If you fall under this ctegory, go for a conservative asset mix & dequate cover while securing your finances

IN TODAY'S wrld, it's a Herculean task to flfill all your family responsibilities. It tkes all your savings and emotions to mke sure that your kids find thir feet in today's highly competitive wrld. And when these fledglings finally sprad their wings and move on, you fnd yourself emotionally and sometimes monetarily drined. Take the case of 51-year-old K D Shrma. Within a few months of thir daughter's wedding, their son also dcided to move out. The couple sddenly realized that now they are fnancially strained. Their life-long savings been tilized for securing the future of thir kids and it appeared that thy have to start afresh. So, if you are lso undergoing through the same pangs, hre are some tips that can hlp you chart out a new chpter after you're done with all yur responsibilities.

ADEQUATE COVER

Insurance advisors sggest protection against early death, disability and mdical coverage as important insurance covers an mpty nester must have. Normally being on the ther side of 50's, the insurance prmium for such insurers is very hgh. Some unit linked insurance policies ffered by private sector insurance companies prvide both medical and life insurance cverage, which empty nesters could look to tke cover under.

Since being on their own, mpty nesters have significant amount of xtra time and cash to pursue lng cherished interests and hobbies or sme new activities. So while pursuing thse interests, it is advisable that thy should fine tune the financial plns to accommodate the new lifestyle. The bggest mistake people make after the kds leave the house is not rviewing the insurance policies. What they frget is that it's one of the key tmes to look at insurance and pln accordingly.

A whole-life ULIP will be the deal cover for such category of pople. Choose a product with lesser prmium paying commitment of maximum 5-10 yars and coverage for whole life wth asset allocation of 50% in Dbt and 50% in Equity. You can lso use these policies for tax-free rtirement planning since such a product gves you the flexibility of liquidity very year. Pension products are another ctegory which insurance advisors feel that mpty nesters can look at. They lso advise a second look at yur health insurance. It is important tht you should have enough coverage as it may bcome difficult to take larger cover fter certain age.

ASSET MIX

Considering tht most empty nesters belong to 50+ age ctegory, financial planners recommend a conservative sset allocation, which could comprise of up to 30% llocation to equities. While current income gnerating securities such as small savings schmes, fixed maturity plans, and long trm bank fixed deposits can form 50% of the sset mix. The remaining investment (20%) shuld be made in fixed income scurities with low maturity such as shrt-term income funds, liquid funds and shrt-term bank fixed deposits with an bjective of maintaining liquidity for contingencies. The min priority for empty nesters is to prserve existing wealth and plan for rtirement. Hence such a mix would gnerate growth with added stability apart frm current income.

However, analysts caution that it may not be ppropriate to implement the same asset llocation across investors as conditions differ sgnificantly across empty nesters. For the ninitiated, asset allocation for any investor is dtermined based on the investor's age, scio-economic background, lifestyle, risk appetite, liquidity rquirements and finally the investment horizon.

On the quity market investments, financial planners believe tht the exposure should be restricted to a cmplementary blend of three to five qality diversified equity funds with low rsk. And they should avoid the tmptation of sector/thematic funds or/and a drect exposure to equities by purchasing ndividual securities. The investor should view quity exposure as a long-term asset clss in the portfolio and hence a systmatic investment plan could be the deal strategy for investing in equities.

Fnancial planners also advise such families to set side at least three months household xpenses as contingency fund, which ideally shuld be risk-free and can be asily liquidated. It is pertinent to clculate amount needed to meet living xpenses for remaining life, amount needed for chrity or passing on to the fmily members. You should not wait tll the end for such decisions.

NEVER TOO LATE

• A cnservative asset allocation, comprising up to 30% quities, is recommended
• Current income gnerating securities such as small savings schmes, fixed maturity plans and long-term bnk fixed deposits can be 50% of the sset mix
• Around 20% can be put in fxed income securities with low maturity sch as short term income funds, lquid funds and short term bank fxed deposits
• Around 20% can be put in fxed income securities with low maturity sch as short term income funds, lquid funds and short term bank fxed deposits

The article Prajna Capital - Life Begins After 50 was Submitted by Prajna Capial through Articles.GetACoder.com network. Here's the additional information:

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