In our company, there is a nice
concept implemented which will help to develop our knowledge and skills. i.e.,
Morning Presentation. Each and every day we learn many new concepts or topics
but in last week one concept/topic which we discussed is reverse brainstorming.
E.g., On our website, customers are not visiting then what to do? After brain
storming also, we are not able to find proper result. In such instances, we can
do reverse thinking. Like, what we can do for our customers for not visiting
our websites? Your reply may be replace content which are irrelevant, dull
quality pictures, develop website in such a way which will take lot of times
(user friendly) and many more. Now from this reverse brainstorming, we can find
out that to make the best websites, what we can do.
In the same way, just think about
“Ramayan”. What was the main reason for Ram exile? We all are very well aware
that due to His father’s promise. And just because of that he went to exile and
after that Lakshman- Shurpankha, Ravan – Sita incident and many more. And the main
reason for Sita’s haran was the golden deer. Now let’s try for reverse brain storming
to avoid Sita’s haran?
Your answers would be it’s better if
she would have avoided obduracy for deer. Another one is its better if they
avoid going to exile. Your all answers are right. And I would prefer being a
king who has invested some money in real estate with amenities which can also
be one of the reasons to avoid kidnapping.
Just think this situation with current
scenario. On any other day if your father will tell you that today is your last
day in my home. From tomorrow onwards find your own way or if suddenly you met
with a major accident and you are the only earning member after your father.
You become the family’s only bread winner then what will happen. If you are
working in small company at that time your boss refuses to take any
responsibility for financial help then what to do? Just think whether you are
proficient enough to live our life with proper living standard without any
compromise.
If your answer is yes, we will live our
life without any compromise then you surely deserve a pat on the back. And if
your answer is “NO” then just spare 5-10 minutes of your time to read these
steps for better financial planning.
Investment Menu Card -
|
Instrument
|
Tax
Benefit
|
Return
|
|
EPF
|
√
|
8.50%
|
|
PPF
|
√
|
8%
|
|
NSC
|
√
|
8%
|
|
FD’s
– Banks & Post Office
|
√
|
5.70
to 8.50%
|
|
Senior
Citizen Savings Scheme
|
√
|
9%
|
|
Mutual
Funds
|
√
|
Market
Linked
|
|
ULIP
|
√
|
Market
Linked
|
|
NPS
|
√
|
Market
Linked
|
|
Direct
Equity
|
√
|
Market
Linked
|
|
Gold
|
√
|
Market
Linked
|
|
Real
Estate
|
√
|
Market
Linked
|
These are the main instruments where
most of the people are investing. Investment is necessary, you can choose any
of these instruments but you should invest. Before you start investing just
think if you are not investing money in any instruments and keeping it idle
then what will be the future value of money.
Cost of money lying idle…
|
Money in
savings account
|
+
|
100,000
|
|
Interest
earned in 1 year (@3.5 per annum)
|
+
|
3500
|
|
Amount
after 1 Year
|
|
103,500
|
|
Impact of Inflation (@5% per annum)
|
-
|
5000
|
|
|
|
|
|
Value at the end of year 1
|
|
98500
|
Your investment ought to beat the
inflation!!!
What
should we do?
Lack of Money is the root
of all evil.
-
George
bernard shaw
How many of us agree with
this? We all are very well aware that because of lack of money many problems
are raised. That means we all want money and the most important thing is that
our money will work for us. Money will work for us only when you focus on
certain points before investing in mutual fund.
First and foremost we
should know what is mutual fund and how it works?
What is Mutual
Fund?
§ A
mutual fund is the trust that pools the savings of a number of investors
who share a common financial goal. Anybody with an investible surplus of as
little as a few hundred rupees can invest in Mutual Funds. The money thus
collected is then invested by the fund manager in different types of
securities. These could range from shares to debenture to money market
instruments, depending upon the scheme’s stated objective. It gives the market returns
and not assured returns. In the long term market returns have the potential to
perform better than other assured return products. Mutual Fund is the most cost
efficient distributors of financial products
Do's and don't for Investment
ü Plan your expenses:
To some people, getting
rich is about spending less. To others it’s about earning more. Unfortunately
we are earning more and spending more, we will just stay where we are. It’s
like running on treadmill.
There are numerous high
income professionals who have ended up with no savings despite a successful
career because they lived a high consumption lifestyle without having an
expense plan.
Let’s learn the allocation
model budgeting from the famous Hong Kong based billionaire Li KaShing.
Let’s unravel this model
with an example. Say you earn Rs.30000 per month. In this case, Li KaShing
advice you to spend like this:
·
Rs.9000
for living expenses.
·
Rs.6000
for Networking – making new friends and professionals and expanding your
circle. These expenses include gifts, lunch dinner.
·
Rs.4500
for Learning. Use this money to invest
on yourself by reading books, spoken English classes, attend training program,
that will help you in your career or business. Never stop learning.
·
Rs.3000
in Travelling/ Emergency Fund. Invest this amount in different bank account. Manage
this fund for your dream destination. Travelling will help you to grow as a
person, broaden one’s horizons and develop one’s outlook and instincts.
·
Rs.
7500 for investing. Invest it on term insurance, mediclaim, mutual fund
Obviously
% allocations may vary depending upon income level.
Key Takeaways:
Keep
a watch on your bank accounts carefully.
Start
a sinking fund.
Budget
all expenses (use the Li KaShing model as a reference)
How to Plan Our Investment?
It’s too easy. Start by listing
priorities and form your check list. Like, Mediclaim, Life Insurance, Term
Plan, Mutual Fund etc., Why many people failed to budget because of their poor
planning. E.g., generally our priorities are mediclaim and Life Insurance. In
such instances many people prefer quarterly, half yearly or yearly installment.
In such cases, it has been observed that installments are coming back to back 2
or 3 months. Because after our job our 1st priority is Life
Insurance and mediclaim and after marriage we purchase same for our wife and
child. In such cases it has been observed that premium of installments are
approaching in back to back months or in the same month. For such cases
planning is must. So we can avoid unnecessary burden.
Before any fix expense, just calculate
your other expenses for each month and how you will manage it. Our financial
advisor will also do the same things. And still you think that it’s not your
cup of tea then call the best financial advisor.
Key Takeaways:
→
Before
any additional investment, just think how much fix expenses you have in month
and plan accordingly.
Plan your Investment as per inflation:
As the year passes your standard of
living and expenses are increasing day by day. If your current age is 40 then
before 10 years you were able to manage your home within 20,000 but now your
salary is 40,000 but still you are unable to manage it. Reason is simple. We will
manage our expenses as per our salary increment or bonuses. We never plan that
amount for our future investment. What we are earning, we will credit that
amount in our saving bank account which will give us 3.5 to 4.5 interests and
will spend that amount in our daily routine life as and when needed. I m sure
you all will agree with me.
Do one thing, whenever you receive any
bonus from your company or salary increment then try to invest at least half of
the amount and reduce your expenses as much you can. Here I just want to
clarify one thing that I am not saying that you need to compromise with your life
style. I mean to say enjoy your life at fullest but avoid unnecessary expenses.
Invest additional amount:
Sometimes we have an additional
amount. Like received bonus of Rs. 100,000 from company but after 3 months I
need that money for my sister’s marriage. Now what to do? Generally we all will
put that money in our saving account and will use as per our requirement. You
are also right because how can we take any risk on that. From our childhood we
had seen that everyone wants to invest their money in FD for 1 year.
So, in such cases, what we can do we
can park that money in FD for 1 or 2 months. Because if anyone invest in FD
then minimum time duration for FD is 7 days or invest that amount in Mutual
Fund in Debt fund. In that fund you will get your money within 3-4 working
days.
Key Takeaways:
·
Invest
your additional amount in Mutual Fund and reduce your expenses as much as you
can.
Plan for your fix expenses/tour:
There are many people who always
believe that fun is required in life. So, once in a year they will plan tour in
different places. Most probably they plan on their marriage anniversary or in
vacation of their children. That is also right that in each and everyone’s life
fun is necessary. For that what majority people do is before their travel schedule
they will save their money in saving account. And at the time of tour they will
withdraw the money and plan the tour.
Instead of this the alternative would
be to start SIP in mutual fund. E.g., if we are planning to visit at GOA in Dec
2017. And for that we are assuming total expenses including Hotel and
transportation around 15000 for 2 people. For that we can start the SIP with
Rs.2000 for 9 months. So, at the end of 9 month, you will get minimum 18000 Rs.
And because of fluctuation in NAV you will get an additional amount also. If
you are not aware in which scheme you would invest then just ask your friends.
In each group there is a person who is well versed about various beneficial
schemes and if you are unable to find such friend then either find and include
that person in your group or increase your knowledge. Because you should aware
that how your money is working for you.
Key Takeaways:
→
For
your fix expense or tour, invest some amount on monthly basis.
