Indholdsfortegnelse for September 2023 i Outlook Money

Financial Advisory The Financial Sherpa You Need in the August 2023 issue has raised a valid point. Despite massive demand for financial guides, supply of Sebiregistered investment advisors (RIAs) is abysmally low. The article has been an eye-opener. I also used to take help from my friend who worked as an insurance agent. But now the space has become complex with many options that insurance agents are not necessarily aware of. Unfortunately, people in small cities like me are forced to adopt the “doit-yourself” strategy. I wish someone can help me manage my funds so that it can generate returns and my financial goals are met. Sharad Bhattacharya, email AUGUST | 2023 NPS Benefits The interview with Pension Fund Regulatory and Development Authority (PFRDA) Chairman Deepak Mohanty, published in the…

MODEL INSURANCE PORTFOLIO Life Insurance: At this stage, typically, financial liabilities increase as you need to provide for your children and parents, and there will be liabilities, too. Consider all the expenses, including education and health expenses, when deciding on the cover amount. If you have a home loan, ensure your coverage factors in that too. Health Insurance: You may consider a family floater plan to cover your entire family. Compare the cost if you plan to include your parents in the floater policy. Also, buy a topup or super top-up policy to maximise coverage at low cost. You could also go for diseasespecific or critical illness policies at this stage. Home Insurance: If you own a house, protect it against damage from fire, natural calamities and other risks. This…

MODEL BANKING PORTFOLIO Bank accounts: This strategy remains the same for senior employees, but they possibly need to add to your FDs to enlarge the emergency fund, and to maintain liquidity for nearterm goals. You could help your teenager children open individual accounts with you as the guardian. After retirement, consolidate your accounts for better tracking. You could also use FDs for regular cash flows. Revisit your nominations. Loans & Debt: Keep a tab on the interest rates. When rates are rising, try to prepay some of your loan to keep EMIs under control. You could go for other strategies like switching to a lower rate. Check your affordability before taking a home improvement loan and balance it out with other needs such as education and car loan. You should…

MODEL FINANCIAL PLANNING PORTFOLIO Budgeting: Develop a realistic budget to track your income and expenses. Prioritise saving a percentage of your income each month. Short-Term Goals: Define short-term goals, such as paying off an education loan, or saving for an expensive gadget or consumer good, and start investing accordingly. Protection: Build an emergency fund equivalent to 3-6 months of expenses, and assess your needs for insurance. Retirement Planning: Begin investing regularly in low-cost, diversified investment options like index funds and ETFs.…

MODEL TAXATION STRATEGY Senior employees need to compare the tax payable under the new and old tax regimes. Take into account the reimbursement part of your salary that can reduce your taxable income. If the difference is only minor, you may still choose the new tax regime, which comes with low compliance. The retired also need to look at whether their incomes are taxable before arriving at a decision. Ensure you take into account the investments you withdraw when calculating your total taxable income. Hire a tax consultant if you are unable to figure things out by yourself.…

Contact The Bank: If you realise you are a victim of fraud, contact the bank’s customer service or antifraud department immediately and report the incident. They can help take appropriate actions like freezing accounts, blocking debit or credit cards, changing passwords, and investigating unauthorised transactions. File A Police Complaint: If the fraud involves a significant amount, consider filing a report with the local law and enforcement agency. This documentation can be useful for any investigation that might follow.…

Can a word embody contrasting views? Consider “retirement.” For some, it symbolizes leisure and freedom to pursue hobbies. For others, it’s a reminder of looming financial uncertainties—two diverging perspectives bound by a single term. The very mention of retirement raises a flurry of financial concerns. From fulfilling household responsibilities to clearing debts, the term prompts us to ask difficult questions: Am I financially independent without a steady income? Have I met all my financial obligations? These questions are a jarring contrast to the monthly salary notifications one receives throughout their working years. Retirement inevitably involves three core financial aspects: disrupted cash flows, unplanned maturities, and lingering liabilities. Addressing these areas is pivotal and constitutes the first major step towards a financially stable retirement. Planning for Retirement: Start Early Retirement planning…

Every year, Teachers Day is celebrated to recognize the invaluable contributions and the profound impact of teachers on our lives. Apart from schoolteachers, we gather many lessons from other individuals in our lives, and a lot of these lessons are about how to handle money. Here are five such lessons that you may have heard about and could really come in handy if you start implementing them in your lives. Save A Part Of Your Income Several of us may feel that we don’t earn enough to start saving. This could happen to people who have just started their jobs and do not have a big pay packet or those who end up spending a chunk on their liabilities or dependents. But that is a misconception. Even if you are…

Twenty-five years and a few months ago, when Outlook Money (then Intelligent Investor) was launched in July 1998, the question the founding team faced was: “Why now?” Television had begun changing the game for print, and launching a fortnightly magazine was perhaps seen as an impractical but an incredibly bold move. Outlook Group broke the barrier in business reporting to launch a unique personal finance offering to address the everyday financial needs of individuals like you and me. Outlook Money continues to do so, standing as it were as the only personal finance magazine in India. In the interim, it has constantly reoriented itself to include and converse with the changes in technology, regulations, investment culture, demography, and the nature of advisory, among others. In 2023, digital has already emerged…

MODEL INSURANCE PORTFOLIO Life Insurance: Continue your term insurance coverage if you have dependents and liabilities. Consider not just the home loan, but also the education loan you may have taken for your child. However, if you think your family doesn’t need protection anymore or you have enough assets, you may surrender the policy depending on the policy tenure left. Health Insurance: Continue to review and update your health coverage, as medical needs change. As you age, the premiums for health insurance go up, so don’t forget to buy a top-up policy. You may also explore products for long-term care coverage and daycare and OPD needs. Remember to build a separate health fund along with it. Home insurance: Continue with your home insurance policy for a comprehensive cover, including one…

MODEL BANKING PORTFOLIO Bank Accounts: Typically, when you start your career, your employer helps you to open a salary account. Apart from that, you can open a savings account for use as your investment account from which your SIPs and other investments can be debited. If you are new to investing, you could try bank recurring deposits to build savings discipline, and move the corpus to an FD at the end of the tenure. Loans & Debt: When you start earning, you may need to fulfil many small needs, such as buying a fridge or air conditioner. You could buy these consumer goods as per your affordability. Ensure the EMIs are paid on time. This is also the stage to start building a positive credit score, which can come in…

Vijay Legha, 40, who works at a Delhi-based multinational company, and belongs to Bikaner in Rajasthan, is among the handful of people who start investing early. He learned to make his “money work for him” early on and kept increasing his investment each year, which has benefitted him immensely. When he was featured in Outlook Money in December 2009 as a 26-year-old single, he was investing in mutual funds, gold funds, Public Provident Fund (PPF), and Voluntary Provident Fund (VPF). After he got married, Vijay diversified into tax-saving mutual funds, exchange-traded funds (ETFs), bank deposits and other small savings schemes such as Sukanya Samriddhi Yojana for his two daughters. He also began investing in precious metals during Diwali or Holi. In fact, he saw the potential in gold and silver,…

MODEL FINANCIAL PLANNING PORTFOLIO Career Advancement: Seek opportunities for career growth or additional income streams to ensure your saving goes up. Child Education Savings: If you have children, begin investing for their education and other expenses, and make it part of your longterm investment portfolio. Retirement Planning: Estimate the expenses you will need post-retirement, calculate the amount you will need to save and start goal-based investing towards that. You could plan it in a way that your investments go up over a period of time if affordability is an issue. Review: Reassess your financial goals, adjust them if needed, and track the progress of your portfolio and investment capacity.…

Outlook MONEY Retirement When India became a republic in 1950, the average life expectancy was 35.21 years, in 2022 it stood at 70.19 and by 2100 it will become 81.96 years, according to UN estimates. Taking 2022 numbers from a financial perspective, the average life can be divided in three phases—early phase, accumulation phase and the transition phase. The early phase refers to the years of growing up, getting formal education and early years of job (10-28 years). The accumulation of wealth phase (28-58 years) is when we excel at our work, change jobs for a better standard of living, earn, spend, save and invest. The transition phase is when there are no earnings, but only expenses (from 59 till death). The most critical question in the third phase is…

An Investor Education & Awareness Initiative It is estimated that the number of retired people is going to steadily increase over the years and, therefore, it is important for people to start investing early for their retirement. A recent panel discussion by Outlook Money in association with Aditya Birla Sun Life Mutual Fund focused on this key issue. The topic was: “Retirement Planning: How To Secure Your Golden Years?”. The guests included K.S. Rao, head of investor education and distribution development at Aditya Birla Sun Life AMC; Amit Trivedi, author, speaker, blogger, and trainer; P.V. Subramanyam, chartered account, author and trainer; and Harsh Roongta, a personal finance and tax expert. The discussion was moderated by Nidhi Sinha, editor, Outlook Money. Here are some edited excerpts from the discussion. WHAT ARE…

The saying, “A journey of a thousand miles starts with a single step,” aptly describes the essence of a Systematic Investment Plan (SIP). A SIP is a simple, convenient and disciplined way to meet your financial goals. It is designed to help investors to save regularly and accumulate wealth in a disciplined manner over a long period. To make a SIP effective, an investor has to be mindful of the following three principles. • Start Early: If you start investing earlier, you may generate relatively higher returns and can benefit from the power of compounding • Invest Regularly: This can help you manage market volatility, as it lets you average out the cost of your investments over time. • Invest the Right Amount: Often, people start with SIP but are…

Writing down your own Financial Milestones is the key factor for any family: Without financial goals most of the times, investment journey becomes directionless. With no end-post in sight, greed and fear of market movement takes over and it drives the decision making process. This may lead to some very harmful wrong investing decisions, like withdrawing at wrong time or moving from one asset class to aother at wrong time. Asset Allocation is the next key driver of successful investment journey: Concentration in one investment product is bad for any situation. Regardless of your financial and life-stage status, it is very important to have right asset allocation in your investment portfolio based on your financial goals. One may never know, when unprecedented changes in life may come up. And if…

MODEL INSURANCE PORTFOLIO Life Insurance: If you have dependent parents or siblings or education loans, you must buy a term plan. You should enhance the cover when you get married, and the number of dependents and liabilities increase. Health Insurance: Start with buying an individual comprehensive health insurance plan. Go for a floater policy once you start your own family, but maintain individual policies for yourself and spouse. Accident Insurance: This kind of insurance policy will protect your family against your accidental death. They also cover disabilities sustained from injuries during an accident that may prevent you from working. You could also add disability insurance, which usually pays a percentage of your income. *Check terms and conditions carefully…

The Uttar Pradesh Skill Development Mission (UPSDM) is a visionary initiative that aims to integrate skill development with alternative education forms, promoting inclusive growth and empowering individuals. It creates a platform for individuals to discover their talents and equips them with relevant skills for industries and societal needs. The UPSDM, established as a registered society in September 2013, operates under the Department of Vocational Education & Skill Development, Government of Uttar Pradesh. Since its inception, the UPSDM has been a leading force in skill development initiatives, promoting excellence and driving progress in Uttar Pradesh. The Yogi government has been working towards achieving a USD 1 trillion economy by focusing on education and skill development. The government has created a minimum of five special education zones to bolster the education system…

MODEL BANKING PORTFOLIO Bank Accounts: Apart from your basic salary and investment accounts, you should have some FDs to park your emergency funds. With a larger family at this stage, your emergency fund needs would have increased. You could also maintain a joint account with your spouse to ease up nomination and other details, especially for investment accounts. In any case, have nominations in place for all your accounts. Loans & Debt: You may need to take bigger loans for a home and car. It may be beneficial to take them jointly with your spouse. Car loans are usually part of the household expense; so, shop for the best rates without affecting your credit score. Use your expanded limit on credit cards judiciously and maximise on rewards and other benefits.…

MODEL FINANCIAL PLANNING PORTFOLIO Review: Review your goals that may have shifted as per the changing times, inflation and other needs, and make the necessary adjustments accordingly. Don’t forget to review your retirement savings and pump in extra to that goal if required. Portfolio De-risking: Start shifting your corpus from high-risk assets to lowrisk ones as your goals come closer. Regular Income Planning: If you are about to retire or already retired, think of ways to deploy your corpus so it gives you regular income. Take into account all your investments, including provident fund, debt investments and equities.…

MODEL TAXATION STRATEGY Choose between the new and the old tax regimes depending on your income and deductions. Chances are that if you have a home loan and you max your deductions under Sections 80C and 24(b), the old tax regime may make sense for you. Remember that your mandatory Employees’ Provident Fund (EPF) deduction and children’s fee will automatically be counted in towards Section 80C. What remains can be invested in ELSS and NPS. Also, the likelihood of maximising your health insurance deduction under Section 80D for self and family is high at this stage of your life.…

There is a tide in the affairs of men, or so goes an oft-quoted quip from Shakespeare’s vast body of work. For men, and I allude to the straight-laced citizens of this mighty land irrespective of gender; the tide in question comes in the shape of a poser. When should they begin to plan for retirement, now or later? And the answer comes pat: for most, it should start immediately. I do not wish to be flippant, but experience tells me that hesitation on this front will be tantamount to foolishness. And when I refer to a retirement plan, I mean one that checks all the boxes. Ergo, a randomly purchased pension scheme does not fit the description, nor does an oddball investment in the alluring real estate. Ditto for…

Do you have a purpose behind your mutual fund investments, or are you putting in money aimlessly? If it’s the latter, it’s time to pivot to goal-based investing. Goal-based investing is the investment strategy where you align your investments with your financial goals within a specific timeframe. However, before you carry out goal-based investment, here are six key don’ts you must keep in mind. • Don’t set unrealistic goals: We all have grand financial objectives we aspire to reach. Daydreaming is fine, but when it comes to planning your investments, keep it grounded in reality. Factor in your current income, expenses, and debts. Also, never neglect the timeline for each of your financial objectives. • Don’t chase trends: In this era of information overload, it is easy to get lost…

The Nifty 50 index is touching an all-time high; in just 15 sessions, the index has risen nearly 900 points, fuelled by solid global market cues, and substantial influx of foreign investor funds. Here’s how to capitalise on the upward trend. The Right Choice • Capitalising on Growth Potential Different industries grow due to different conditions. For instance, technology companies might experience explosive growth due to technological advancements, while real estate companies may benefit from increasing property prices. Picking the right sectors is crucial. • Diversification for Risk Mitigation By diversifying their portfolio across various sectors, investors can spread their risks. For example, technology stocks may perform well during a bull market, and healthcare or consumer goods might offer stability and act as a buffer in any downturns infecting the…