"Though retail investors may not have the bandwidth to switch on the basis of market views, people who are aware can make use of this facility very effectively," says Alam. It is important to note that Ulip is not just about equities. Smart Insurance Planning Services in India can also move within debt, shifting to long duration funds when interest rates are expected to go down and moving to short-term funds when rates are on the rise. If mutual fund investors do this, they will have to pay tax on the short-term and long-term capital gains made on the fund. Since Ulips are insurance plans, the gains and maturity proceeds are tax-free under Section 10(10d).

However, the sum assured must be at least 10 times the annual premium for this tax benefit. This year's budget has changed tax rules for debt funds. The minimum holding period has been increased from one year to three years. Debt fund investors will have to pay higher tax if they rebalance by shifting out of debt within three years of investing. However, there will be no tax in case of Ulips. Investors should note that insurance companies allow only a limited number of free switches. While some Ulips allow unlimited free switches, others permit only 4-12 free switches in a year. There is a Rs 100-250 charge for every switch beyond the free limit. Like banks, insurance companies also charge you less if you do the transaction online. For example, HDFC Click2invest charges Rs 250 per additional switch if done offline and only Rs 25 if the same is executed online.

Financial Planning - How disciplined savings can help Chandras meet their financial goals

amount of Rs 6,576 from their existing mutual fund investment. Similarly, for Meghana's marriage in 13 years, they will need a sum of Rs 40.79 lakh. For this too, they can allocate an existing SIP amount of Rs 7,042 a month to arrive at the desired corpus. If, however, they decide to use the existing gold fund SIP of Rs 3,000, they will have to allocate an SIP of Rs 4,042 in an equity fund to meet the goal.

Next, the Chandras require a sum of Rs 9.4 crore in 16 years to fund their retirement. It is not advisable for Ramesh to retire at the age of 56 years if he wants to build a corpus comfortably, but he can consider the decision later when he approaches the goal. To build this corpus, he will have to deploy several of his existing resources, including the EPF/PPF funds, stocks, mutual funds as well as property. Together, these will amount to Rs 2.67 crore, and to make up for the shortfall, he will have to start an SIP of Rs 50,089 in an equity fund. He can do this once he has built the emergency corpus in five months.

Finally, Ramesh wants a corpus of Rs 10 lakh for his parents' medical needs. To achieve this objective, he is advised to allocate his existing recurring deposit, mutual funds and the value of his surrendered insurance policies. These funds should be parked in a liquid option that is easily accessible.

(Financial planning by Fincart)

Financial Planning - How disciplined savings can help Chandras meet their financial goals

As for his health insurance, Ramesh currently has a cover of Rs 3 lakh and a company cover of Rs 2.5 lakh. Fincart suggests boosting this with a super top-up cover of Rs 12 lakh, with a deductible of Rs 3 lakh Financial Planning. It will cost only Rs 4,326 a month and will be eligible for a tax rebate under Section 80D. There will be no additional premium cost for Ramesh since his expense will reduce from Rs 2.35 lakh a year to Rs 75,068 after surrendering the policies. The amount thus saved can be used to invest for other goals.

Before the Chandras start planning for their goals, they need to have an emergency corpus of Rs 4.23 lakh in place, which is equal to six months' expenses. To achieve this, they can allocate their cash holding of Rs 1.5 lakh and debt fund value of Rs 9,953. To make up for the remaining amount, they should invest a sum of Rs 51,605 in an equity fund for five months to meet the goal.

http://fincart.blogspot.in/2014/10/financial-planning-how-disciplined_16.html

Besides this, Ramesh gets a salary of Rs 1.3 lakh, which brings their monthly income to Rs 1.44 lakh.

s for their financial outgo, the Chandras spend Rs 35,000 on household expenses and Rs 14,500 on house rent, while Rs 16,500 goes as home loan EMI, Rs 20,080 as insurance premium and Rs 4,500 for Meghana's education Financial Planning. They invest Rs 49,000 in various avenues and are left with a surplus of Rs 4,420 a month.

The current goals of Chandras include building funds for Meghana's education and marriage, their own retirement, creating a contingency corpus and having a buffer for Ramesh's parents' medical needs. Fincart suggests a realignment of investments and a revamp of insurance portfolio to be able to meet all the goals.

Insurance coverage

Though Ramesh has a seemingly impressive collection of insurance policies, these are all costly, traditional plans which will be unable to beat inflation and offer a low cover at a high premium of Rs 2.35 lakh a year. While he does have a term plan, it is expensive. Ramesh needs a cover of Rs 2.5 crore given his income, expenses and home loan, and the Fincart team suggests buying an online cover of this amount, which will cost him Rs 38,742 a year. Since Meenakshi is not working, she doesn't require any life insurance.

Financial Planning - How disciplined savings can help Chandras meet their financial goals

Despite a high net worth of Rs 96 lakh, he has 75% of his portfolio in real estate, has bought expensive, traditional insurance policies with a low risk coverage, and has an unmanageable equity portfolio of 14 funds and 11 stocks. More importantly, he is not sure he will be able to fulfill his important goals. To find out, the financial planning team at Fincart analyses Chandras' portfolio and helps them realise their objectives.

Existing financial status

Ramesh is a software professional, who is married to 38-year-old Meenakshi, a homemaker, and the couple has a 10-yearold daughter, Meghana. They stay in a rented house in Hyderabad, but own two houses worth Rs 80 lakh, which helps them earn a rental income of Rs 14,000 a month

Financial Planning - How disciplined savings can help Chandras meet their financial goals

The ability to see the big picture is critical for the success of any strategy. This is also true of financial planning. Most investors find their best-laid plans going awry because they are focusing on parts instead of the whole. This is the reason they binge on one asset at the expense of others, or have a bloated portfolio without considering if the investments will help them achieve their goals. This is why financial planners insist on aligning one's investments with the financial goals. Forty-year-old Ramesh Chandra has taken the right step in approaching a financial planner at this stage because he needs to streamline his finances as he approaches retirement.

financial planning-Win big by using all asset classes

Target score: Irrespective of the team batting first or second, each team keeps a target score in mind. Similarly, investors must ask some questions before they start their investment journey. These can include: What are they saving for? How much will they need for their children's education? How much should be the retirement kitty to live a comfortable retired live? etc.h Game format: The strategy for a 20-20 game is different from a one-day match which, again, is very different from that of a test match.Likewise, short-term goals must be funded by fixed-income products, whereas growth assets such as equity or equity funds must fund only long-term goals. h The team: A winning team comprises few good batsmen, few good bowlers and good fielders. Similarly , not always all asset classes perform simultaneously. It is seen that each asset class performs under a certain situation and economic environment financial planning. So, an investor's winning team must comprise of investments across all assets classes, such as fixed income, equity, gold and real estate.h Optimize player's potential: Investor's risk tolerance and time horizon of the goal plays a critical role in deciding the winning combination of assets. The winning team must try to optimize returns within each asset class. For example, if someone is conservative and has a higher debt allocation, then FMP and debt funds for over 3-year period, or tax-free bonds could be a better alternative to FDs.h Focus & hold your nerves: The mindset of players always plays a crucial role in winning. The winning team's body language gets reflected on the field. Players are also trained about the external environment which they can control, so all they should do is to control their own self. Investment is no different. No one can ever predict or control the market, so one has to keep their goals in mind and have to ensure that the products selected will enable them to reach their goals by re-balancing their asset allocation periodically .h Keep faith in your team: Holding one's nerves becomes easier if there is conviction in the products one is invested in. Ask yourself simple questions like: Is it going to help meet any of the goals?

financial planning-Win big by using all asset classes

There is a need to understand the difference between a financial plan and financial planning. A cricket team’s plan is like a financial plan, decided much before the players take the field. It includes studying the field, the environment, selecting the winning team, analyzing opponent’s strengths, weaknesses, etc. However, when the actual match starts, a lot of the plan quickly gets adapted based on the situation that the team exists in. The plan acts as the guideline but it is certainly more important to navigate the plan, which is what financial planning is all about. A financial plan is based on assumptions and it is quite certain that those assumptions may or may not come out as envisaged. Hence, there is a need to review the progress and navigate them to the goal.

financial planning-Win big by using all asset classes

To a large extent, the fear of losing money prompts people to take such safe routes.But being aware of the real demon is extremely important. Consider this: Over a 34-year period, the sensex has delivered a compounded annual return of 17.85%. So, an investment of Rs 1 lakh 34 years ago is now worth Rs 2.68 crore. And such a phenomenal return has come despite some major events, crises, scams and disasters during these years.

However, very few investors have made such returns.That's because people who have overcome the fear of investing may still get caught in the behavioural biases of overconfidence, thereby at tempting to time the market to beat it and in the process losing money.

Creating wealth lies in simplicity. Let me explain this in cricketing lingo: The financial planning: ‘Failing to plan is planning to fail’. Most people do ad-hoc investments.

financial planning-Win big by using all asset classes

In India, most people look at one or two financial products as the solution for all their financial worries.This is because in India, for years, the transaction-based approach has existed as a proxy to financial planning and investment advisory services. However, it's about time this practice changes.

T raditional products worked well during our fathers' time when rate of interest on fixed deposits was 12% per annum and inflation was below 4%. Currently, however, FD rates hover around 9% compared to the overall consumer inflation rate of about 8%, and inflation on higher education and medical costs are even more.Yet, most people prefer FDs and conventional insurance plans that deliver poor posttax returns.

Best Investment Planning in India-Learn From Market Gurus To Create Wealth

TAKE TIME & EFFORT

“ An investment in knowledge pays the best interest

BENJAMIN FRANKLIN |

US STATES MAN & SCIENTIST

All the time and effort that you put in to understand things would rarely go waste and, in most cases, they pay you multi baggers. You may attend some conference which is free, but you obviously put in time and effort for the same Best Investment Planning in India. Investing such time and efforts will surely pay you in the long run. And this is not only true for financial markets and investments, but also in every area of life. -Gajendra Kothar Tanwir Alam is the founder & CEO, http:www.fincart.com Mukund Seshadri is a co-founder, MSVentures Financial Planners. Gajendra Kothari is MD & CEO Etica Wealth Management NEXT WEEK

In our next edition, we will deal with the basics of capital protectionoriented funds and their importance to investors.

Best Investment Planning in India-Learn From Market Gurus To Create Wealth

GO FOR MARGIN OF SAFETY

“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price

WARREN BUFFETT |

CHAIRMAN, BERKSHIRE HATHAWAY Benjamin Graham, whom Buf fett considers his guru, coined the phrase `Margin of Safety', which became the guiding principle and worked as a safety net for a lot of his followers. This puts a very important perspective about valuing a company and buying below its intrinsic value, providing the margin of safety Best Investment Planning in India. The phrase means that a company's liquid assets depicted on the balance sheet (net of all debts) must be more than the company's market capitalization.

Markets work on a phenomenon called reversion to mean: In euphoric situations, companies get valued much above their intrinsic value, and in a bad market it is typically under-valued. However, the belief is that during such a transition, it reverses to its fair price sometime before it diverges again. This strategy has a dual advantage: The downside risk is very limited or muted even if the market were to go down further and, more importantly, the return potential of the stock becomes much higher if the market were to go up and arrive at its fair value. -Tanwir Alam.

Best Investment Planning in India-Learn From Market Gurus To Create Wealth

These simple yet sensible investment philosophies can help you tide over uncertainties and achieve financial goals.

Over the years, investment needs and financial goals of in vestors have changed. But the wisdom derived from people whose financial successes made them famous in the field of investments has not changed much.Here are a few lessons that are easy to understand and should be followed by most Best Investment Planning in India...

financial services companies in delhi

This way, companies can earn some extra money. However, if they keep this money in their current account in banks, they will not earn any income for these four days.

Large corporates have the financial muscle to have a dedicated treasury department that can take care of such opportunities. However financial services companies in delhi, SMEs, being much smaller in size and not having enough financial strength to have a dedicated team to look after such strategies, require to think smartly or depend on fund houses for solutions.

financial services companies in delhi

Alam points out that companies should always look for such opportunities for better returns on their cash without taking much risk financial services companies in delhi. One such opportunity will arise during the week beginning August 11.

Since August 15 is a holiday and August 16 and August 17 are Saturday and Sunday, a company with a free cash flow can deploy the same in liquid funds on August 14, which is a Thursday, and withdraw the same on August 18, which is a Monday.

Alam points out that companies should always look for such opportunities for better returns on their cash without taking much risk financial services companies in delhi. One such opportunity will arise during the week beginning August 11.

Since August 15 is a holiday and August 16 and August 17 are Saturday and Sunday, a company with a free cash flow can deploy the same in liquid funds on August 14, which is a Thursday, and withdraw the same on August 18, which is a Monday. 

financial services companies in delhi

During the last one year, liquid funds gave a return of about 8% per annum on a pre-tax basis. So on a cash deployment of Rs 2 crore in liquid funds for six months, on a 4% pre-tax basis, the company earned about Rs 8 lakh in total. "This extra income was then used for the company's employee benefit scheme," says Alam. Since the income was expended for an employee benefit scheme, this Rs 8 lakh was not taxable to the company either. According to Alam, this company financial services companies in delhi, without taking any extra financial burden, was able to give something to its employees just by using some smart cash management techniques. 

financial services companies in delhi

According to Alam, each year, the company had Rs 2 crore freely available for 52 weekends, which could be put into liquid funds on a Friday and withdrawn on the following Monday -that is, for three days.

"So the company deployed the cash in liquid funds for about 150 days a year. In addition to this, there were also holidays during the year when it could deploy the free cash in liquid funds," says Alam. So, in effect, financial services companies in delhi the company put its available cash in liquid funds for about half a year, that included the weekends and the days around the holidays. 

financial services companies in delhi

An SME client of Tanwir Alam, founder & MD, Fincart, wanted to start a new employee benefit scheme that was to cost the company Rs 6-8 lakh per annum. After going through the books of the company financial services companies in delhi , it was seen that it often had extra cash of about Rs 2 crore in its bank account.

And almost surely this cash was available to the SME during the weekends. So Alam suggested the company deploy this extra cash in liquid funds during weekends and holidays for some higher returns. 

The insurance company may also declare and pay 'loyalty bonus' on maturity. The sum assured along with declared bonus gets paid to the insurer either on death or maturity. Fincart is a Delhi based FinancialCompany provides the best financial risk protection services.