August 2012

Mr. Gerard Colaco: Property insurance too is not compulsory. If you have no meaningful property, you do not need property insurance.

A number of youngsters today, well qualified, landing jobs in India at a salary of approximately Rs 3 lakhs per annum. They may be working well away from their hometowns. Most reasonably good Indian companies provide them with comfortable accommodation. Such individuals have virtually no property and mostly live out of a suitcase. This is a classic case of not needing property insurance. Of course if they own a vehicle, insurance of that vehicle is compulsory under the motor vehicle laws.

Mr. Gerard Colaco: The financial plan of every individual and every family must be built upon a solid foundation of safety and security. Only after safety is ensured, do we venture out looking for higher returns.

When the risks of death, disease and damage to property are taken care of through regulated institutions, it is called insurance. Apart from this institutionalized insurance, every individual and family must have their own ‘private’ insurance in the form of a reserve of money to meet emergencies. Such a reserve is called an emergency fund.

Mr. Gerard Colaco: When we talk to youngsters about retirement planning, very often the response we get is, “Oh, I have another 30 years to go for retirement.” They do not realise that while retirement may be 30 years away,retirement planning should commence when an individual draws his or her first pay cheque.

Mr. Gerard Colaco: Everyone should own a residence of their own. This is most applicable of course, to those who are not fortunate to have already taken steps in this direction, and/or those who are not fortunate enough to be sure of inheriting a house or apartment. So you can say, a house or apartment is an essential part of any financial plan.

Mr. Gerard Colaco: Extinguishment of debt means getting rid of debt, or not getting into debt in the first place. It is important to distinguish between acceptable and unacceptable debt, productive and unproductive debt. Any debt which is designed to automatically end itself is better than debt which remains open indefinitely.