Karnataka - Bangalore   

Survey: salaried class poor in financial planning

Bangalore: “Hum hai na!” says a TV commercial by a noted banking institution in an attempt to offer personal financial planning services to people. But how many of us among the salaried class have given a thought towards wealth management and financial planning?

The annual tax survey by Right Horizons, an investment advisory and wealth management firm, shows that financial planning among salaried individuals is by and large conspicuous by its absence.

The survey was conducted on 1,169 salaried individuals from the IT/ITES segment in the age group of 22 to 54 across Bangalore, Chennai and Hyderabad.

It revealed that although life insurance was one of the key elements in personal financial planning, 43 per cent of the respondents in Bangalore did not have any kind of life insurance. On the equally critical medical insurance front, 84 per cent of those surveyed did not have any, and about 12 per cent were covered by their employers.

This clearly indicates that there is lack of awareness about rising healthcare risks and healthcare costs. The in medical insurance premium exemption limit from Rs. 10,000 to Rs. 15,000 also does not seem to have helped.

Investments under Section 80C earn tax breaks for investors, up to a maximum investment limit of Rs. 1 lakh. Long-term investment options such as Provident Fund (PF), Public Provident Fund, life insurance premium, equity-linked savings scheme and investments in mutual funds can be used within the limit to earn tax benefits, in addition to the return on investments. But more than 60 per cent of those surveyed had not fully utilised the limit of Rs. 1lakh and many of them actually went on to pay income tax.. However, 35 per cent of the respondents in Bangalore completely used the Rs. 1 lakh limit.

Other interesting findings include the fact that 21 per cent of the respondents in Bangalore used only PF investments, among the various tax-saving options available.

Even though the majority of the respondents were in the 25 to 30 age group, traditional and safe instruments such as PF, National Savings Certificate and life insurance dominated the investment profile, with almost 60 per cent of those surveyed using only such avenues.

Commenting on the findings, Anil Rego, chief executive officer of Right Horizons, said it was all the more important for people to pay greater attention to financial planning in the present situation.

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