Want to start building retirement corpus early? Use these expert tips

I am 34 years old and want to invest Rs 30,000-40,000 per month to build my retirement corpus. Where should I invest my money to get the maximum benefits?  

Two key aspects to keep in mind while investing are your goals and your profile as an investor, which depends on the risk you are ready to take and the returns you expect  over time. Try some of the tools available online to know the type of investor you are. At 34 years, you have time on your side to build a retirement corpus, and maybe you even have a higher risk-taking appetite. If you are risk tolerant, adopt an aggressive investment strategy and invest in market-linked funds. Ulips fit in well here. They are market-linked investment plans that come with several advantages. They make you disciplined by ensuring you invest regularly towards meeting your goal. You also invest in the markets for a long time, thereby enjoying the advantages of compounding your returns. You also get the benefit of rupee-cost averaging over time. Ulips also help you diversify into both equities and debt according to your needs. They provide you the flexibility to switch between them depending on market conditions and your risk profile. Furthermore, Ulips also offer life cover and tax benefits.   

 If you are looking at guaranteed returns from your investments, and don't want to dive into market-linked plans, you may opt for traditional life insurance products that give guaranteed returns on maturity. You may also consider other conventional investment products such as fixed deposits or PPF that give guaranteed returns. Ideally, your portfolio should be well balanced and diversified for achieving any goal. 

I have an endowment plan with a Rs 5 lakh cover. I am married and have twins. Should I invest in a Rs 1 crore term plan? 

Term plans are pure protection covers for the family/dependants, which come into play in the event of the death of the family's breadwinner. The cover helps the family continue its journey towards its life goals without hitting a financial roadblock due to the death of the breadwinner. Since you have a family/dependants, opting for a term plan would be right for you. An endowment plan enables you to accumulate wealth for achieving your and your family's life goals. 

As for whether you should invest in a Rs 1-crore term plan, it is difficult to answer this as how much life insurance you should purchase depends on several factors such as current income, liabilities, number of dependants, cost of child’s education, etc. Use one of the Human Life Calculators available online to understand the amount of sum assured you need.

I am getting married this year and plan to buy a house. My annual income is Rs 15 lakh. I already have a term plan worth Rs 25 lakh. Should I increase my insurance cover? 

It is an excellent idea to review your life insurance cover at every life stage you cross. You need to ensure continuity of your financial goals. At the same time, you need to secure your family's life goals. If you are the only breadwinner in your family, you should review your existing life cover after evaluating your and your spouse's life goals, lifestyle needs, rising inflation and healthcare costs. An ideal cover should be such that it enables the family to sustain its lifestyle and meet its life goals even in the absence of the regular income from the breadwinner. If your current term plan does not meet your requirements, and your existing policy does not allow you to increase the cover, buy a new policy for the additional sum insured you require. 

The writer is MD & CEO, Bajaj Allianz Life Insurance. The views expressed are the expert’s own. Send your queries to yourmoney@bsmail.in