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Bajaj Allianz Life Insurance


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so if you could tell us why is there a need for educating every parent about this the things that we've just discussed any parent any person who is whether he's salaried whether he's self-employed but definitely there's a need to educate them about education inflation so kudus could you please explain us this whole thing and Why it has become so very important now yeah so uh so first first i'll tell you that we we had this uh survey conducted last year with kanta i am out of the various life goals which people articulated there uh children's education continues to be one of the top goals for which people are today focused on and also it said that you know nearly 50 percent Of the indian parents they found it difficult to afford higher education for the children because of lack of financial support so and and just just before it started uh mr pai was mentioning that you know the typical indian parents would not really want to take loans for uh for educating their children at least you know that's that's how we are Our value system is so if if our life goal remains revolving around uh children's education and education is becoming expensive you know if you look at the top b schools the top irons today have a fee of anywhere between 25 to 30 lakh rupees which used to be anywhere in the range of 15 lakh rupees till 5 years back or maybe lesser than 15 Rupees yeah so inflation is playing a very critical role in deciding the affordability and and as parents we need to be aware of that and we need to start preparing for that start factoring the inflation part in in savings that we keep aside for our children's uh education the safest way for that would be You know there are a lot of tools which are available in in on the internet today you know you can go and pick up any of those calculators which uh factor in inflation which also factor in what is the kind of return that you are expecting on your portfolio which also gives you an idea whether you are a conservative a moderate or an aggressive investor and on the basis of that what is the kind of Return that you can expect it gives you an idea on how much you should be saving on a monthly or a yearly basis if you have to reach at that financial goal or you have to reach at that amount which you are planning to have for your children's education at the time when it is needed so my suggestion there would be that you know it is it is very very important to decide and Define that amount in in financial terms we call it future value so if your goal today is five lakh rupees uh considering the inflation how much that 5 lakh rupees is going to look like let's say 10 or 15 years hence when the parents need that money for their children's education how much do you need to start investing today And what kind of long-term investment tools do you pick up or long-term investment instruments do you pick up so that you are systematically investing and meeting your goals quickly since we're talking about the different kinds of skills and since parents are pressured into this because obviously of the marketing and you know the kind of environment we're living in the digital world so to say Uh so could you tell us how can insurance plans help uh help parents in planning for this new educational age and what should be the right strategy for parents to follow sure first of all i must acknowledge that you know the words of mr pai they they come as such a big relief in their learning you know Especially to come from someone who's who's been a pioneer in the iit industry not only in our country globally and uh emphasizing on the human side of growing up that's very very important mr pai thank you so much for that advice uh coming to how insurance can help in planning for new education uh tell me if i if i take you back a few years you know until a few years back when in our Country we did not have too many investment options uh our parents only had two primary sources of savings what was lic policy second was fixed deposits or maybe we had you know some of them who believed in systematic monthly savings we had recurring deposits uh and my answer to the question that you asked me it lies in that itself that you know the Reason why all of us got educated uh in middle class families uh and our parents could afford that was uh because they had this habit of disciplined long-term savings which they had started with how insurance helps you is it's a it's a long drawn product you know you are you are paying your uh insurance premium for 10 15 20 years and the maturity amount comes to you

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After the policy term has matured so it's a it's a disciplined way of investing uh it doesn't really give you too many options of you know or there are options of withdrawing your funds uh premature but you know it's it's not easy and hence you know it builds that discipline long-term savings habit for you there are products which offer you Guaranteed returns which means that as parents you don't have to be worried about volatility in the interest rates if you have invested in a certain plan today then whatever is the rate which is guaranteed in that plan you are going to get that rate uh at the time of maturity which could be let's say 20 years hence as well another significant factor why insurance is a preferred mode for Uh for funding for education is the tax efficiency the maturity amount that you get in insurance plans subject to you know a couple of parameters being paid it is tax free so it becomes very very efficient for you to save through an insurance policy i also want to bring in another aspect of insurance here which is protection which is the plain simple life insurance You know so if as a parent i feel that you know i need some amount of money ten years hence to be provided for my children in case of an invading mutual during those 10 years period so that my children's education doesn't get derailed life insurance policies also offer you that element of protection right it takes care of your children's future goals they remain protected And within our company also we have we have you know products like git which is a guaranteed plan or we have a product which is called flexi income goal which starts giving you uh interim payouts uh and these products have all been designed keeping the long-term goals of people in mind so i think insurance really helps you in in making systematic disciplined long-term Investments which are tax efficient as well as offering protection so mr pai uh one last question to you uh since we already talked about the multiple career options that the children have in front of them today vis-a-vis which were there like maybe 10 or 20 years ago so any piece of advice as to how the planning part can match up to the education needs of today Well i would agree with you know everybody should save money for the rainy day because money is not going to grow on trees it comes because you work hard you don't consume everything that you earn and you save so we have to say and we must be very careful that uh when we say we keep the money safe when you are younger we have the temptation to put money into instruments which have got Greater risk yes we must take some risk when you are anger but we must decide the quantum of money that we can take a risk on so we always have money at call and i i am one of those who believe that you must consume less than you want because if you consume more than you want then you're going to get into trouble because you have children you have family the dependence etc So you gotta inculcate a habit of saving and you must you'll cultivate a habit of saving in your children too because remember what we do in later life is very often what we are told as children and what we understood as children so children should be taught to save money and to uh you know keep some money and not use the pocket money not to you know spend the entire pocket money And to spend and accumulate money for a period of time and spend what is essential for your child don't over spend don't try to do too many things because the value may not be there don't try to copy others sit down and think about what you want for your child and give them a very good education very good education with values values are very very important Right you see the most successful people around the world many of them are grown up in middle class families with great values which they have even now they're very humble they're very down-to-earth you know they're very very understated correct and i think it's very important to have because that is required for success in future that's my personal view and of course when they Finish schooling we want them to go to the best colleges we want them to get the best professional degree and that for that too you required to save money so i think you had to play it very very carefully because like i said earlier you're going to have very few children we don't have many children and we have to lavish our love and care on the children And as you get older pallavi when you look back in your life how will you determine whether you are being successful or happy if a child is not doing well the children don't do well after you work very hard 25 30 years what you look back and say what what have you done in your life you could be the biggest most richest person in the world you could be the most powerful man in the world

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But if your children are not done well they don't settle down they don't do well they don't get a good education they don't do you know they don't not doing and they're not happy i mean your whole life is gone right so i think it's very essential that uh we do things in a very structured manner and make sure that we have enough for our children and we inculcate the Savings habit to inculcate the right balance between frugality and spending we are already learning a lot from mr pai as to what has to be done and what is to be avoided but when it comes to financial planning are there any common mistakes which need to be completely awarded for a better result and better planning so uh i think the first common mistake Which which i have come across from investors or parents is that we don't have a sharp clarity on the goal itself you know we don't know what is the future amount which is needed to fulfill my child's education goal so first thing i would say is define your goal clearly uh second is start investing early third thing is you know investment as a You know overall investment as a philosophy is is not a short-term philosophy so plan long term when i say plan long term i mean to say stay invested don't get tempted by the volatility in the markets there's a very famous fidelity study old fidelity study which said that you know the the investors who made the highest returns were not the ones who were very Smart in switching and climbing the markets they were the ones who forgot that they had body invested in fidelity and it continued to grow for decades together so i'm not saying forget your money but all i'm saying is stay invested stay invested for long giving into the temptations of markets is is probably a mistake which is to be avoided completely Some of the things which which really deal our long-term plans are a requirement for emergency funds you know we at times are compelled to dip into our long-term goals and that details the plan so create an emergency fund and always keep it aside there are various you know various rules of thumbs that we apply in financial planning but Typically it is said that you know at least three months of your monthly expenditure amount should be kept aside as an emergency fund so that you don't have to dip into your savings which you are making for your child's long-term goal and last thing i would say is if it is possible lock in your money uh in the guaranteed products You know anything which which takes care of the worries around interest rate fluctuate fluctuation look at those investments they will take a lot of your worries away in fact uh leader just to you know close the session as you rightly said during the session as well that financial planning and good habits this is something part of our daily life it cannot be done in a day's time Uh so lastly uh how can one make sure that the returns that one is aiming at on the education fund outspaces inflation you obviously told a couple of things during the session but just to summarize the whole thing uh first thing is that you know power of compounding is known as the eighth wonder in the world if i continue to invest for the long term then the compounding Of my my returns on the investment is something which will adequately take care of inflation effect second thing is uh systematic investment will in technical terms it is called rupee cost averaging which means that you know if if i continue to invest a similar amount of money for a long period and my investments are being deployed at Different rates that also is very effective in meeting the inflation third thing is uh asset allocation how much money do you want to invest in fixed income instruments how much do you want to play in equities uh there i would first say is if you don't know how the equity markets or how the fixed incomes behave rely on a good investment product rely on fund managers And allow them to take decisions but again as a rule of thumb there's one simple rule of thumb which says that hundred minus your age is the amount of money which should get exposed to equities so you know if if somebody's at the age of 40 then 60 percent of the amount can grow in equities but if you are at 50 then you have to start reducing that know your appetite you know just because uh there's some product or some Instrument which has given fancy returns do you have that kind of peptides to play in high risk markets that's something that only you would be able to tell for yourself so these are some of the things which i feel focus on compounding go for rupee cost averaging focus on asset education and be careful about where you're investing if you're able to take care of all these Things i'm very confident that you know parents will be able to take care of inflationary increase in costs

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