Reset required | Value Research Jayasimha is an NRI residing in Indonesia. He wants to know how he can invest better in order to achieve his goals
The Plan

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Jayasimha is an NRI residing in Indonesia. He wants to know how he can invest better in order to achieve his goals

I am 41 year old Indonesian NRI. My wife and a 9-yr old son are financially dependent on me. I earn a monthly salary of ₹1,90,000. I have an additional income of ₹2,900 p.m from agriland. I spend a total of ₹1,04,500 per month which constitutes household expenditure of ₹60,000 and remaining is home loan EMI (home loan of ₹42 lakh). At present I do not have any term life insurance or health insurance. I have several insurance cum investment plans from LIC namely, LIC Endowment, LIC Jeevan Anand, LIC Janraksha Endowment, LIC Komal Jeevan and LIC Money Back. I have invested into mutual funds which include BSL Pure Value, HDFC Infrastructure, HDFC Mid Cap Opportunities, ICICI Pru Focused Bluechip Equity, Reliance Equity Opportunities and SBI Magnum Tax Gain. Apart from mutual funds, I have invested into direct stocks, PPF, and real estate. I own an agricultural land too. I have kept ₹2,50,000 in my savings bank account as emergency fund.

My goals include my son's higher education, his marriage and saving for my retirement. I am not concerned of taxation as my taxes are taken care of by my employer.
- Jayasimha

What he has (Cash Flow)

  • Monthly disposable income of ₹88,400

What he wants (Goals)

  • Education for his child
  • Marriage of his child
  • His own retirement

What he should do
Emergency fund:
Jayasimha already has ₹2.5 lakh in his bank account for any emergency. However, since he has a kid, we recommend that he should increase his contingency kitty by ₹1 lakh. He may opt for the sweep-in facility to earn higher returns.

Health insurance: Jayasimha and his family do not have health insurance. This could be very risky. A family-floater policy covering the three would be suitable.

Life insurance: Jayasimha's insurance cover is inadequate. Also, he has bought all traditional life insurance policies. Endowment plans and money-back policies neither disclose expenses nor investment avenues. Their returns are also very less. Jayasimha has also insured his child. Insuring a dependent makes no sense. Life insurance is taken for an earning member, especially when he is the sole breadwinner. Jayasimha should make a planned exit from these policies to limit his losses. He must go for a term-insurance cover of at least ₹40 lakh.

Investments: 83 per cent of Jayasimha's investments are in mid and small caps. This is fine considering the long time he has to achieve his goals. He is investing via both mutual funds and direct equity. He may continue investing directly in stocks if he has a high risk appetite, is interested in stocks and understands the market; he should not speculate on stocks. He can also take the mutual-fund route alone if he can't manage stocks.

Looking at his fund portfolio, he has invested in an infrastructure fund. Being a sectoral fund, it restricts itself to the same sector, even if the sector underperforms. He may sell it. He may also exit UTI Gold Exchange Traded Fund. Jayasimha must exit his three-star-rated funds. He may continue investing in ICICI Pru Focused Bluechip Equity, HDFC Mid Cap Opportunities and SBI Magnum Taxgain. He must start switching to debt gradually once his goals near.

For his retirement corpus, we have assumed life expectancy of 80 years. If he survives longer, he will require more money. Once he exits his insurance policies, he will have an additional disposable sum of ₹1,59,500. It can be utilised for investing for his goals. He will still be left with some surplus, which he may use as per his own wish.

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