Aarushi is a worried girl these days. Not because she hasn’t done well for herself in life, but like many parents, her parents have also spent a major chunk of their earnings towards funding her Ivy League education and in the process neglected their financial planning. 10 years away from retirement now, she’s worried as to how they will manage once the regular monthly salary dries up and time is slipping away.
While she’s willing to help them out, she also wants them to build a corpus so that they live with dignity in their old age and enjoy the little pleasures of life, which they neglected only for her sake.
While wondering what she could do to help, she realized that instead of showering them with expensive gifts, which are of no real use to them anyway, this Diwali she’s going to help them organize their finances better. Hence, she’s busy researching investment plans that will help her parents live with dignity and enjoy their retirement. As part of the endeavor she decided on the following steps:
1.Take them to a financial planner:
Aarushi is aware that her parents may not want to discuss their finances with her. Part of the reason is also the Indian culture, wherein parents don’t discuss monetary issues with their children, because we never grow up for them! That’s adorable, but it won’t solve the issue at hand. To solve the problem, she’s decided to take them to a financial planner. A financial planner will assess their current financial situation by factoring in total income, outgo, how much they have saved and what will they need in the future.
2.Encourage them to buy a critical illness policy:
An open heart bypass that was in the range of Rs. 2lakh?Rs. 3lakh 5 years ago in a decent hospital costs anything between Rs. 4lakh?Rs. 6lakh now. Going by the trend, the maximum expenditure that your parents are likely to incur will be on the upkeep of their health, which includes medical treatment. With reduced income levels post retirement, the only way to be prepared is to buy a critical illness policy in addition to a regular health cover.
3.Invest in a pension plan:
Your parents will need money once they grow old and hang up their boots. With increasing life expectancy the corpus required to maintain the life >
4.Check their investment allocation:
For reaping maximum benefits on your investments, one should always maintain a diversified investment portfolio. It helps because you can opt for some traditional schemes such as National Pension Scheme, Public Provident Fund, Post Office Deposits etc. to build a safety net, while the other portion of your money should be invested in ULIPs, Mutual Funds or Money back schemes because these schemes will help you negate the effects of inflation on your investment. In any case, “It’s not wise to put all eggs in one basket”.