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Chat Transcript

Harshvardhan Roongta

CFP , Roongta Securities

Financial Planning and Asset Allocation


Questions Answered


guest: how ULIPS can help me for retirement planning? I am planning a early retirement after 20 years.

Harshvardhan Roongta: Retirement planning entails saving upto the date you are going to retire and thereafter getting regular income out of that accumulated corpus for the rest of your life. How you save upto retirement date depends on your financial acumen. One option is through Mutual Funds (through SIP) or NPS or ULIP or Pension Plans offered by insurance companies etc. I suggest that since your sole objective is to "invest" , stick to investing in Mutual Funds. Avoid ULIP`s. Incase you want a structured pension product then go in for NPS.

guest: I had bought a ICICI SmartKid-New Unit Linked Regular Plan policy in 2009, with a SA of Rs.500000 and annual premium of Rs.50000. What will be the tax implications if the policy is surrendered now?

Harshvardhan Roongta: If a ULIP policy is surrendered before completion of 5 years then the tax rebate availed (if any) get reversed. However, since your policy has been in existence for more than 5 years, then in my opinion there should not any tax implication upon you surrendering the same.

guest: My wife died on 3.9.2016.She had FDRS in her name apart from getting the pension.The banks are deducting the 10%tax as required.How I should file her return to claim the refund.One case of refund had already been pending with the Deptt

Harshvardhan Roongta: You will need to intimate the bank and the Income tax department that your wife has passed away and submit a copy of her death certificate. The bank FD`s can be redeemed in the name of the nominee. You can file her returns and represent her before the IT authorities. I am not sure for how many years post demise can you continue to file her returns and/or represent her. A practicing CA would be the best person to approach in this case.

guest: To purchase a house, what is more advisable- a loan of Rs 30 Lakhs at 8.75% from bank, or a withdrawal of Rs 30 Lakhs from one\`s GPF Corpus? My GPF balance is over Rs 1 crore. Kindly guide.

Harshvardhan Roongta: This has always been a very subjective debate. For people who dont like any loan on themselves prefer to use up their investments and others avail a loan and continue with their investments. There is no "best" approach. In your case you may evaluate the numbers of years left in your employment , the tax benefits that are available on Housing loans (particularly on interest payment u/s. 24 ) and your personal comfort levels before deciding upon the same. Look the cost:benefit of a loan on the above parameters and decide. My apologies as i am unable to suggest a clear direction for you as i donot have all the other information about you right now.

guest: I have selected a online life insurance policy click to protect 3d plus life option?I wanted an opion on that. please provide. Raghavendra

Harshvardhan Roongta: Its a good plan and go ahead and insure yourself.

guest: I have taken a home loan from SBI. Now after the first year of paying EMIs ( which totals a little above 1.5 lacs) when the statement arrived it showed all of the amount that I re-payed went towards interest of the loan and not a penny has been reduced from the principal I had borrowed. Is it fair practice on the part of the bank? Can a bank choose to do so? Whats troubling is that the projected repayment for the coming year shows only 6000 will be deducted from the principal and the rest will go towards interest. My loan amount is 1495000.

Harshvardhan Roongta: This is quite strange ! Usually the EMI amount comprises of Interest and a portion of Principal as well. Depending upon the interest rate and the duration of the loan, the EMI is computed. In the initial years, the portion of EMI that goes towards interest servicing is high and reduces over a period of time ( due to principal outstanding gradually reducing) However, not a penny being adjusted towards Principal amount is surprising. You should approach the branch and seek clarification. Incase of unsatisfactory response you may approach the Banks Nodal Officer and if still not satisfied then you can file your complaint with the banking ombudsman and RBI

guest: Sir, I am planning to invest for my son\`s education future. My son is 1 years old. I am 29 yrs old and planning to invest around 35-40k per annum. My objectives are: 1. to create a corpus around 17-18 yrs from now 2. to cover my life risk for my son\`s future Please suggest me investment schemes so that i can create maximum possible corpus keeping risk factor under consideration. I am open to take up a portfolio investment rather than sticking to a single plan. What investment return can i expect at maturity seeing the markets?

Harshvardhan Roongta: The first step should be to adequately cover you life with an appropriate Term Life Cover. Buy a total life cover of 10-15 times of your annual income. After adjusting for the premium commitments , whatever surplus you are left with goes into pure investment plans. For long term needs invest in equities via mutual funds. Use the SIP method for investing. The scheme selection will be based upon the total investment that you wish to make every month. w.r.t returns that you can assume on your investments in equities via SIP... we usually assume a CAGR of 14%-15% .

irana22: Sir is this prudent to continue with the sips of approximately 20k per month in different mfs including elss considering the overvaluations and threat of an correction

Harshvardhan Roongta: The reason you choose to invest via SIP is that you donot know which side the markets will go in the future. Besides, investing via SIP also gives you the benefits of rupee cost averaging. Therefore, if you donot need the money for next 5-7 years atleast then you need not worry about valuations. In any case you will be investing even if the markets were to go down thereby averaging your portfolio.

bhav_23: Hi...I have 25Lac in my fxed deposit that will mature in Dec 17. I am thinking of putting it in a hybrid fund that yield monthly dividend like HDFC Prudence Dividend Fund. My aim is to protect my capital but get returns better than FDs. I alreasdy have exposure to equity via other MFs route. Is it a correct choice?

Harshvardhan Roongta: A direct comparison between FD and Equity oriented hybrid scheme is not the right thing to do. They both have different functionalities. If you aim is to protect your capital and at the same time potentially earn a higher return then you should look at hybrid schemes that invest a maximum of 25% in equities. Though these conservative hybrid schemes are taxable ( since they are considered as a debt scheme) they are more suited for investors looking for capital safety but a higher return than bank FD.
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