Tuesday, 21 February 2017

CONSEQUENCES OF DELAY IN INVESTING

CONSEQUENCES OF DELAY IN INVESTING

Usually we often tend to delay investing with very nice excuses.

And we do happily thinking that few months would not matter much.

But the reality is that even small delays can make huge impact on your wealth in long term.




The secret to being wealthy is not always making big decisions but also making small decisions like not delaying your SIP and starting it right now.


You get away with this inaction because you don’t immediately see the consequence of putting your investment decisions on hold.



Please check this video to understand how delay in investing is costing you a lot slowly and steadily.



Rajiv Kapoor
BSc., LLb., FCS, CIA
Practicing Company Secretary
Kanpur

www.rajivfcs.blogspot.in

9839034761

Friday, 10 February 2017

PUT IDLE MONEY TO WORK - EARN 4% MORE

Put your money to work to earn more.

Here’s a simple idea that earns practically every one anywhere between 2,000 and 30,000 extra every year. 

You don’t need to make any special effort, or take risk. Just check out how much average amount you are holding in your savings account. 

Find it difficult to estimate an average? Just look at the ‘Interest capitalized’ credit column in your account statement. 

There are usually 2 entries – one in end-September and one in end-March. If it is anything over 2,000 in a year, you are leaving too much money idle in your savings account. 

If you hold multiple bank accounts in the family, the idle money just multiplies.

The problem is simple – money in your savings account earns a measly 4% a year. Some banks offer 6%, but put so many caveats that you still end up with only 4%. 

This amount can easily earn you ~8% a year, without taking any risk. That means, if you have an average of 1 lakh lying idle, you are losing 2,000 interest every year for nothing. 

A rule of thumb is that you should be earning double the interest shown in your pass book every year.

Why do we still let money lie idle? Usually, it is because we want flexibility – we aren’t sure when we would need the money. It seems too much of a hassle to carefully keep track of the balance and do paperwork to move the money. 

Worse, we fear it will take too much time to retrieve the money when we need it.

Now, thanks to improvements in technology and regulation, all this has changed. From the anytime-anywhere comfort of your mobile, you can move money into what are called liquid funds. 

Liquid funds are basically mutual funds that park money in papers issued by government or banks.

They do not deal with the stock market, and are practically as safe as your savings account. Currently, they earn you about 8% a year. 

The best part is that when you want to withdraw, you just put an order on the mobile app. The amount gets credited to your bank account next morning. 

Now, you don’t hear about this in advertisements because your bankers / brokers don’t make any money from this – only you do!

We have customers using this to optimize returns quite well. For instance, Rajesh gets his salary credit on the first of every month, and his home loan EMI is due on the 20th. He uses liquid funds for the intervening 20 days, and finds he earns an additional 150 every month. 

Even if you don’t want to get to this level yet, you can start in a simple way by moving excess cash from your balance to liquid funds. 

To know more .... call

Rajiv Kapoor

9839034761

www.rajivfcs.weebly.com

rajivfcs@gmail.com 



Thursday, 9 February 2017

Do STPs give better returns than SIPs ?

Someone wisely said that one cannot and should not time the market. This is why investing through Systematic Investment Plan (SIPs) works.
Taking the SIP route takes away the risk to the larger extent, especially in the long term.
However, there is another option which suits those investors who wish to invest lump sum money into mutual funds, that is, Systematic Transfer Plan (STP).

What is Systematic Transfer Plan?
By opting for Systematic Transfer Plan, an investor is able to invest lump sum amount into mutual fund with the option of transferring the fixed or flexible amount into a different scheme.
It can also be termed as the extension of SIP as like in the case of SIPs you can invest in mutual funds in a small amount that is as low as Rs 500.
In the case of STP, you can typically park a lump sum amount in any debt mutual fund scheme, from which fixed or variable sum gets transferred into an equity oriented mutual scheme at a periodic interval.
It means that the unit equivalent to the transferred amount will be sold from primary debt mutual fund schemes and the same amount will be used to buy units of the chosen equity mutual fund scheme.
One can use the STP into several schemes at the same time.

Why is it useful?
STP helps in re-balancing the portfolio by helping an investor to switch investments from debt to equity or vice versa. If investment in equity-oriented schemes increases money can be reallocated to debt funds through systematic transfer plan and if investment in debt goes up money can be switched from debt to equity-oriented schemes.
Returns in Systematic Transfer Plan are consistent as money invested in debt mutual fund schemes earns interest till the time the whole amount is fully transferred to equity fund.
Also, returns in debt mutual fund schemes will be higher than the fixed interest of your savings bank account.
It is also useful for people whose cash is lying idle in the bank account as any lump sum amount invested in debt mutual scheme will fetch higher returns as compared to bank account interest.
What are the types of STPs?
STP is of two types: Fixed and flexible STP.
In fixed STP, the transferable amount will be fixed and preset by the investor at the time of investment and the same amount will be transferred every periodic interval.
In the case of Flexible STP, investor has a choice to transfer variable amount.
Transfer facility is available on a daily, weekly monthly and quarterly interval.

What to avoid?
In the case of STP, your choice is limited to the scheme of one Asset Management Company; so it is better to go with those fund houses which have many options to choose from debt mutual fund and equity mutual fund.

Conclusion
STP route is best for all those investors who wish to invest lump sum in mutual fund schemes because this way they get the dual benefits of comparative risk investment. Retired people who wish to invest for their grandchildren can also choose this option to get inflation-beating returns, rather than keeping their hard money in bank account at low interest rate.
STP can also work as Systematic Withdrawal Plan (SWP), where the invested amount will flow into debt mutual funds schemes of your choice to get better returns than your bank account. 

Rajiv Kapoor
BSc., LLb., FCS, CIA
Practicing Company Secretary
Kanpur

www.rajivfcs.blogspot.in
9839034761

Monday, 6 February 2017

How to Grow Old Gracefully – 10 Ways You May Not Have Considered

How to Grow Old Gracefully – 10 Ways You May Not Have Considered

Aging is inevitable, but to grow old gracefully is a choice. While we know that getting old is unavoidable, how we perceive this natural process depends greatly upon our social and cultural influences. In western culture, we tend to idolize youth, while aging is stigmatized as undesirable, even shameful. We worry about what we will look like, how our bodies will function, how our minds will deteriorate and how or where we will die. In many ways as we get older we become less visible; in popular culture, in employment, in our communities, even in our own families and this can have a greater impact on women than men. We risk becoming isolated and depressed, instead of experiencing old age as a celebration; of our achievements and of knowledge accumulated over a lifetime.

In many cultures aging is revered and if we look to the ways the elderly are perceived and cared for by these societies, we may discover ways to grow old gracefully ourselves. Instead of focusing on the physical and mental deterioration that growing old inevitably brings, these cultures look deeper into what it means to have lived a long life. It begins with how language is used and instead of placing a negative connotation on the word ‘old’ it instead becomes a term of endearment; even implying being closer to divinity. Getting older is also seen as a resource. Knowledge and experience are revered. Aging is associated with wisdom that needs to be passed down to younger generations. In this way, the elderly are respected and become desirable instead of a burden. They are cared for by their families or the greater community in a different way. They aren’t just hidden away in nursing homes and hospitals. Often children will care for their parents or grandparents and the community is accessible to the elderly. They are visible in public spaces and are catered to and included through accessible services. In some cultures, the hierarchy of age is observed closely and to be an elder in a family or community is something that is given authority and admiration. The cultures that value aging the most are those that reflect on their own mortality. Death is not a taboo; it is discussed openly and rather than being feared or ignored, it is seen as an opportunity to contemplate and reaffirm life.
Sometimes it is easier to think about the things we shouldn’t do in order to delay aging. The aim is to focus on self preservation by avoiding things rather than embracing the predictability of getting old. Perhaps this is the difference between sliding down the bumpy road of old age, by clinging desperately to our youth instead of accepting the inevitable and facing it head on with enthusiasm and willingness. The choice to grow old gracefully doesn’t have to feel like giving up or ‘letting ourselves go’. It should feel like surrendering in a positive way to the twilight of our lives by reflecting on the years gone, living fully and mindfully in the present and looking forward to the future, however short it may be.

Here are 10 ways to grow old gracefully that you may not have considered:

1. Get checked out

Don’t ignore the niggles. It’s easy to be in denial about symptoms and signs that something in our body, mind or emotions isn’t right, particularly for men. Usually it is fear that prevents us from seeing someone about an ache or dysfunction either because we don’t want bad news or we don’t want medical intervention to snowball. Better to be sure. It may be nothing, but it may be the start of something and the earlier we address ailments, the sooner we can treat them or eliminate them as a problem. It is important to find a balance between being hyper cautious to the point of hypochondria and being sensible. We should approach our physical and mental well being pro-actively instead of neglectfully.

2. Enjoy food and drink

We are always being told what not to eat or drink as we get older. There has been a lot of research done about how our bodies metabolize food as we age and how cutting calories throughout our lives can contribute to better health and a longer life. This is all sound advice and it is wise to reduce the intake of salt, sugar, fat and alcohol and increase the intake of fresh and raw food, water and wholegrain. However we don’t need to suck all the enjoyment from dining. Food is a source of pleasure and an opportunity to commune with others. Getting older is a chance to mindfully observe our diet while at the same time throwing caution to the wind occasionally and having that piece of chocolate cake or glass of wine. It’s important to be aware of portion size and destructive habits, but there is no benefit to obsessing.

3. Rest and meditate

By the time we reach the age of retirement we discover that we have spent a large portion of our lives working. This is a good thing; in most instances hard work gives us value and self worth. Our years as seniors are our opportunity to enjoy the fruits of our labor, but retirement can make some people feel a little lost. Going from years of routine to suddenly having a lot of time on our hands can affect both our physical and mental health. Many older people start to experience sleep disruption and insomnia and it is at this time in our lives that we need restful sleep the most. The more time we have on our hands, the more time we have to think about things and for many getting older can cause a lot of stress. Meditation has many benefits for the elderly including aiding memory and digestion.

4. Have fun and try new things

The retired years are a great opportunity to utilize all the new found time we have on our hands and one way to enjoy this time is to pick up some new leisure activities. It’s time to start ticking off that bucket list and to do the things we’ve not had the time to do. Why not try yoga, tai chi or pilates? Go for a swim regularly; in the ocean, it’s exhilarating. Perhaps walk more or cycle, or maybe do something a little more daring like scuba diving, sky diving or bungee jumping. Maybe pick up a new hobby like painting or rediscover an old one like a musical instrument we haven’t picked up in years. Go to art galleries, musicals, movies and shows. Participate in local councils and community groups or volunteer at a non profit organisation. Make something; knit, crochet, build things from wood, bake and garden. We can use our hands and our minds and rediscover our creative and artistic sides.

5. Notice appearance without being critical 

Wrinkles and grey hair are coming whether we like it or not. Instead of resorting to plastic surgery or injectables, we can get to know the lines on our face; they tell our story. We can stop dying our hair and avoid the chemicals. While this advice will largely impact women more than men, it applies to both. There is a vulnerability about loving our appearance despite the pressure to resist the changes and in itself it is a revolutionary act not to succumb. We don’t realize that trying to appear younger by masking the visual reality of what our bodies and faces have become doesn’t actually work. We will still look our age. Likewise we should love our bodies. It has worked hard to get us this far and deserves our affection. Perhaps if we focused on the inside; on our emotions and thoughts rather than the façade, we can grow old gracefully. Feelings of inadequacy, insecurity, jealousy, regret, anger, sadness and bitterness are all normal human emotions, but can make our bodies and faces ugly and no amount of enhancements will change the person we become; people can see it in our eyes, hear it in our words and sense it in our disposition. An old person that is content, happy, kind, grateful, connected to others, interested in the world around them, willing to contribute and make a difference is beautiful despite the wrinkles and grey hair. Their true beauty shines through and they become young at heart. They hold on to that youthfulness forever regardless of what their body and face is doing.

6. Connect with people

Call on your family and friends. Make new friends. Get out and about and talk to people. Embrace technology and get online. It is an unfortunate outcome of our reluctance to embrace aging that we can easily become isolated. Feeling abandoned by society contributes to the tendency to opt for solitude, it’s just easier. However becoming insulated and lonely is not good for our health. When we share our experiences with our peers we feel less alone and experience greater levels of empathy. When we connect with the younger generation, we find opportunities to share our wisdom and offer advice. Personal experience is priceless to young people, whether they appreciate it in the moment or not. It is our obligation to offer guidance when we can to the youth of society; after all it takes a village to raise a child.

7. Remembering our youth

Looking at old photos and reminiscing about our life has many benefits. Retrospect is advantageous and cathartic. Re visiting the fashion of our generation and listening to the music that inspired us in our teens can take us back to our youth in an instant. Harvard Professor of Psychology Ellen Langer researched extensively the psychology of thinking ourselves younger. In 1979 she conducted a social experiment called Counter Clockwise to demonstrate how the psychology of aging can impact the physical reality. She took two groups of men in their 70s and separated them. One group lived in the ‘now’ of 1979 and the second group lived in a replicated environment of 1959; the era of the men’s youth. Their vital medical information was taken prior to the experiment and at its completion and it was found that the second group of men had an improved level of health overall, just by reconnecting with their youth.
We can write our story. These days there are a number of ways to document our memoirs that doesn’t require hand writing or typing like voice recognition or using a dictaphone.

8. Go to new places

We all want to travel and most of us have a list of places we aim to visit before we die. Sometimes aging makes traveling long distances difficult, whether due to expense or physical stamina, but we don’t have to go far to see the world with new eyes. We can start with our own town and go to the places we’ve never been. We can visit a park, museum, art gallery or shopping district in our own city that we’ve never experienced before. Eat at a restaurant we’ve not yet tried. It can be really exciting to experience our own city as though we are a tourist. Book into a nice hotel, take a guided tour and experience the city as though for the first time. If we’re up to it, we can work our way out from there to neighboring towns and states; even countries. Who knows? You may end up seeing the world.

9. Get a pet

“Pets not only offer companionship and unconditional love, in fact, emerging research suggests they may have the ability to boost health and general well-being, especially in the elderly.” Aged Care Guide, Australia
Extensive research has shown the many benefits for the elderly that owning a pet can bring. Dedicated pet owners will grow old gracefully, because the relationship we have with animals forces us to shed the negative beliefs about vanity and other unimportant issues that we may focus on in relationships with people. Although connecting with people is very important, a relationship with a pet has a much deeper and purer connection.

10. Speak up

As we age we need to keep asserting ourselves. As we get older we tend to be ignored or dismissed, but we shouldn’t let this dishearten us. Age and experience are valuable and the older we get, the more important it is for us to use the lessons we have learned in life to make a difference to the future generations. It is so important for seniors to be included in decision making, public life, politics, community standards and popular discourse. It is also valid for us to continue to participate in order to maintain our self determination and independence. We should have a say in how we want to live and how we want to see out our days. This will ensure we have a quality of life as we get older and an opportunity to grow old gracefully.



Rajiv Kapoor
BSc., LLb., FCS, CIA
Practicing Company Secretary
Kanpur
www.rajivfcs.blogspot.in
9839034761

Thursday, 2 February 2017

CREATE AN OCEAN OF MONEY WHEN YOU JUST HAVE DROPS OF CASH - THE SIP WAY OF INVESTING


“I have just started working and don’t have enough money to invest. I will save up for a few months so that I have money to invest”
People often mistakenly believe that they have to collect a large sum to start investing. You don’t. And that’s where a SIP comes in.
What is a SIP?
The best way to accumulate wealth is by setting aside a small amount of money every month from your salary before you start to spend it. If you are in the early stages of your career it doesn’t even matter how much that amount is – even Rs 1000 per month is a good start.
The question then is what to do with that saving? You could keep it sitting in your savings account (bad idea) or start a recurring deposit (RD). You could also start investing it in mutual funds. This regular monthly investment in a mutual fund is called a SIP – short for Systematic Investment Plan.
You instruct the mutual fund or your chosen investment platform (like Scripbox) how much you want to save/ invest every month and the money gets automatically transferred from your bank account and invested in the mutual fund of your choice.
Building the investing habit
So a SIP is just a common sense way to invest. A way to follow the investing principle of save before you spend. This habit helps you prepare for life’s commitments such as home purchase, marriage and education for children.
A SIP is also scheduled for a particular number of months. So a 3-year SIP would be 36 months. In the case of equity mutual funds, a long term SIP for a duration of 84 months is advised.
Is SIP a better option as compared to investing money all at once?
For the vast majority of us, investing every month is the only option. Having large lump sums is a rare event. So this is really a theoretical question.
If you wait till December to invest a large lump sum, you are delaying the investment of the sum you set aside in January. During that period your saving earns a savings account interest rather than a potentially higher equity return.
For example, a SIP of Rs 3000 per month for 3 years into a debt mutual fund will net you about Rs. 1.22 Lakh.  If you invest it every year as Rs 36,000 at the end of the year, the amount will be Rs 1.16 Lakh. However, if you had the entire amount of Rs 1.08 Lakh in the beginning (a bonus for example) and invested it, You would have Rs. 1.36 Lakh.
This tells us that investing as soon as we have the money makes more sense than delaying it.
SIPs help in averaging out risk but not by a huge margin
You might have heard of this concept called Rupee cost averaging. According to this concept, money that is invested regularly and is spread over a period of time tends to reduce the volatility risk your money is exposed to. This is true but not the reason to do a SIP.
So what are the real reasons why anyone should consider SIPs approach to investing?
#1. You want to start early with your investing and you want to start small.  – The most important reason
#2. You want to build the saving and investing habit.
#3. You do not have lump sum amounts to invest.
So now you know how SIPs can help you get started with investing and the real ways SIPs can help you, in your wealth creation efforts.
Rajiv Kapoor
BSc, LLb, FCS, 
Certified Financial Advisor
www.rajivfcs.weebly.com
9839034761