Asked by narendra_ahuja@hotmail.com

IT IS a good idea to start as early as possible. Although you have not mentioned the age group you are in, we assume you haven’t turned 35 yet. You can get a headstart on building your financial future if you start early. You can do this by:

• Contributing to a pension plan (see Kothari Pioneer Pension Plan)

• Subscribing to a systematic investment plan

Ideally, during this period you should be investing more in equities or equity-related mutual funds because this is the time when you can afford to take some risks. Some portion of total investment must also be kept liquid in a savings bank account.

Identify your long-term and short-term goals right now. Because funding them would require different strategies. Keep in mind that investing for the long-term is good for your current financial situation too as you also save tax by investing in these schemes.

Further, we suggest you to visit pages on the site that tell people in their 20s and 30s to start saving. Click here for more information.

Asked by sathissh@eth.net

NO, IT is not necessary to invest the maximum permissible amount of Rs 60,000 every year. What you need to invest every year is a minimum of Rs 100 to keep your account active. Therefore, in any given year your investment can range between Rs 100 and Rs 60000.

In case you fail to pay even the minimum amount of Rs100 in a particular year, the account would be considered as "discontinued". You can "continue" with the account again by paying a default fee of Rs10 for each year of default, along with the usual minimum instalment of Rs 100. An investment of more than Rs 60,000 is not allowed under any circumstances. You may also invest this amount in 12 instalments over a year.

PPF rules do not recognise a joint holder. You should nominate a member of your family at the time of making the application. For obvious reasons, do not nominate a minor. Also, in case of two adult nominees make sure that they have a joint savings account in the same bank.

In the event of your death, your nominees may withdraw the amount anytime. However, if not withdrawn, it would continue to earn tax-free interest till maturity. On maturity, the amount will be paid to the nominees. When there is no nomination made by you, the amount will be paid to your legal heirs on production of the succession certificate.

In case you have not opened the account yet, get the account opened between the 1^st and 5th of the month and also make subsequent contributions between these dates. Click here to know more about this scheme.

Asked by nandu_58@rediffmail.com

UNFORTUNATELY, THERE aren’t many options available for a retired person whose primary concern is regular monthly returns. Although you have not indicated the tax slab you will fall into (on retirement), we suggest you take a look at a few instruments that enable periodic returns - monthly, quarterly, half-yearly or yearly.

The post office monthly income plan is a good option. It gives you an assured return of 11 per cent, on a monthly basis, for six years. The income also has the benefit of section 80 L. For more details, click here

Then there are 9% RBI Relief Bonds that give you an assured half-yearly return of nine per cent. The income is tax-free and will be suitable to you if you are in the highest tax bracket. Click here to find out more.

LIC’s "New Jeevan Akshay" provides immediate annuity till the time you survive. It also has several other options to choose from. We would also suggest that you invest a part of your money in equity or equity-based instruments. Mutual funds - income funds or balanced funds, with regular return option (monthly etc.), could be a part of your portfolio. You may also consider the "systematic withdrawal plan ", depending on the tax slab you fall in. Some good income funds and balanced funds are as follows:

Income funds
Templeton India Income
Birla Income Fund
Sundaram Bond Saver
Reliance Income Fund
KP Income Builder Account

Balanced funds
Alliance 95
Zurich fund
Tata Balance

Some banks, like IDBI Bank, have a fixed deposit plan especially for retirees wherein an interest of 10.5 per cent is paid on a monthly basis. Diversify your investment as far as possible. And, as you correctly mentioned, do not put your funds into company fixed deposits that do not sport a rating.

Asked by v-kap@yahoo.com

IT IS not clear from your mail as to how many years have passed after you bought the policy. The instalments that you have already paid could be half-yearly or yearly. It is better to wait and withdraw after five years, as only 0.5 per cent of the target amount would be deducted. You would then also be eligible for tax benefit. But, in case you withdraw before five years, the deduction would be about 1 per cent of the target amount. Also, the rebate enjoyed in the year of contribution would be included in the total income during the year of withdrawal for the purpose of income tax. Therefore, go by the number of years into the scheme and then decide to withdraw.

Asked by praveen_nagrani@bplnet.com

Your mail does not contain any information about your age when you opted for VRS. The investment you make would depend largely on the age at which you retire. Even though you have not indicated any specific requirements, we assume that you need to figure out a general investment strategy. To get a clear picture of your asset allocation in the changed times, we suggest that you click here.

Talking of investments (and since the sum involved is quite big), you need to invest much of it into instruments yielding tax-free income. This would keep your tax liability to a minimum, which otherwise would have put pressure on you in your non-earning years. There are two fixed income instruments that could give you tax free income on your investment - the RBI Relief Bonds and Bima Nivesh.  

Based on your risk profile, you can also invest a part of your money in mutual funds. Although, one cannot expect a fixed return from these, the return, in the form of dividends, is tax-free. There is also the potential to earn a higher return. To know more, please read the folowing stories.

Getting started with mutual funds

How to pick a debt fund

The ideal vehicle for equities

You may also think of owning some equity as a part of your portfolio. This link can help you figure out the right strategy. There are also some post-office schemes that could help you save taxes and get you regular monthly returns. Click here to know more about them (though iinterest rates might have changed).