This weekend, we discuss three important questions: (1) Why term life insurance alone will not protect your family (2) A beginner question: Which equity mutual fund should I choose first? (3) How to define a financial goal – part one.
If you have not heard my Paisa Vaisa podcast, go give it a listen. This is part one. Part two is coming up. Why we need to forget about “pension after retirement” & focus on “financial freedom” – Paisa Vaisa Podcast Part 1. Do share it with those who have not yet thought about retirement.
Also, do check out Lazy Investing: Five Test Stock Portfolios Aug 2018 Update I am currently working on three different ways to list “good stocks”. Watch this space.
Why term life insurance alone will not protect your family
A term insurance cover is subject to inflation risk. A once crore cover can halve in value over a decade. So it is important to start investing early, investing right and investing as much as possible.
Give yourself 10Y to reach a net worth of 50% of your life cover. So invest at least 60% of what you can in equity. With some luck, you can make it.
Here are 3 personal finance milestones to conquer: liquid net-worth = 50% of term life cover ===> liquid net-worth = 100% of life cover. The equity portion of net worth ====> 100% of life cover ====> Fixed income portion ===> 100% of life cover.
As an example: Suppose you start with no net worth and one crore life cover, give yourself 10Y to have a wealth of 50 lakhs (50%). Another 5-10Y to make that one crore (100%). Then your equity holdings should become one crore and then your fixed-income holdings.
With aggressive investing, I was able to achieve this within 10Y (don’t get ideas, my life cover is < 1 crore). You can too. All it takes is time and non-interference.
Which equity mutual fund should I choose first?
This is a question that has multiple “right” answers. I had written a slightly different version here: what should be my first mutual fund? To the funds mentioned, you can also add Franklin Balanced fund (now called Franklin Hybrid Equity Fund)
How to define a financial goal – part one
If you wish to start managing your money from scratch, then download this free e-book: Re-assemble
Subscribe and join the freefincal Youtube community!
Connect with us on social media
- Twitter @freefincal
- Subscribe to our Youtube Videos
- Posts feed via: Feedburner
- We are also on Google PlusandPinterest
Do check out my books
Get it now. It is also available in Kindle format.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You WantMy second book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at low cost! Get it or gift it to a youngearner
The ultimate guide to travel by Pranav SuryaThis is a deep dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step. Get the pdf for ₹199 (instant download)
Free Apps for your Android PhoneAll calculators from our book, “You can be Rich Too” are now available on Google Play!
Install Financial Freedom App! (Google Play Store)
Install Freefincal Retirement Planner App! (Google Play Store)
Find out if you have enough to say "FU" to your employer (Google Play Store)