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Investments You Should Start with Your Family

Investments You Should Start with Your Family

Investments You Should Start with Your Family

Traditionally, our culture has directed our efforts towards personal financial planning. As your family life progresses you will receive gifts from your parents which are more of an investment than a gift. For example, gold ornaments upon marriage, a gold coin or FD certificates on the birth of a child, and so on.

This is perhaps one of the simplest ways of financial planning; the only difference would be the involvement of financial transactions now. So, here’s a list of five saving plans and investments you should start at five key events in your life.

1. Term Insurance Plan before you get married

Marriage is one of the greatest chapters of your life and changes a lot of things, starting with your financial and personal responsibilities. Thus, the first thing you need is a term insurance plan. It will help you financially protect your spouse and your parents in the event of an unfortunate incident with you.

Also, nowadays term insurance cover is not just about your death, you can also cover your spouse under the same plan. Canara HSBC Life Insurance’s term plan iSelect Smart360 allows you and your spouse the insurance cover against the following:

  • Risk of untimely death
  • Total disability due to accident
  • Terminal illness like cancer, heart failure, etc.

In case you have purchased the term cover before marriage, you can add your spouse to the plan if you get married within a year with this plan. Additionally, iSelect Smart360 Term Plan allows you to increase your cover at the time of marriage, childbirth and home purchase.

Thus, saving you from the efforts and expenses of buying new term insurance to keep up with the new obligations.

Replace Your Income with Term Plan: Another thing you should take care of while buying a term plan is that your family will need a regular income and lump sum to invest for long term goals. Thus, you need to divide your total sum assured under the term cover into:

  • A regular monthly income, hopefully growing at a fixed rate every year to account for inflation.
  • A lump sum amount which can be invested safely to achieve the family’s financial goals and take care of any liabilities

2. Family Floater Health Insurance after marriage

Importance of health insurance is a common fact, and when you start a family, its role becomes even more extensive. Whether your spouse is employed or dependent on you any emergency to her health would affect the family financially. Thus, it’s better to include her under the same health plan.

This will also allow both of you to avail certain benefits which you do not have in the individual Mediclaim covers. For example, maternity cover and health cover for a newborn child.

Both of these benefits will come in handy when you plan to grow your family further.

3. A Child-Plan at childbirth

You may have heard the saying that ‘early bird gets the worm.’ It cannot be more correct in the sense of investments. The more time you give to your money, the better growth it receives. And when it comes to preparing for children’s future you don’t want to leave any stone unturned.

The best time to start investing money in the child’s goals is at her birth. Also, since you cannot afford to compromise on this goal, you need a plan which will help the child even in your absence. This is where child plans come into the picture.

Child plans like Invest 4G from Canara HSBC Life, offer not only goal protection but also bonus additions for long-term investors.

4. A ULIP for Retirement

Retirement for the spouse is perhaps the most neglected aspect of the personal financial plan. What happens to the retirement of your homemaker spouse in case of your early demise is a critical financial question.

The simple solution to resolve this problem is to add a ULIP plan with goal protection option to your retirement plan. How does it help?

Here it is:

  • Invest and enjoy tax-free growth of your retirement corpus which you will receive upon survival at maturity
  • The insurer will invest the due instilments into the plan in case of your early demise, thus ensuring that at least your spouse gets the appropriate maturity value

Thus, whether you can complete your retirement savings or not, your spouse will at least have the comfort of retiring financially independent.

5. Home Loan Repayment Plan

Buying the first house property is one of the major life decisions and one which comes with significant financial liability. So, it makes sense to financially prepare for a better future after picking up such a responsibility.

Here are the two things you should do to start preparing for a safer financial future:

  • Increase your term cover to include the home loan principal amount
  • Start saving to prepay part of the home loan every few years.

When Is the Best Time to Prepay Your Home Loan?

While dealing with the home loan we should keep the following factors in mind:

  • In the first half of the total loan period, you pay about

    75% of the total interest that you will pay throughout the tenure of your home loan, &

    25% of the total principal amount

  • Home loan interest payment can give you a tax rebate of up to Rs. 200,000 under section 24B
  • Home loan principal repayments will give you a tax rebate of up to Rs. 150,000 under section 80C

Ideally, you should make some additional payments to your home loan every year. Thus, it makes sense if you repay the principal of your home loan every year and meet the deduction limit under section 80C.

For example, in the initial years, your principal repayment through EMIs is low, and if it is lower than Rs. 1.5 Lakhs repay the additional amount. This will create two advantages for you:

  • Save More on Interest Payments: Your interest payment in the next year will be lower. Remember you are paying higher interest in the beginning years, so a higher reduction in balance principle will result in higher savings on interest payments.
  • Claim full Deduction u/s 80C: You can complete your 80C deduction needs, saving additional money in taxes.

Speak to an insurance specialist now!

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