E-Gold is recommended over Gold ETF- My recommendation

E-Gold is recommended over Gold ETF- My recommendation

The reasons for opting e-gold over Gold ETF are good enough, to choose between the two. Investors can invest in gold through ETFs as well through e-gold of national spot exchange.There are some minor differences in ETF and e-gold.

1.Fund managers track gold prices through Net Asset Value (NAV).NAV of Gold ETF is net of liabilities so NAV and returns of different ETFs are different.

2.While in NSEL e-gold investors directly tracks gold prices.

3.NAV of ETFs are inclusive of custodian charges.while NSEL do not charge any holding charges.

4.In e-gold ,investors are directly holding the gold units ,,,while in Gold ETFs gold is actually owned by mutual fund AMCs.

5.Physical delivery in small denominations is possible in e-gold.while in gold ETFs physical delivery depends on  sole discretion of ETFs.

6.ETFs may offer delivery for investors holding Gold of  higher amount.

7.We can invest in gold ETF only up to 3:30 PM IST as market get closed.while spot market is open till midnight and we can invest in e-gold series till 11:30 PM.Suppose if gold ETF closed  with NAV of 2300 (Time : 3:30 pm) and get closed at e-gold at 2330(At 11:30 pm).Then there is a difference of Rs.30 per gram in both the prices.Gold ETF will try to cover up this difference on opening itself.Investors will not get opportunity to get the price in between.

8.In both cases,buy-sell intraday/delivery brokerages are payable which are in general in the range of 0.3 to 1%.

9.E-gold will be taxed like a Physical gold while Gold ETFs are taxed as Non equity mutual fund

From above, we can observe that E-gold has got edge over Gold  ETF.

 So, it is recommended to to invest in gold via E-gold.

Financial Ratios, a rough skeleton on which a Client's Financial well being can be projected

Financial Ratios, a rough skeleton on which a Client's Financial well being can be projected

Financial planners usually on their way to create a path of financial freedom for their clients, start with the analysis of the current set of investments and the plans which the client has taken. The current financial situation is judged basis their net income and expenses, their debt, their liquid assets, liquidity, solvency, net worth, savings rate etc.Financial ratios are decision making tools which tell you how good or bad your financial health is.
For any financial plan to be made all the above ratios have to be taken into consideration. Let us have a quick look to what they actually mean:

1.Net worth ratio, simply means what is the difference between the total assets you possess and the total liabilities which stand against your name.

Net worth is not only that starting step that directs you to set a financial plan to reach your goals, but helps you to protect your assets via insurance coverage by determining the worth of your assets.

Formula: Net Worth = Total of all your assets – Total of all your liabilities

Thumb rule: Net Worth thumb rule = (Your Age x Gross Annual Income from all sources except inheritances)/10*;

   

Example: If you're 30 and earn Rs 5 lakhs a year, ideally you should have a net worth equal to or more than Rs 15 lakhs.

2.Savings ratio

The Savings ratio simply tells you how much are you saving monthly. It is not only the proportion of income which is saved, but also a measure of one's risk profile­ whether you are proactive with investments or not.

Formula: Savings Ratio = Monthly savings / Total monthly Income

Rule of thumb: There is no general rule of thumb as the amount of savings to be made depends upon an individual’s lifecycle stage. As a guideline, it can be taken as 15%-20% of monthly salary. However, the more the better.

         

Note: A single month savings ratio does not reveal much but taking an average of several monthly savings ratios will be a better indicator of how good or bad you are at saving.

   

3) Debt to income ratio

This ratio indicates the total monthly income that goes towards paying all your monthly debts (home loan, car loan, personal loan, credit card, consumer durable, gold loan etc) - all outflows towards servicing debt are taken into account here.

Formula: Debt to Income Ratio = Monthly debt payments / Total monthly Income

But just about everyone has debt. The real question how much is too much? That will again depend upon the lifecycle stage of the individual. For example, a man in his early 30s usually would be servicing more debt payments (on account of home loan, auto loan, consumer durable etc) than a person in his 50s who is nearing retirement.

    

Rule of Thumb: The lower the ratio, the better. The lower this ratio the lesser burden there is on the individual to make payments on his/her debts. High debt to income ratio also means having a low savings rates. It also threatens one’s ability to retire with the desired retirement corpus.  General guideline is a ratio of less than 40%.

      

2 more Debt ratios:

(i) Housing loan outflow Ratio – This is a parallel version of debt-income ratio used by home loan underwriters to scrutinize the creditworthiness of borrowers. You can apply this to assess your monthly housing loan liability against monthly total income.

Formula: (Home loan EMI + loan insurance + property taxes + other relevant payments) / by Total Monthly Income

Rule of Thumb: Housing loan expenses should not exceed 30% of gross monthly income.

    

(ii) Credit card debt Ratio – On similar lines of housing loan outflow ratio is credit card debt ratio. It is useful to assess credit card debt payments vis a vis total monthly income.

Formula: Monthly credit card debt payments/ Total monthly income

Rule of Thumb: This ratio should be less than 20%. A high ratio could point to excessive use of credit cards.

  

4) Debt assets to Total assets ratio

This ratio compares total debt assets to total assets to gain a general idea as to the amount of borrowed money being used by you.

Formula: Total debt assets/Total assets

Rule of thumb: A lower ratio is desirable. A low ratio means that you are less dependent on borrowed money.

Why consult your Financial Doctor aka Financial Planner?

Why consult your Financial Doctor aka Financial Planner?

Authored by: Ajit Panicker
Financial planning is not only about investment planning. Investment planning is a part which comes under the umbrella of a comprehensive financial planning. People make some common mistakes when taking crucial financial decisions related to their asset building or investment with "return" as the biggest parameter to judge.
Doctors are specialists in their fields of medicine and surgery, so also are other professionals. Similar to them, Financial planners are professionals certified by FPSB Board in India ( FPSB India is a part of FPSB Ltd, USA). They are certified to do financial planning internationally.

Usually, the decisions in a family are taken by the eldest most but in many families it could be liberal to an extent that , opinions are asked. The purpose of taking opinion from elders or those who are experienced is basically because we expect them to have knowledge about those aspects  But is it prudent to say that, every eldest member of the family, knows about all the things in this world. No , it is not.

Financial Planners are specialists in their field , who know their job and do comprehensive financial planning.
Therefore you should consult your financial planners , not only before taking any financial decision but to plan you finances , so that your life can be planned.
Few WHY's to consult your Financial Planner:
1. Financial Planner is a super specialist in managing and planning your finances.
2. He is a certified professional, registered under an internationally acclaimed board and examination.
3. He is focused in helping you set your goals and achieve the same on time.
4. He is knowledgeable and recommends you the best plans.
5. He has great interest in the field of financial planning and so keeps himself abreast with the latest in the financial world.
6.He is your Financial doctor, who treats your diseased financial portfolio and wrong decisions.
7. He is unbiased and gives genuine recommendation which are highly useful and advantageous in long term.
8. He is empathetic and understands the "returns" sentiments attached to each asset or investment being made in an asset.
9. He constantly endeavors to keep you happy and free from all financial turmoils or tensions.

Lesson of Sincere Sales Pitch

Lesson of Sincere Sales Pitch

Authored By: Ajit Panicker


Lesson of Sincere Sales Pitch:
Yesterday, in a coffee shop waiting for my client to arrive, i met a real estate executive. He must be around 25 years old. seeing me wait for my client and scribbling some notes in my diary, he called up an invitation to sit with him and chat. During our talks i realized that this 25 year old has a path to follow to reach his destination. Focused sincerely on his work was carrying two mobiles, a usual phenomenon in metros, to show that you are a busy guy. I asked him why does he need two mobiles, his answer was "sir, i make appointments by calling people, and the day the charge of both my mobiles do not finish during the day, i consider the day , that my work is unfinished.
Impressive", i thought. While talking he understood that i am a financial planner, but he did not make any effort to make link up with me for future business prospecting. it was a soft call on me while i was leaving the table, when he said "why don't you book an apartment, for yourself, when you are doing for others".
I said, we have planned and would soon take up a flat. He was just not pushy and kept a decent sales pitch throughout the conversation, showing interests and knowledge on varied topics.
What i want to share with my fellow financial planners, advisors, working in banks or self employed, to make sincere efforts to reach to your customer.

"Plan your day and the day will unfold according to you" 


As you design your presentation, develop both a strong opening and a powerful closing. After your opening, preview your main points and then provide enough specific information to support your message. 

The following S-S-S formula helps your listeners retain important information and prompts them to act: 

State State your main points clearly and concisely. 
Support Provide enough supporting information to address your listeners' needs adequately. 
Summarize Summarize each main point of your message.

CHITTI, the Financial ROBOT , answers you " What is Foreign Direct Investment"

CHITTI, the Financial ROBOT , answers you " What is Foreign Direct Investment"

Authored By: Ajit Panicker

Foreign Direct Investment is an investment which is made in a country by company or a group from some other country either by buying out the company from the target country completely or by buying a percentage of it or by expanding its operations into the target country in the line of existing business.
Foreign Direct Investment or FDI, is done in either of the ways:

·                     By incorporating a wholly owned subsidiary or company

·                     by buying out shares of the company

·                     by mergers or acquisitions

·                     through an equity joint venture

According to the Ernst & Young (E&Y)'s 2012 India Attractiveness Survey, investors view India as an attractive investment destination. India stands as the fourth most attractive destination for FDI in the survey's global ranking. Domestic market's high potential driven by an emerging middle class, cost competitiveness and access to a highly qualified workforce are the major factors that has been the magnet force to attract global investors.

But of late, in past few months due to delayed political and economic decisions by the Indian government, there has been an outflow of the foreign investment and together with other  factors the investment picture is looking bleak as of now. It is just a passing phase , wherein a number of external, global and internal factors have impacted the country, but there would soon be a turnaround and in next 2 years , the growth story would be right back on the track.

Invest while you are in debt

Invest while you are in debt

Authored By: Ajit Panicker

"When you are in debt, why should you invest, there is no need". This is what we say to ourselves when we are in debt, with the loans taken from banks to purchase our own house or cars we buy or consumer durable items we purchase.
Most of us think like this, and this is even logical. Why should you pay unnecessary interests when you are already in debts?
 Let us take a situation where a family of four with husband , wife and their two kids stay together. Both husband and wife are working and the children are going to school. They have recently taken a home loan and a car which they purchased three years back. many household items are also financed by various financing companies.
Both husband and wife earn handsomely, but still this kind of debts are still there, the reason being , that they want to live a better life and banks and financial institutions being there to provide such credit facilities.
Now what i think, are they not investing for their retirement or for their children's future, they must be.
What i need to understand is that are they DOING INVESTMENTS while being in DEBT.?
Yes they are, and this is what almost all of us do, barring a few.
In this situation what should be done is , the individual should analyze what is the total debt, which he has taken, and what is the interest he is paying on them. He should at the same time calculate what is the total investments he is making and what would be the interest he would earn over a period of time, he has taken that investment for.
After doing both the calculations, present value of money  for all the corpus (from the investments made)which would be created after the tenure should be calculated. Then with the debt he has and the interest he is paying on the assets, or items he has purchased and would be paying till the tenure ends, he should calculate the benefit of assset he is having and the appreciation of the assets which would happen over a period of time.
If there is a positive outcome , in the present value of future money and present outflows, then investments should be made regularly.
But if there is a negative outcome, then still, investments in systematic way should be made so as to maintain the discipline of saving and thus not allowing all the earnings either outflowing as interest to banks or debt repayment or expenses for the household.

Why you should not compare insurance with mutual funds when planning for your child?

Why you should not compare insurance with mutual funds when planning for your child?

Authored By: Ajit Panicker

Everyone likes to see their hard earned money grow quickly. But there are no quick gains. An investment has to be long term in order to be really beneficial. As you make up your mind to invest, make sure you are ready to keep patience. Besides, risk factor is always there to escort your investment. So, you should be absolutely clear in your mind, what you want. Whether it’s life insurance Policy, National Savings Certificate or Mutual funds, all the investment plans have their merits and demerits that you need to consider before you proceed. Unit Linked Insurance Plans are also gaining popularity these days for their investor-friendly profile.

When planning, the objective should be clear. If the objective is that of child's future planning, ons should consider the following things before zeroing on a particular product?

1. Is the product allowing you a regular flow of investment or is it asking for a lumpsum investment?

This can both be provided by a mutual fund and a child insurance plan. In case of mutual fund a lumpsum investment one time or on SIP mode , and in case of insurance plan it can be a single premium plan or a regular premium paying plan.

2.Is the product giving you decent returns which is beating the inflation? Mutual funds or a child insurance plan both over a period of more than 10 years would provide a return around10-12%. But in mutual funds, till this financial year only tax saving mutual funds allow tax rebate, and all other mutual funds would attract tax, but in case of all life insurance plans under section 80C the principal amount and the returns or maturity amount under sec10(10)d are tax free.

3.Is the product liquid  or it allows you to adhere to a discipline of regular investing and does not give you an easy chance to exit. If the planning is for the child's future, it is always better to get into a plan where you have less chances to exit, so that even emergencies do not force you to exit. And the child's plan continues.

4.Is the product giving a rsk cover in case of any risk happenning to the person who has bought the product for the child. This can only happen in an insurance plan.

So the point in consideration is that all products available in the market with due respect to the risk, return and liquidity involved them, should be considered by keeping the financial planning objective in mind.

All product have their own individual importance and work accordingly.

Consult your Financial Planner 

Qualities one should look at before deciding to hire a financial planner for self

Qualities one should look at before deciding to hire a financial planner for self

Authored By: Ajit Panicker
The field of financial planning is growing fast and may be in few years from now , it would be an industry in itself. The prominence and importance of financial planners has come into being due to a situation where clients have felt that all the advisors involved in the wealth management or financial planning are primarily from some kind of institutions.
 Due to which they are compulsorily biased to, if not sell , then recommend only the products which their companies are selling. The professionals involved are independent financial advisors, agents and advisors of particular product based companies like from life insurance or mutual fund companies, bank employees, tax accountants, chartered accountants, insurance employees, investment advisors from stoch market and so on.

 There is no dearth of such people who are making their livings by either selling the products or by recommending them. Hence it becomes very important to assess the qualities which you should look into your advisor before finalizing him to do your financial planning. Following qualities may be of vitaility to you, in assessing the advisors:
1.Ethical : Has the financial planner informed you of  the limitations on their ability to provide objective financial planning services. Has he declared his qualifications and experience to you in the most transparent manner.
2.Competence: Is the financial planner you are getting engaged with, is professionally qualified and is certified. Does he have requisite certifications, qualifications and minimum standard experinece required to practice financial planning.
3.Confidentiality: Does the financial planner you are engaged with, maintains all levels of confidentiality in keeping your information and takes specific consent wherever required before using the information you have given.
4.Integrity : Does his background credits his profession and has he been a part of any act which doubts his integrity.
5.Knowledge: Apart from the certifications he has, is he well equipped in handling your portfolio and has all the required product, legal, compliant knowledge required in developing your financial plan.
6.Nature of his recommendations: Is his nature biased towards any product, any particular company or any specific type of investment intrument, if it so, probably the reason is that , there are monetary interests involved.

Set Goals First, then Plan your investments

Set Goals First, then Plan your investments

All of us know we have to save and invest if we want to achieve our financial goals. We diligently penny-pinch to save money and invest in various financial instruments like bank fixed deposits, company deposits, bonds, mutual funds, stocks and so on.
However, according to financial pundits, most of these 'invest-as-you-go' portfolios don't really deliver the goods. It is mainly because the portfolio is nothing but a host of stuff put together - mostly at the advice of some friends or colleagues or on the basis of the market performance - without a proper thought.
Worse, most people don't even bother to track their investments regularly or restructure or rebalance the portfolios accordingly.
"Such portfolios typically include too many products which are difficult to track. There is also no thought behind most of these portfolios and these may not be helpful in achieving the financial goals of investors," says Vishal Dhawan, founder, Plan Ahead Wealth Advisors.
However, this is not to suggest that if you have invested your kitty in such a portfolio you are doomed. You can always take stock of the situation and take remedial measures. Of course, it indeed comes at a cost, and most importantly the lost opportunity cost.
"Make a list of investments you have in your existing portfolio and articulate your financial goals in money terms along with time lines," says Uday Dhoot, deputy chief executive officer atInternational Money Matters.
The first step of taking stock of investments can be done by going through your investmentrecords. For the purpose of quantifying the financial goals you can either use an excel sheet (if you are savvy enough to use it) or use financial calculators offered by various websites.
Once you have goals and the time to achieve them on paper, tally them with your investments to make sure that you have the right investments to meet your goals. For example, fixed deposits and relatively safe investments, such as short-term bond funds and fixed maturity plans, can be used to achieve short-term goals.
Diversified equity funds with good track record can be aligned with long-term goals. This process will ensure that you switch to goal-based investments from random investments.

Stop Emotional Spending , Control your Monthly Expenses

Stop Emotional Spending , Control your Monthly Expenses

By: Ajit Panicker

Spending must be a conscious activity.  What do I mean by that?  Have you ever said the following at the end of the week or month: “Where on earth did my money go?”  I know that I’ve said that!  The idea behind conscious spending is to break the habit of spending whenever you ‘feel’ like it.  Emotions have just as much of a role in spending as knowledge does, so getting the emotional side under control will help you put your knowledge to use!
BUT…building self-discipline can be tough, especially when we’re talking about finances.  If you’re trying to control your spending or looking for ways to help you know where your cash is going, explore a few of these ideas to help you to get your budget under control.

Spending Money With a Purpose

Envelopes

You’ve heard of this route before, but may not see its usefulness.  If you’re having trouble with overspending in certain areas, try using envelopes for a trial period with certain categories.  For example, your cell phone payment may be automated…no envelope needed.  Your grocery bill may fluctuate more than you’d like it to – so set out an envelope.  The same can be done for eating out or entertainment.  You don’t need a lot of categories to be successful with envelopes, start small and you’ll see how effective it can be!

Gift Cards Only

This is similar to the envelope system, but an alternative to carrying cash.  If you want to set a limit on gas, groceries, or entertainment, you can use a gift card to control your spending.  It takes a little more involvement, but you can prepay your gas, groceries (if you buy them at a place with gift cards, like WalMart) or entertainment like a movie store.  I’d rather do cash only, but it’s an idea for people who like plastic.  Just be careful that you don’t get stuck with any unnecessary fees.

Limit Trips To The Store

Creating a shopping schedule for groceries, or personal items can help control your spending.  Plan out the days you absolutely need to shop and avoid the ‘pick it up after work’ routine.  That’s a sure-fire way to forget how much you’re spending on things.

Write Down Every Purchase

If the small things are breaking your budget, try carrying around a mini notebook and writing down each item you’re purchasing.  Coffee here, snack machine there, or whatever it may be – write it down!  It’ll feel like a hassle (good!) and hopefully slow you down to really consider what you’re spending money on.

Automate The Savings

If you don’t see it, you’re less likely to miss it.  Try paying the savings account each month like you would do with a bill.  How you do it will be up to you.   Many online banks will set up automated transfers each month.  If you cash your checks, put a portion in a jar or enveloped marked as savings.  The point is to get into the habit of living on less so that you have room to breathe in your budget.

Find A Money Buddy

Setting goals with a friend can make saving money easier, especially if you like a challenge.  If you really need accountability (and trust the other person), have a bi-weekly or monthly comparison of expenses.  If you don’t want anyone to see your actual expenses, keep it focused on the amount saved.  Challenge each other to increase your savings month after month – it’ll naturally cause you to shape up your spending.

Make a 30 Day Rule

The ultimate discipline for controlling your cash is the ability to say NO, and to let a period of time go by before you commit to the purchase.  This works best with big ticket items like a computer, TV, car, hobby items, or home décor.  The main idea is to kick that impulsive buying habit we can all fall prey to.

Last minute tax planning done is like gulping a hot cup of coffee in one go

Last minute tax planning done is like gulping a hot cup of coffee in one go

Authored by: Ajit Panicker

Nowdays, the clients who belong to the salaried class try to complete their tax planning much on time and even file teir taxes on time. Many believe that they are abreast with the required information about tax planning. But i doubt is that much sufficeint. After having serviced so many clients in my professional life till now what i have largely observed is that, 90% of the employees of even large firms do feel that the last minute tax planning which they do so as to furnish the proofs for the tax declaration done in the beginning of the year is what is tax planning, and this tax planning they assume to be their investment planning.
This article is seriously dedicated to all the salaried employees who file taxes and hence purchase the products which come their way at the last moment.
when you declare the investments in the begiining of the year, almost all the employees try to declare the limits under various sections of the income tax, so as to avail the maximum tax advantage. They do so, so that the tax is not deducted monthly, and once they declare the same at the end of the year with proofs the tax deducted would not be a burden,
But what people do not realise is that, at the fag end of january or february when almost all the corporates ask for the investment proofs , many do not have all the proofs. Because the products which give you tax rebate have not been prrchased.
Then comes the herd of the insurance advisors, mutual fund advisors and whover approaches them or they get hold of someone, the product for tax planning is purchased, without realising that it may not fulfill their financial objectives.
The lesson to be taken here: please plan during the complete year, contact a professional financial planner who plans your cash flows, calculates your net worth, plans your protection, evaluates your existing investments , evaluates your exitsing health cover etc and then designs the plan according to the objective decided together by you and the planner.

Health insurance - A necessity- My own experience

Friday, 16 March 2012

Health insurance - A necessity- My own experience

Authored By: Ajit Panicker

"This incidence which i experienced few weeks back, was that my wife got into a medical emergency which required a surgical operation and the doctor who was treating her wanted to operate her in one of the international hospitals in New Delhi. Understanding the risk which our life carries every moment, and i being in this field to help others understand the importance of insurance, had taken a health insurance policy for my wife too from MAX BUPA health insurance co. ltd. 
The health insurance program had made the entire process of admission , operation, stay and billing so seamless, that i did not even realize that my wife was in a big trouble. all the while i was sitting besides her without thinking even for a moment that how would i settle the bills. Thank you max bupa and than you health insurance."

 “Health is Wealth”. It is not a meaningless saying as it defines a very important fact of life. Your health is the most precious wealth that God has given you. It is your own property and you are the sole owner of it. Therefore, it is your responsibility to look after it properly. However, it is also true that the life is full of uncertainties and you never know what will happen in the next few hours. Therefore, it is also your duty to make certain arrangement so that you can take care of yourself as well as your family even if some misfortune falls upon you.
 This health insurance program, as the name itself tells, is entirely meant for the proper care of your body and health. It is a permanent arrangement that you can avail at a time when you need to undergo some serious health disorder. These health disorders are very expensive by nature and you may need the help from some sources to meet the expenses of this treatment. As you all know, the cost of medical treatment has become very costly and a person from the lower or middle income group cannot think about such a costly treatment.
A health insurance program is a service of the insurance companies that keeps your ensured against any serious illness like cancer. If, unfortunately, you happen to suffer from this serious disease ever in your life, you would not be worried about the cost of treatment as you can get the sum for treatment. As far as success of treatment is concerned, it is not sure, however, your family gets a huge sum of money if you happen to die in the process of your treatment.
The advantage of this health insurance program is very unique. You need not spend a penny from your pocket and the whole cost of treatment is borne by the insurance company. It is a great relief for the members of your family as well because they need not worry about your treatment. A health insurance program is a very useful investment because it helps you at the time when you need the money most. If you do not have the health insurance program for yourself, then you will be in deep trouble when a situation like occurs in front of you and leaves you in want of a huge sum of money.
Therefore, everyone should go for health insurance program. There are many such programs lying with different insurance companies and you need to choose the best health insurance program that suits your situation in the best possible manner. If you have not insured your health till now, then start the proceedings today and contact the representative of the best insurance company. It is your responsibility and you should not ignore it even for a single moment. Get insurance for your health today and see what relief it brings to you and your family.

Financial Planners are your Financial doctors, specialists in the Financial Field

Financial Planners are your Financial doctors, specialists in the Financial Field

Authored By: Ajit Panicker

In past decade and strongly in past few years the banking and the financial markets, the regulations and the investors have all become very active and alert. If i talk about insurance, for about 60 years Life insurance co. Ltd(LIC) was synonymous with insurance until early 2000's when private insurers arrived in india. Mutual funds became a popular in past 15-20 years, and people have now realized its importance for which the moderate risk takers and all those who want to diversify their investments look towards mutual funds as a good investment option. Stocks have always been an option in this country, but many have burned their fingers and even their homes due to less information about the option or due to wrong guidance. Real estate as an investment option has become public in past decade very strongly. But since time immemorial people have kept land as a great investment option, because this particular option in long term gives good return, inspite of it having a number of timely advantages and disadvantages attached to it.
Gold has always been an option suggested and practiced by our grannies, irrespective of belonging to any part of the world, and has been always more in india. Bank deposits, corprate deposits, saving accounts , post office deposits, have all been investment options or savings options been used since a very long time now.
BUT, these all investment products as they are called has been bought either by your own understanding about them or suggested by agents, advisors or bankers. All the people involved in selling these products are motivated to bring fee income to self or the organizations they are working for, with very minimal concern about the investor or the client.
Here comes the FINANCIAL PLANNER as a FINANCIAL DOCTOR, a specialist in the field, to the rescue of the client. He meets the client with the sole objective to make him realize the importance of planning. Carving a chart and the course of action of how to achieve all the short term, mid term and long term goals , with proper risk adjusted, inflation adjusted and tax adjusted returns to the investments made by the clients. He helps the clients decide their objectives, analyses their current investments, the inflows and the outflows of the cash component, the assets and the liabilities, calculates the present net worth and help the client achieve the desired networth.
He treats the client(patient) with all the ill-investments, replaces them with best options with full analysis. Creates an emergency fund, plans for his retirement, plans his estate, plans his taxes, plans his consumptions and savings pattern, lead them to a disciplined financial life. With all these he finally achieves the FINANCIAL Freedom.
Consult a Financial planner, the specialist

What is micro-insurance?

What is micro-insurance?

Microinsurance is one of the many ways in which the lower sections of the society which are deprived of even the basic needs of their families, are protected for the perils they can encounter. This is done by providing them protection inform of insurance cover where the regular premium is very low and is proportionate to the risk and its cost involved.
This arrangement is being made so that every section of the society can be adequately insured according to their living expenses and which can be insured by paying very small amount of premiums.
Microisnurance provides greater economic and psychological security to the poor as it reduces the exposure to multiple risks and cushions the impact of the disaster.
There is an overwhelming demand  for social protection among the poor

Microinsurance in conjunction with microsavings and micro credit would therefore go a long way in keeping this segment away from the poverty trap and would truly be an integral component of financial inclusion.

Microinsurance is synonymous to community-based financing arrangements, including community health funds, mutual health organizations, rural health insurance, revolving drugs funds, and community involvement in user-fee management. Most community financing schemes have evolved in the context of severe economic constraints, political instability, and lack of good governance. The common feature within all, is the active involvement of the community in revenue collection, pooling, resource allocation and, frequently, service provision.

PPF- Best instrument to create corpus , without paying TAX

PPF- Best instrument to create corpus , without paying TAX

 Authored by: Ajit Panicker

PPF account is the best investment option where you can put good amount every year and build a huge corpus without paying taxes. With a little planning, it can be an important part of your financial portfolio. Here are a few tips that will help you make the most of this option: 

Maximise limit: 

The 8.8% compounding interest you will be earning from now on, the latest news today declared , on the balance can work wonders for you, especially because a PPF account is a long-term investment. There is an annual limit of Rs 1,00,000 that one can invest in the PPF. You may feel it is a waste to be investing Rs 1,00,000 in this option when your Rs 1 lakh tax saving limit under Section 80C has already got exhausted. But don't let the tax savings alone guide your decision. Invest as much in PPF as you can afford to. If you contribute Rs 1,00,000 a year to your PPF for 15 years, your investment would grow to a gargantuan Rs 35.43 lakh on maturity. 
And remember, this is tax-free money. In the 30% tax bracket, this is equivalent to receiving almost 12.8% interest on a bank fixed deposit. “The PPF offers the highest post-tax returns among all fixed income options since no tax is levied on the investment, income and withdrawals,” 

Distribute income: 

There are benefits in store if you open a PPF account in the name of your spouse or child. Tax laws say that if any money gifted to a spouse is invested, the income from that investment is clubbed with the income of the giver. But since PPF income is tax free, it will not push up his tax liability. This way, you can invest more than Rs 1,00,000 a year in this tax-free haven and benefit from its various advantages. 

This strategy does not work in case of minor children though. You can open a PPF account in the name of a minor child but the combined contribution to your and your child's account cannot exceed Rs 1,00,000 a year. 

Invest for children: 
However, if the child is over 18 years, up to Rs 1,00,000 a year can be invested in his name separately. The taxman insists on clubbing the income of minor children with that of the parent. But once they turn 18, they can have a separate income. “A PPF is an ideal way of building a fund for your child's educational needs instead of falling for all the ‘high-commission-paying’ child plans of insurers,”
 “In a child plan, you are not sure of the final returns.

Saving today will create an excellent Future tomorrow- My Life experience

Tuesday, 27 March 2012

Saving today will create an excellent Future tomorrow- My Life experience

Authored by: Ajit Panicker

Yesterday in the morning in the gym, while working out, I was having a discussion with my neighbour about the spending patterns of consumers and what makes them buy the most frivolous of things. He said there was a time when he would himself buy things on a whim, especially through a credit card. Now, he says, he has turned over a new leaf. He has cancelled his second gym membership that he had paid thousands for, reduced eating in restaurants and has started investing in various plans in a systematic manner. “Live simply today to live lavishly tomorrow,” he calls this plan. 
My friend, unknowingly, has managed to save more in three months, than he would usually have in several months, if he had continued his lifestyle. He got me thinking. Can it be that uncomplicated to save for the future? The answer is Yes. When you get money, do you save first or spend first or spend by borrowing? 

Usually, when we spend on buying things, we end up borrowing. You may think, “How can I borrow when I am spending from my own pocket?” What you don’t realise at that moment is that every penny you spend on buying something that is more of a want than a need, you are borrowing money from yourself . You may think that you don’t have to pay yourself back, but this tendency pulls you away from your life dreams and goals since you do not have the money to save or invest.

An associate of mine recently presented me a study that analysed spending patterns. 
An important fact put forth was that individuals forgo long term goals for instant gratification. Most of us just get a certain “high” while buying a particular product for e.g. a new pair of shoes, or going to the best restaurant in town. This habit increases borrowings. 

A way to break this pattern is by making a clear demarcation between what you want and need. They are always two separate things. Though instant gratification is fun for the moment, on a long-term basis, it might not be what you need. Commit yourself towards creating reserves for your future, instead of just thoughtlessly spending money. 

Investing for the future is not an easy task. I often suggest a simple trick to friends which helps them stick to their plan – I ask them to create a collage of pictures of their dreams and desires. It could have pictures of your dream house, holiday, retirement or anything thing else that you are working to achieve. 

This will provide you the motivation that you need to turn these dreams into reality . But remember to not shape your future by borrowing. Make the distinction between good and bad borrowing. Any borrowing that can help you buy/build an appreciating asset (like house) is good borrowing. 

Another important lesson that you need to understand is that you will need to downgrade on your current needs to move in on your future. You can cut down on some unwanted expenses and instead use that amount in a financial plan that can help you achieve your dream, goals and plan for emergencies. 

The idea of downsizing now is to create a foundation to stabilise your future. Over time, this will help you become financially independent. And your dreams will be your own, no matter what...