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I work in a private company and have two queries:

1) I would like to take a life insurance policy for my spouse with the LIC. But after the recent talks about the losses suffered by LIC and SBI pension fund, I am confused. Please suggest if HDFC, Tata or any other private insurers are reliable to opt?

2) On National Pension Scheme, if SBI fund is chosen, will SBI pension fund loss impact returns? Is there a need to shift to banks such as HDFC?

Balaji

A I think you are talking about the Contributory Pension Scheme (CPS) for government employees and the news that funds from LIC and SBI suffered losses as underlying shares like Adani crashed some months ago. This has nothing to do with the insurance service they provide and more to do with the stocks they held under CPS. That is the very nature of investing in market-linked instruments. This has nothing to do with the efficacy of the insurance providers.

Simply go with any large insurance provider for a simple term insurance policy (and not any fancied policy).

Check the coverage age, premium for sum assured in the event of death of the insured. Technically, there are various parameters such as solvency ratio, premium market share, claim ratio etc., to look at the quality of term insurance providers but it is suffice to say large players like Bajaj Allianz, LIC or Tata tick these reasonably well in terms of premium versus cover. You can go with one of them. We do not provide specific recommendations.

On NPS, again, they are market-linked and you should be willing to take the ups and downs. There is no cause for concern with the SBI NPS fund on the grounds you have mentioned. Others too suffer when large index stocks fall. Different NPS fund managers excel in equity and debt, and depending on your asset allocation, one would need to choose the fund manager.

I have ₹1 lakh with me which I am planning to invest for long term as a lump sum. Which could be the best instrument to invest? Which instrument provides good returns with zero or less tax liability. I am a 34-year-old salaried person.

Vineeth

Expecting zero tax with good returns in your salaried phase of life is not quite practical! You can consider investing in PPF for moderate returns and safety with no tax as of now. Otherwise, consider bank FDs where rates are now attractive in some banks but with tax on interest. If you are looking at long-term growth in wealth and can handle temporary losses, then use SIPs to invest in an equity index fund like Nifty index. These will entail tax in the form of capital gains but that is nothing considering the growth potential in the long-term of 10 years or more.

I will turn 25 soon and earn ₹20,000 a month. I usually do stock market trading but am not proficient. I am confused about my financials and need guidance for an investment plan suited to me (like SIP MF or other option) How much should I invest from my salary?

Kashi Gangasagre

It is good to have a core of your portfolio in sound, long-term investments like PPF and mutual funds. Start investing in PPF and SIP in index equity mutual funds based on Nifty, Nifty Midcap 150 and Nifty 500. How much to invest will depend on how much you can spare.

Try to invest at least 20-30% of your salary to begin with if you have some commitments, or invest more if your commitments are less. If you have dependents take a good term-insurance cover on your life and a health insurance policy. These should be the stepping stones for your financial journey. Do not allocate more than 3-5% of total investments to trading. As you embark on your career you may also find less time to trade actively. Hence, keep that at best a hobby with very small sums.

(The author is Co-founder, PrimeInvestor.in)

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