Your portfolio and current asset allocation is skewed towards debt with around 78.7% in debt whereas equity is only 21.5%. It should be rectified and made around 30% in debt and 29% in equity; 16% into liquid funds, 11% in balanced fund and 15% in Arbitrage funds. The revised asset allocation is done addressing all aspects of investments - liquidity, capital protection, wealth creation and tax efficiency.
The existing money should be managed for both short term and long term requirement parallel. Your very short term requirement is annual vacation and regular income, for initial years. And long term requirement includes education, marriage and regular income for later age.
Allocation of corpus should be taken care via bucket strategy; we need to separate short-term, medium-term and long-term money requirement. The short-term allocation will be funded through liquid or short term and arbitrage fund to make it tax efficient. The medium term goals and subsequent year cash-flow requirement will be funded through balanced fund and equity funds will be used to enhance portfolio returns, primarily focusing on the longer end of the time horizon.
If you are coming back to India permanently, you should sell the current self occupied property in Qatar as gross rental yield of the property will be around 10% there. You can invest the same in buying a property in India for your stay if don't have one.
You should also get a good online term insurance policy with high insurance cover, which is a must if one has family members financially dependent upon them. But life insurance cover of Rs 50 lakh is not sufficient for a family with dependent parents, wife and child. You should increase your term insurance cover to approx 4 crore based on your lifestyle and need, by adding 3.5 crore to the existing policy.
The premium is also eligible for tax rebate under section 80C.
It is strongly advisable to have a proper health insurance cover with good sum assured. You can create a combination of base policy + super top policy to get high insurance cover and yet not pay a high premium, which is also eligible for tax rebate under section 80D. You should create a combination of Rs. 25-30 lakhs health insurance cover for an annual premium of Rs. 20,000 thereabout.
Answered by, Tanwir Alam, CEO of Fincart, an online financial advisory.
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