The New Rules of Financial Planning for Dummies in India How you can effectively do the Financial Planning for your Retirement & for your Child’s future and build enormous Wealth for you & your future Generations in India by SIMPLE Financial Planning? in India by SIMPLE Financial Planning? [ For Resident Indians & NRIs] Asav Patel Personal Finance Blogger, Ahmedabad, India Blog: www.MyJourneyToBillionaireClub.com Forum: www.Investta.com E-mail: [email protected]Investta.com A Personal Finance Forum, Discuss Everything about Financial Planning…!!! MyJourneyToBillionaireClub.Com India’s Leading Personal Finance Blog
Transcript
The New Rules ofFinancial Planning for Dummies in India
How you can effectively do the Financial Planning for your Retirement & for your Child’s future
and build enormous Wealth for you & your future Generationsin India by SIMPLE Financial Planning?in India by SIMPLE Financial Planning?
[ For Resident Indians & NRIs]
Asav Patel
Personal Finance Blogger, Ahmedabad, IndiaBlog: www.MyJourneyToBillionaireClub.comForum: www.Investta.comE-mail: [email protected]
Investta.com A Personal Finance Forum, Discuss Everything about Financial Planning…!!!
MyJourneyToBillionaireClub.ComIndia’s Leading Personal Finance
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Index1. Introduction: Financial Planning in India2. What is Financial Freedom? – The Definition3. Know the Power of Compound interest before starting Financial Planning4. How much is enough to retire in India?5. Budgeting: The most important Exercise6. Why Budgeting? – So you spend less than you Earn7. Get out of Debt: The first step of Financial Planning8. How to get out of debt?9. Emergency Fund – A Must Thing10. Financial products available in India11. Financial planning for Retirement12. Financial planning for child’s future12. Financial planning for child’s future13. Consider inflation14. Basic asset classes15. Investment time horizons16. The power of long term investing17. Best financial products in India18. Best asset class – Equity – Know the power of equity19. Worst financial products in India- Avoid these products any how20. Keep (Insurance) agents out of Financial planning game21. ULIP Charges in India22. The Simple & most Powerful Financial Planning formula – Term Insurance + Mutual Funds + PPF23. Pure term life insurance24. Online term insurance plans in India25. Medical check-ups for Term insurance plans – Is it necessary?
26. Mutual funds27. PPF (Public Provident Fund28. Asset allocation29. Mutual Funds Portfolio Building30. NFOs – A Risky Bet – Beware NFO Lovers31. The power of SIP (Systematic Investment Plan)32. How to Choose Best Mutual Funds in India?33. How to Invest in Indian Mutual Funds?34. KYC (know your Client) for the Mutual Funds35. Direct Equity Investing: Myths & Facts – Is it for You?36. What is Demat Account? How to open Demat account in India?37. How to learn stock market investing?38. Value Investing – Benjamin Graham Formula39. IPO Investing – Good or Bad?39. IPO Investing – Good or Bad?40. When to Buy a Home on Home Loan?41. PAN Card42. Tax Planning for Dummies in India43. Income Tax Benefits on Home Loans in India44. HRA – House Rent Allowance45. Tax Saving Infrastructure Bonds – Section 80CCF46. Gift Tax in India47. Wealth Tax in India48. Income Tax Return (ITR) filing – Which ITR Form to Use?49. Fixed Deposits & Government Bonds in India50. Corporate (Company) Fixed Deposits in India
51. Post-office Savings Schemes in India52. Gold Investing in India53. Chit Funds in India54. Digital Assets / Web Properties à The Next Generation Investing55. Art Investment in India56. Offbeat Assets57. Health Insurance (mediclaim) in India58. Gold Loan in India59. Personal Loans60. How to Generate Steady Income after Retirement?61. NPS (NPS) – New Pension Scheme – A Bad Idea62. EPF (Employee’s Provident Fund)63. Car & Auto Loans in India63. Car & Auto Loans in India64. WILL – A Very important step of Financial Planning65. Top 14 Most Common Financial Planning Mistakes66. 5 Model Portfolios of Intelligent Indian Investors- Financial Planning for NRIs- About the Author- About MyJourneyToBillionaireClub.com- About Investta.com- Special Offer to the Readers- Feedback- Download “My Journey To Billionaire Club” eBook for FREE
1. Introduction: Financial Planning in IndiaFinancial planning is not a new concept in India. Since centuries people are doing
financial planning in India. However, in the modern world because of the introduction of vast range of financial products have made financial planning a difficult task.
Day by day various expenses are rising such as education expenses, medical services, lifestyle expenses and many other expenses and that’s why day after day it is becoming more and more difficult for the people to retire with the financial freedom.
In this ebook, I have given quick over view of modern financial planning.in India. You can use this eBook as a reference book or simply print it and keep it with you so that before taking any financial planning decision you can refer the new You can use this eBook as a reference book or simply print it and keep it with you so that before taking any financial planning decision you can refer the new rules of financial planning given inside this eBook.
This eBook is useful for both Resident Indians and NRIs to do the Simple and most effective financial planning to secure their own future as well as the future of their kids.
This eBook is mainly for the dummies who don’t have any idea about financial planning and don’t have much knowledge about various financial products available in the market. This book will helpful to you to choose the best financial products available in the markets to build long term wealth, cover your life and secure your financial future.
So just sit back, get relaxed and learn the new rules of Financial planning for dummies in India
2. What is Financial Freedom? – The DefinitionBefore starting financial planning it is very important to
understand the meaning of financial freedom. Many people think that, financial freedom means having hundreds of crores in the bank accounts. But well, this is not the truth. Here is the real definition of financial freedom.
Thus, if your monthly expense is Rs.10,000 and your monthly passive income is Rs.25,000 than you are financially free.
-If you want to retire in 2030 and want to passive income is Rs.25,000 than you are financially free.
What is Passive Income?Passive income is the income to earn which you don’t have to
work hard. Weather you work or NOT, this income will keep flowing into your bank accounts for the rest of your life.
Example – Interest income, rental income, royalties, Business income, Investment income, capital gains, stock dividend, web properties income…etc…
-If you want to retire in 2030 and want to do Rs.1 lakh of monthly expense after your retirement than to become financially free, you will need to generate at least more than Rs.2 lakh of monthly passive income. Than and only you are financially free in true sense.
-Everything in financial planning revolves around this simple concept of passive income. If you can generate a passive income stream in your early life (30s, 40s & 50s), you can retire early.
3. Know The Power of Compound Interest before starting Financial Planning – START EARLY & WIN THE RACE…!!!Albert Einstein once said that, “The Compound interest is the greatest Force in
the Universe”. He also said that. “The Compound interest is the 8thwonder”.
Just remember one thing that, investment/financial planning is not just the game of money but it’s the game of money and time both. The more money and time you invest, the more it will grow and more financially free and rich you will become.
If you never save and invest your money, the compound interest will never work for you and thus, you will never become rich.
If you never save and invest your money, the compound interest will never work for you and thus, you will never become rich.
Many people argue that, retirement is still decades away so why to hurry? Well, if you know the power of compound interest, you will understand that the people who have started investing early will accumulate more wealth than people who started just 5 years late even if they save and invest double amount of money for the rest of their lives. This is because people who started early have invested more time and time is the important element of success of financial planning.
So if you are reading this eBook than no matter in which age group you are, start financial planning, savings and investing right now.
The best time of investment was 20 years before & the second best time is NOW…!!! So Start investing NOW…!!!
4. How Much is Enough to Retire in India?
This is the most common question that readers of my blog (MyJourneyToBillionaireClub.com) ask me very often. So what is the true answer of this question?
Well, it depends. May be Rs.1 Crore or Rs.5 Crores are sufficient to retire peacefully in India or may be Rs.100 crores are not enough to retire peacefully.
So how much is enough to retire in India really depends on your level of lifestyle, in which city of India you live and how much you want to spend after your retirement and of course at what age you want to retire?spend after your retirement and of course at what age you want to retire?
Of course, if you are turning 65 in 2015 in Tier-II cities of India having moderate lifestyle than Rs.1 Crore is enough to retire as it will generate Rs.6-7 Lakh post tax return every year but well if you are turning 65 in 2030 than Rs.1 Crore may not be enough as the inflation will drive the lifestyle further higher.
So what I advise you is, ask yourself that, how much you want to spend after your retirement every month and after that do some simple algebraic maths and calculate that how much capital you will require to generate that much of monthly post-tax income? And this much of capital should be your ultimate financial planning goal. Also keep in mind that in which year you want to retire. This is because you will have to consider inflation also.
5. Budgeting: The Most important Exercise
Budgeting is the most important financial planning exercise. I know that many of you find it boring exercise. In fact, I personally find it very boring exercise. But well, its very important.
So what is budgeting?
In layman’s language, budgeting means keeping track of your each and every expense, income and cashflow.
No need of complex software & worksheets
Now a days, lots of complex softwares and worksheets are available online for FREE for budgeting. But well, I seriously doubt that if anyone is using them. I personally keep a small pocket book with me in which I note down my each and every expenses. And at the end of month, I analyze all of my expenses and try to cut down all the bad expenses.
Budgeting is MUST but well, it should not be complex. You can do budgeting on simple paper and pencil or a small pocket book also.
The ultimate goal of budgeting is to keep the track of your each and every expense.
6. Why Budgeting? à So you “Spend Less than You Earn”
I know that budgeting is the most boring part of the financial planning game. It’s most boring exercise. And many people ask me that what is the importance of budgeting?
Well, the logic behind budgeting is,
“You Should Spend Less than You Earn”
Unless you keep track of your all income sources and all kind of expenses, you will never know that weather you spend less than you earn or not? And spending less than you earn is the key of earn or not? And spending less than you earn is the key of successful financial planning , build wealth and fulfill your financial goals.
Many people spend more than they earn by excessively using the credit cards.
The idea behind Budgeting Exercise is, you minimize your expenses, increase your income and thus increase the Cashflow (Income –Expense) and divert this cashflow towards long term investing. Unless, you divert your cashflow towards investing to build wealth, you can’t be financially free and rich. So do budgeting every month and keep the track of all your expenses.
Image Source: bythedrop.com
Break Time…. Red Indians & the Power of the Compound interest
DO YOU KNOW that in 16th Century Red Indians sold Manhattan to the USA people for just US $ 16?
Well, yes. The entire Manhattan (Where World Trade Centre was located), world’s one of the costliest city was sold to USA by Red Indians for just US $ 16.
What do you think that, suppose if the Red Indians put that $ 16 in the Bank FD at the rate of 8% compounded annual return than today after 44 years can they buyback Manhattan back from USA?
Let me tell you that the approx valuation of Manhattan is US $ 2 Let me tell you that the approx valuation of Manhattan is US $ 2 Trillion today.
What do you think that, how much it will become after 400 years if you invest $ 16 at the rate of 8% annual return?
Well, it becomes US $ 8 Trillion and more….!!!
This is the power of compound interest. Red Indians can not only buy back the entire Manhattan but they can also buy the entire New York, London & Shanghai today.
Moral: Start Investing as early as possible & stay invested for the long time horizon to build Wealth. The compound interest is very powerful and make you very rich over a time.
7. Get Out of Debt: The First Step of Financial Planning
The first step of successful financial planning is getting out of debt. Indians have now started adopting the western culture means buy today and pay tomorrow. People are scratching their credit cards like hell, buy expensive cars on loan and live a luxurious lifestyle on borrowed money.
Borrower is a slave to Lender…!!!
Unless you will pay off all of your debt, you will have to work like a slave in the economy. So first of all get out of debt. People ask me that which is the best investment? My answer is,
Paying off your debt is the Best investment.
Credit card is the worst form of debt thus, cut down all of your credit cards and replace them with debit cards. Get out of your car loans. Think the future of your children before taking a car loan or any other kind of consumer loans.
If you are in a deep debt than consider to sell off your some assets or seek debt relief services. Following are the debt help (Financial Counseling) services in India.
1) Abhay – Bank of India2) Disha – ICICI Bank
8. How to Get Out of Debt?Getting out of debt is not easy because it’s related to our psychology. The
famous American financial author Dave Ramsey has suggested Debt Snow Ball method to Get out of Debt. We can also apply the same principles in India also.
Debt Snowball Method by Dave Ramsey to Get out of Debt
• The principle is to stop everything except minimum payments and focus on one thing at a time. Otherwise, nothing gets accomplished because all your effort is diluted. First accumulate $1,000 cash as an emergency fund. Then begin intensely getting rid of all debt (except emergency fund. Then begin intensely getting rid of all debt (except the house) using my debt snowball plan. List your debts in order with the smallest payoff or balance first. Do not be concerned with interest rates or terms unless two debts have similar payoffs, then list the higher interest rate debt first. Paying the little debts off first gives you quick feedback, and you are more likely to stay with the plan.
• You attack the smallest debt first, still maintaining minimum payments on everything else. Do what is necessary to focus your attention. Keep stepping up to the next larger bill.
Dave Ramsey American Financial AuthorDaveRamsey.com
-Stop Borrowing More Money
-Cut Down Your Credit cards &replace them with Debit Cards.
9. Emergency Fund – A Must thing
Emergency fund is the 3-6 months of you r monthly expenses sometimes 1 year of monthly expenses.
An emergency fund should be used for emergency purposes like medical emergencies, job loss or any other kind of financial emergencies.
Many people argue that, they keep credit cards with them in their pockets for the emergency purpose. But well, a credit card is not the Emergency fund. You should have separate emergency fund for emergency purpose.
The emergency fund will protect your long term investments like investments in mutual funds and equity to get liquidated during the time of financial emergency. Most of the people don’t keep emergency fund with them and that’s why they have to liquidate their long term investments during the time of emergency.
You can keep your emergency fund in cash form or in your bank savings accounts or in liquid mutual funds.
Many people ask me that, where should they invest their emergency fund? Well, emergency fund is not for doing investments but it is for emergency use so forget the idea of investing your emergency fund.
•Your Brother-in-law’s birthday is not the emergency.•Emergency fund is mainly for the financial emergencies like medical emergency•Your credit card is not the emergency fund•Emergency fund is not for investments or burning it into the stock market.
10. Financial Products available in India
• Stocks• Bonds• Fixed deposits• Gold• Mutual funds• Real estate• Term Life insurance• ULIPs• Whole insurance plans• Money back insurance plans
MYTH: to become financially free one has to invest in all the financial products available in the market.
TRUTH: The Truth is that, only few financial products from this list can help you achieve your financial goals and you should combine these financial products in different proportions • Money back insurance plans
• Pension plans / retirement plans• Health insurance (Mediclaim)• Post-office savings scheme• PPF (Public Provident Fund)• Home loans• Gold loans• Car/Auto loans• Personal loans• Credit Cards• Auto/Car Insurance
• Not the all the Financial products can help you to achieve Financial Freedom.•Many people invest in all types of financial products available in the market – This is a BIG Mistake…!!!•To do the effective financial planning, you need to understand which financial products are best and which are worst?•Only 3 financial products are useful for financial planning – Term Insurance, Mutual Funds & PPF
in different proportions according to your risk appetite and financial goals to become financially free and rich.
11. Financial Planning for Retirement
Before starting financial planning for retirement, you should calculate that how much you will need after your retirement?
Many people have a false belief that, after retirement their expenses will be reduced because they will be in old age then. But well, also remember that after retirement, you will be free and that’s why your expenses like travel and many other expenses will increase.
So take a paper and pencil and write down all of your expenses that you want to do after your retirement say for example,
1. Two Domestic tours per year with your spouse – Rs.2 Lakh-Consider INFLATION while counting your financial goals for 1. Two Domestic tours per year with your spouse – Rs.2 Lakh
2. One international tour per year with your spouse – Rs.5 Lakh3. Monthly expenses – Rs.30,0004. And so on….
Do the total of these expenses. So now, you need to build a capital that can generate this much of income every year post-tax. Say for example, if we consider 10% annual returns from fixed income instruments and your annual expense is Rs.10 lakh after your retirement than you will have to build Rs.1-1.20 crore of capital to retire peacefully.
counting your financial goals for retirement
-Consider each and every major and minor expense that you want to do after your retirement.
-Many people want to retire before 60 years of the routine retirement age so consider this factor before doing retirement planning.
-Equity mutual funds are the best financial products to build enormous wealth for your retirement
12. Financial Planning for Child’s FutureFinancial planning for your child’s future is no different than
financial planning for your retirement.
Here are the few major expenses that will occur for your child’s better future.
1. Education Expenses2. Marriage3. Start-up Business Expenses
The above are the 3 major expenses that you will have to plan for
-The best time to start financial planning for your child’s future is the first day he/she born. The second best time is now.The above are the 3 major expenses that you will have to plan for
your child’s future and build capital accordingly.
First of all calculate and decide that how much you will need for each and every expense? And then start investing for your child’s future.
Remember that, you can ‘t build enough capital for your child’s future in just few years. You will need more than a decade to fulfill your child’s financial goals so plan ahead and start as early as possible.
time is now.
-Consider INFLATION
-Equity is the most powerful tool to build wealth for your child’s future
-Equity mutual funds are the best financial products to build wealth for your child’s future
-Child future plans and other insurance cum investment products offered by insurance companies are worst. Avoid these products.
13. Consider Inflation…While doing financial planning for retirement as well as for your
child’s future, you will have to consider inflation. And if you don’t consider inflation while doing the financial planning, you will surely fail.
Say for example, today the abroad educational expenses are around Rs.20 lakhs (In 2011) but after 20 years from now in 2030 the same expenses will be Rs.80 Lakhs if we consider the inflation at 7% annual rate.
Today suppose if you need Rs.1 Crore to retire peacefully in India (2011) than you will need almost Rs.4 Crores in 2030 to retire (2011) than you will need almost Rs.4 Crores in 2030 to retire peacefully with the same level of lifestyle and expenses as that of today (2011).
Suppose if you today (2011) need Rs.15 lakhs for the marriage of your daughter than in 2030 you will need Rs.60 lakhs to do the same level of marriage.
So take a compound interest calculator and consider the inflation while planning the financial goals for your retirement as well as your child’s future.
-You will require a Compound interest calculator to calculate inflation
-Consider 7% annual inflation rate (8% better and to be on safer side) in India for next 20 years at least.
-Remember that, government inflation figures are much lower than the actual inflation in the economy so always consider higher inflation rate while planning your financial goals.
1. Domain names-Assets multiply your money and over the time make you rich and financially free
2. Blogs3. Websites4. Forums5. Online properties
Offbeat assets
1. Stamps2. Coins3. Collectibles (Vintage toys, coke bottles, stamp papers…etc..)4. Art & paintings [includes Art funds]5. Antiques 6. Vintage jewellery
time make you rich and financially free
-Equity (Stocks) is the only traditional asset class which has given highest returns than any other traditional asset classes
-Young generation (Who born after 1990) believe in digital assets and invest in these digital assets to become rich & financially free.
-Digital assets can give you highest returns than any other asset class in this world.
-Buying assets out of your money is known as INVESTMENT.
15. Investment Time HorizonsBefore starting financial planning you should understand various time horizons
and best financial products suitable for these time horizons. I personally divided them into 4 time horizons.
Ultra-short Time Horizon (< 1 Year)- Cash on Hand- Bank Savings Accounts- Liquid & Money market mutual funds (Ultra-short term debt funds)
Short Time Horizon ( 1- 3 Years)- Short term Debt Mutual Funds- Bank Fixed Deposits -Equity is the best Asset class for long time horizon
Medium Time Horizon (3-5 Years)- Bank Fixed Deposits- Debt Mutual Funds- Gold- Medium term Gilt Funds
Long Time Horizon (> 5 Years)- Equity (Stocks)- Equity Mutual Funds- Real Estate- Government & Private sector Bonds- KVP, & NSC- Gilt funds (long term)
-Long time horizon investments are to multiply your money & build Wealth
- Short & Medium time horizon investments are to preserve and grow the purchasing power of your money for the purpose of near future
-Ultra-short time horizon investments are not to multiply your money but to maintain the liquidity of your money say for example Emergency fund.
-Equity is not for the short & medium time horizon investments because of volatility.
16. The Power of Long Term InvestingAs I have already explained in beginning that, investment is not only the
game of money but it’s the game of MONEY & TIME both. To build wealth and become financially free, you don’t have to just invest lots of money but you will also have to invest lots of time to work compound interest work better in favour of you.
Here is one example of the power of compound interest & long term investing.
Consider the following four investors ages 25 – 55. Each invests Rs.1 Lakhper year in Equity Mutual Funds and earns 20% annually. Q. How to invest more time?
At age 65:
• The investor who started at age 25 has over Rs.26 Crores• The investor who started at age 35 has just over Rs.4 Crores• The investor who started at age 45 has just Rs.70 Lakhs• The investor who started at age 55 has just Rs.12 Lakhs
It is obvious that the younger investors get a lot more “heavy lifting” from their investments because of the power of the compound interest. The lesson is clear: The earlier you start the less you have to invest to reach your financial goal.
A. It’s Simple. Start Early. The person who starts investing at the age of 25 will invest 10 years more time than the person who started investing at the age of 35 and 20 years more time than those who start investing at the age of 45.
The only way to become successful in the game of financial planning is you START EARLY & invest more time.
Break Time… What is Inflation?
Once upon a time there was a small island which had 5 people and 5 gold coins and nothing else. One day, people decided to print 5 notes of 1 rupee each for the transaction purpose.
So how much one gold coin worth now?
Well, 1 Gold coin = 1 Rs. Right?
Now after a year, these people became greedy & they thought that printing money will solve their financial problems so they printed 5 more rupees and pushed it into the circulation.
So now how much one gold coin worth?
Well, now 1 Gold coin = 2 Rs. Right?
Moral: It is not actually the price of gold which is going high. The gold is same here (5 coins). It is actually the price of money going down & this is known as inflation. Whenever, the governments & central banks from all around the world print money, the purchasing power of money goes down & the price of the gold goes up because now more money is available to buy the same amount of gold.
Gold has doubled in its price from 2007-2010. this means governments from all around the world (mainly US Government) has doubled the money supply by printing money out of thin Air…!!!
17. Best Financial Products in India1. Stocks2. Equity mutual funds3. Term insurance4. PPF5. Post-office savings schemes6. Bonds7. Bank fixed deposits8. Health insurance (Mediclaim)9. Gold & Gold ETFs10. Real Estate (If carefully chosen) -No other financial product is as cheap as 10. Real Estate (If carefully chosen)
-Above are the best financial products in India that you will require to do the effective and successful financial planning.
-Equity mutual funds and equity are the best financial products to build long term wealth
-Term life insurance is the best financial product to cover your life with adequate cover
-Bonds (Government & Private sector), Bank FDs & Post office savings schemes are best financial products to generate steady income after retirement safely.
-No other financial product is as cheap as Mutual Funds in India as they will charge 0% Entry load and 0% Exit load after 365 days of investing. [1.5% Annual Fund management charge]
-Insurance companies claim that their financial products (ULIPs, Child future plans, pension plans, money back plans…etc) are better than any other financial product available in the Indian market but well this is not the TRUTH.
-Term insurance is the only best product being sold by insurance companies
18. Best Asset Class: Equity – Know the Power of Equity à Is it Really Risky?Gone are the days when people used to build wealth with fixed
income instruments such as PPF, Bank FDs and Government Bonds.
Equity is the must have asset class in anyone’s portfolio to build wealth in today’s world.
Most of the Indians don’t invest in equity because they think that equity is RISKY.
But well, equity can beat the two biggest wealth killers in the long run and provide highest returns than any other traditional asset class in the world.
-No need to learn direct equity investing now a days. Equity mutual funds will do all the job traditional asset class in the world.
1. Inflation2. TaxSo consider, equity as a major asset class in your portfolio
during the first decade of your active earning life at least.Equity has power to transform an ordinary individual into a
financially free and independent individual over the period of time.
days. Equity mutual funds will do all the job for you.
-Equity mutual funds are so much convenient and professionally managed and cheap (Entry load is 0%) that they can build enormous wealth for you in the long run.
-Equity can build enormous wealth for you in the long run that you can fulfill all of your and your child’s financial goals
-95% of the people have made money from equity who invested for 5 years and 100% have made money from it who invested for 10 years.
Benjamin Graham – Equity is a Voting Machine in short Run& Weighing Machine in the Long run.
-It means over the time the volatility in equity reduces and it gives you excellent returns. But for that you will have to start Investing early.
19. Worst Financial Products in India – Avoid These Financial Products ANYHOW …!!!
1. ULIPs (Unit Linked Insurance Plans)2. Whole life insurance plans3. Money back insurance plans4. Pension / retirement plans5. Child future plans6. Any INSURANCE CUM INVESTMENT product
-Insurance + Investment = Bad Combination
-Never mix insurance with investment or buy any financial product which is the mix of insurance and investments
-For a life cover, term insurance plan is the best product and to build wealth/investments equity mutual funds are the best products
-ULIPs, Whole life insurance plans and all the other insurance cum investment products selling by insurance companies in India are very very COSTLY. These products will charge lots of charges from you and invest very less money for you.
-ULIPs and other insurance cum investment products give you just 5 to 10 times life cover than the annual premium. So for Rs.1 lakh of annual premium, you will get just Rs.5-10 lakhof life cover which is peanut size in comparison to the term insurance plans.
-Many ULIPs and other insurance cum investment products charge 20-100% premium allocation charge from your first premium. While mutual funds charge 0% Entry and Exit load (After 365 days).
20. Keep (Insurance) Agents out of your Financial Planning Game
There is not any role of (Insurance) agents in successful financial planning. So keep them out of the game of financial planning.
In India, the only job of insurance agent is to sell the financial products of the company for which he is working. Following are the commonest promises/speech of the insurance agent.
- “This ULIP will double your money every 3 years”.- “This Pension plan will give you GUARANTEED 40% return
per annum.”- “Get out of this insurance plan and invest in the new plan” There is a JOKE on insurance cum - “Get out of this insurance plan and invest in the new plan”
(Because I am getting huge commission on this new plan)- “This Child future plan will build a wealth for your child”- “Money back insurance plans are better than the term plans.”
The above are the commonest SLAES SPEECH of the insurance agents. Don’t get fooled by these words.
Term insurance is the only best insurance product being sold by the insurance companies and all the other insurance cum investment products being sold by the insurance companies in India are very costly.
There is a JOKE on insurance cum investment products.
“The insurance cum investment financial products are the most profitable financial products when you are on Selling Side…”
It means you can only make huge profits from these products if you sell them to other fool. The agents are getting huge huge commissions on these costly financial products. Sometimes 100% of the first premium…!!!
21. ULIP Charges in IndiaULIPs are the most costly financial products selling in the Indian
markets and should be avoided any how. And if you have already invested in ULIPs, get out of this even after loosing everything and start investing in mutual funds.
Many financial planners will charge you Rs.500-1000 to review your ULIP portfolio to give you a financial advise on it. However, you really don’t need to pay anything behind such services if you have the following knowledge about the charges.
How to Review any ULIP Plan in India?
Step: 1 Visit the website of the insurer & Download the ULIP Brochure in PDF format.
-Never forget to see Premium Allocation charge + Policy Administration charge.
-If the total of the above two charges is more than 10% (Which is usually more than 20% most of the time), the policy is too costly.Brochure in PDF format.
Step: 2 ULIP charges are mentioned in small letter from anywhere between page 4 to 7. so directly go this section – “ULIP Charges”.
Step: 3 Here are the common ULIP Charges.1) Premium allocation charges: This is the charge where the
insurance company will hit you hard. This can be 20-100% for the first premium & up to 4-30% for the subsequent premiums.
2) Policy Administrative charges – This is the second charge. Many ULIPs say that they have NIL Premium allocation charge. But in that case, this charge will be 10-15% per annum . So never forget to look this charge
3) Fund management charge – Up to 2.5% per annum4) Mortality charges5) Switching charges
most of the time), the policy is too costly.
-If it is 2-10%, it is still costly. This is because Mutual funds have 0% Entry & 0% Exit load and just 2.5% annual fund management charge.
- Thus, ULIPs and any other insurance cum investment product should be strictly avoided as they are very costly & they don’t have any roll in successful financial planning.
-Government insurers like LIC & SBI don’t even show ULIP charges in their product brochures.
22. The Simple & Most Powerful Financial Planning Formula Term Insurance + Mutual Funds (Equity & Debt) + PPF
The most simple and the most powerful financial planning formula to build wealth , save tax and cover your life (insurance) is,
Term Insurance + Mutual Funds (Equity & Debt) + PPF
No other financial product is as cheap and as effective than the above simple combination.
The life cover provided by the ULIPs & other insurance cum investment products (Pension plans, child future plans, whole investment products (Pension plans, child future plans, whole life insurance plans & money back insurance policies) is just 5-10 times the annual premium which is a peanut size in comparison to the life insurance cover provided by the pure term life insurance policies.
The above simple formula/financial combination is both for your retirement planning & child future planning.
Child future planning is not different than your retirement planning. You don’t need any child future plans or complicated financial products by insurance companies to build a wealth for your child’s future. As these products offered by insurance companies are very costly.
-ULIPs, Pension Plans , Money back insurance plans & child future plans are costlier than this simple combination of 3 financial products.
-Mutual funds have 0% entry load & 0% Exit load after 365 days.
-ULIPs & other insurance cum investment products will charge 0 to 100% as premium allocation charge from your 1st & subsequent premiums.
23. Pure Term Life Insurance
Pure term life insurance is the BEST insurance product available in India as it covers your life at very cheap cost.
Ideally one need anywhere between Rs.30-75 lakh of insurance cover to cover his/her entire life and that’s why this is the best financial product available in the market.
I personally advise people to divide their life cover in 2-3 term insurance plans. Say if your insurance need is Rs.50 lakhs than buy 3 term insurance plans of 20,20 and 10 lakh cover. This has two advantages.
-Never mix insurance with investment means never buy any financial product in India which offers you the benefits of both life insurance and investments offered by insurance companies in India
1. You will diversify the risk of rejection by dividing your life cover in 2-3 term insurance plans.
2. During your retirement/old age when your dependents become financially free and you become liability free, you can discontinue 1 or 2 term insurance plans and reduce your life cover and premiums also. If you have invested in just 1 term insurance plans than this won’t be possible.
All the insurance cum investment financial products in India are very costly and should be avoided. Remember that, you need a pure term life insurance policy to cover your life, equity mutual funds to build a wealth and PPF to save lots of tax under section 80c.
insurance companies in India
-Insurance cum investment products will give you just 5 to 10 times life cover than the annual premium which is very small in comparison to term insurance plans.
-Insurance cum investment products are very costly as they charge 20-100% of entry load from your annual premiums by various charges like premium allocation charges, mortality charges, administrative charges…etc…
-Many insurance cum investment products charge 100% from your 1st Premium…!!!
24. Online Term Insurance Plans in India
Online term insurance plans are the new generation concept in India. I advise you to invest in 1 or 2 online term insurance plans also as they are very easy to buy.
You just need the internet connection and a credit card to pay online and buy term online insurance policy.
Advantages
- Cheap: The main advantage of online term insurance plan is that, as they are online, the insurance companies don’t have to pay as they are online, the insurance companies don’t have to pay agent commissions and that’s why they pass on this benefit on you. And thus, the annual premiums of online term insurance plans is much lower than the traditional offline term plans.
-Wide Availability: Another advantage of these plans is that, you can buy them from any city of India. All you need is the internet connection and a credit card to pay premiums.
- No Medical Check-ups: The main advantage of online insurance plans is that, they will require no medical checkups.
Try this new generation term insurance plans. It will make your life really easy.
Online Term Insurance Plans in India
1. ICICI iProtect2. AEGON Religare – iTerm3. Kotak e-Insurance Plan4. Metprotect Online5. Many other online term insurance
plan will come in future
25. Medical Check-ups for Term Insurance Plans – Is it Necessary?
Many people ask me that, Why medical check-ups before buying term insurance plans? Is it really necessary and what if someone is afraid of medical check-ups?
Well, medical check-ups are MUST before buying term insurance plans in India (Offline). But well, recently the online term insurance plans have entered into the market which does not require any medical check-ups and the premiums are also lower than the offline plans.
Basically as a rule, if you don’t go for medical check-ups, your premiums will be higher and if you show that you are fit before buying the life insurance, the premiums will be
Online Term Insurance Plans are No Medical Checkup Plans which are Alternatives to painful Medical checkupspremiums will be higher and if you show that you are fit
before buying the life insurance, the premiums will be low. However, this is the scenario of western countries. In India, you MUST go for medical check-ups before buying a term insurance plan.
Well, don’t afraid of medical check-ups. All they will do is, collect a sample of your blood and send for various investigations, take your ECG and then you will be examined by a physician.
Many people avoid buying term insurance plans because they want to avoid the medical check-ups. Don’t do this mistake. Think of your nominees/dependents and go for it.
Tests required for Term Insurance Plan
- Physical check-up by Physician appointed by the Insurance Company-Hemogram (Hb, CBC)-Blood Sugar-ELISA for HIV-Serum Lipid Profile-ECG-Chest X-ray (If necessary)
checkups
26. Mutual Funds
Mutual funds are the best and most cost-effective financial products to build wealth in India.
Mutual funds are available in all the varieties means equity, debt, gold, exchange traded funds, gilt…etc..
You don’t even need to invest in government bonds and bank fixed deposits because gilt funds and debt funds are available in the Indian market.
Mutual funds (Equity & Debt) are the best financial products available in India to build some serious wealth.
-Mutual funds have 0% Entry load & 0% Exit load after 365 days of investing.
-No other financial product is as cheap as in India to build some serious wealth.
No need to invest in child future plans offered by insurance companies. Only 2-3 equity diversified mutual funds are enough to build enough wealth for your child’s future and for your retirement.
Start investing in equity diversified mutual funds as early as possible via SIP. Many people have a false belief that, mutual funds are costly and they will invest in equity by themselves. But well, mutual funds are so much professionally managed that its hard to beat the returns generated by them unless you have extremes levels of expertise in direct equity investing.
-No other financial product is as cheap as mutual funds.
-MFs charge 1.5% Fund management fees every year
-All the insurance cum investment products offered by insurance companies are HIGHLY OPAQUE mutual funds which charge 20-100% entry loads by various charges so avoid them anyhow.
-Exit from any insurance cum investment product and start SIP in mutual funds.
27. PPF (Public Provident Fund)
PPF is one of the best tax saving financial product in India. The maximum limit of PPF is Rs.70,000 per annum which is tax free under section 80C and not only this but it also gives you 8% annual returns which is best in India.
Why to open a PPF account even if you don’t need it?
- Many people ask me this question. This is because PPF has a long lock-in period of 15 years (with intermittent partial withdrawals). This long lock-in period discourages many investors to invest in PPF.
- Well, definitely PPF can’t help you in near future but think long
How to open PPF account in India?
-You can open PPF account with any - Well, definitely PPF can’t help you in near future but think long term. Think after 10-12 years. After 10-12 years, you can put your money in PPF account and in next 3-5 years it will be matured and whole the maturity amount will be tax-free and earn you interest of 8%.
- And it just costs Rs.500 per year for account to be active. So even if you are not going to invest lots of money in PPF right now, open the PPF accounts in name of all your family members including your minor children. So that in the future you can get this benefit.
- Open the PPF account in the name of all your family members at the interval of 2-3 years so that after 10-12 yrs , you have each PPF account maturing in a period gap of 2-3 yrs and you can use it as a investment product which gives 8% assured tax free return
-You can open PPF account with any nationalized bank as well at your local post-office branches.
-The commonest bank to open PPF account in India is SBI.
-Visit your nearest SBI branch, fill the PPF form and submit identity documents and submit them and get your PPF passbook. It’s that much easy.
-PPF is not for NRIs
Break Time…What is Hyperinflation?
Do you know that What is Hyperinflation? Well, hyperinflation means excessive inflation in very short period of time.
When the government prints money out of thin air to solve the financial problems of the nation, the purchasing power of the money goes down markedly.
See the photographs on left side. It is the Zimbabwe Hyperinflation in 2009. You can see the 100 Billion Hyperinflation in 2009. You can see the 100 Billion Zimbabwe dollar bank note. And you can buy just 3 eggs from it.
In 1923, Germany had also suffered from the Hyperinflation after World War I.
Moral: Printing money is not the solution of financial problems. Today governments & central banks around the world are printing money out of thin air to solve the financial problems of the nation. But well, this will cause hyperinflation.
28. Asset AllocationIn layman’s language, asset allocation means putting all of your
eggs in different baskets. Here eggs means money and baskets means different asset classes.
Asset allocation is very important in financial planning because various asset classes perform differently in different market conditions.
Here is the Rule of Thumb for asset allocation.
Rules: 1:100 – your Age = % Equity Allocation of your portfolio
-I have personally modified the rule of thumb for asset allocation.
Rules: 1:100 – your Age = % Equity Allocation of your portfolio and rest should be in Debt.
Rule: 2: Never invest more than 10% of your portfolio NET Worth in GOLD.
Thus, if your age is 20 years than you should invest 80% in Equity in 20% in debt while if your age is 50 years than you should invest 50% in Equity and 50% in Debt.
Many people started investing lots of money in gold after 2003-2010 gold rally. But remember that, equity is the only asset class which can give you highest returns than any other asset class in the long run. So don’t ignore the importance of equity in your portfolio & never invest more than 10% of your net worth in Gold.
-According to me, in your young age (20s & early 30s), when you don’t have any dependents and retirement is still far away, you should invest 100% in equity & 0% in debt to build enormous wealth.
-Remember, equity is the most powerful asset class to build wealth if you start early and stay invested for more than 10 years of time horizon.
-Many financial advisors advise people to invest 100% in debt after retirement (60 years) but I personally believe that, one should invest in equities even after retirement.
29. Mutual Funds Portfolio BuildingMutual funds in India are so much professionally managed, highly
regulated by SEBI and cost effective (Entry & Exit loads are 0%) that you don’t need to invest in any financial products except Term Insurance & PPF to do effective financial planning.
Virtually all the varieties of mutual funds are available in the market such as equity, debt, gold, gilt, Index…etc..
Many financially unaware Indians invest in insurance cum investment products like ULIPs , money back policies, whole life insurance plans and child future plans or retirement plans thinking that they will fulfill their two needs – Insurance & Investment.
Principles of Mutual Funds Investing.
1. Never invest in NFOs2. Invest in 3-4 Equity Diversified mutual
funds
But well, Term Insurance + Mutual Funds + PPF is most cost effective and powerful financial combination that no insurance cum investment product can beat.
Mutual funds have 0% entry load and 0% exit load after 365 days and just 1.5 % annual fund management charge which is reasonable while insurance cum investment products charge you anywhere between 20-100% premium allocation charge and lots of exit/withdrawal charges and long lock-in periods. So avoid these combined financial products.
Invest in mutual funds via SIP regularly for long term and build enormous wealth for your retirement and for your child’s future.
funds3. Don’t be collector of mutual funds.
Never collect more than 4 equity mutual funds, 2 debt funds and 1 ELSS.
4. Invest via SIP5. Avoid Sector/thematic funds.6. 1-2 Debt funds are enough7. 1 ELSS is enough.8. Invest in mutual funds having past
record of proven performance of at least 5 years.
9. Invest more in largecap funds if you want stable portfolio
10. Invest more in mid & small cap funds if you want aggression in your portfolio.
30. NFOs – A Risky Bet – Beware NFO Lovers…!!!Most of the people in India are NFO lovers. Yes, I call them NFO lovers
because they simply can’t resist their temptation to invest in NFOs (New fund offers) by mutual funds. I have seen people who have invested in dozens of NFOs available in the market.
Here are the Top 2 reasons why people invest in NFOs.
1. This is because people think that NFOs are cheap because they have NAV of Rs.10 per unit.
2. It’s the normal human psychology that it loves to try something new and this psychology also reflects while investing.
Are NFOs really cheap?Are NFOs really cheap?
Nope. Even though the NFOs have Rs.10 per unit NAV price, the underlying market is same stretched or contracted. Second thing is that, Unit price (NAV) does not have to do anything with MF returns.
Suppose if Fund A has NAV of Rs.10 and Fund B has NAV of Rs.1000 having identical portfolios and after one year suppose both the funds will generate 10% return, the NAV of fund A will be Rs.11 per unit and fund B will be Rs.1100 per unit.
NFOs don’t have any past proven record of good performance and that’s why they should be avoided. A smart investor is one who invests in mutual funds having past proven record of more than 5 years of good performance.
31. The Power of SIP – Always invest via SIP
- SIP (Systematic Investment Plan) is the most powerful way of invest in equity via mutual funds and build wealth over the period of time.
- SIP works like this – when the market is up, you will buy less units (automatically) and when the market is down you will buy more units (automatically). Over the time, this strategy will dramatically reduce your overall entry price in the market and gives your excellent returns.
- In the real life people do exactly reverse means when the market is up, they run to buy stocks and the market is down, they sell their stocks and run away from the market.
- SIP develops patience and systematic discipline in your investments and build huge wealth over time.- Start monthly but REGULAR SIP in equity diversified mutual funds since the first day of your active
earning life and do this SIP for 10,15,20 or even 25 years or even more and see how wealthy you will become.
- The compound interest is so powerful over the time that it will multiply your money in a breath taking manner.
Image Source: Fidelity.co.in
32. How to Choose Best Mutual Funds in India?There are so many mutual funds available in the Indian market since 2000
than finding a best mutual fund in any category itself is a job. And in today’s world it is really difficult to believe someone.
But well, there is one easiest way to choose best mutual funds in India in every category. It will take just 1 minute to find a best mutual fund in any category. Here is how?
Valueresearchonline.com
Valueresearchonline.com is India’s independent unbiased fund rating Valueresearchonline.com is India’s independent unbiased fund rating agency. All you need to do is, visit this website and find 4 or 5 star rated mutual funds in various categories and start investing in them.
Review your funds rating every 6 months and suppose if it drops to less than 4 star than its time to exit that fund and move your money to some other 4 or 5 star rated mutual funds. Finding best mutual funds from the market without the need of anyone is this much easy.
Dhirendra Kumar is the CEO of Valueresearchonline.com and I personally follow his mutual fund investing advises. You can also read his articles on his website Valueresearchonline.com
Dhirendra Kumar CEO,Valueresearchonline.com.India’s Best MF Rating Agency
33. How to Invest in Indian Mutual Funds?
There are three ways to invest in Indian Mutual Funds.
1. Buy Mutual Fund units directly from the fund house
2. Invest in Mutual Funds via Online Demat account
You can either visit the website of any mutual fund house and download the form and fill it with required documents and submit it to your nearest fund house office.
NRIs & Mutual FundsYou can also invest in mutual funds from your online demat account.
ICICIDirect.com gives this facility. Many other online demat services in India also gives the same service.
The best thing about investing through online demat account is that, you don’t have to do any paperwork as everything is online. While in case of buying mutual fund units directly from the fund house, you will have to submit all the physical documents and lots of paperwork.
NRIs & Mutual Funds
-NRIs can also invest in Indian mutual funds. However, according to SEC, the NRIs living in America can’t invest in Indian mutual funds of US origin say HSBC, Fidelity & Templeton.
-All the other Indian origin mutual funds are open for NRIs.
34. KYC (Know Your Client) Form for Mutual Funds
Since January 2011, the KYC form is MUST for all types of mutual funds investments in India. So complete this formality if you want to continue investing in the Indian mutual funds. KYC is MUST for both resident Indians & NRIs.
Download KYC Form Here
Documents required for KYC - Salaried
- Photo- PAN Card
KYC Form & NRIs
-If you are NRI than no need to come to India. The originals of the documents along with a copy each to be presented and the original will be returned after - PAN Card
- Notarized GPOA- Copy of CDC & Mariner Declaration (For Mariner)- Indian Passport, Overseas Employment issued by the
Government- Foreign passport / National ID Card / Social Security
Card (For PIO)
presented and the original will be returned after verification. Alternatively, investors can also provide an attested true copy of the relevant documents. Attestation could be done by Notary Public/ Gazetted Officer/ Manager of a Scheduled Commercial Bank.
- Investors have to provide the relevant documents and information ONLY ONCE for complying with KYC. After that Investors could invest in the schemes of all mutual funds by merely attaching a copy of the KYC acknowledgement slip with the application form / transaction slip when investing for the first time in every folio (Post KYC) in each Mutual Fund house, without the necessity to submit the KYC documents again.
35. Direct Equity Investing – Myths & Facts: Is it For you?Many people ask me that why not direct equity investing rather than
investing in mutual funds? Why to pay 1.5% annual fund management fees to the fund managers?
Well, let me ask you the simple question.
- What is the PE of Reliance Industries right now? And weather its over valued, under valued or fairly valued?
If you don’t know the answer of this simple question than well, direct equity investing is not for you. You will surely burn your money in direct equity investing. To save that 1.5% annual fund management fee, you will surely do a large disaster with your
-Returns generated by professional direct equity investing and mutual funds are management fee, you will surely do a large disaster with your
money.
Many people also plan to invest in equity by following the advise of their friends/broker/brother-in-law. Well, this is not the right kind of equity investing.
Direct equity investing demands lots of time investment on daily/regular basis to research the markets and the best scripts in the market. If you are not going to invest this much time in the market than direct equity investing is not for you. You can’t build fortunes in direct equity investing by following your brother-in-law’s advise.
equity investing and mutual funds are exactly the same.
-If you are going to invest in equity by following the advise of your friend/broker/brother-in-law than direct equity investing is not for you.
-Mutual funds have a team of research analysts who take highly informed decisions on behalf of you.
-Only go for direct equity investing if you are willing to invest 1-2 hours a day for equity market research
36. What is Demat Account & How to Open a Demat Account in India?
Before 1995, the shares (Stocks) in India were traded in the physical form. But after 1995, the government of India and SEBI has digitalized everything. And this new digital form of the shares is known as Dematerialization (Short form “Demat”). So now, you can not buy, sell or transfer shares in India without Demat accounts.
You can open Demat account with anyone. It may be your bank, private broker or independent brokerage service. But without demat account you can not trade shares.
Now a days, online demat accounts available in the market so that you can buy Now a days, online demat accounts available in the market so that you can buy and sell shares online with a single click. You will need to submit PAN Card, Passport/Driving License, Residential proof along with a dematapplication form to open demat account with your bank or some other brokerage service. Following are the few best demat services in India.
- ICICI Direct- Kotak Securities- SBI- Sharekhan- Motiwal Oswal- Angel Broking- India Bulls- And many others….
Before choosing a Demat Service...
-See the Brokerage rates – 0.50% or less for delivery base and 0.10% or less for trading is the best brokerage rate.
-See for the online demat services
-Services which provide online trading terminals are good
-See customer reviews online before going for demat services
37. How to learn Stock Market Investing?Ok. So still want to invest in the stock market directly and want to
learn direct stock market investing?Well, than here are the few useful books and websites from which you
can learn the stock market investing. Believe me, these are the best books ever written on the stock market investing and anything else available in the market about stock investing is a garbage.
1. The Intelligent Investor Book by Benjamin Graham –This is the best ever book written on stock investing in the world.
Warren Buffett, the world’s most successful investor has learned his value investing principles from this book only. This book is his value investing principles from this book only. This book is available in all the Crossword stores and you can also buy it from Amazon.com and they will deliver the book on your Indian home address. The book is written in very simple language.
2. Security Analysis Book by Benjamin Graham –This is another book written by Benjamin Graham about securities
analysis in detail.
3. Moneybhai.com – The Online Indian stock market Game –Moneybhai.com is the best online Indian stock market game that tracks the real time stock prices of Indian listed companies. If you want to learn equity investing in India than this is the best website to learn Equity Investing in India. Give it a try…It’s FREE…!!!
Warren Buffett The Legendary Investor
Break Time… How Stock Markets Work? The Monkeys are Costly
Do you know that how the stock market works? Well, once upon a time there was a village of 1000 population. The village was full of monkeys and nobody really like those monkeys.
One day, a stranger came & told to villagers that he is from other country & he need monkeys for his business and he will pay Rs.100 for each monkey.
The villagers started picking monkeys and started selling to this stranger. After all who wants these monkeys? Very soon the village became empty of monkeys. There was very hard to find even a single monkey.
One day the stranger again came back & told the villagers that he really need more monkeys & he is willing to pay Rs.500 per monkey. But villagers did not have any monkey. not have any monkey.
After few days, another stranger came to the village and told people that, he wanted to sell his monkeys for Rs.300. villagers thought that they will buy these monkeys from this stranger for Rs.300/monkey and sell it to another stranger for 500/monkey and make Rs.200/monkey profit.
So they bought all the monkeys from the new stranger for 300/monkey and now they started waiting for the previous stranger. Several years has been passed but none of the stranger came back.
This is how the stock market works in the real life.
Moral: Never overpay for any stock for more than its real Value no matter how bull the market is. Always buy stocks at discounted prices from the market. Value investing is the method to buy stocks at discounted prices than its real value.
38. Value Investing – Benjamin Graham FormulaThe value investing method was first described by Benjamin Graham in 1928 which he
described in his two books – The Intelligent Investor & Security Analysis.This method is based on “Margin of Safety” Formula.Each stock has its price and an intrinsic value. With the help of Graham’s formula, we can now
that weather the price of the stock is more or less than its value. If the price is less than value, its undervalued and one should buy the stock and if the price is more than value than its overvalued and one should stay away from the stock.
Here is the RGV (Relative Graham Value) Formula:
RGV = V/PV = EPS * (8.5+2g) *4.4 / Y
Benjamin Graham
-This calculation should never be used in isolation.-The investor must take into account other factors Warren Buffett is the Value Investor & Where,
RGV = Relative Graham Value,V = Intrinsic Value of the CompanyEPS = Company’s last 12 months Earnings Per Share8.5 = the constant represents the appropriate P-E ratio for a no-growth
company as proposed by Grahamg = the company’s long-term (five years) earnings growth estimate4.4 = he average yield of high-grade corporate bonds in 1962, when this model was introducedY = the current yield on AAA corporate bonds
Interpretation• An RGV of less than one indicates an overvalued stock and should not be bought, while an
RGV of greater than one indicates an undervalued stock and should be bought.
into account other factors like Debt to Equity ratio, net current asset value, quality of current assets and other macroeconomic factors.-Analyzing each stock in the stock market by this method is not difficult but time consuming. And this is the reason I advise people that if you are not willing to spend your time, direct equity investing is not for you.
Warren Buffett is the Value Investor & he takes investment decision by this method only. Anyone with average IQ can go for value investing & build wealth
39. IPO Investing – Good or Bad?Now a days, every Tom, Dick & Harry is investing in the IPOs (Initial
Public Offerings) of Indian companies going public first time. Many people think that all the IPOs list on premium price on the day of listing. But well, this is not the truth & this is not the definite way to build long term serious wealth.
I personally never invest in any IPO if I am not willing to stay invested for at least 5 years in that stock. This is because investing is not just about doubling your money but its about multiplying your money and you can’t multiply your money in the stock market without investing for a long time horizon say 10,15 or 20 years or
Image Source: Rediff.comwithout investing for a long time horizon say 10,15 or 20 years or even more…
See Standard & Poor’s CRISIL IPO Ratings before investing in any IPOs.
CRISIL IPO Grading Scale–
5/5 – Strong Fundamentals4/5 – Above Average Fundamentals3/5 – Average Fundamentals2/5 – Below Average Fundamentals1/5 – Poor Fundamentals
-Invest in IPOs only if you think that the company is fundamentally strong and you are willing to stay invested for a long time horizon (> 5 years)
-Check the CRISIL IPO rating before investing
- CRISIL IPO Grade 3 or more is the good indicator to invest in IPO.
-Most of the government PSUs have 4+ CRISIL grading.
40. When to Buy a Home on Home Loan?Buying a home on home loan of 15-30 years of tenure is the very
key and important financial planning decision. But well, when should you buy a home? Years before our parents
and grand parents used to buy a home during the time of their retirement when they have accumulated the enough corpus. But well, it was the era when there was nothing like home loan in India.
But now, because of the easy availability of the home loans, many people have started buying home since the first few years of their active earning life.
So when you should buy a home?Well, first of all keep in mind that, your home is not your
-Many financial planners argue that, one should go for home loan as early as possible Well, first of all keep in mind that, your home is not your
investment. Never consider your home as your investment even though the price of real estate goes high.
This is because you are not going to sell your Rs.1 crore value home to fund your child’s education but you are definitely going to liquidate your Rs.1 crore of Mutual funds portfolio for your child’s education.
So what I am saying is, going for a home loan in your early life (20s & 30s) is a good idea only if you are simultaneously going to build wealth by investing in mutual funds and other asset classes.
If you are going for a home loan considering your home the biggest investment than sorry, you should build wealth first before going for a home loan.
should go for home loan as early as possible in their life. Because in just few years because of the inflation, your income will go high & you will feel that your EMIs are small.
-But well, Investment is not just a game of money & inflation but it’s the game of time also.
-The TIME that you have spend behind EMIs is never going to come back and during the same time period you could have build a great wealth by simply investing that money in Mutual funds via SIP.
41. PAN CardWhat is PAN Card?PAN means Permanent Account Number. It’s the 10 digit
alphanumeric number given to any Indian entity (Individual or a Company) for the purpose of filing tax.
Your PAN Card contains,- Your Full Name- Your Fathe’s full name- Your date of birth- Your Pan Number- Your Signature- Your Signature- Your Photo
Why do you need a PAN Card?For any financial transactions in India, you need a PAN card.
Say real estate investing, filing returns, opening bank account, opening demat account, equity investing, mutual funds investing, starting a business or anything else…
How to apply for PAN Card?
Download Form 49A Here
-PAN Card is also MUST for NRIs
-You can also apply for PAN Card Online from,
1) NSDL Website2) UTIISL Website
42. Tax Planning for Dummies in India…!!!In India, Tax planning is broadly divided into two things.
1. Tax Saving under Section 80C (Maximum Limit Rs.1 Lakhin any Financial Year)
2. Tax Saving beyond Section 80C
Section 80C deductions
1. Provident Fund (PF)2. Voluntary Provident Fund (VPF)3. PPF
Tax Saving Beyond Section 80C
1. Sec 80D – Medical Insurance premium deduction2. Sec 80DD - Deduction in respect of maintenance
including medical treatment of a dependent who is a person with disability 3. PPF
4. Life Insurance Premiums5. ELSS6. Home Loan Principal Payment
(Home Loan Interest Payment – Sec 24b)
7. Stamp Duty & Registration charges8. NSC9. Pension Funds – Sec 80CCC10. Bank FDs having 5 year maturity11. Senior Citizens Saving Scheme12. Post office Time Deposit Account - > 5
Years13. Children’s Education Expenses
person with disability3. Sec 80DDB - Deduction in respect of medical treatment,
etc.4. Sec 80E - Deduction in respect of interest on loan taken
for higher education5. Sec 80G - Deduction in respect of donations to certain
funds, charitable institutions6. Sec 80GG - Deductions in respect of rents paid (If you
are not getting HRA)7. Sec 80U - Deduction in case of a person with disability8. House Rent Allowance – HRA – Section 10 (13A)9. Exemption of Leave Travel Allowance (LTA) or Leave
There are lots of tax benefits on home loans in India. Here I have outlined all of them in brief. Read this page carefully before taking a home loan.
Broadly home loans come with double tax benefits.
1) Tax Benefits on Principal2) Tax Benefits on Interest
Principal:Few things that you might know about Home Loan Tax BenefitsPrincipal:
Under Section 80C, you can get tax deductions up to Rs.1 lakh every year on the principal amount paid.
Interest:Under Section 24(b), interest component of EMI is eligible
for deduction from taxable income if the loan is on a property/house that you are currently living in. you can claim MAXIMUM Rs.1.5 lakhs in every financial year.
Loan Tax Benefits
1. You can claim Stamp Duty & Registration charges also under Section 80C
2. Take a Joint Loan: Buy House with parents & Siblings as joint owners so that you can get more tax benefits
3. You can take unlimited deductions for your second home loan interest payment under section 24(b). There is no upper limit. It should be your second property only.
4. If you and your spouse are both working then there are double tax benefits to be availed by taking a home loan.
44. HRA – House Rent AllowanceIf you are an employee of some company and getting the HRA component in your salary
and if you are living in a rental house than you can claim tax deductions under HRA.Here Section 10 (13A) applies.
Who is Eligible for HRA?An Individual who fulfills ALL the 3 following conditions.1. HRA must be included in your salary component2. You are staying in the rental house3. Your rent is more than 10% of your BASIC salary
How to Calculate HRA?The Least/Minimum/Lowest of following 3 will be considered as HRA deduction.
Some Useful Tips-If you are living in your own house than you can not claim HRA even if you get HRA allowance from your employer
-If your house is in your The Least/Minimum/Lowest of following 3 will be considered as HRA deduction.
1. HRA received from your employer 2. Rent paid in 10% of the Basic Salary 3. 40% of Salary (50% in case of Metro City)
• Say for Example, you are based out of metro city, and have Rs.5000 as the actual HRA received, and Rs.20000 is your basic salary, and the rent you pay is Rs.7000/month.
• 1. Actual HRA – Rs.50002. Rent paid in excess of 10% of basic salary Rs.7000 – Rs.2000(10% of 20000) = Rs. 50003. 40% of salary (50% if residing in a metro) Rs.8000
• So the minimum of the above three values which Rs.5000 is the permissible HRA Deduction.
-If your house is in your parents’ /spouse name than you can claim HRA by showing that you are living on rent.
-If you have taken a home loan to buy a house and you are living in rental house than you can claim HRA & home loan tax benefits both.
-If you are not employee (self-employee/businee owner) & living in rental house, you can still claim HRA under section 80GG
45. Tax-Saving Infrastructure Bonds – Section 80CCF [ Tax Planning Beyond Section 80C]You can deduct tax by investing in Tax Saving
infrastructure bonds under section 80CCF. And this benefit is beyond the Rs.1 lakh limit of section 80C.
The main advantage is that, the tax benefit of these bonds will rise as your income slab will increase. So according to your income slab you can deduct 10, 20 & 30% by investing in these bonds.
If your tax slab is 10% (Rs.1.6-5 lakh) than you can
-Tax saving bonds have 2 drawbacks.1. Long lock-in period 2. Inflation
-The long lock-in period is a problem with these bonds. They have 5-10 years of lock-in period depending on the issue. So what if you have invested the same money elsewhere say for example in equity which gives 15-20% compounded annual return.
-Inflation in India is high (10% or more) and these bonds offer 8% annual return. So your actual return is -2%.If your tax slab is 10% (Rs.1.6-5 lakh) than you can
save maximum Rs.2060, if your tax slab is 20% than you can save maximum Rs.4000 and if your tax slab is 30% than you can save up to maximum Rs.6180.
Thus, if you invest Rs.20,000 in some infrastructure bonds than you can get Rs.2000 (10% tax slab), Rs.4000 (20% tax slab) and Rs.6000 (30% tax slab) tax benefit.
How to invest in tax-saving infrastructure bonds?
You can invest in these bonds during the time of issue of these bonds. So keep watch on the market news.
-2%.
-Demat account is necessary for investing in these bonds
-NRIs can’t invest in these bonds
-If your annual income is more than 8 lakh (30% tax slab) than it makes sense to invest in these bonds.
-- if your annual income is 5-8 lakh (20% tax slab bracket) than invest in it if the lock-in period is 3 years.
-If your annual income is Rs.1.6-5 lakh (10% tax slab) than it makes no sense to invest in these bonds.
46. Gift Tax in India
What is Gift Tax?When you receive gift from anyone
(spouse/family/friends), it is considered as your income and added in your total income and taxed according to the tax slab you fall.
Say for example, if you receive a gift of Rs.30 lakhhouse than you directly shoot up into 30% tax slab (Income more than 8 lakh per annum) and you end up paying near Rs.10 lakh tax on it.
When you have to pay Gif Tax?
-If you receive a gift of Rs. 50 Lakh from your father’s brother (your uncle ), it will not attract gift tax.
-If you receive a gift of Rs. 50 Lakh from your father’s brother’s wife (your aunt), it will not attract gift tax.When you have to pay Gif Tax?
In any financial year, if you receive more than Rs.50,000 value of gift, it is included in your income and taxed according the tax slab you fall.
How much is Gift Tax?Well, the gift you receive is considered as your income
and added in your total income and you will be than taxed according to the tax bracket you fall.
Gift Tax Exemptions• When you receive gifts from your blood relatives, it
is not taxable. Example – spouse, brother, sister, parents, spouse of your brothers & sisters.
-If you receive a gift of Rs. 50 Lakh from your wife’s father (your father in law), it will not attract gift tax.
-If you receive a gift of Rs. 50 Lakh from your wife’s father’s brother (your wife’s uncle), it will attract a gift tax.
-Gift money to your Major Children: Suppose if you have Rs.50 lakh than income generated by investing this money will be taxable. In this case you can divide this money & gift to your major children and then it will be considered as their income and tax slab thus you will save tax.
47. Wealth Tax in India à Tax the Rich…!!!The wealth tax is the tax which is to be paid on your wealth.
Here are the few things which are considered as your wealth.
- Residential House- Moto car- Jewellery- Yacht / Boat- Aircraft- Urban land- Cash on hand
Wealth Tax Exemptions
Wealth Tax Rules are sameFor Resident Indians & NRIs
- Cash on hand
How much is Wealth Tax in India?
Net Worth - < Rs.30 Lakhs – NILNet Worth – > Rs.30 Lakhs – 1% on the amount which
exceeds Rs.30 lakh
Say for example if your net worth is Rs.40 lakhs than you are liable to pay tax on extra 10 lakhs at the rate of 1% per annum means Rs.10,000. Here you don’t have t pay any wealth tax on the entire 40 lakhs. But you will have to pay tax on anything which exceeds 30 lakhs.
-Cash on Hand < 50k
-Aircraft or boat used for business purpose provided by the company
-Furniture & electronic items for personal use
-Accommodation provided by the company or organization to its employee. The annual salary of the employee is less than Rs 500,000Any land donated for the religious purpose or to charitable trust is not subjected to wealth tax.
- Assets transferred to son’s wife, spouse, grandchildren, & assets held by minor child.
48. Income Tax Return (ITR) Filing à Which ITR Form to Use?
Form ITR1For Individuals having income from,- Salary / Pension / Family Pension- Interest• Form ITR-1 is not for people having capital gains, or for people
having income from house property or business / profession.
Form ITR2ITR-2 is for individuals and Hindu Undivided Families (HUFs) having
income from:• Salary / Pension / Family Pension• Salary / Pension / Family Pension• Interest• House Property• Capital GainsForm ITR3• From ITR-3 is for individuals or HUFs that are partners in firms,
but who are not carrying out business or profession under any proprietorship.
ITR4• Form ITR-4 is for individuals and HUFs that have income from a
proprietary business or profession.
-You can now file your IT Returns Online in India.
-Visit Government of India Online Tax Filing Website & file your IT returns online.
-There are several private websites that also offer you online tax filing services.
Break Time… The History of Gold Standard
Do you know that the bank notes and coins in your pocket is not the real money? Well, yes. Your 100 rupee or 5 dollar bank note in your pocket is a piece of paper without any intrinsic value. The government has printed that money out of thin air only.
Before 1971, the entire money supply of the world was backed by gold. And that’s why before 1971, you could redeem your bank notes for real gold if you don’t have any more faith on government policies. simply by visiting your local bank branch.
But in 1971, President Nixon of United States removed the gold But in 1971, President Nixon of United States removed the gold standard & dollar became free float currency. And it means that governments can now print as much money as possible according to the need of the economy. Followed by USA, all the countries of the world has adopted this standard.
And thus, modern money is not backed by gold. The Modern banking operates through Fractional Reserve Banking System.
The Modern money is not the Money in true sense but it’s the “CURRENCY”.
Today many Economists believe that, the world should again adopt the Gold Standard to solve its all the financial crisis.
49. Fixed Deposits & Government Bonds in IndiaBank FDs & Government Bonds are the age old financial
products of India to save money and generate steady income from your saved money.
In India, Bank FDs earn anywhere between 6-10% returns depending on the type of bank and tenure of the FD.
Government Bonds generate 6-8% (Slightly lower than FDs) compounded annual returns.
However, there are two major killers of these fixed income instruments.
-Many people argue that FDs & Bonds are safe because they give guaranteed returns. But this is a Myth. The Truth is that, Inflation & Tax are the 2 major silent killers of your money parked in these instruments.
-Debt Funds are better than Bank FDs because if the interest rates are rising, debt funds will automatically change their rates while in case of FDs, you will have to break that FD and do another FD to take advantage of higher interest rates. And breaking FD will attract 1-2% penalty charges.
1) Inflation2) Tax
The only problem in India is higher inflation. Suppose if the inflation rate is 10% per annum and your FD/Bonds generate 8% annual return than your actual return is-2% (Negative). Thus, actually you are loosing 2% every year from your money parked in these instruments in terms of purchasing power.
Another problem is Tax. Interest income will be included in your total income and will be taxed according to the tax slab you fall.
parked in these instruments.
-Bank FDs & Govt. Bonds are the instruments to generate steady income from your capital after your retirement.
-During the initial years of your active earning life (20s & 30s), it is advisable that you invest 100% of your money in Equity and 0% in Debt (FDs& Bonds) to build wealth.
-Many people never invest in equity & invest their entire life in FDs & Bonds and think that they are playing it safe – But this is the Biggest Financial Planning Mistake…!!!
50. Corporate (Company) Fixed Deposits in IndiaUp to now in India, there was only one option to invest in Fixed
Deposits to generate steady income and that was Bank FDs. But now there are several options available in India.
Now a days, NBFC (Non Banking Financial Companies) & private companies are also offering fixed deposits.
The main advantage of Corporate Fixed Deposits is that, they offer higher returns than the regular Bank FDs say 9-16% per annum. Bank FDs give only 6-10% annual returns.
Risks with Company FDs
Tips to invest in Corporate Deposits
-Invest in Company FD after seeing its credit rating from CRISIL, ICRA & CARE. A or higher rated FDs are better. Avoid FDs having less than A rating.Risks with Company FDs
- Default risk- Unsecured Deposits (Bank FDs are secured by RBI up to
Rs.1 lakh per branch while Corporate FDs are not secured.)- Premature Exit from company deposits are not as easy as
Bank FDs & demands lots of paperwork.
Should you invest in Corporate FDs?If you want to park your money for short to medium term and
are comfortable with little bit higher level of risk than these are the good options as Company FDs give you higher returns than regular Bank FDs.
less than A rating.
-Avoid investing in FDs whose parent companies offer more than 15% interest.
-Avoid if the Company is not giving regular dividends to its shareholders.
-It is advisable to check company performance & its share price every 6 months.
-Divide your debt portfolio in Bank FDs, Government bonds & Company FDs. Don’t put all of your eggs in one basket (Company FDs)
51. Post Office Savings Schemes IndiaIndian post office savings schemes are the best financial
products offered by government of India
These schemes are basically for the small investors to save money, save tax & generate regular and steady income from their capital.
-Post-office savings schemes are mainly for small investors.You can not invest huge amount of money (Say more than 10 lakhs) in many of these schemes.
-These are all the Debt products means they are mainly to 2) 5-Year Post-office Recurring Deposit Scheme3) Post Office Time Deposit Account4) Post Office Monthly Income Account5) PPF (Public Provident Fund)6) Kisan Vikas Patra (KVP)7) National Savings Certificate (NSC)8) Senior Citizens Savings Scheme
-These are all the Debt products means they are mainly to generate steady income from your money & not to build wealth. To build wealth, Equity is still the best asset class.
-These schemes are best for those who want to generate regular & steady income from their investments.
-These are tax deductible schemes under section 80C up to Max. Rs.1 lakh
-I personally advise to go for such schemes after the age of 45-50 years when you have build sufficient wealth and want to generate steady income from it.
-For young people (20s & 30s), Equity is still the best asset class to build wealth.
How to Invest in Post Office Saving Schemes?
Visit your nearest post-office branch and you can open any of the above schemes from there. They open an account after some paperwork & give you a passbook for your account.
SCHEME Interest Rate Investment Limits Key Features
Post Office SavingsAccount
3.5% per Annum Minimum INR 50/-. Maximum INR 1,00,000/- for an individual account. INR 2,00,000/- for joint account.
Cheque facility available.Interest Tax Free.
5 – Year Recurring Deposit Account
7.5% per Annum (Quarterly Compounded)
Minimum INR 10/- per month or any amount in multiples of INR 5/-. No maximum limit.
One withdrawal upto 50% of the balance allowed after one year.
Minimum INR 200/- and in multiple thereof. No maximum limit.
Account may be opened by individual. 2,3 & 5 year account can be closed after 1 year at discount. Account can also be closed after six months but before one year without interest. The investment under this scheme qualify for the benefit of Section 80C
Post Office Monthly Income Scheme (MIS)
8% per Annum In multiples of INR 1500/- Maximum INR 4.5 lakhs in single account and INR 9 lakhs in joint account.
Maturity period is 6 years. Can be prematurely encashed after one year but before 3 years at the discount of 2% of the deposit and after 3 years at the discount of 1% of the deposit. (Discount means deduction from the deposit.) A bonus of 5% on principal amount is admissible on maturity in respect of MIS
PPF 8% per Annum (Compounded Minimum INR. 500/- Maximum INR. Deposits qualify for deduction from income under Sec. 80C of IT PPF 8% per Annum (Compounded Annually)
Minimum INR. 500/- Maximum INR. 70,000/- in a financial year. Deposits can be made in lumpsum or in 12 installments.
Deposits qualify for deduction from income under Sec. 80C of IT Act. Interest is completely tax-free. Withdrawal is permissible every year from 7th financial year. Loan facility available from 3rd Financial year.
KVP 8.4% (Compounded Annually)Money doubles in 8 years & 7 months.
No limit on investment. Available in denominations of INR. 100/-, INR. 500/-, INR. 1000/-, INR. 5000/-, INR. 10,000/-, in all Post Offices and INR. 50,000/- in all Head Post Offices.
A single holder type certificate may be issued to an adult for himself or on behalf of a minor or to a minor, can also be purchased jointly by two adults.
NSC 8% (Compounded half-yearly)but payable at maturity
Minimum INR. 100/- No maximum limit available in denominations of INR. 100/-, 500/-, 1000/-, 5000/- & INR. 10,000/-.
A single holder type certificate can be purchased by an adult for himself or on behalf of a minor or to a minor. Deposits quality for tax rebate under Sec. 80C of IT Act.
Senior Citizens Savings Scheme
9% per annum There shall be only one deposit in the account in multiple of INR.1000/-maximum not exceeding rupees fifteen lakh.
Maturity period is 5 years. A depositor may operate more than a account in individual capacity or jointly with spouse. Age should be 60 years or more. and 55 years or more but less than 60 years who has retired on superannuation or otherwise on the date of opening of account subject to the condition that the account is opened within one month of receipt of retirement benefits. Premature closure is allowed after one year on deduction of 1.5% interest & after 2 years 1% interest. TDS is deducted at source on interest if the interest amount is more than INR 10,000/- p.a. The investment under this scheme qualify for the benefit of Section 80C of the Income Tax Act, 1961 from 1.4.2007.
52. Gold Investing in IndiaGold is the most precious asset class and Indians love to
invest in Gold. However, keep in mind the following facts about Gold Investing.
Gold ETFs: they are just like mutual funds. Here the fund manager collects money from large number of investors and buy a physical gold and keep it in safety custody on behalf of you. So if your sole purpose to buy gold is investment purpose than Gold ETFs are the best options.
Advantages of Gold ETFs –You can buy gold jewellery from the gold jewelers in your
city and gold coins & bars either from banks like ICICI, SBI, HDFC & Bank of Baroda or directly from the jewelers.
Jewelers Vs Banks – Which is better?Both have pros and cons. The problem with buying gold
from jewelers is the issue of purity. And the problem with buying gold from banks is, they will charge you 10-15% more price than the market price for that certified gold & not only this but your bank won’t buy back that gold. So the best way to buy a physical gold at market price is, find some TRUSTED JEWELER & buy from him.
-No Purity issue-No Security issue-No Wealth Tax on any amount of Gold investing-Annual Fund management charges - <1%-You can buy them just like Mutual Funds
How much to invest in Gold?-Note More than 10% of your Total Portfolio Worth.-On and Average 5% of your total portfolio worth.-It is true that gold is an excellent asset class and Indians have emotional attachment with this asset class but well, Gold is not the asset class to build wealth. It can just beat the inflation & provide stability to your portfolio. Equity is the only asset class to build wealth.
53. Chit Funds in IndiaChit Funds are very popular in South India and many other parts of India and many people ask me that, what are my
thoughts about investing in Chit Funds?
Well, I personally don’t consider Chit funds the asset class / Investment vehicle to build wealth. And in my opinion, Chit funds don’t have any role in successful financial planning. In fact, this is a PURE FORM OF GAMBLING in my opinion & one should not give priority to such kind of schemes to build wealth. And still if you invest in Chit Funds, Don’t consider it as an Investment. It’s the pure SPECULATION…!!!
I am including this issue here because I receive several queries about the chit funds every month.
How Chit Funds Work?
Say there are 20 people who are investing 500 rs per month for a term of 20 months a fixed amount so the total is 10,000 every month now say on 5th of every month they will gather and bid for 10,000 now say 'x 'says I want only 8000 from this 10,000 and so on 'y' says 7500 and 'z' says 7000 only then the winner will be 'Z' he will get 7000 rs of amount
now how a person earns when he is investing 10,000 and getting 7000 and what happens to the left out 3000.
The answer is that 3000/- some body from the group will take on interest or the owner (who has started the chit) will keep it on interest (say at 2% Pm)so 60 rs interest on 3000.
next month the group people have 3060 already with them and they have to pool for 6940 only which when divided by 20 will be 347 for that month, so instead on paying 500 (fixed amount) you are paying only 347 so profit of 153 rs for that month and the same kind will go on till the term some times less amount or the fixed amount (500).
54. Digital Assets / Web Properties à The Next Generation investing…This is the information age and you MUST be familiar
with the new asset class – Digital Assets also known as Web properties or Internet Assets.
Right now the young generation (teen agers, 20s & early 30s) from all around the world is investing in the web properties for huge profits.
Web Properties/Assets:
- Domain names- Websites
-Website Flipping is the hottest investment & money making opportunity online. Website flipping means developing a website/blog out of scratch or buying an already established website/blog & selling it for huge profits later on.
-Domaining/Domain flipping: means buying & selling domain - Websites- Blogs- Forums- FacebookApplications- iPhoneApplications- Anything else which is on the Internet
Advantages of investing in Web Assets:
- Fastest growing asset class- Potential to make you very rich in young age- Low investment capital required
-Domaining/Domain flipping: means buying & selling domain names.
-Flippa.com is the reputed marketplace where you can buy web properties for investment purpose and later on sell them for huge profits.
-GoDaddy.com is the website where you can buy domain names for just Rs.500/year charge.
-Sedo.com is the largest online marketplace to buy and sell domain names.
-Always make overseas online payments for web property transactions via PayPal.com or Escrow.com
55. Art Investment in IndiaArt is the asset class just like any other asset class in India
such as stocks, bonds, gold, real estate & mutual funds. Art is not just for hobby purpose but you can actually invest in art and generate huge returns just like any other asset class.
How to invest in Art in India?
1. Buy directly from the Artist2. Buy online - eBay3. Buy from Auction Houses – Christie’s, Sotheby’s
-Minimum Investment amount in Art Funds: Rs.10-15 Lakhs
-Unite price for Art Funds: Approx: US $ 2.5 / unit4. Buy from Art Gallery5. Invest in Art Funds
How much returns Art generate? – 15-30% Compounded annually
Art Funds in India:01) Copal Art02) Edelweiss Securities03) Crayon Capital04) Osian’s Connoisseurs Art
-Unite price for Art Funds: Approx: US $ 2.5 / unit-Never invest in direct art if you are not an expert in art investing.
-Always buy art from reputed auction houses and reputed sellers & art galleries.
-Invest in art with the help of an art expert
-If you don’t have expertise to invest in art than the art funds are the best option.
-Art funds sell units just like traditional mutual funds and later on buy good arts on behalf of you. However, many art funds have lock-in period.
56. Offbeat AssetsMany people have a false belief that only Stocks, Bonds, Real Estate, Gold
& Mutual funds are the only assets. But well, this is not the truth. Many people in India and around the world invest in the offbeat asset
classes and make huge profits. Here are the few offbeat assets in which you can invest.
How much return Vintage/Offbeat Assets generate? Where to buy & sell offbeat assets?
You can expect 20-30% compounded annual returns from these assets. You can buy & sell these assets on eBay, auctions or from private seller.
Caution:
- Investing successfully in offbeat assets require deep knowledge of the market otherwise you will end up buying artificial assets at over price.
- Invest in offbeat assets only if you have expertise in it or you know someone who help you to invest in these assets.
57. Health Insurance (Mediclaim) in IndiaIn India, there are basically two types of insurance companies.
1) Life Insurance Companies2) Non-Life (General) Insurance Companies
The health insurance is provided by both of these companies in India. However, all around the world, the health insurance is mainly a product of Life insurance companies. However, in India health insurance is mainly the product of Non-Life Companies. You will have to understand pros & cons of health insurance provided by both the types of insurance companies before buying it for you.
-Always see for the Cashless facility in your local area nearest Hospitals where you are likely to admit during medical emergency
-Health insurance provided by PSUs & private Health Insurance by Life Insurance Companies:- The premiums of these plans are higher than non-life
companies- The premiums will be fixed for at least 3-5 years.- Health policies by life insurers are more long term in nature
Health Insurance by Non-Life (General) Insurance Companies:- Recently, many five-star hospitals have withdrawn Cashless
facility by general insurers.- The premiums of these plans are lower than life companies- You will have to renew this policy every year so the premiums
will go high year after year- Health policies by general insurers are of shorter duration than
life companies.
-Health insurance provided by PSUs & private insurance companies are same & all of them are highly regulated by IRDA so go for anyone.
-Many people argue that so & so insurance company has high rejection rates so should they go for those company health plans? Well, the rejection depends on several criteria so its not so that one insurance company has low rejection rate than the other one.
-If you feel injustice you can anytime go with IRDA or consumer court.
Break Time… “Save Money” – Old Financial Advise“Save & Invest” – New Financial Advise
Do you know that, “Saving Money” is the age old financial advise which is no longer effective to ensure any kind of financial success? In fact, today if you follow this advise, you will surely meet the financial disaster.
Why “Save Money” was effective Financial advise once upon a time & not now?
Saving money was the golden financial advise during the time of our parents & grand parents. I am talking about the era before 1971 when there was a Gold Standard in the world & the entire money supply of world was a Gold Standard in the world & the entire money supply of world was backed by Gold.
Before 1971, saving money means actually you are saving that much amount of gold.
But after 1971, the Gold standard has been removed & the money became Currency. Today if you only save money, inflation will erode its purchasing power as it is no longer backed by any gold.
Today you will have to Save & Invest your money to maintain its purchasing power by growing it. This is the only way to maintain the purchasing power of your hard earned money.
Moral: Investment is now a MUST learning skill for everyone who want to become financially free. As our parents told us that stay away from investments as they are risky. But well, it was the Gold standard era. Today the scenario is different.
58. Gold Loan in IndiaAdvantages of Gold Loan –- Good for Bad Credit History Individuals- Low interest rates (10-17% per annum)- No Income proof required- Lower income people can apply for it- Quick approval
Gold Loan interest rates in India –
10-20% per annum which is much lower than personal loan interest rates (15-24% per annum).
Tips of taking a Gold Loan in India
-Cheapest Gold Loan: if you can restrict your loan amount to around 50% of the market value of the jewelry than the interest rates are most reasonable.
-Only go for gold loan if you really think that you will repay that money. Because in case of your default, your lender will sell your gold jewellery which is psychologically disturbing.
-Smart investors borrow money against gold, invest it in businesses and generate huge returns from this idle asset class. Don’t borrow money against gold to do speculative investments.
Which Banks/Institutes offer Gold Loan in India?
- Banks: SBI, ICICI, HDFC & many other banks- Private Companies: Muthoot Finance,
Manappuram Finance
Loan repayment options –
1. Regular option: Means you pay Interest + Principal as Monthly EMI
2. Interest Only option: Here you pay only interest during the entire tenure of the loan and pay the entire principal at single shot at the end of the tenure.
investments.
-You can take up to 80-90% loan as that of market value of your gold.
-Take gold loan for genuine reasons when all the options to raise money have failed.
-Traditional LIC (Non-ULIP) policy is the best alternative to Gold loan which gives 90% loan to surrender value at just 8% interest rate.
-Documents required: Original Identification proof & Residential Proof nothing else.
-Gold loans usually don’t have pre-closure charges
59. Personal LoansPersonal loans are the best options to raise money
in Emergency because of its following features.
- Quick Approval- Minimum Paperwork- Available at short notice
Because of the above features the Personal loans in India are very popular. However, keep in mind the following key facts before taking a Personal Loan in India.
Flat Rate Vs Reducing Rate – Which is Better?
-Always go for Reducing rate personal loans.
Tips:
A) For Emergency Purpose, you should have Emergency Fund & not the Personal Loans.
B) The Best Financial Planning is one in which the person has build emergency fund so that during any financial emergency he does not have to take personal loan.
C) Never use personal loan for Travel, shopping or any other un-necessary things as its costly.
Facts about Personal Loans:
- Very Costly: They charge 15-30% Annual interest rates
- Processing Fee: The Bank will also charge upfront processing fee which is non-refundable to give you this loan.
- Prepayment penalty: Prepayment of the loan will attract 1-5% of penalty on amount outstanding.
-Your lender will tell you that flat rate is better than reducing rate because of several reasons but this is not the Truth.
-Flat rate means at the time of your loan your lender will calculate the interest payment on the entire loan amount for entire tenure and divide it and add it into each EMI. So on your last EMI also you will pay the interest on the entire loan amount.
-Reducing rate means you are paying the interest on the amount outstanding. Say for example, if you have taken Rs.5 lakh of loan and paid Rs.3 lakhs than you will have to pay interest on just Rs.2 lakhs outstanding and not the entire 5 lakhs like flat rate like flat rate.
60. How to Generate Steady Income After Retirement?This is the commonest question that people in their 50s ask
me. Well, here are the few ways to generate fixed & steady income after your retirement.
1. Bank FDs (6-10% interest per annum)
2. Corporate (Company) Fixed Deposits (9-17% per annum)
3. Government of India (GOI) Bonds (8.5% annual return)
-The highest income earning scheme is post-office senior citizens saving scheme (9%)
5. Post-office savings schemes- NSC – National Savings scheme (8% annual return)- Post-office Monthly Income Scheme (MIS) – 8% per annum
- Senior Citizens Saving Scheme (9% per annum)
-Post-office MIS has maximum limit of Rs.4.5 lakhfor single account & Rs.9 lakh for joint account.
-GOI Bonds will give you yearly or half-yearly interest income.
-Never invest in corporate deposits which offer more than 15% returns.
-Only invest in Corporate FDs having AA or AAA bond ratings by CRISIL, ICRA or CARE.
-FMPs give you the benefit of indexation and returns could be in the range of 8-8.5% for a 1-3 year tenure
61. NPS [ New Pension Scheme] – A Bad idea…!!!In mid 2009, the Government of India has launched the New
Pension Scheme also known as NPS. The government of India already has two such kind of schemes.
1) EPF – Employees Provident Fund2) PPF – Public Provident Fund
The logic behind NPS –The main logic behind launching NPS is to provide all the
Indians the true pension scheme at cheapest cost. There are 2 major limitations of EPF & PPF.
1) PPF has a lock-in period of just 16 years while EPF is to save money for the entire active earning life but unfortunately, most of the people blow out all of the money from EPF at various stages of life as you can
Why NPS is not a good idea?
-Lock-in Period: Its longest lock-in period is its biggest drawback. If you are going to lock your money for full 30 years than why not 100% equity? Why to even go for a debt? NPS has Max.50% equity exposure.
-The fund managers of NPS are bound to invest only in Largecap stocks. But well, if you are going to lock your money for 30 years than why not midcap and small cap stocks also?
money from EPF at various stages of life as you can withdraw money anytime and nothing remains after the retirement for steady income. While NPS (Tier –I) has a long lock-in period of around 30 years or before you retire and there is no other way to withdraw money from it before maturity so the logic is that people will have some capital on their retirement.
2) Both the schemes (EPF & PPF) are pure debt schemes means they don’t invest in equity. While on the other hand, NPS has equity component in it so it can provide better returns than EPF & PPF.
Tier – I Accounts: We can not withdraw money in tier-ITier – II Accounts: We can do unlimited withdrawals in tier-II
not midcap and small cap stocks also?
-If you invest your money in equity mutual funds than they are sufficient to build a wealth for your retirement. No need to go for NPS.
-Tier-I scheme is still not implemented well in India and the government guidelines are very unclear.
-So at this movement, EPS & PPF are better options in government’s portfolio to build wealth for your retirement & no need to go for NPS.
62. EPF [Employees’ Provident Fund] – Pays in Long-run…!!!
EPF is a statutory body of the Government of India under Ministry of Labour and Employment.
This one of the best savings scheme promoted by Government of India after PPF to save money & build corpus for your retirement and various other purposes.
What is the Scheme?
Well, if you are an employee (Government or private sector) working in India than you can apply for this scheme. Under this scheme, you will have to contribute 12% of your basic
-My only concern about EPF is that, what if somebody is Financial genius? Well, in that case he can invest the same 12% of basic this scheme, you will have to contribute 12% of your basic
monthly salary in EPF account & your employer will also contribute the same amount in your EPF account.
The interest rate payable is 9.5% per annum which changes every year according to the government policies.
The entire interest income is Tax-free just like PPF.
You can withdraw all of your money at the age of 55 years. However, under special circumstances, you can withdraw your money prematurely also.
The basic aim of EPF is to develop Regular & Disciplined investment approach in your life. If you invest 12% of your basic salary every month at the rate of 8-10% per annum than it can grow very well over the period of time.
case he can invest the same 12% of basic salary every month somewhere else (Say equities, private businesses, web properties…etc..) and generate much more returns than EPF.
-And suppose if you are not financial genius than also you can invest the same amount of money every month in Equity mutual funds via SIP & generate 15-20% returns and build much more wealth than EPF.
-EPF is 100% Debt instrument & my concern is that if you are going to lock-in your money for 15,20,30 years than why to go for Debt products & why not Equity?
63. Car & Auto Loans in IndiaYou can now buy a car of your dream in India. This is because no several car
financing options are available in India. Here are the all the possible car financing options.
1) Regular Auto Loan (Margin Money Scheme):This is the simplest car financing option. Here you put 10-20% of car’s cost as
margin money (Just like down payment in case of real estate purchase) and the bank will give you 80-90% amount of loan as that of the value of the car.
The tenure of this loan is usually 3-5 years. As the tenure increases, the monthly EMI will reduce.
The rate of interest is usually 14-16% per annum which is higher than the home loan but lower than the personal loan.
-If you are a car lover & want to own a car for just 2-3 years than the car lease is the best option as you can use a new car model for 3-4 years and give it back to the financer and go for another car.
2) Advanced EMI Scheme:This is just the variant of the margin money scheme. Here you get loan for the
100% of the cost of car. But you will have to pay 4-5 EMIs in advance.
3) Security Deposit Scheme:Another variant of regular auto loan. Here you pay 10-30% of the loan amount to
the bank as a security deposit and your bank will finance 100% of the car value. You will earn interest on your deposit and get back this deposit when you will repay the loan.
3) Car Lease:This is the most exciting car finance option. Here the bank/institute owns the car
& give you the option to buy the car at the end of the tenure or return it back. Means here you don’t really own the car but only pays for its depreciation.
financer and go for another car.
-Car lease is not a good option for employees but best option for self-employees & business owners for the tax purpose.
-If you want to keep a car for years or decades, regular auto loan is the best option for you.
-Never consider your car as your investment. A car is not your investment/asset as the value of a newly bought car always go down and down.
64. WILL - A Very important step of Financial PlanningThe financial planning is not complete unless you make a WILL.
The WILL ensures that after your death, your wealth/assets are divided among your nominees according to your desire and no foul playing is done.
You can make a WILL on a plain paper in India. It’s not legally necessary to make a WILL on stamp paper.
However, it is advisable that you hire some attorney/lawyer to make However, it is advisable that you hire some attorney/lawyer to make a professional WILL of your assets.
Parts of WILL:
1) First Part: Declaration – You will have to declare that you are making WILL in full sense and without pressure of anyone.
2) Details of Property & Ownership3) Details of Ownership4) Signing the WILL in presence of 2 Witnesses
-Make a WILL to avoid any disputes between your nominees after your death
-If you don’t want to give anything to your nominees, give everything in some charitable organization.
-You can change the WILL anytime. However, in the new WILL make it clear that the old one is cancelled otherwise it will make confusions.
65. Top 14 Most Common Financial Planning Mistakes
A) Starting LateB) Insufficient/NO Emergency Fund – Credit card is not the
Emergency FundC) Excessive DebtD) Negative Cashflowà Spending more than you EarnE) Playing it Very Safe à Very less equity exposure in early years of
your earning lifeF) Being a Mutual Funds Collector & Not the InvestorG) Investing in Insurance cum Investment Products All of us are human beings and we
afraid of doing mistakes and we learn G) Investing in Insurance cum Investment ProductsH) Investing in ULIPs (Costly + Inadequate Life Cover)I) Inadequate Life Cover à Go for Term Insurance PlansJ) Having only one Term Insurance Plan à Divide Life cover in 2-3
Term Insurance PlansK) Excessive Credit card DebtL) Direct equity investing is not the game of everyoneM) Excessive exposure to GoldN) Buying a Home on Home Loan Too Early
afraid of doing mistakes and we learn from out own mistakes.
These are the 13 most common financial planning mistakes that you should avoid.
Since March 2008 I am advising the financial planning via my blog MyJourneyToBillionaireClub.comand since June 2010, I am advising through my forum Investta.com.These are the commonest financial planning mistakes that I have encountered….
Started investing in equity mutual funds via SIP just 6 months ago.
This is the commonest mistake most of the people (especially high earning professionals) do. They think that their income is high so no need to do financial planning & start investing early.
Dr. Ramesh Kumar earns lots of money every month from his medical practice but he started investing at the age of 45 years.
Thus, to retire with financial freedom, he will have to invest lots of money. While someone who started investing at the age of 25 will definitely be ahead of Ramesh Kumar even thoguh he earns & invests much less amount than Mr. Ramesh because the compound interest will work more in favour of him as he has invested more time.
Remember, When you are too smart, You are Too Late…!!!
B) Insufficient / NO Emergency Fund àCredit Card is not the Emergency FundName: Suresh BabuAge: 35 Years, Married, 1 ChildOccupation: TeacherMonthly Income: Rs.25,000Monthly Expenses: Rs.15,000Monthly Cashflow: Rs.10,000Emergency Fund: ICICI Bank Credit card
The only problem with this portfolio is that, Mr. Suresh Term Insurance:2 Term Insurance plans of Rs.25 lakhs each (Total
The only problem with this portfolio is that, Mr. Suresh Babu considers his credit card as an Emergency Fund.
This is one of the most commonest financial planning mistake.
What will happen during the time of Financial emergency? ààààWell, you will scratch your credit card and go into a deep credit card debt. And the ultimate logic of financial planning is you should be debt free
Your credit card is not your emergency fund but you should have emergency fund (3-6 months of monthly expenses) for this purpose in your bank savings account.
The only problem with this portfolio is – “Excessive Debt”
Personal Loan: Rs.6 LakhsCar Loan: Rs.8 LakhHome Loan: Rs.25 Lakh
Term Insurance:2 Term Insurance plans of Rs.25 lakh each
Mutual Funds Portfolio:3 Equity, 2 Debt & 1 ELSS Fund investing via SIP
PPF: Rs.5000 / year
Vikas is earning lots of money every month but most of that money (Rs.1.3 lakh) goes towards paying those loan payments.
Remember that, Borrower is a slave to lender. In India, many high income group people are passing through this kind of situation. They earn lot but the more they earn, the more they take debt and than they can’t stop working.
If Vikas had not taken these loans than today his Monthly cashflow was improved by Rs.1.3 Lakhs and he could have easily become financially free at the age of 55.
D) Negative Cashflowà Spending more than you Earn
Name: Prakash ParekhAge: 30 Years, Married, No ChildrenOccupation: LawyerMonthly Income: Rs.70,000Monthly Expenses: Rs.80,000 (including credit card payments)
Credit Card outstanding: Rs.60,000(Growing at the rate of 10k/mth)
How someone can spend more than they earn? Well, by scratching their credit cards and (Growing at the rate of 10k/mth)
Term Insurance:1 Term Insurance plans of Rs.25 lakh
Mutual Funds Portfolio:NIL
PPF: NIL
Well, by scratching their credit cards and borrowing money every month after month.
Prakash is a high earning lawyer but he loves to scratch credit cards while shopping and never do Budgeting, the most important financial planning exercise.
As a result of this nothing goes towards long term investing (Mutual Funds, PPF…etc..) at the end of month. Thus, Prakash spends a lot but no wealth is being created out of that spending. Thus, he can’t be retire peacefully unless he makes his cashflow positive by spending less than he earns.
E) Playing it Very Safe - Very Less/NO Equity exposure in Early Years of your Life àName – Mr.AniketAge – 32 Years, Married, 1 ChildOccupation – Public Relation Officer, XYZ BankMonthly Income – Rs.40,000Monthly Expenses – Rs.25,000Monthly Cashflow – Rs. 15,000
Term Insurance - 2 term insurance plans of Rs.30 Lakhseach
-Mr. Aniket believes to play it very safe. He has not invested anything in equity (Directly or via Mutual Funds). He loves to invest in fixed income instruments.
Portfolio –
PPF – Rs.30,000 / yearICICI Bank Fixed Deposit (5 years, 8.0% interest) - Rs.2
LakhSBI Bank FD (3 years, 8.0% interest) – Rs.3 LakhPost-office Recurring Deposit – Rs.1.5 Lakh (Rs.10,000 /
-Age 32 years, 100% Debt allocation & 0% Equity Exposure
-Don’t play it very safe. Equity is MUST in the initial first or two decades of your early earning life to build wealth.
-Equity is the only asset class which can give you highest returns than any other asset class so give it a place in your portfolio.
-Inflation in India is roughly 7% and FDs give 8% returns so real return is just +1%
Break Time…Good Debt Versus Bad Debt
Do you know that not the all types of debts are bad. Many personal finance advisors will advise you to get out of debt as early as possible & stay away from new debt.
This advise can actually harm you. Because if you follow this advise, you will never take any debt in future – Good or Bad and to become rich many times you need to take good debt. Here, understand the difference between two types of debts.
Good Debt: Whenever you borrow money to acquire (Buy) assets out of that money, it is known as Good debt such as assets out of that money, it is known as Good debt such as business loan, real estate mortgage loans, education loans…etc..Here ultimately you become the owner of some kind of asset when you repay this debt.
Bad Debt: Whenever you borrow money to acuire liabilities out of that money, it is known as a Bad Debt such as Car loan, personal loans, credit card debt, shopping EMIs, loans for travelling…etc.. Here you become the owner of something, the value of which goes down markedly (Say for Example car) when you repay that debt.
A Good debt will make you rich while a bad debt will make you poor.
F) Being a Mutual Funds Collector & not the Investor àName: Mr. Vipul PatelAge: 42 years, married, 2 childrenOccupation: Government Class I OfficerMonthly Income: Rs.1 LakhMonthly Expenses: Rs.40,000Monthly Cashflow: Rs.60,000
Term Insurance – 3 term insurance plans of Rs.25 lakh eachEmergency Fund – Rs.5 Lakh in Savings AccountMutual Funds Portfolio –
-Everything is fine with Mr. Vipul’s portfolio except he has
1. Quantum Long term Equity Fund2. UTI Dividend Yield Fund3. Templeton India Equity Income Fund4. ICICI Prudential Dynamic Inst I5. Reliance Equity Opportunities6. SBI Magnum Contra7. Reliance Growth Fund8. ICICI Pru Dynamic Fund9. UTI Infrastructure Fund10. HDFC Top 20011. UTI Master Value12. Reliagre Contra Fund13. DSPBR Small & Midcap
-Everything is fine with Mr. Vipul’s portfolio except he has collected 13 mutual funds in his portfolio in the name of diversification. [This is Gross Over-diversification]
-Many people are not the MF investors but the MF Collectors. They collect dozens of funds in their portfolios in the name of diversification.
-Only 3 or MAXIMUM 4 equity diversified mutual funds (2 Largecap & 1 / 2 Midcap) are enough to achieve optimal diversification.
-If you will collect more than 4 funds, your returns will be average and every stock in the stock market will now be in your portfolio via these dozens of mutual funds.
G) Investing in Insurance cum investment products à
Name – Mr.Prakash VermaAge – 45 years, Married, 1 ChildOccupation – Small Business ownerMonthly Income – Rs.2 LakhMonthly Expenses – Rs.50,000Monthly Cashflow – Rs. 1.5 Lakh
Portfolio -
Term Insurance – 2 Term insurance plans of Rs.50 lakh each
-Mr. Verma is fond of ULIPs, Pension plans, Child future plans and all the other insurance cum investment products.
Term Insurance – 2 Term insurance plans of Rs.50 lakh eachEmergency Fund – Rs.12 Lakh in Short term debt fundsPPF – Rs.70,000 / yearMutual Funds – 4 Equity Diversified Mutual Funds (2 Large
cap & 2 midcaps)Insurance cum Investment Products –1. SBI Life Unit Plus Super2. SBI Life Smart Scholar (Child Future) Plan3. LIC Pension Plus Pension Plan4. LIC Jeevan Nidhi5. ICICI Prudential Life Stage Pension Plan
-ULIPs & all the insurance cum investment products are very costly. They charge anywhere between 20-100% premium allocation charge from your first & subsequent premiums.
-Term Insurance + Mutual Funds + PPF is the best financial planning combination.
-Mutual funds have 0% entry & Exit loads.
-Never mix insurance & investment needs. Never invest in any insurance cum investment product as they are costly & wealth suckers…
H) Investing in ULIPsà (Costly + Inadequate Life Cover)Name – Mr. Anil KulkarniAge – 34 years, married, 1 ChildOccupation – Bank OfficerMonthly Income – Rs.40,000Monthly Expenses – Rs.15,000Monthly Cashflow – Rs.25,000
Portfolio –
Term Insurance – 2 term insurance plans, Rs.25 lakheach
Emergency Fund – Rs.1.5 Lakh in Bank savings
-Mr. Kulkarni is ULIP Lover. He has collected lots of ULIPs in his portfolio thinking that ULIPs will give Emergency Fund – Rs.1.5 Lakh in Bank savings
ULIPs portfolio –1. SBI Life Unit Plus Super2. SBI Life Smart Elite3. ICICI Prudential Life stage Pension4. KotakWealth Insurance Plan5. ICICI prudential Pinnacle II
ULIPs in his portfolio thinking that ULIPs will give two benefits – Insurance + Investment
-Well, ULIPs are the WORST FINANCIAL PRODUCTS of India.
-ULIPs are costly because of charges associated with it and ULIPs provide just 5-10 times life cover than annual premium which is peanut size in comparison to the life cover provided by Term Insurance plans.
-Get out of all your ULIPs & Never invest in any ULIP or insurance cum investment product. ULIPs have no role in successful financial planning.
I) Inadequate life cover à Go for Term Insurance Plans
Name – Mr. SurajAge – 45 years, Married, 2 ChildrenOccupation – EngineerMonthly Income – Rs.80,000Monthly Expenses – Rs.40,000Monthly Cashflow – Rs.40,000
Term Insurance – NILLife Cover – 2 ULIPs with annual premium of -Mr. Suraj has done BIG financial planning
mistake and that is, considering ULIPs to cover his Life Cover – 2 ULIPs with annual premium of
Rs.50,000. Each ULIP provided life cover of 5 times (Sometimes 10 times) the annual premium (Rs.2.5 lakh in this case). Thus, total life cover is Rs.5 lakh
Emergency Fund – Rs.2 Lakh in Bank Savings Account
Mutual Funds – 4 Equity Diversified Mutual Funds
PPF – Rs.70,000 / year
mistake and that is, considering ULIPs to cover his life.
-ULIPs don’t adequately provide life insurance cover. Just think that what if suppose Mr. Surajdies today? Will his nominees survive on just Rs.5 lakh of Capital & fulfill their financial goals?....Probably Not….
-You need huge life cover (probably Rs.50-75 lakhs) to cover your life and only term insurance plans can provide this much of life cover.
-Term Insurance plans provide adequate life cover with cheapest premium rates so go for them and avoid ULIPs
J) Having only one Term Insurance Plan: Divide life cover in 2-3 term insurance plans à
Name – Rajesh KumarAge – 50 years, Married, 2 ChildrenOccupation – ProfessorMonthly Income – Rs.60,000Monthly Expenses – Rs.40,000Monthly Cashflow – Rs.20,000
-Mr. Rajesh Kumar has adequate life cover of Rs.75 lakhs but the only problem is that, he has only one Term Insurance Plan – 1 Term Insurance plan with
lakhs but the only problem is that, he has only one term life insurance plan so after his retirement if he wants to reduce the life cover, he can’t.
-Always divide your life cover in 2-3 term insurance plans so that on your retirement you can discontinue 1 or 2 term plans and reduce your life cover as well as annual premiums.
-The advantage of dividing life cover between 2-3 term insurance plans is that, when your dependents become financially free and you become liability free, you can reduce the life cover and annual premiums by discontinuing 1-2 term plans.
K) Excessive Credit Card Debtà
Name – SwapnilAge – 30 years, married, No ChildrenOccupation – Business ownerMonthly Income – Rs.1.5 LakhMonthly Expenses – Rs.1.30 lakhMonthly Cashflow – Rs.20,000
Term Insurance – 2 term plans of Rs.25 lakh each
Emergency Fund – Rs.7 lakh in short term debt funds -Mr. Swapnil is a frequent traveller & shopper and he is fond of credit cards. He has collected 5
Mutual Funds – 4 equity, 1 debt & 1 ELSS funds
PPF – Rs.70,000 / year.
Credit Cards Outstanding Balance–
1. ICICI Bank Credit card – Rs. 20,0002. Citi Bank Money back Credit Card – Rs.50,0003. HDFC Bank Credit card – Rs.35,0004. SBI Credit card – Rs.42,0005. HSBC Bank Credit card – Rs.60,000
and he is fond of credit cards. He has collected 5 credit cards from major banks and all have thousands of rupees outstanding balance.
-Credit card is the worst ever financial product in the history of mankind.
-In United states, Credit card debt is the leading cause of Bankruptcy.
-Cut down all of your credit cards & replace them with debit cards.
L) Direct Equity Investing is not the Game of Everyone àName – Gaurav SharmaAge – 37 years, married, 3 childrenOccupation – Civil EngineerMonthly Income – Rs.60,000Monthly Expense – Rs.40,000Monthly Cashflow – Rs.20,000
Term Insurance – 2 term insurance plans, Rs.25 lakh eachEmergency Fund – Rs. 2 lakhMutual Funds Portfolio – 4 equity mutual fundsBank FDs – SBI & ICICI Bank 5 year FDsPPF – Rs.30,000 / year
-Mr. Sharma is the equity lover. He has collected more than 50 stocks in his portfolio by blindly following the advise of his broker & brother-in-law.
-I ask one simple question –“What is PE? What is the PE of Reliance Industries right now? & weather its fairly valued, over valued or
under valued?”
-If you don’t know the answer of this simple question than equity investing is not for you.
-When you invest in equity mutual funds, you already invest in the stocks than why to buy the same stocks again & again?
-Never invest in stock market by following advise of your friend,/family/brother-in-law.
M) Excessive Exposure to Gold àName: Sanjay MishraAge – 40 years, married, 2 childrenOccupation – RetailerShop ownerMonthly Income – Rs.50,000Monthly Expense – Rs.30,000Monthly Cashflow – Rs.20,000
Term Insurance – 2 term insurance plans, 25 lakh cover eachEmergency Fund – Rs.2 LakhPPF – Rs.30,000 / yearBank FDs – ICICI & SBI, 3 year FDs -After 2007, many people started thinking
that Gold is better than Equity. But this is Post-office saving schemes – POMIS
Equity Mutual Funds – liquidated all the equity investments in year 2008 after watching Gold rally and invested all of that money in physical gold & gold ETFs à BIGGEST MISTAKE
Gold Portfolio – [Gold Allocation – 70% of Total Portfolio Worth]
that Gold is better than Equity. But this is the biggest mistake. Gold has never outperformed the equity in past 300 years all around the world.
-Never invest more than 10% of your portfolio net worth in Gold.
-Gold is not to build wealth. It just beats the inflation very well. Equity is the only asset class which has given highest returns than any other asset class & its best asset class to build wealth & beat inflation and tax.
N) Buying a Home on Home Loan too Early àName: Akash ShahAge – 30 years, married, No childrenOccupation – Software EngineerMonthly Income – Rs.60,000Monthly Expenses – Rs.20,000Monthly Home Loan EMI – Rs.35,000Monthly Cashflow – Rs.5,000
Term Insurance – 2 term insurance plans, 25 lakheach
Emergency Fund – Rs.1 Lakh
-This is the commonest financial planning mistake. Akash has taken a home loan very early in his life even before building sufficient wealth.Emergency Fund – Rs.1 Lakh
PPF – Rs.10,000 / year
Equity Mutual Funds – Monthly SIP of Rs.2500 in 2 equity diversified funds, one largecap and one midcap fund.
before building sufficient wealth.
-Every month, Rs.35000 goes towards Home loan EMI payment while just Rs.5000 goes towards building long term serious wealth.
-The Property value of Akash’s Home will become Rs.1.5 crores after 10 years from today & his Rs.5000 monthly SIP in 2 equity funds will become just Rs.20 lakhs after 10 years at 20% compounded annual return.
-If he had started 35k monthly SIP in mutual funds than he would have Rs.1.40 Crores of MF portfolio which is more useful than having a house worth Rs.1.5 crores
- When you go for Home Loan EMIs in your early life, you are actually losing that much of TIME which could have been used to build a huge wealth. Only go for a home loan if you are also simultaneously going to invest that much amount of money in equity mutual funds or any other asset class to build a wealth.
66. Model Portfolios of Intelligent Indian InvestorsThe Optimally Diversified Most Powerful Portfolios
Following are the Top 5 Model portfolios of Intelligent Indian investors in various age groups.
Remember that, Financial Planning is to make your life simple and easy.
You really don’t need complicated financial products to do successful financial planning. Following simple financial successful financial planning. Following simple financial products are most effective to build most powerful wealth building portfolios.
1. Term Insurance2. Mutual Funds (Equity & Debt)3. PPF4. Bank FDs & Government Bonds5. Gold6. Health Insurance7. Real Estate
Avoid Following Financial Products Anyhow
1. Credit cards2. ULIPs3. Pension Plans4. Endowment Plans5. Money back Plans6. Child Future Plans7. Any Insurance cum Investment Products8. Direct equity investing (If you blindly
invest in it after following the advise of your broker/friend/relative)
Portfolio: 1 Age Group – 20 to 30 (College going, Just Started Earning & Without Any Dependents)Emergency Fund – Rs.50,000 in Bank Savings Account.
Term Insurance – N.A. (As in this age group you don’t have any dependents on you so no need of term Insurance)
Mutual Funds Portfolio – [Monthly SIP Rs.20,000 divided into 4k, 6k & 10k in each of the following funds]
1. Franklin India Bluechip Fund (Large cap Fund) - 20%2. Quantum Long Term Equity Fund (Multi cap Fund) – 30%
Asset Allocation
Name: SandipAge: 26 YearsOccupation: Software EngineerMonthly Income (Salary): Rs.30,000 / monthMonthly Expenses: Rs.10,000Monthly Cashflow: Rs.20,000Annual Salary: Rs.3,60,000 Total Debt: NIL
2. Quantum Long Term Equity Fund (Multi cap Fund) – 30%3. HDFC Midcap Opportunities Fund (Mid & Small Cap Fund) – 50%
[ Note:All of the above funds are 5 star rated funds according to Valueresearchonline.com as on Jan. 2011]
PPF –
Rs. 5000 per year.Even if you are not going to invest large amount in PPF, it is better to open
PPF account as early as possible to keep in mind the future. After 10-12 years, you can start investing in it and than in just 4-5 years you will have Tax-free maturity of your money.
Equity: 100%Debt: 0%Gold: 0%Real Estate: 0%
-Just 3 equity funds are enough to achieve optimal diversification
-No need to invest in debt/fixed income instruments at all in your 20s.
-No need to have any term insurance plan if your age is young (20s), you are single and you don’t have any dependents.
Portfolio: 2 Age Group – 31 to 40 (Active Earning Phase: 1)Emergency Fund – Rs.1.5 Lakh in Short term Debt Funds
Term Insurance (Total Rs.75 Lakhs divided into 3 plans)
1. Aegon Religare iTerm Online Term Insurance Plan – Rs.25 Lakh
2. LIC Jeevan Anand – Rs.25 Lakh3. Kotak Preferred Term Insurance Plan – Rs.25 Lakh
Mutual Funds Portfolio – [65% in Equity & 30% in Debt & 5% in Gold]
PPF – Rs.70,000 / annum investment in PPF to save tax under section 80C.
Health Insurance – Family Floater Plan
Equity: 65%Debt: 30%Gold: 5%Real Estate: 0%
-Divide Your Life Cover in 2-3 Term Insurance plans so that you can reduce the life cover after your retirement by discontinuing 1-2 policies.
-4 Equity Funds, 2 Debt Funds & 1 ELSS is enough for optimal diversification
-Never invest more than 10% of your portfolio net worth in Gold
Portfolio: 3 Age Group 41 to 50 (Active Earning Phase: 2)Name: AkashAge: 45 Years, Married, 1 ChildOccupation: TeacherMonthly Income (Salary): Rs.40,000/ monthTotal Monthly Expenses: Rs.25,000 / mthMonthly Cashflow: Rs.15,000/mthAnnual Salary: Rs.4.80 LakhTotal Debt: NIL
Asset Allocation
Equity: 50%
Emergency Fund – Rs.1 Lakh in Bank Savings account
Term Insurance (Total Rs.50 Lakhs divided into 3 plans)
1. Aegon Religare iTerm Online Term Insurance Plan – Rs.25 Lakh
2. LIC Jeevan Anand – Rs.25 Lakh
Mutual Funds Portfolio – [50% in Equity & 40% in Debt & 10% in Gold]
Debt: 40%Gold: 10%Real Estate: 0%
-As your advances, reduce the equity exposure of your portfolio and increase the debt allocation.
-No need to invest in Bank Fixed deposits as debt mutual funds are better than Bank FDs. This is because if Government hikes the interest rates, your Bank FD won’t increase it unless you break it. But mutual funds will automatically hike the interest rates.
Equity Funds – Three 5 star rated (According to Valueresearchonline.com) Equity Diversified Mutual Funds – 2 Largecap & 1 Mid cap funds – 60:40 allocation
Debt Funds – 2 Debt Funds (5 star rated)
ELSS – 1 Tax Saving Fund (5 star rated)
Gold ETF – Reliance Gold ETF
PPF – Rs.30,000 / annum investment in PPF to save tax under section 80C.
Health Insurance – Family Floater Plan
Portfolio: 4 Age Group 51 to 60 (Pre-Retirement Age)Name: Mr. OmprakashAge: 56 Years, Married, 2 ChildrenOccupation: Government officerMonthly Income (Salary): Rs.1 lakh/ monthTotal Monthly Expenses: Rs.40,000/ mthMonthly Cashflow: Rs.60,000/mthAnnual Salary: Rs.12 LakhTotal Debt: NIL
Asset Allocation
Equity: 20%Debt: 80%
Emergency Fund – Rs.3 Lakhs in Bank Savings account
Term Insurance (Total Rs.25 Lakhs )
1. Aegon Religare iTerm Online Term Insurance Plan – Rs.25 Lakh
Mutual Funds Portfolio – [20% in Equity & 80% in Debt ]
Equity Funds – Four 5 star rated (According to Valueresearchonline.com) Equity Diversified Mutual Funds
Debt: 80%Gold: 0%Real Estate: 0%
-Reduce the life insurance cover & annual premiums by discontinuing 1-2 term insurance plans in your portfolio as your children are financially independent now so no need of much life cover.
-Start booking profits from equity to debt funds just few years before your retirement . Reduce the equity exposure and increase the debt exposure to generate steady income after your retirement.
– 2 Largecap & 2 Mid cap funds – 70:30allocation
Debt Funds – 3 Debt Funds (5 star rated)
ELSS – 1 Tax Saving Fund (5 star rated)
PPF – Rs.70,000 / annum investment in PPF to save tax under section 80C.
Portfolio: 5 Age Group > 60 Years (Post- Retirement)Name: Mr. Mahesh SinghAge: 65 Years, Married, 2 ChildrenOccupation: Retired Army OfficerMonthly Income (Pension): Rs.30,000/ monthTotal Monthly Expenses: Rs.25,000/ mthMonthly Cashflow: Rs.5000/mthAnnual Pension: Rs.3.6 LakhTotal Debt: NIL
Asset Allocation
Equity: 0%Debt: 100%
Emergency Fund – Rs.6 Lakhs in Bank Savings account
Term Insurance (Total Rs.25 Lakhs )
1. Aegon Religare iTerm Online Term Insurance Plan – Rs.25 Lakh
Mutual Funds Portfolio – [0% in Equity & 100% in Debt ]
Debt: 100%Gold: 0%Real Estate: 0%
-It is better to have large amount of Emergency fund after your retirement.
-Only 1 term insurance plan is enough. Discontinue every other term plans as your children are now financially independent.
-Book profits from your equity funds and invest 100% of money in debt funds/Bank FDs to generate steady income after retirement.
-Go for Senior Citizen’s Health Insurance plan after the age of 65
Equity Funds – NIL
Debt Funds – 4 Debt Funds (5 star rated)
ELSS – 1 Tax Saving Fund (5 star rated)
Health Insurance – Senior Citizens Health Insurance Plan
Break Time…Know the Difference between
Assets & Liabilities
Many parents ask me that, which is the best personal finance advise that you would like to give to our children?
Well, it’s only one.
Teach your Children the Difference between Assets & Liabilities, Buy Assets & Stay away from Liabilities
Assets: means anything that appreciates in its value over the Assets: means anything that appreciates in its value over the time & put money into your pocket (Cashflow). Examples: Stocks, bonds, gold, real estate, mutual funds, businesses, art, coins, web properties…etc..
Liability: means anything that starts loosing its value from the day you buy it & takes money away from your pocket.Examples: Car, Luxurious automobiles, Watches, Club memberships, expensive mobile phones, clothes, electronics, credit cards, personal loans & other high status symbols items.
Financial Planning for NRIs
The following section is specifically for NRIs or people who are planning to become NRIs. In this section, I have given very important information about financial planning for NRIs in very COMPREHENSIVE manner such as which accounts they should open?, in which Indian Financial products & Asset classes they can invest, which are the financial products in which they can’t invest and various Tips, Dos & Don'ts for NRIs while investing in India.
NRE & NRO Accounts – Difference, Which is Better?NRIs can open two types of banking accounts with Indian banks – NRE
& NRO. Both the accounts have different features so it is very important to understand that which type of account suits your needs best?
NRE (Non-Resident External) accounts:- Only NRIs can open this account- Repatriation (Transferring money to abroad) is possible. Means
funds from this account can easily be transferred to any other country around the world.
- It can not be opened jointly with resident Indian.- It is Tax-Free account. Interest earned in this account is Tax free
-Both the accounts can be opened jointly with NRI & both are the Rupee accounts.- It is Tax-Free account. Interest earned in this account is Tax free
- Source of Fund: Funds remitted from abroad
NRO (Non-Resident Ordinary) accounts:- This account can be opened by both NRIs & Indian residents
planning to become NRIs in future but currently living in India- Repatriation is not possible with NRO accounts.- NRO account can contain only funds received from within India.
These funds have to be used only for local payments in Indian rupees.
- It can be opened jointly with resident Indian.- Tax: This account is taxed as per applicable tax slabs.- Source of Fund: Funds received from within India
-Power of attorney holder can’t open NRE or NRO accounts. However, power of attorney can operate the account.
-Nomination facility is available in both the accounts.
-When the NRI returns to India, both the accounts will be converted into resident account.
-It is possible to transfer funds from NRE to NRO account. But the reverse is not possible.
NRIs & Investing in Indian Assets/Financial Products
Which Asset Classes can NRIs Invest in?
1. Bank Fixed Deposits2. Corporate Fixed Deposits3. Stocks4. Mutual Funds (All the Indian origin mutual
funds)5. Real Estate
Which Asset classes NRIs can’t invest?
1. Government of India (GOI) Bonds2. PPF (Public Provident Fund)3. Senior Citizen Saving Schemes4. Post-office saving schemes (MIS, KVP,
NSC, Recurring deposit scheme & Time deposit scheme)
5. Real Estate6. Insurance products (However, its difficult
to buy term insurance).
There is no upper limit of investing in the above assets. NRI can invest as much money as he/she wants.
deposit scheme)5. US origin mutual funds like – HSBC.
Fidelity & Templeton
If and when the accounts office comes to know of the anomaly, the deposit will be returned to the investor, without any interest.
Tips for NRIs before Investing in India
- If you are NRI & want to come back in India in future than,Term Insurance + Mutual Funds + PPF is still the best financial planning combination.
- However, keep in mind that you can not invest in PPF as an NRI and pure term insurance plans have several exclusions and limitations for NRIs. So better to start investing in 3-4 good equity diversified mutual funds and 1-2 debt funds to build wealth for your future in India.
- Insurance cum Investment products: During your visit to -Equity (& Equity Mutual Funds) is the - Insurance cum Investment products: During your visit to India please keep in mind that don’t be fooled by the insurance agents/brokers/bank officials and NEVER invest in any insurance cum investment products of India like ULIPs, Pension plans, money back policies & whole life insurance plans. All of these are the very costly investments. A simple equity mutual funds are the best options in India to build wealth.
- Real Estate: The real estate market in India is highly unregulated so take the advise of good and reputed real estate broker before investing in real estate of India.
-Equity (& Equity Mutual Funds) is the best asset class to invest in India if you are going to lock-in your money for more than 5 years of time horizon.
-Corporate FDs are another good options to earn higher interest returns than Bank FDs. However, always check AA or AAA ratings before investing in any Corporate deposit scheme.
-Insurance agents & private sector banks target NRIs to sell their costly insurance cum investment products. So don’t take your any financial decision following their advise.
About the Author- Asav Patel is the Certified Financial Planner (CFP)
and awarded Gold medal by Hamstring School of Economics, Oxford University, London
- He is the member of Harvard Business School of Financial Planning
- He is the member of “Save the World Foundation”
- He is the active member of “GoDaddy Child care - He is the active member of “GoDaddy Child care Foundation”
- He has presented a paper on “Sovereign Debt Crisis” in international G20 summit.
- He is on the advisory boards of several Fortune 500 Companies including Xiphi Corporation, OrexPharma & Sun Network Digital Media.
- He loves to drive fast cars, playing golf, gambling in world’s best Casinos, travel the world and dating with world’s most beautiful women.
This is a Joke (Fake Bio). Please don’t take it seriously. If you want to read my Real Bio than go to the next page. On the next page, you will find everything about me (And that’s REAL BIO….!!! ;)
Real Bio àHiii, I am Asav Patel, Personal Finance Blogger from
Ahmedabad, Gujarat, India. I born on 7th Jan 1983, Sunshine – Capricorn; Moonshine – Libra.
Basically I am a doctor (Ophthalmologist) but I found my Passion in Personal Finance, Investments & Entrepreneurship & that’s why I started a personal finance blog MyJourneyToBillionaireClub.com in March 2008 also known as MJ2BC.
The Blog started purely out of my passion as a hobby to teach people personal finance & spread the real financial
It’s me, Asav Patel, Ophthalmologist, Personal Finance Blogger & the people personal finance & spread the real financial
awareness all around the world.
But ultimately it turned out to be a Mega Success Online Business. Today the blog receives literally Millions of visitors every year from India & all around the world & it’s India’s leading Personal Finance Blog.
In June 2010, I launched a Personal Finance Forum –Investta.com so that people from India & all around the world can discuss, share & solve their financial problems
Spreading the Financial Awareness all across the world is the basic spiritual mission of MJ2BC & Investta.
Personal Finance Blogger & the founder of MyJourneyToBillionaireClub.com& Investta.com
And yes, that’s my Real Photo & Real Bio…!!! No Kidding…!!!
I am not any gold medalist from any economics school nor I am any Certified Financial Planner (CFP). I am just like you who started MJ2BC & Investta out of my passion to teach personal finance & spread financial awareness.
About MyJourneyToBillionaireClub.com àMyJourneyToBillionaireClub.com also known as MJ2BC is
a personal finance blog which started as my passion to teach personal finance & spread financial awareness in India & all around the world.
In March 2008, when I first time launched this blog, many people told me that, such kind of things don’t work. Because nobody in India is interested to learn personal finance.
But well, Today the readers of MJ2BC have proved everything wrong. Today MJ2BC receives millions of visitors every year from all around the world.
That’s me doing blogging from my laptop on my hostel bed
Google AdSense Cheque: My 1st earning from my Blog
visitors every year from all around the world.
This shows that, Indians are willing to learn money & personal finance. This shows that, Indians are willing to solve their financial problems.
Many of you may not know that How I started MJ2BC? Well, I started it from my home only on 25thMarch 2008 & after that in May 2008, I joined my Post-graduate course in MS-Ophthalmology at D.Y. Patil Hospital, Kolhapur, Maharashtra, India. And since then up to May 2011, I have run this blog through my hostel room.
I used to write 6-8 hours a day during the initial 3 years of this blog.
My Laptop on my study table in my Hostel room
That’s my notebook in which I write down the future articles titles for my readers.
About Investta.com àInvestta.com is a personal finance discussion forum which is
also just like MJ2BC born out of my Passion to teach personal finance & spread financial awareness all around the world.
I launched this forum in June 2010.
You can discuss & share your personal finance & financial planning problems, mistakes & knowledge on Investtaanytime for the benefit of other people around the world.
I am full time available on Investta.com & only thing I want to tell you about Investta is, just visit Investta.com not only to tell you about Investta is, just visit Investta.com not only to discuss & learn personal finance and financial planning but to see the PASSION of Investta forum members.
You can ask me anything related to financial planning, personal finance & money on Investta & I will be more than happy to discuss & solve all of your queries.
Be the Active member of Investta.com and discuss anything about personal finance, make money online, businesses, entrepreneurship & Investing.
Share your knowledge, experience & mistakes about money & finance on Investta and help other people in India and around the world to solve their financial problems.
That’s me, Asav Patel, The Founder of Investta.com , A Personal Finance Forum & MJ2BC, India’s leading Personal Finance Blog.
Visit Investta to discuss & solve your financial problems & to see the passion of Investta forum members.
Buy Now àOn the next page, there is a great deal for you.
This is the thing that you will need to do effective financial planning.
The market price for the entire package is Rs.50,000
But as you are a good reader, I am giving you 50% Discount. And that’s Rs.25,000 only…..And that’s Rs.25,000 only…..
This offer is for the Limited Time PeriodOnly.
So Hurry & Buy your own copy right now for just Rs. 25,000/-
Go to Next Page for more offer details.
This is Just a Joke…!!!Well, this is just an another joke. I don’t have anything to sell you.
Everything that I know about Financial planning is already described in this eBook.
I have put this joke because I want to tell you that, the purpose of writing this eBook is not to sell you something. But the real purpose of writing this eBook is to educate you to do effective financial planning for you & your future generations.
I have put hundreds of hours of mind work to prepare this Financial Planning eBook because the real purpose of this Financial Planning eBook because the real purpose of this eBook is not to sell you something but to teach you financial planning in simple, quick & most effective manner.
You will find lots of FREE eBooks online about financial planning and not only this but you will also find FREE Newsletters & Subscriptions. But well, their sole purpose is to sell you something.
I advise you to make a print of this eBook & put it in your drawer so that you can refer it anytime before taking any financial decision.
FeedbackGive your Feedback / Suggestions:
So Finally,If you want to give any kind of feedback (Positive & Negative) and
suggestions about this eBook than you can directly contact me on my personal e-mail address [email protected]
Your suggestions & feedback is very important to improve the quality of this eBook.
Discuss and Solve Your Financial Problems & Queries:
However, if you have any query about financial planning / personal finance that is still in your mind and didn’t solve after reading this eBook than the best way is to put your this query in detail on my Forum – Investta.com
I am full time available on Investta to discuss & solve your financial problems. So feel free to ask & discuss any of your financial problem/query on Investta.com
If you enjoyed this e-book, you might enjoy following FREE eBook also by Asav Patel:
My Journey To Billionaire Club
What Rich Teach their Kids about Money that Poor & Middle Class Don’t?
This 162 page Diagram Rich eBook (PDF) contains the 6 Basic Lessons and 10 Commonest Myths about Money that Rich people teach their Kids but Poor & Middle Class Don’t.
