Financial Planning Wealth Management

2020-10-23T17:54:00.002+05:30

Time to Focus on Short Term -

How to manage our money over next three years

The greatest impact of Covid-19 is the tremendous uncertainty about the future.
Today we are talking about our habits and beliefs before Covid-19 & after Covid-19 and trying to address the area of focus for next 3 years.

1. Before the corona virus breakout - we were habitual of investing for Long term say 10 years and more. Also, in each ups & downs we just keep on adding money for future goals.

Current time has come to focus on and reorganise your income, loans, investments and savings.

2. Earlier we were lazy to invest and review annually. We thought that frequent tracking of portfolio isn’t a good idea.

But looking towards future uncertainties, we need to change our portfolio according to the changes in the economy.

Current economy’s structure is changing in many ways and we need to focus on doing tactical asset allocation of our own by deciding below three things:

a. Which asset class is suitable for me?

b. How much allocation in each asset class?

c. What are the right entry & exit points?

3. Before the corona virus breakout, we had a fixed lifestyle. Fixed amount of Loans, Investments and spending on social events, birthdays, weddings, vacations, outings, etc.

Now we have to try and save every penny we can. We need to focus on understanding our own financial position and review it quarterly.

4. Earlier we believed that 3 to 6 months’ expenses are enough to be kept liquid.

After Covid-19, we have realised that one has to create survival fund (size depends upon earning and spending style of each family) for future uncertainties.

We need to focus on converting illiquid assets to liquid funds for future opportunities and let it act as a cushion against future risks.

2020-08-29T12:19:00.001+05:30

2020-08-20T11:28:00.002+05:30

Time to Focus on Short Term -

1. Before the corona virus breakout - we were habitual of investing for Long term say 10 years and more. Also, in each ups & downs we just keep on adding money for future goals.

Current time has come to focus on and reorganise your income, loans, investments and savings.

2. Earlier we were lazy to invest and review annually. We thought that frequent tracking of portfolio isn’t a good idea.

But looking towards future uncertainties, we need to change our portfolio according to the changes in the economy.

Current economy’s structure is changing in many ways and we need to focus on doing tactical asset allocation of our own by deciding below three things:

a. Which asset class is suitable for me?

b. How much allocation in each asset class?

c. What are the right entry & exit points?

3. Before the corona virus breakout, we had a fixed lifestyle. Fixed amount of Loans, Investments and spending on social events, birthdays, weddings, vacations, outings, etc.

Now we have to try and save every penny we can. We need to focus on understanding our own financial position and review it quarterly.

4. Earlier we believed that 3 to 6 months’ expenses are enough to be kept liquid.

After Covid-19, we have realised that one has to create survival fund (size depends upon earning and spending style of each family) for future uncertainties.

We need to focus on converting illiquid assets to liquid funds for future opportunities and let it act as a cushion against future risks.

2019-04-27T17:47:00.002+05:30

Let`s play a Game of Investing.

We all are investing in something .

It may be in relationships, It may be in Marriage or a career.

It means different things to different people.

And Life is all about doing something to reap benefits in the future.

2019-04-11T13:48:00.001+05:30

Teaching Children about money is most important

In real Life child is exposed to money ever since s/he is born.

S/he observes their parents taking out wallet and making payment for vendor, milkman, newspaper boy....and then after money being given to purchase small candy, toy, comics etc.

Few things which we can do with our children -

1) Concept of nurturing wealth -

We can made s/he sow seeds in a pot. And inspire them to water the plant regularly. Over a time nurtured seed converted into plant. And slowly we can increase the plants.

2) Inflow out flow concept -

We can give s/he a chocolate bank like piggy bank. Inspire them to collect chocolate into that and eat it twice a week.....can fixed a day .(Wednesday & Sunday) .Deposit of chocolate increase the number & eating chocolate reduces the number that helps them to learn inflow outflow concept.

3) Concept of Bank & setting goals -

Give children two piggy banks -

First piggy Bank - Purchase piggy bank whose shape is like Bus. Whenever elders of the family give them money on various occasion, parents should inspire them to put money into Bus piggy & can tell them the story of Bus going to Bank.

Second piggy Bank - This you can purchase shape of transparent bottle. Beside transparent bottle put a picture of Toy which kids want to purchase from that saving.

One piggy bank teaches them long term saving and second piggy bank teaches achieving short term goals.

4) Delay gratification - On every month on their birthday date make habit of purchase the gift of their choice. But it is with condition of no buying throughout the month. And in case S/he wants larger gift then S/he has to miss gifts for 1 to 2 months.

5) Budget learning - Kids learn from parents. If they observe you to write down your expenses they also demand small diary to write down their expenses. If you as a parent aren`t willing to do family budget your child won`t develop the habit.

In reality there are four aspects of Money ......Income, Expenses, Asset (Investments), Liabilities (Borrowings) Our children are already expose to spending power ......slowly give them the power of other 3 aspects of money.

2019-03-28T17:14:00.001+05:30

Asset allocation-

Health and Wealth ...... well balancing keeps us Healthy & Wealthy

Our daily food habits keep us healthy. If we take care of our regular diet proportions of

Carbohydrates, fat, Dessert, Protein, Vitamins, Minerals .......and if review our diet plan we remain fit always.

Like that to remain financially healthy we should take care for proportions of

Fixed Income, Real estate, Gold, Alternative investments, equity, Insurance & Loans.

v Fibre (Green vegetables, Sweet corns, Carrots, Broccoli, Fruits) / Fixed income (FD, Post MIS,EPF,PPF, Debt MF, NSC, Bonds & Debentures)

Fibre in the diet keeps the stomach in good shape as fibre rich diet won`t make us fat.

Fixed income is like Fibre in the portfolio.

Low risk debt investments give us stability but never bit the Inflation.

Too much allocation to Debt won`t create sufficient wealth.

v Protein (Milk, Yogurt, Oats, Almonds, Eggs, Dates, Beans) / Equity (Diversified Mf Equity Funds -Large cap, Mid caps, Multi cap, Value funds, Small caps)

Protein builds muscle & helps the body grow.

We need it most when we are young & the body is developing.

As we grow older, we can reduce, but not completely eliminate, our intake of protein.

Equity act like protein in our portfolio, building wealth & adding its growth.

Focus on them when we are young & watch our portfolio grow.

Whether we invest directly or through Mutual funds can give the higher returns.

v Carbohydrates (Whole grains, Bananas, beetroots, Apples) - Real estate ( Home, Land, Commercial) Carbohydrates are instrumental in the digestion of fatty foods.

Real estate gives stability to our portfolio and accounts for the big investment in terms of value. However, if we have too much of real estate, all other investments get force to leave from the portfolio. This can suddenly change direction of the portfolio and generate disappointing returns.

v Fat (Cheese, Dark Chocolate, Peanut Butter) - Gold (Physical, Gold ETF & sovereign Gold Bond) everybody needs to consume fat. It provides energy and gets stored as reserve in the body.

Yet, too much fat in our diet can make us unenergetic and lead to several health problems.
The yellow metal is the fat in our portfolio. It also acts as a cushion to fall back on during an emergency.

But too much gold will drag down our portfolio returns. so allocation shouldn`t be more than 10%.

v Vitamins- Insurance (Life and Health insurance)Just as we need vitamins in our diet to safeguard our health and improve immunity, we need insurance to protect our finances against unforeseen circumstances.

Don't depend on the insurance that comes along with an investment. Take a dose of pure insurance, much like the vitamin supplements that doctors prescribe.

v Minerals – Loans

Loans are like the small minerals in our financial diet.

They help in building assets but excessive intake can lead to complications. They are good for your portfolio if taken in moderate amounts.

v Review
Even the healthiest of diets will not have the desired result if the individual does not exercise. Our portfolio should also not be fixed.

Ensure that we move it around regularly. Rebalance it once a year. Review your Assets & Investments.

v Allocation
As we grow older, our diet undergoes a change. Similarly, our asset allocation alters as we add on years. Make sure we follow a disciplined asset allocation and we will never make a wrong investment.

2019-01-03T10:16:00.001+05:30

Net worth

Net worth is the amount by which assets exceed liabilities. (Assets – Liabilities)

Another way to say this is, it's the value of everything we own, minus all our debts.

Net worth is a concept that can be applied to both individuals and businesses, as a measure of how much they are really worth.

A consistent increase in net worth indicates good financial health; conversely, net worth may be depleted by a substantial decrease in asset values relative to liabilities.

While calculating our net worth following are the assets to be considered

v Liquid Assets – May be cash or money in savings account

v Debt Assets – PPF /EPF, Bonds/Debentures, Debt mutual funds, Insurance policies

v Equity – Shares, Equity oriented mutual funds, Unit Linked Insurance Policies

v Real Estate – Land / Plot (Commercial), Second Home etc

v Gold- Physical (in the form of coins/ bars), Sovereign gold bonds/ Gold ETF’s

v Personal Assets- Home, Jewellery, Vehicles

Liabilities to be considered are –

v Home Loans – Loans for our dream home / may be renovation of our home

v Vehicle Loans – Loan for two wheelers/ Four wheelers etc

v Personal Loans – Taken from banks, money lenders, or family members/ friends

v Gold Loan – Through banks or non banking institutions

v Loans Against Securities – Loan against shares, mutual funds, PPF, real estate.

Hence, net worth calculations include each and every aspect of our assets and liabilities

Net worth is the mirror of our financial health. It shows our real worth.

2018-11-19T16:05:00.002+05:30

Check the Financial Ratio's

There are few financial principles / ratios for tracking good financial health.

1. Emergency Fund = Liquid Assets

Monthly expenses

· This is the provision for unexpected expenses like job loss, medical treatment, marriage or any other requirements in family

· A lower Ratio means you run a risk of not having adequate money & too high ratio means not making money to work hard for you

· It is in the form of Cash + Saving Account Bal + Liquidity and Flexi Deposits

· People with more stable income may need a lower ratio than those who are having irregular income.

· Idle Ratio should be around 3 to 6 months of our total expenses

2. Savings Ratio = Amount invested per month

Take home part

· We need to have Healthy saving ratio to protect our Future

· As our life span are increasing, job spans are reducing so we have to built a large retirement corpuses

· But too much saving at the cost of not enjoying the life is also bad idea.

· This Ratio differs from person to person but it should be minimum 20% to 30% of our take home pay

3. Debt /Loan coverage Ratio = Total loan EMIs per month

Per month take home pay

· Easy availability and lower interest rates induces us to take a personal / home / vehicle loans, credit card outstanding balance etc.

· In case of uncertainly in life due to job loss, accident etc it would be advisable that as your age increases you should try to make your ratio zero .No loan into your retirement

· It should not be above 30% to 40% of our take home pay

4. Net worth = Assets (Minus) – Liabilities

This is the most important indicator among all ratios which shows progress of financial health

5. Life insurance coverage Ratio = (Net worth + Today s life cover)

Annual take home pay

Ø This ratio takes care of the life cover needs for the earning member & will determine how many years the family will sustain if something happens to earning members.

6. Expenses to income Ratio = Total monthly expenses

Monthly take home pay

Ø Total monthly expenses /Monthly take home pay (House hold + Lifestyle)

Ø It should not be more than 30% to 35% of our take home pay.

7. Net worth growth Ratio = Net increase in net worth

Net worth at the beginning of the year

· Which indicates Net worth growing rate and our net worth should increase minimum above inflation

“Every financial worry you want to banish & every financial dream you want to achieve comes from taking tiny step today that put you on the path towards your goal.” – Suze Orman

2018-09-21T15:32:00.004+05:30

Make sure our investment beat inflation

Inflation is the rate at which the general level of prices for goods and services is rising and, hence, the purchasing power of rupee is falling.

Are we considering inflation while investing our hard earned money?

Let's see the chart of living cost of middle class family.

In Year 1920 cost of living was Rs 1/-

In Year 1940 cost of living was Rs 10/-

In Year 1960 cost of living was Rs.100/-

In Year 1980 cost of living was Rs 1,000/-

In Year 2000 cost of living was Rs 10,000/-

And In Year 2020 it will be Rs. 1,00,000/-

So when we make investments, we’ve to be cautious that as our investments grow, the silent monster of inflation also catches up.

Hence, our overall portfolio should earn at least an amount over & above the inflation, or say a positive real return.

How to achieve that?

· By including some amount of equity in our portfolio as per our comfort level.

· While fixed income investments like FD and debt funds give stability, equity MF in the portfolio will bring the much needed growth so that our portfolio beats inflation in the long term.

Don’t plan the future on today's value, always consider the factor of Inflation and Tax.

We can reduce the stress of impact of inflation on our returns by balancing our portfolio smartly.

“Inflation takes from the ignorant and gives to the well informed” – Venita Vancaspel

2018-07-02T11:40:00.002+05:30

Power of Compounding in Investments

In very simple terms, the process of earning, “income on income” is termed as Compounding.
The beauty of compounding lies in the fact that:

a. It is a very powerful force to multiply money.

b. It is a very simple idea to understand.
c. It is a very easy tool to implement.

Let us understand compounding effect with the help of following example:

An investment of ₹1000/- pm for 30 years generating returns of 6%, 10% and 15% amount to ₹10 lakhs, ₹22 lakhs and ₹70 lakhs respectively. The difference can be seen in the graph below.

From the graph above we understand that in the short term the difference in growth may not be more, but in long duration, there is a drastic difference in growth due to the magic of compounding, which is the reward for patience and consistency.

“Compound interest is the eighth wonder of world.He who understands it earns it, he who doesn’t pays it.” -Elbert Einstein

2018-03-31T10:28:00.000+05:30

10. Know and learn the types of Risk.

· Risk is the potential of gaining or losing something of value.

· It can also be referred as chances of having an unexpected or negative outcome.

· Financial risk is the possibility of not earning the expected return.

The quantum of such risks depends on the type of financial instrument.

All the asset classes of investments are prone to some or other type of risk.

· Different types of risk associated with various asset classes can be explained as below:

1. Equity investments are subject to market and business risks.

2. Debt investments involve inflation risk, default risk and reinvestment risk.

3. Cash and its equivalents are subject to lower returns risk

4. Commodities are subject to changes in demand and supply cycle risk.

5. Real estate, currency and gold are related to economic cycle risk.

· So investment should be made after understanding risk and return features involved in various asset types

Ø For short term goals, cash and it’s equivalents should be preferred

Ø For medium term goals, income assets (Debt instruments) are preferable

Ø For long term goals, growth assets (equity investments) which appreciate in values and offer higher returns should be considered.

· Thus risk management becomes essential before taking investment decisions.

· It can be done through risk profiling which shows the willingness of an individual to take and accept the risk involved.

A risk profile is important for determining a proper investment asset allocation for a portfolio.

2018-02-08T18:31:00.001+05:30

9. Assign every Investment with a Life Goal

Goal setting is a powerful process for thinking about ideal future.

The process of setting goals which helps us to find What we want ?where we are going? What we enjoy?

Once our goals are defined and preset, now is the time to link the investments to our life goals.

When we link our assets to a goal, it will be a great sense of responsibility towards our financial well being & will resist the temptation to liquidate the funds which are earmarked to a financial goal.

For e.g. we have been consistently investing a certain amount per month through SIP.

Some years down the line, if we’ve consciously tagged this investment to our child’s education goal, we’ll feel less inclined to withdraw it for buying a sedan or going on a vacation or lending that money to relatives & friends when they knock the door.

While doing this, we should check on the expected maturity of the investment to find the best match between due year of the goal vis a vis maturity year of the asset that is linked to the goal.

Below specification can broadly lay down the right way to link the financial goals to the assets:

· Short Term Goals (Less than 2 years) - Fixed Deposit, Liquid fund, Cash & Bank Balances

· Medium term goals (2 to 5 Years) - FD/ RD, Debt & MIP Mutual funds

· Long term goals (5 Years +) - Direct Equity, Equity Mutual funds, PPF, EPF, Insurance cum Investment Plans, NPS

2017-12-06T15:53:00.000+05:30

8. List Down Life Goals

A goal is a future achievement with a timely deadline we can work towards. We can define a goal like this:

“A goal is a thought with commitment to make it real.”

Setting life goals is one of the most life-changing things we can do.

Till date, we’ve invested as a “reaction” to something – maybe to get tax deduction, or because someone requested to purchase it. Yes, there has always been an underlying intention to plan and save some amount regularly towards our financial goals, but most likely those goals are somewhere in thin air & not much thought has been given to clarify them.

Now, we should practice to actually write down the precise financial goal, when and for what, we need the funds & an estimated amount for it.

So, if we have a vague idea of purchasing a car some years down the line, it has no value. BUT, if we specify the details about which car, at what price, in which year we want to purchase then it becomes a financial goal. (For example I want to buy Hyundai Elite I 20 with price ₹ 7.8 Lakhs in 2017)

So our goals should be SMART i.e. Specific, Measurable, Attainable, Realistic and Time bound.

We should prioritise our goals once decided.

How does listing down financial goals help? In the following ways:

v Gives a lot of clarity on money requirements that are due in near future as well as requirement for long term goals so that the right planning can be done.

v Different goals require different kinds of planning. Planning for a short term goal is very different from planning from a long term one.

v A financial goals listing helps the investor take the right decisions on where & how much to invest so that the goals are met.

“Setting Goals is the first step in turning the invisible to visible.” – Tony Robbins.

2017-10-26T10:36:00.001+05:30

Stop leakages to create wealth

· Stop the leakages of our (financial) water tanks –

· Our income is a tap of our financial tank.....and if it has a leakage, water (money) will keep flowing.

And if tank isn't filled up...it will not provide us water (money) continuously.

· If we don't plan properly and keep leakages as they are...our financial tank will not be fulfilled and we will always have a deficiency of funds.

· What are our leakages?

1. Keeping money idle (cash) at home or in saving accounts...its purchasing value reduces with inflation.

2. By choosing wrong path for our financial goals. Our hard earned money not able to work for us.

3. Spending it on unneeded branded items.

4. Not planning for short, medium and long term requirements.

5. Not balancing between income and growth oriented assets.

· Thus leakage is one of the common problems involved in investing.

· It can be managed by proper diversification of available funds into various asset classes after considering various other factors like time frame, requirement, risk profile etc.

“If you don`t find a way to make money while you sleep, you will work until you die” – Warren Buffet

2017-09-01T11:44:00.002+05:30

1. Know common money mistakes

For financial success here on people have to shift from product centric approach to their own financial situation without mistakes.

Too many expenses and loans: - India has one of the best saving rates when compared with western nations, but same really can’t be said about the next generation.

Even having high and stable income their saving rate is very poor due to too many expenses on loans. EMIs, High Insurance premiums & Personal expenses all eat earnings quickly.

Many Business owners and professionals take on loans only for tax saving but without taking a view of the family’s liquidity, present needs & future requirement which leads to severe liquidity problems.

Over Concentration in Real Estate: - Our love for real estate creates huge flow of black money in the system and many people’s income in cash can be easily cushioned in real estate.

Most Indians have completely forgotten the great Indian real estate crash of 1995 to 2003-04 and taking loans for real estate is a double side pain, may be risky especially since real estate is an illiquid investment.

Inadequate Insurance against risks of death, disability professional liability: - Most people buy life insurance as an investment, so most people pay high premiums and get a very low cover.

There is no assessment of the actual financial risk their family will face, in case of premature death and if most liabilities aren’t covered.

Investments done and money mistakes: - The portfolio of most people would probably look like this 50% to 60% in Real estate 30% to 40% in Debt funds like PPF, Insurance policies, fixed deposits, bonds and post office. 5% to 6% in cash (saving account, short term fixed deposits and cash) gold (primarily bought as jewellery) and very negligible equity.

Day by Day people are getting busier and end up taking decisions based on the advice of different set of people like CA, friends, different agents and there is no Co ordination between all financial decisions and their requirements of funds.

Achieving financial responsibilities and dreams are most important to achieve peace and that is always different from family to family.

Lack of goal setting and planning: - Most of the people take life as it comes. They don’t plan for it.

But nothing meaningful can be achieved in life without setting goals and planning. For uncertain things review of planning is essential.

Many of us plan for our vacations for several months and discuss as a family on next big car to be bought. But, when it comes financial life planning and goal settings we have no time.

2017-07-25T17:10:00.001+05:30

Family Budget & Automate Payments and Investments

Budgeting is the process of creating a plan to spend our money. This spending plan is called a budget. Creating this spending plan allows us to determine in advance whether we will have enough money to do the things we need to do or would like to do.

Family budget is the best way to prepare for emergency; it plays a vital role in savings and wealth creation. Budgeting gives clarity in every aspect.

Framing a budget and tracking expenses on a regular basis is a powerful exercise to build awareness about our spending patterns, and take control over it. It helps in reducing the fear of unknown expenses that may spring up in near future.

While moving towards taking these actions for financial well being, we can simplify the process of recurring payments and investments by introducing automation techniques.

Ø It will give us more free time to use for other productive pursuits.

Ø It reduces instances of late payment charges, insurance policy lapse etc.

Ø Most important it inculcates a saving discipline.

All this is done through Electronic Clearing Service (ECS) that makes payment and investment easier.

It can be used for:

Ø Utility payments like telephone, mobile, internet, gas, electricity, etc.

Ø Credit card bill payments

Ø Mutual fund investments (SIP’s)

Ø Insurance premium payments (if opted monthly)

Ø Loan EMI’s.

After following procedures through banks for ECS, handling these transactions becomes easier. And it provides peaceful mindset.

“Your budget is the tool that helps you play by the rules your logic set down when your emotions demand that you break them.”

2017-06-24T12:56:00.001+05:30

1. Organize papers with accurate filing

Papers that we need to manage at home

1. Personal documents –PAN card, Passport, Aadhar card, ration card, driving license, voter card, certificates(educational and professional), other certificates (marriage, birth) etc. – originals and photocopies.

2. Utility bills – Electricity, phone, internet, gas, water etc.

3. Job/ Profession related –Salary slips, Form 16, appointment letter, relieving letter, promotion letter, appraisals, and certificates of recognition and so on with respect to our current / previous organizations

4. Property documents – Pretty self-explanatory, Society maintenance fee receipts, share certificates, buyer’s agreement, possession letter, property tax receipts etc.

5. Photos – minimum 8 photos’ of each family member.

6. Guarantee / Warranty documents – Whatever items we buy, it also brings home its own set of papers – invoice, warranty papers, user’s Manual!

7. Medical papers – There could be many – doctor’s prescriptions, diagnostic reports, vaccination history, discharge certificates etc.

8. Tax documents – Copies of our recent / old IT return files, refund details, capital gains reports etc.

9. Bank papers – Bank passbooks and statements – for all of our accounts – updated.

10. Investments Documents – These are mostly assets related – FD or Bond certificates (along with Form 15G/H reminders); PPF passbook; Demat holding statements, Share certificates, Dividend receipts; MF statements etc.

11. Insurance papers – We need to keep original policy documents always safe and accessible. Along with that premium payment receipts, claim history and health card (for mediclaim) also need to be kept in order.

Emergency Kit –The details of person to contact like Family physician, lawyer, financial advisor, CA. Also note down various passwords for online banking accounts, demat account, ATM pins, Will, Bank Locker Keys etc.

2017-05-31T18:55:00.002+05:30

1. Life Vision

“Start with the end in mind”

Let’s think – How we want our life to be ‘x’ years from now in areas like health, work, social relationships,

family relationships, money, spirituality etc? Once we are clear on this the work is half done.

How does it help?

· It helps to live life confidently in direction of Freedom.

· Financial life Planning releases us from whatever holds us back and help to live for our passionate purpose.

· Discover our Dreams and to bring them in living by recognizing our relationship to money gives us greatest value and meaning to life.

· Money conversation make many couples to fall in love and helps them to come on the same page on their finances & other matters.

· It gives clarity to the family on their major life goals.............like Family ,Relationship, Spiritual, Creativity, Social contribution & Health etc.

2017-03-13T15:36:00.003+05:30

1. Clarity in life through Financial Planning

When we do any work, we are so focused and immersed in doing it effectively in the best way and in the least time, that we somehow lose focus on the end goal. Financial life planning helps us to get clarity on below things.

· What you really want to do in your life & what is more important in your life?

· What are the ways to be financially free?

· How much should I spent on household, lifestyle & Dependent expenses?

· Do I have enough money for my emergency, retirement. Children graduation, higher graduation & Marriage?

· How much amount my Family required in my absence?

· Can I achieve my travel goals with family & friends ?

· How I can fulfil my dream of contributing to society & Nation?

· How I can balance between Life & Money ?

'The sooner you start planning your life, the sooner you will live the life you dream of ' - Heans Glint

2017-03-01T10:55:00.000+05:30

1. What is Financial life Planning?

Financial life planning is a process moving ourselves from "Things we are doing now` to` Things which we really love to do`

We as a family spend on doing 80% of our time on doing the things which we don`t like and 20% of the things what we really love..........and our life moves on in that similar pattern.

Few years down the line, when we look back we realize that we have spent major years of our life doing same things on and of.

Financial life planning is a wonderful process that provides us the flexibility to do what we like and spend life as per our wish.

Money has both positive as well as negative emotions.

Basically we require money for food, clothing, shelter & health.
And all other expenses over & above, come under desire.

When we compare ourselves with outside world like relatives, friends & neighbours, We become greedy about money due to comparison, which leads to jealousy, insecurity and fear of not having enough money. All that in a subtle way creates Ego and arrogance inside us.

Financial life planning helps us to move towards negative emotions to positive emotions of money. Financial planning gives us Confidence, Security, Freedom, Happiness, Peace.

Now let's see the process:-

In first meeting planner helps you to explore your underline values, hopes and dreams.

That may be related to Work, Family, Relationship ,Health, Creativity, Social Contribution & Spiritual .

In the second meeting the planner prepares different solutions for clients from data given. The planner knows very well that client is a master of his/her life & he/she understands their life far more better than anyone.

So with Joint efforts with the clients, the planner discusses different options to achieve their responsibilities & Dreams.

And further discusses about the obstacles coming in between. Then they jointly decide for one solution.

In third meeting the planner uses his/her financial knowledge of different vehicles, write down the Financial life plan step by step to help clients to reach their desire destinations with joy and calmness.

Through financial life planning process the planner monitors clients growth by ` How healthy they become than previous year? , How much more time they can spend with their family? And how they are moving towards their financial freedom?

The Benefits of Financial life Planning-

· Discover the sense of purpose within yourself that is essential to accomplish your goals.

· Determine what freedom means for you.

· Find the practical resources, including the capacity to save and need to accomplish your financial goals.

· Find ease within every penny that comes to you.

· Live from a spirit of everyday generosity and kindness.

· Invest with simplicity ,profitability, and peace of mind in order to build for freedom.

Goals For Your Life
	3 months	1 Year	5 Year	10 Year	Lifetime
Work
Family
Relationship
Finance
Community
Creativity
Health

“No one has ever become rich simply by saving, money grows by proper planning...warren Buffet

2016-07-04T12:25:00.005+05:30

Few points that one must consider before taking holiday club membership -

" Learning from others mistake is smartness "

As per the data... 44% members aren’t utilizing their club membership holidays after buying. And many want to cancel but cancellation policies are very hectic.

Once you enter can't withdraw...... you have to continue and if not possible then can sell to somebody else.

If we check the sites like OLX and Quicker...... we will find, lot of sellers who want to sell their membership card but there are no buyers.

Each day generally we take 4 to 5 financial decisions or sometimes even more. But there are fair chances that few of them would prove wrong.

Decisions taken emotionally on small money matters like movie & dinner may not create much leakages to our finances.

But decisions where large amount is involved with future maintenance like club membership for holidays without understanding our own requirements & without doing money calculations are not fair to our hard earned money.

1) Let’s assume.... one has to pay upfront Rs.5 lakh for 25 years club membership..... But instead of that if he put that Rs.5 lakh in 8 % FD then he will get Rs. 40,000/- interest per year which is lifelong and Rs.5lakh amount will also be get back whenever he wants. It means he would loss Rs. 40,000/- interest per year, if he pays Rs.5 lakhs for Club Membership.

· Loss of that Rs. 40,000/- interest plus one has to pay Yearly maintenance in club membership which is minimum Rs. 10,000/-.

· It Means.....

Rs.40000/- + Rs 10000/- = Rs. 50000/- per year (for 7 days accomdation)

· And if we divide that...

50000 ÷ 7= 7100 per day.....

in that amount one can get a best accommodation anywhere.

· So point is.... why to restrict it just for few locations and few areas & that too on the mercies of clubs & resorts?

2) Also understand.... is it suit to our family nature?

· Generally ask yourself why are we going for travelling?

· If we want to go to other places mainly to learn & explore other country / states culture, economy and want to see heritage structures than this type of luxurious membership can't work for you. It's mainly for leisure.

· So if we are passionate about travelling & want to explore the places in and around the city.....don’t restrict yourself to sit & enjoy at one place only.

3) When it comes to food and other cost...... they charge us heavily.

· They run their business smartly. Annual charges are in their hand and it is almost above inflation._

· And the food and other facilities cost are also very very high.

4) Many holiday membership's are missold by showing different attractions and by using smart tricks-

· There is mostly a gap between number of members & inventory available in the resorts -

· Holiday Club houses proudly say that there membership is increased but when we look into their inventory data there is huge gap between members and resorts they have.

· All resorts given on rental to non members.... also even in the peak seasons.

· And members can get good resort or booking only if booked almost before 6 months....which is very difficult to plan for many.

· So members have to compete with non members ...

5) There is a big difference between what club membership promise and what they deliver. Many times they fail to fulfill peoples expectations.....

· There are lots of other loopholes within and if that club can't do profit there is always risk of shut down. Ultimately there is also risk of our paid up amount.

· So kindly suggest to review own requirement, priorities.... and do not to take decisions emotionally.

· If you are confused in few points... consult your financial adviser before taking any such membership.

2016-06-06T15:47:00.004+05:30

How to maintain safe distance from income tax department!! -

Below is the list of expenses/investments done by us, which at any point of time may invite notice from income tax personnel.

Depositing yearly cash above Rs.10 lakh in saving account and depositing/withdrawing cash of Rs.50 lakh and more in current account.
Making credit card payment and investment in Mutual Fund above Rs.2 lakh.
Investment in Shares and Gold ETF above Rs.1 lakh.
Investment in RBI Bonds / Debentures / Bonds above Rs.5 lakh.
Purchase / Sale of Real estate above Rs.30 lakh.
Receipt of Cash Payment exceeding Rs.2 lakh from sale of any Goods and Services.

1. How do the income tax personnel get to know about all of these transactions?

v To keep an eye on such high value transactions, the IT Department has developed a statement of financial transactions called Annual Information Report (AIR).
v On that basis department shortlist their targets and sends them notice.

2. Who provides the high value transaction information to prepare the AIR?
v Banks
v Mutual fund companies
v Companies issuing Shares
v Credit card companies
v Sub-registrar offices on Real estate deals.

3. How can we trace our High Value Transactions reported under AIR?
v We can trace it in our 26AS report under AIR section.
v All high value transactions will be reflected therein.

4. How to avoid receiving a notice from IT department?
v Most important step is to file your income tax returns on time and file them correctly.
v Always re-check your Tax credit with the 26AS statement.

v Disclose all your Taxable as well as Exempt income under right head.

2016-04-07T13:36:00.002+05:30

Let’s See Common Money Mistakes-

“Financial planning, Money management and financial literacy all the three are the pillars of financial success”.

Here on people have to shift from product centric approach to their own financial situation without mistakes.

1. Too many expenses and loans: - India has one of the best saving rates when compared with western nations, but same really can’t be said about the next generation.

Even having high and stable income their saving rate is very poor due to too many expenses on loans. EMIs, Insurance premiums & Personal expenses all eat earnings quickly.

2. Over Concentration in Real Estate: - Most people buy real estate like there is no tomorrow.

Our love for real estate creates huge flow of black money in the system and many people’s income in cash can be easily cushioned in real estate.

3. Inadequate Insurance against risks of death, disability professional liability : -

Most people buy life insurance as an investment, so most people pay high premiums and get a very low cover.

There is no assessment of the actual financial risk their family will face, in case of premature death and if most liabilities aren’t covered.

4. Investments done and money mistakes : -

The portfolio of most people would be probably look like this 50 % to 60% in Real estate investments 30 % to 40 % in Debt funds like PPF, Insurance policies ,fixed deposits ,bonds and post office .5 % to 6 % in cash (saving account ,short term fixed deposits and cash ) gold (primary bought as jewellery) and very negligible equity .

Day by Day people are getting busier even they don’t have time for their families and even financial planning takes a back sit.

People end up taking decisions based on the advice of different set of people like CA, friends, different agents and there is no Co ordination between all financial decisions and their requirements of funds.

Achieving financial responsibilities and dreams are most important to achieve peace and that is always different from family to family.

5. Lack of goal setting and planning : -

Most of the people take life as it comes. They don’t plan for it.

But nothing meaningful can be achieved in life without setting goals and planning.

For uncertain things review of planning is essential.

Many of us plan for our vacations for several months and discuss as a family on next big car to be bought. But when it comes to planning and goal settings we have no time.

2016-03-14T17:21:00.006+05:30

Learning from Union budget

Union budget vs. Family budget

· Govt. Dreams ... and plan for every Indian's life and income growth in Union budget.

· Like that let's plan for our family dream and responsibilities for our children, wife and parents.

· Try to draw our annual budget to track our expenses and stop leakages

· Govt. move towards equality by transferring money from rich to poor.

· Govt. stop leakages by planning for their planned expenditure (like infrastructure, science, technology) reducing non planned expenditure (salaries and pension of Govt. servants, subsidies)

· Like that we can transfer our money from unnecessary expenses to necessary expenses.

· We should also planned for our yearly expenses and keep control on unplanned expenses.

· And to stop leakages - stop low insurance and low cover premiums, idle money in saving accounts, switch costly home loans to best rate provider.

· Our Government focused on our GDP that is countries total income.

· Below are the four pillars of our economy growth.

1. For agriculture income - Government focuses on rural economy

2. For Manufacturing income - Government focuses on Make in India

3. For Services income - Government focuses on employment generation

4. For Export - Import-Government focuses on increasing export and decreasing import deoendency.

And

· Like that as a family we should also focus on our four pillars -

1. For Income - Learning skills... so that we can improve our income

2. To control Expenses - Keep an eye on all our expenses.

3. To creat Assets- Keep all the our money work for us rather only we work for money.

4. To minimize Liabilities - Keeping them low and rate of our loan should be low than our returns on investments.

2016-02-15T13:55:00.002+05:30

Importance of money in our life journey –

v What is money?

v What our scriptures say about money?

v How financial planning helps to control our emotions and help to enjoy our money?

v Our entire life revolves around money.

v Money is difficult and highly emotional subject.

v Money managing is less about managing money and more about managing emotions.

v And there are many misunderstandings about money which disturbs our financial growth.

Now let's see what our scriptures say about money.....

v 1. Firstly, they have depicted Laxmi as a Devi and not an aasur. When we go to a temple we feel a sense of peace and security:

· Do we get that type of security with the wealth that we create?
Or

· Do we feel fear, insecurity, anxiety, and greed while earning and spending our money?

v Secondly, they discussed about four types of wealth, not only financial wealth.

· Physical wealth

· Social wealth

· Emotional wealth

· Financial wealth

All four are important pillars of our life......for example

· Nobody can enjoy alone, even if he has crore of rupees

· Fighting with relatives in court won’t give us a sense enjoyment

· Even though we may be wealthy, any health issues still disturbs us

· And even if we have all - good health, family, social bonding, but no money to give quality education and life to our kids and family, we cannot enjoy our life.

v Thirdly, scriptures have written about how to earn and how to spend our money.

· Money should be earned in an ethical way and in legitimate way.

· We shouldn't earn money by manipulating anybody and should pay our taxes legitimately.

And how we should spend our money?

· Enjoy money - Like a child

· Spend money - Like a youth, with full heart and emotions for our loved ones and society and don't be practical or calculative.

· Saving and investing - Like elders - It should be done like a mature person by giving full thought to our hard earned money.

· Our major spending of money should be on timeless things ........like a weeklong workshop, lecture of famous personalities, vacation in nature and historical places because they all add value to our wisdom and personality and we grow from within.

· Spending only on materialistic things like car, music system, gadgets, crockery becomes outdated one day and that gives only short term desire fulfillment.

So if we really want to enjoy our wealth we have to follow a few disciplines with guidance from a financial planner –

· Expenses – should not be more than 30% to 35% of our income, planner helps you to divide necessary expenses & lifestyle expenses

· Loans - shouldn't be above 30% to 35 % of our income – planner helps organize Good loans and Bad loans

· Saving - must be minimum 30% to 35 % of our income – Planner helps to maximize your hard earned money.... considering taxes, inflation and diversification.

And lastly, financial planning isn’t restricted only to investments…….it’s much more than that.
• Financial planning is a life planning in which we organize our dreams and responsibilities.
• Financial planning is a spending plan.
• Financial planning is deciding destinations and choice of vehicles for our financial journey.
• How we invest, multiply and enjoy our money is more important for peace and security in our life.

Wishing you all a wealthy and peaceful life.