How should I start a financial plan for my 10-year-old son?
— Vinod Sharma
You need to plan for the education and marriage of your son. Higher education cost will be greater than that of schooling. The schooling cost may be met out of your regular monthly income, but you need to save for meeting the higher education cost. First, decide on the course you plan for your son and the estimated cost at current prices. Start investing through debt/balanced/diversified equity mutual fund schemes, depending on your risk appetite. Similarly, you can decide on the marriage expenses and start investing through PPF/diversified equity mutual funds/gold ETFs. You may also take a life insurance cover in your name of the amount of both education and marriage cost.
I worked in an organisation for two years and quit in 2010. Since then, I am not working anywhere and now want to withdraw my Provident Fund (PF) of two years. Would it be taxable?
— Ashok Verma
Yes, PF withdrawn before completing five continuous years in a job is taxable.
What kind of duration should I look for investing in fixed-maturity plans (FMPs)?
— P Subramanium
Fixed-maturity plans are closed-ended debt schemes with a fixed maturity date and they invest in debt and money market instruments maturing on or before the date of the maturity of the scheme. Hence, they do not carry interest rate risk. But there is liquidity risk as they cannot be withdrawn before the due date of maturity. FMPs have advantages from tax point of view, i.e., the gains are taxed at 10% without indexation, or 20% with indexation, which is lower than the maximum slab of individual tax, which is 30%. Before investing in FMPs, one must decide on the goal and duration of the investment. The duration of the investment should match with the duration of the FMP. Currently, FMPs are generating inflation-beating returns at the shorter end of the maturity.
How do I decide on a term plan for my 15-year-old daughter?
— Roshni Sood
One should take term life insurance only when one has dependents or has any loan liability. Further, insurance companies also verify the