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.

https://youtu.be/m5_KL0pa9z8

Rajiv Kapoor

BSc., LLb., FCS, CIA

Practicing Company Secretary

Kanpur

www.rajivfcs.weebly.com

www.rajivfcs.blogspot.in

9839034761

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 20^th. 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 

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.weebly.com

www.rajivfcs.blogspot.in

9839034761

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.weebly.com

www.rajivfcs.blogspot.in

9839034761

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

SET UP AN EMERGENCY FUND - VERY IMPORTANT

If you had to come up with a lakh in 24 hours, because of some emergency, could you do it?

Here’s an action plan that will make sure you’re not left hanging if such a situation does come up.

How much is enough?

Usually, it is best to save up 6-months’ worth of your expenses as your emergency fund. If you don't track expenses - make this number 4 months of your take home salary. A large round defined number, such as Rs. 1 lakh is a good target too.

How do you go about doing it?

If you are saving up for a lakh, set aside Rs. 8,000 every month for a year (12-months x 8,000 = Rs. 96,000). This will typically be 20-30% of your salary. If your salary is lower, don't worry. Even if you save just half, viz. Rs. 4,000 every month, you will take at most 2 years to reach your goal amount.

Where to keep it?

Don't leave this money in your savings account where you could accidentally spend it. Move it out of your savings account into an RD or, even better, into a debt mutual fund. This will help you get to your goal even faster, with earnings from your investment.

Keep in mind that instant liquidity is the need of the hour in any emergency situation. There are specific debt mutual funds that also provide you with an instant withdrawal, and sometimes even a debit card for you to withdraw your money at any time. After all, emergencies can strike anytime.

Keep it safe!

Try not to touch this SOS fund for any reason other than an actual emergency. This will be your parachute - and a parachute must be intact to be useful.

Note: The latest fashion accessory is NOT and emergency :)

Start creating your emergency fund now. Set a target amount and start saving up for it.

Financial Freedom For Women

Financial Freedom For Women

Men and women have been created as equals and have equal rights. Unfortunately, for most of us, the financial and social status of women in India comes second to men. The women around us - be it daughters, sisters, mothers or our better halves, have a special place in our hearts and our lives. But many of them are likely to "not" be financially sound, literate or independent.

In today's world, where society is undergoing a big change, women continue to be most prone to financial crisis and are financially most vulnerable. We believe that it is very essential for women to be financially literate and independent, for many reasons like...

The average life of a woman is more than the average life of a man.There is a growing number of single women. This may occur anytime due to career choices, divorce or death / disability of husbands.In absence of earning male members, females often carry the burden of the family.

The work life of women is less than men because of various reasons like raising a child, family problems, health issues, etc. Generally women also receive less pay than men.

Women are more likely to come under pressure /influence of others in financial and inheritance matters.Financially literate and independent women can be of great support and financial help to their families, especially husbands. Women have been known to be smart savers and money managers at home.

One needs to look at the numerous examples before judging women as not being smart enough to handle financial matters. A financially independent woman can today support herself and her family with income. Such a person would have good control over finances and would attempt to shape the financial future for the betterment of all.

Most women are totally dependent on their husbands and families, not only for their day to day expenses but also for their financial future. Women generally don't have any clue about their family finances and are left totally dumbfounded in case of an emergency. Irrespective of how much money is the father or husband making, you are never fully financially independent without your own money. Being economically independent will boost your confidence, taking decisions for yourself, will increase your risk taking ability. You can satisfy your whims with your own money and might be the bread earner for your family in times of need.

Women generally have a different work life than men. Some are freelancing or working part-time or the hours of work are lesser or are more prone to taking leaves and sabbaticals. All these head to small savings for women. Clary Boothe Luce said "A women's best protection is a little money of her own". However, if not properly managed and directed into the right investment channels, these hard earned small savings will be futile.

What to do?
Proper savings and investments can help you become financially independent over time, even if you are not earning. The following are the steps that one should take...

Learn about money: Never feel shy or hesitant to learn more about money - savings, investments, investment products, mutual funds, etc. In case your family is not supportive, you can always reason with them. It is better to know about the financial holdings /assets /insurance policies and bank/demat accounts in your family to be ready for any emergency.

Be Active: The idea is to get more engaged in financial matters of your family, with the support of your spouse. Open your own bank account or have a joint account with your husband. You can also have your own credit card / debit cards for managing your regular expenses. Also start a demat & trading account with which you can make your investments.

Get Covered: Most often we find that the women, not having financial earnings are neglected when it comes to insurance coverages. This is a wrong perspective to adopt as every girl /woman has to be adequately covered with insurance.

Start Saving: The first step is to start saving and then investing those savings. The easiest way to save for long term wealth creation is by starting an equity mutual fund SIP. You can start with a very small amount, say R500 every month. Invest small savings in mutual funds through SIP and see your savings grow. You can also increase the amount of the SIP with the increase in your savings / income. Plan for your goals: You may have many short-term or long-term financial goals. Try to invest for your goals through mutual funds which offer different types of funds which will easily match your investment objectives and horizon. The investment horizon can range from few days to double digit years.

Old Age: A regular inflow of funds or a huge corpus is necessary for your maintenance in your old age. Just imagine being at the mercy of your son /daughter-in-law in future in absence of your husband. We don't even want to imagine that! No matter how much you love your family and children, you should not leave to fate what you can prepare for your tomorrow by investing smartly.

Emergencies: As the pillar of your family, women are likely to find themselves in emergency situations like accident, ill-health, loss of income, etc. of their husband or other family members. Having some money saved for emergency can prove to be be immensely helpful and you would not be forced to beg for money from others. Keep aside some liquid investments for emergencies only.

Conclusion:
Every person has an equal right to dignity, respect, freedom to pursue own dreams and independence, including financial independence. Financial independence and empowerment of women can not only bring great benefits to a family but also to the entire community and country at large. Let us work towards ensuring this, beginning first at home.

Nurture Investments
Rajiv Kapoor FCS
Kanpur
98390-34761

PRIORITISE TAX PLANNING

Few more days to go when the current financial year would end. Sensex is depressed right now. For those who do not follow investment discipline of SIP it's right time to consider investing in ELSS Funds to save tax under section 80C. It would go a long way if one can look at his tax planning as an opportunity of investing.

Prioritise Tax Planning

Tax planning is more than Section 80C. It is more than fixed income instruments such as the Public Provident Fund, or PPF, and the National Savings Certificate, or NSC.

Good tax management can go a long way toward enhancing your return. But, the decision needs to be made in conjunction with your overall portfolio and not in an ad-hoc fashion. For instance, if you have no equity exposure in your portfolio, you should consider an equity linked savings scheme, or ELSS, which is an equity mutual fund that offers benefits under Section 80C. Most investors, in a crazy dash to meet their Section 80C requirement, will opt for unit linked insurance plans, or ULIPs, and endowment plans and often end up with a portfolio heavy with insurance products that do not suit their need.

Most individuals rarely think about tax planning from an investment point of view. Hence one finds that they do not approach an investment with a perspective of whether or not it fits in with their overall portfolio. The approach is often just grabbing up investments that will give them the tax break, irrespective of whether or not it will help them reach their determined financial goals or fit into an overall investment strategy.

Tax planning investments are no different from conventional investments. Hence, it is imperative to obtain an in-depth understanding of all investment avenues available which offer tax benefits and choose suitable ones that will help save tax and achieve goals.

It's right time NOW.

Rajiv Kapoor
FCS
98390-34761

YOUR FIRST MUTUAL FUND INVESTMENT

Useful, simple to understand and easy to execute. Those should be the qualities that your first fund investments should have.

For beginners, these requirements are generally best satisfied by tax-saving funds or balanced funds. Here's why. When you start investing in mutual funds, it makes sense to invest in a fund that invests mostly in equity. The reason for this is that you are likely to have no equity investments at all. Investors at an early stage of their investing life generally have bank deposits, PPF and other fixed-income investments. Since equity is the best form of long-term investment, and mutual funds the easiest and safest way to invest in equity, it follows that the type of fund you choose must be an equity fund. There are two types of funds that are uniquely suitable as beginners' funds. These are Tax-Saving Funds and Balanced Funds.

Tax Savings Funds: Tax saving funds are also called ELSS funds as their formal name in the tax law is Equity-Linked Savings Scheme. They are basically all-equity funds, investments in which are eligible for tax exemptions under Section 80C of the Income Tax Act. Under Section 80C, you can invest up to R1.5 lakh in a set of investments, one of which is ELSS funds. Since they are equity funds, one should invest in them for long-term. This long-term imperative is compulsorily enforced because under the tax laws, investments made into these funds are locked in for at least three years. Because of this lock-in, investors tend to have a good experience of getting reasonable returns from these funds. Moreover, the tax-break acts as a natural boost to returns.

Balanced Funds: Balanced funds, also called hybrid funds combine equity and debt investments in a certain ratio. In order to maintain this ratio, the fund manager will typically disinvest from holdings that have gained more and invest in holdings that have gained less. This, of course, is asset rebalancing.

Effectively, the gains that are made in equity are protected by debt. The great advantage of balanced funds is that they are inherently safer than pure equity funds. They gain well when the markets gain but when the markets fall, they fall less sharply, thus protecting the gains that were made in the good times.

RAJIV KAPOOR
FCS
9839034761
rajivfcs@gmail.com

6 Money Mantras for 2017

Money isn’t everything but everything needs money. With a lot of aspiration and hopes, we have entered in 2017. You must be looking for good Money Mantras to elevate your financial life. I am here with 6 Money Mantras for 2017. 

I am sure that these money mantras will defiantly improve your financial life in 2017.

6 Money Mantras for 2017

1. I will Plan for Income tax saving in advance

Every year we rush at last minute to save tax and end up making bad investments. This year take a pledge that you will start income tax planning exercise in advance. Advance tax planning will surely help you in taking an informed decision.

2. I will establish the second source of Income this year

The next money mantra of 2017 never depends on the single source of income try to generate a second source of Income. Distributed income source always helps you to reduce a risk. Start with part time online or offline business to establish the second source of income.

3. I will save more money for future

Money saves the money saver keeping this thought in mind the next mantra is saving more money for the future. You should challenge yourself by throttling your saving level.

4. I will adopt a rule of pay myself first

If you want to be rich adopt a rule to pay yourself first. This means before you spend any money on groceries, entertainment or household expense allocate an amount for yourself into your saving.

5. I will maintain discipline while making investment

The next money mantra for 2017 is maintaining a discipline while making an investment. The best way of maintaining discipline is SIP. You should atomize your investment via SIP route.

6. I will assess my portfolio regularly and make changes as per requirement

The last money mantra for 2017 is regularly reviewing your investment portfolio and making changes as per requirement.

Rajiv Kapoor
B.Sc, LLb, FCS
9839034761
rajivfcs@gmail.com
rajivfcs.blogspot.in

3 Stages Of Retirement

The 3 Stages Of Retirement

Have you thought about and tried answering these questions?

What will I do after retirement?

Do I have enough money to take care of my retirement?

How will I maintain the same lifestyle once I stop getting regular income?

Retirement is an important aspect of life. With increasing longevity, one cannot stress enough that one has to plan finances for it so that life goes on comfortably.

3 Stages of your Retirement
Retirement can be divided into three phases and the financials are a little different for each of the phases. Let us look at the three phases and how we should manage our personal finance for it –


Active Retirement Phase
This is the phase when you have just entered retirement. You have just retired. You had a regular income which has stopped now but you might have got funds in terms of gratuity, superannuation fund etc.

If you were in a business, you might have cashed out your share. You might have looked forward for retirement so that you have time for yourself, your loved ones and your interests.

This is the time when you can invest time and energy in these aspects of life. You might be starting on or looking for another phase employment or income stream or a business.

You should ensure that you know how much you need to fund your retirement and how much you have accumulated. You should revisit your investment portfolio and tweak it to match the current financial situation.

You might have to reduce some of your aggressive investments and increase allocation in conservative investment options.

You will not have employer insurance and ensure there is arrangement for the same. Check if you have about 6 months of living expenses as cash in hand and cash in bank which can cover emergencies.

Your spending will increase in areas such as medical expenses, hobbies and travel. It can decrease in areas of commute, taxes and office wear. If you have not drafted your WILL yet, it is a good time to do so.

It is better to go for a medical checkup to assess your health and take the necessary precautions. This will help in not being caught off guard on the health front which can cause imbalance in the personal finances.


Slow Go Retirement Phase
This is the second phase of retirement wherein you are used to your retired lifestyle.
Your children might have got married, settled in different homes and cities. You will find a pattern for your daily life that keeps you comfortable and secure. It is important to keep yourself mentally and physically active.

There might be some physical limitations as you are ageing.
Your medical expenditure might rise. Expenses like home renovation, tax payments and financial support for children will reduce.

It will be better if your investment portfolio is more conservative as at this stage in life compared to the earlier stages as your financial losses will have too much of a negative impact to bear or you will take a long time to recover the lost money. Check your will and make changes if necessary at this stage.


Inactive Retirement Phase
In the last stage of retirement, you slow down your activities. You might need support in terms of finances, physical health or psychological health.

You may not be earning too much at this stage. It is important to manage the funds in a manner that takes care of your basic necessities, your comfort and your medical expenditure.


There are non-financial aspects of retirement too that one has to prepare for.

Prepare psychologically – You have to prepare yourself to be at home post retirement. Your life will be less busy. You may not get as many phone calls and emails as you were getting when you were working.

How to keep busy and active – Decide on some hobbies and interests that you want to pursue post retirement. After retirement, ensure you have some activities so that you can be mentally and physically active and life would be more enjoyable.

Family should be ready – You and your family members should be prepared to spend more time together if you are going to be at home.

Identity – You would have always be know as ‘Director of Operations’ or ‘Professor’. But now it will be different. You should be prepared to lead a life outside your profession.

Retirement is an important phase of life and retirement planning should not be neglected.

It is good to be aware of the different stages in retirement and have some plan to manage finances for each stage.

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Rajiv Kapoor
FCS
98390-34761
rajivfcs@gmail.com
www.rajivfcs.weebly.com

Saving is not Investing

Saving is not Investing

The two wonders of personal finance "Saving" and "investment" are often perceived as same by most of us. But, both these terms are distinct and have a very important role to play in our financial life.

An investor must understand the difference and relevance of both the elements. And we have to participate in both activities to secure a sound financial future for ourselves.

To begin with, let's understand the meaning of the terms "saving" and "investment". Saving is nothing but the excess of income over expenses. So, if your monthly income is Rs 50,000 and your expenses are Rs 30,000. So your saving is Rs. 20,000.

This Rs. 20,000 helps you in meeting your upcoming family emergencies, buying clothes for a cousin's wedding, or buying gifts for your family this new year, or meet other unexpected expenses, etc.

This saving can be in the form of cash at home or money lying in your savings bank account. When this saving is put to use with a view to generate a return, this process is called investment.

So, when you use your saving and buy a mutual fund, or an FD, or put it in real estate, you do it because you want to generate an income on your money. So, these are investment activities.

Although your money lying in your saving account is also giving you a return of about 4%, but it isn't your investment, because the return is not even able to cover the cost of inflation.

If Rs. 2000 can get you a third AC train ticket from Mumbai to Delhi today. Five years later, you would need around Rs 2800 for the same ticket.

Now if you deposit Rs 2000 in your saving bank account today, it would give you around Rs 2500 after 5 years, which will not be enough to provide for the ticket.

Therefore, money kept in a saving bank account is not enough to cover the cost of inflation and hence is not an investment.

This means money looses its value over time because of inflation, and in order to combat with the evil of inflation, we must Invest. A major differentiating factor between saving and investment is the purpose behind engaging in each. 

And that is where we shall give a deep thought and decide if the goal for which we are saving, will be met by simply saving or if we need to put in more efforts and "invest that saving" and actualize our goals.

Saving is generally not backed by a goal. The money is being saved because that money is not in use today, or is saved for meeting any uncounted expenses. Or even if there is a purpose it isn't a defining factor of your life, it can be saving for buying a mobile, or a dress, etc.

On the contrary, there is a specific purpose behind investing which has a significant impact on your life. We invest for buying our dream house, we invest for our children's education, we invest for our children's marriage, we invest for our retirement or may be we invest simply to create wealth.

These goals can not be achieved by just saving. Imagine saving Rs 10 Lacs in a bank account @ 4% interest for meeting your daughter's wedding expenses which is planned 10 years hence.

There will be a huge mismatch between the funds you have in your saving account then and the funds you require. And this gap can only be filled with investment.

Therefore, it is important that in order to achieve our life goals, we invest. And each goal must be aligned with an investment.

For each goal, a particular type of investment is required which is determined by the investment horizon, amount required, your financial position, risk taking ability and various other factors. Your financial advisor will help in selecting the investment products ideal for your goals.

The bottomline is it is important to save and to invest the saving. Both of them are independent as well as interdependent. You must be able to draw a boundary between saving and investment, and not just save for your future. 

Saving & Investment is an ongoing process and should not be disrupted. So, if you are saving and not investing or worse not saving at all, then you must get your act together as your financial health is dependent on these exercises.

Rajiv Kapoor
FCS, CIA
9839034761

Women Play an Important Role in Shaping of Country's Economy

I play such an important role in India’s economy and all this while I thought I was just a housewife.

I have spent years and years playing hide and seek with my savings, saving and hiding, saving and hiding and more saving and more hiding my savings from my family.

I secretly and proudly felt richer and richer with the increasing count of my savings every year. No one and no one except me knew how much and where that money was.

After all, that was my true treasure and world’s best kept secret. I had seen how my mother resorted to her secret treasure in the times my father needed money. Impressed, I believed in carrying the same tradition. And would have continued to do so, sigh! Happily.

I still remember those ideas of sewing additional pockets in my purses where my treasure could be nicely placed. I still remember how I had to once protect my treasure from being eaten by the rodents which attacked my kitchen (yes, I had kept a few thousands first and then filled my jars with pulses). I had once fallen from the stool trying to keep one hiding in the upper part of my cupboard.

Sometimes my money needed extra protection as I had kept a few under the ‘tulsi’ plant in my courtyard. I offer prayers to ‘tulsi’ daily, though my money hasn't really grown.. if wishes were horses.. !!

My daughter who is now in graduation, would often make fun of me by calling me a ‘hoarder’. Yes, she was my partner in crime as she counted ‘my’ money for me once in a while with a ‘God promise’ to not share with anyone.

On the fateful night of 8 November 2016, when my husband announced on the dining table to look for all the currency to be exchanged in the bank, my heart sank.

I did not want to share the world’s best kept secret so openly and so easily with the same set of people I risked my life to hide from.

After all, it was for them that I was doing all this, just like my mother did, for a rainy day!

How will I ever emerge like a super woman with all the money when my family will need – perhaps on my daughter’s wedding? Or even better, for buying a house a few years later? My dreams shattered.

This was not all. While I was recovering from this shocking news, I heard my husband talking on phone with his friend “that’s why, its best to keep money in the banks. Not only the money grows, it offers opportunities to invest elsewhere and also protects our hard earned money” (in my case hard ‘hidden’ money).

I glanced at my tulsi plant which was swaying with the changing direction of winds. I instantly knew what I needed to do. I confessed to my husband about my savings. All the sewn purses, secret pockets, kitchen jars were emptied. After a hearty laugh, here he was, explaining to me what I should have done for the benefit of my family, instead of hoarding the money ‘for the benefit of my family’:

I should have opened a bank account and deposited my money instead of hoarding it.

Had I been a smart investor in addition to being a smart saver that I already was, I would have actually multiplied my money several times.

By not investing my money rightfully, though I was able to somehow protect them from rodents in the house, I could not protect them from the fall in their value due to inflation. My money kept losing its worth sitting in my purses and I never got to know.

All I needed was a bank account to start a systematic investment plan (SIP) of as low as Rs 500 a month.

The timing could not be better to be financially wise. My husband did understand my self-esteem need of having my ‘own’ money, my ‘own’ savings.

He suggested that I should immediately start investing. In the era where I can withdraw and transfer money with the blink of an eye, there was really no need to keep real currency at home at any time. With the changing times, one needs to change. I wonder why I did not, earlier.

He introduced me to an app known as ‘NJ Wealth’. 

There are several other such apps in the market now. I particularly liked it as it appeared extremely user friendly (even for non-finance savvy persons like me) and helped me make my financial decisions with a lot of ease.

When one door closes, the other opens. For me, this blow was an eye opener. I will no longer have to decide where to hide my money. Instead, I will now make decisions on where to invest.

The ‘tulsi’ in my courtyard was springing and my partner in crime was smiling!!

Rajiv Kapoor
BSc, LLb FCS CIA
9839034761

Why don't women make investment decisions?

Why don't women make investment decisions?

Today the world is talking about Women Empowerment.

In India, most public discourses on women focus on their safety. However, when you dig deeply, many of the issues boil down to empowerment in an everyday sense, and one of the issues underlying empowerment is often money.

The obvious problem here is that women in general earn less than men, often a lot less.

However, that's just one part of it.

There is another dimension to this.

Even when women earn well, and even when they belong to a milieu where there is no overt discrimination, they are less likely to be managing their own money, their savings and their investments.

Leaving out those who are in a financial profession, it seems that investments is something that women just don't do.

This state of things wouldn't come as a surprise to anyone but we need to pause and question it a little deeply. What exactly is the reason?

The obvious answer is that in families, it's the men who manage savings and investments. 

Also, there's the basic assumption that men are the savers and investors while women are the spenders.

This is incredibly widespread and not just in a traditional background. Watch the ads on TV. There are plenty which show women as the wise and smart and sensible decision maker and men as the impulsive ones.

However, these are all likely to be in things like nutrition or consumer goods and such. When it comes to ads that are about financial products, you see the reverse. The wise and foresightful husband plans for the future while the woman is buying LCD TVs etc.

So how will this change? I for one don't think that any kind of top down, patronising solution (an investment equivalent of a women's bank, for instance) is going to work. Nor are the bizarre 'specially for women' bank accounts--they're just marketing gimmicks.

Money is power, and that power extends not just to earning money but managing it, investing it and having a say in what's done. This kind of power is something that's transferred not when someone who has it gives it away but when someone who doesn't have it steps up and acquires it.

At the end of the day, there's no difference between men or women who don't know enough about personal finance. Both are in majority. And there's no separate men's and women's solutions to this.

Regardless of gender, there are plenty of resources out there to educate oneself and pull one's level of understanding up by the bootstraps, as it were. It's sounds like a tough job, but there it is.

Rajiv Kapoor
BSc LLb FCS CIA
9839033761