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98% Indians are eroding their wealth each year and they do not even know it ! – A case study

1 Comment / Blogs, Wealth Creation /

Sanket Shah (Name changed) is 40 years married HR executive. His wife is working as government employee in a granted educational Institutions for differently abled students. They are blessed with 8 years old daughter. Both are earning greater than 11 lakh per annum. They have purchased a tenament with a cost of 20 Lakh for which their current outstanding loan amount is 10 lakh. Their total savings are in access of Rs. 20 Lakh . Out of this fund apprx 80% are parked in Cash Management Fund and some 20% are in stocks and Tax Saver Mutual Fund. Mr. Sanket is paying insurance premium of Rs. 31000 per annum with Insured Value of Rs. 7.5 lakh and his wife is paying premium of Rs. 15000 p.a with insured value of Rs. 2 Lakh. They need Rs. 8 lakh for their home improvement and renovation in 2 years time. Mr. Sanket wishes to upgrade his car with an additional financial outlay of Rs. 5 Lakh after 5 years. The couple wishes to provide for their daughter Higher Secondary , College education and marriage. Mr. Sanket aspires to go on an international tour every 3 year and a domestic tour every year. Mrs. Sanket being government employee is having pensionable job but Mr. Sanket is executive in a private manufacturing company do not have pension. Now Important Issues : a. Total Savings of couple is very low as compared to their income b. 80% funds hardly beat inflation forget growth as they are parked in Cash Management Fund/ Debt funds earning less than or equal to inflation. c. The couple is paying relatively large premium but are inadequately insured as compared to their financial life as their insurance is investment linked. 2. Solution : a. We did risk profiling of Mr. Sanket and found him to be aggressive investor with asset allocation of 70% equity- 30% debt. As couple financial situation enhances their risk taking capacity and Mr Sanket wishes to cover time lost in late start coupled with inadequate savings parked in debt funds ,we jointly decided to do more aggressive asset allocation ratio of 75% Equity – 25% debt. b. We advised all except 2 insurance policies to be surrendered and buy two term plans with annual premium outlay of Rs. 39,000 and insurance Value of Mr. Sanket Rs. 50 lakh and his wife Rs. 25 Lakh and also advised to enhance their medical insurance to 5 Lakh Family floater to ensure financial security of Family. c. Based on future value of Family Financial goals/ Obligations and retirement , we advised to do SIPs in diversified funds mapping towards their Goals. 3. Wrap up – A few important points to remember a. The family is not having enough savings as compared to their earnings b. Couple being both working were under insured , though they were paying relatively higher premium as their insurance policy was investment linked c. Their Majority of savings was parked in Low return Short term debt fund which was hardly growing. As stated in title 98% of Indians are parking their funds in Debt funds/ Bank Deposits etc for the sake of security or lack of financial literacy. d. There is also a problem of mixing investments with Insurance thereby creating a problem of inadequate insurance and most Indians do not plan for their financial goals and obligation. Above planning ensures that Mr. Sanket Achieves Financial Independence in life.

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What to expect from my services as Financial Planner ?

Leave a Comment / Blogs, Financial Planning /

What Is Financial Planning? Financial planning is the process of: Understanding your financial goals; knowing when you will need to use your money, and what you will be using it for. Then laying out a plan of action with specific steps you need to take to achieve those goals. To give good advice a financial planner, also called a financial advisor, must gather personal and financial data about you. They use this data to create projections that show you when and how you might accomplish your goals. What I as your Personal Financial Coach do for you and your family ? A good financial planner will give advice as to all of the following: • What you need to do differently • How much you need to save • What types of retirement Planning is needed, • What type of mortgage/Loan you should have • What type and how much insurance you need (this would include life insurance, long term care insurance, disability, and some planners also give advice on property and casualty and health insurance) • How much to keep in your emergency fund • What changes might improve your tax situation • What rate of return you will need to earn to achieve your goals over a given time frame • Whether it makes sense for you to pay off your housing Loan/Other loansIn addition, many financial planners provide estate planning advice and tax planning services. How Do I Know What Areas you, as my financial planner, Will Give Advice On? Ask a financial planner which of the above questions they address, and if they put their advice in writing. How Do we, as your Financial Planners, Charge? We as your, Financial planners may charge in any of the following ways: • A flat fee to complete a specified project • A quarterly or annual retainer fee • A fee charged as a percentage of assets that they manage on your behalf (Typically anywhere from 2.0% per year to .50% per year. The more assets you have, the lower the fee usually is.)How Can I Know How I will be charges? Always ask us for a clear explanation of how you have to compensate for our services based on services availed. A Good Financial Planner Will Not: Make recommendations until they understand your goals, and have run a long term financial plan for you. A Good Financial Planner Will: Want to gather account statements and data on all aspects of your financial life. Do you, as my Financial Planner, Also Offer Investment Advice? Please ask for services matrix to clearly understand services scope and offerings

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Six ways to leak-proof your budget

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USE BUDGETING APPS OR ENVELOPES Most budgets spring a leak because they are not implemented well. To account for each paisa, you need to track your expenses under various heads and reconcile these with your income. So, note down all your expenses in a diary or on your mobile, and do it consistently. You could use envelopes to put in money at the start of the month under different categories, say, utility bills, entertainment, children fees, insurance premium, etc. At the end of the month, compare your income with your outgo to identify leaks. Another way is to download a budgeting app that will do all this for you. You could pick from: To read More Click :

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How to select the best term life insurance plan for you

Leave a Comment / Blogs, Insurance Planning /

We have discussed a number of times on our blogs that term insurance is the best form of life insurance. It is a straightforward protection policy and the premium is much less than life insurance cum savings products. With a term life insurance plan you can get the optimal life cover and generate sufficient investible surplus to meet your long term financial goals.  Once you have decided on buying a term life insurance, you should know that half the battle to provide financial security to your family in the event of an untimely death is won. In this blog we will discuss how to select the best term plan. You should go about the process of buying term insurance in a very methodical way and if you engage an experienced certified financial planner your job will be that much easier. There are 5 broad steps involved in buying the right term life insurance policy.   Click here to read more ….

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