Debashree – Page 3 – My Money Streets

April 3, 2018

Grandfather clause in equity investments to protect you from some tax liabilities on LTCG

The famous budget speech by Arun Jaitley left the investors dissapointed with the re-introduction of Long-term capital gains tax. LTCG which was abolished sometime in 2004, by introducing STT was re-introduced for the equity investors with a 10% tax on capital gains over and above rupees 1 lakh for the financial year for the investments made above one year.

The shocker was too much for the investors, leading to a short-term fall in the market. The finance minister tried to tame the anger by keeping a grand-father clause applicable till 31st Jan 2018. Now the point is what is this grand-fathering clause and how is it going to make any difference to the investors?

Step by step guide to buy ULIPs

As the LTCG was introduced, it simply meant April 1, 2018 onwards one has to pay tax on income on equity sales over 1 lakh. However, this is not exactly the case. Grand-father clause give you some respite. According to.this clause, investor need not pay tax on the notional profit accumulated till 31st of January. The returns generated over and above on the closing price of the equity as on 31st January will attract LTCG of the return is over 1 lakh. However, the return will be grand-fathered upto 31st July, 2018, post which investors will have to pay 10% tax on LTCG.

Let me give you an example with a real equity test case example. Lets take ESCORTS as a test case. Assume I purchased ESCORTS share on August 9, 2016 at a price of Rs. 260 per share. It reached a peak of Rs. 811 per share on Jan 31, 2018. So, according to grand-father clause, If I sale the shares at or below 811, I dont have to pay any tax on the same (before 31st July, 2018). Assume I sale it on 3rd April, 2018 at the price of 884 per share, my tax liability will be based on 884 – 811, 73 Rs. i.e. my tax liability would be 10% of Rs. 73 (Upto 1 Lakh tax free inclome still applies here)
Step by step guide to buy ULIPs

The Grandfather clause is applicable to domestic investors for equity and mutual funds investments on LTCG.

grand-father-clause-in-equity-LTCG, Long term capital gain

April 1, 2018

Dont be a financial fool – a suggestion on April Fool’s day!

Step by step guide to buy ULIPs
Few days back I came across a news report on Rahul Dravid being conned by an entity on investments. A firm promised him more than 40% return on investments and duped him of crores. While I don’t feel surprised when I hear my housemaid or my neighbor aunty are miss-sold a chitfund or endowment plan, Rahul Dravid, the ace cricketer known for his perfect calculation on field being conned, came as a big shocker to me. Shocked to know that a person who is a millionaire or even a billionaire on his own right who can afford a personal Charterd accountant or even a team to take care of his finances can fall in this trap. The point to note here is anybody can fall into this trap. These frauds in the name of ponzi, misselling wrong products and false promises has been existing since long. It is likely to continue in some form or the other. The point we should focus here is to catch it before it traps us. These wrong investments have a patern to it. If we learn the pattern and ask few questions, we can save ourselves from being cheated and a lot of mental agony along with it. Let me give you some points to ponder over.

It should strike if someone guarantees you high referral bonus, guarantee high returns, or kickbacks on your investments etc. The best way to identify and handle these, is stick to wellknown finanicial products, well known financial advisors and brokers and well known financial institution. Though there are numerous online frauds available, these fraudster may knock your door and call on your cell-phone, to give you a more genuine feel to it. Financial fraud is not limited to running away with money, it inculdes misselling as well. Be clear about investment objective and expected return. Do little bit of calculation and follow few steps to safeguard yourself.

These are the traps, however, there is no harm in double checking and being assured of you are not duped. Whoever is the seller few points you definitely need to check before you say “yes”

So, take few steps and varify –

1. Google it – if it is a genuine company, or even false, it will have a website or some online listing. If it doesn’t have no internet presence, don’t even bother looking at it.

2. Do a little search – if you find the company name, check for the results its throwing up. Check for reviews. Reviews will guide you a bit.

3. Ask for the business model – no, you are not getting personal. If you are asked to invest 1 lakh rupee and assured of a 50% return in one year, you must know the source of the return. Any fixed deposit in India will not give 10% return if bank rates are hovering around 7%. Equity related investments have a potential of giving higher return.

4. Dont be emotional fool – last week my young cousin had a query that if I would like to buy an insurance product from her, a specific product which is her target. She was told by her bosses that it was the best seller product. Mind you, I am talking about a very very reputed company. I felt helpless. I was astonished to see it was a high cost endowment plan. I really wanted to help my little sis. And she wasnt working with the insurance company, but the retail broking wing. So, I offered to buy some mutual funds worth 4 times her target, incase it helped her. But to my surprise, the company refused to consider it. If I were not aware of the product features, I would have simply bought the insurance to make my sister happy, which is nothing but highest level of misselling. My sister is matured and understanding 🙂 but dont comit this mistake.

5. Call on that toll-free no. – It takes few minutes. Whichever financial product you are buying, in the brochure you will find a customer care no. Call up and verify the commitment s your broker made it you. Tally the benefits. If it suits you and if it completely match, you are quite safe.

Read, google, compare and ask experts on forums like Quora etc to make an informed decision. This financial year has brought in many changes, look forward to sharing updates and insights on them. Stay invested Stay happy.

March 29, 2018

Your nominee may not be your legal heir

Know the difference between nominee and legal heir

How to invest in ULIPs

While filling in the request for a online fixed deposit, the site popped an request to file in nomiation details for the fixed deposit. How strange is that? I was just blocking a small amount of money as a fixed deposit for a period of two years. It just stuck on my mind for a while and I assumed that it means incase of my death, the nominee would receive the money as a beneficiary. But my inquisitive mind doesn’t stop that easily as I have been reading too much on the latest stories on e-will, importance of making a Will. I decided to do a brief study on the same, While doing an online research I came across numerous queries and news piece on the conflicts on this topic.

The confusion over legal heir and nominee may even create fights and create chaos amongst family and close relatives. The question arise here is if nominee is requested for all large investments, why Will is required, isn’t it natural that after demise of the individual, nominee is naturally handed over all the possession,? the answer I found here is different. While it is acceptable to nominate any family member for the assets, nominee only refers that he/she is eligible to take the handover of the possession incase of demise of the investor as a custodian or trustee. And the actual beneficiary of the assets will be the legal heir.

The assets and properties include – assets like house, jewelery, art work, land, valuables, mutual fund, Insurance policies (Endowmwent, ULIPs, Term plans), Bank fixed deposits, company fixed deposits, bonds, PPF, NSCs etc.

Who can be a nominee and what is nominee’s role?

Nominee can be any member of family – mother, father, brother, sister, husband, mother-in-law, sister-in-law, son, daughter etc, but they have to be a relative of the individual. Incase of no immediate family, one can make nominee outside family, however, incase he/she acquires family the previous nomination will be cancelled and a fresh nomination needs to be filed. Nominee is nothing but a trustee who is authorised to receive the assets/ funds post demise of the individual. It doesn’t give the individual the right on the assets of the deceased.

Who is legal heir of your assets?

Legal heir simply means the person who is legally inherit your assets and properties according to your Will, if will is not in place, it will follow the ‘provision of succession law’. As per succession law of Hindu, heirs are divided in two classes, Class I and class II.

Class I heir has the first right on the assets and properties of deceased. It includes Sons, daughters, mother, widow, sons of predeceased son, widow of predeceased son. However, incase if the widow of the deceased son is remarried, she wont be legal heir anymore.

ClassII heir – Incase of absence of class I heir, Class II heirs have the right on the assets of the deceased. The class II heir includes Father, Brother, sister, niece and nephews.

Registering a will is important and saves lot of hassles for the closed ones of the deceased, especially if you are clear about whom you want to passon your properties. So, to stay away from conflicts, make informed decision. The nominee and legal heirs are two different things, you should keep in mind and educate your family members and near and dear ones for making informed decision.

#HappyInvesting #moneystreets #legalheir #nominee

Know the difference between nominee and legal heir

March 21, 2018

Plan your Life Goals with ULIP. Chapter 2 – How to invest

how to buy ULIP, Invest in ULIP, Save tax with ULIP, Bajaj Allianz G

Test Case – Bajaj Allianz Goal Assure, Step-by-step guide to invest in ULIP

Hi Friends, I have taken it up as my resolution for this year to guide or help you with step by step process of various investment options. To name a few would be how to make fixed deposits, how to buy life insurance, how to buy mutual funds etc. On this blog post, I would like to focus on the emerging life insurance cum investment products, which in recent times have gone through many upgrades, to promise superior return on investments for long term (10 years and above).

ULIPs are not only a convenient investment solution; they also offer tax benefits under 80c.

For a test case, I am choosing the newly launched BajajAllianz Goals Assure. Three reasons I have chosen this investment solution:it’s the latest ULIP plan which boasts of minimum cost structure of the policy, secondly the funds this ULIP invests in have proven track record and last but the most important part, this plan focuses on your goal, which gives many flexible options to switch investment within the plan, withdrawal options, free-switches and flexible maturity benefits.

This ULIP Policy address an important need of goal based financial planning. Often our financial plans are not aligned with the life goals,which proves to be inadequate in the times of need. Hence, more and more financial planners and experts are suggesting to move to goal-based planning to make the maximum out of the investment and lead a stress free happy life. This policy comes handy as you will have to sit once, read through, choose your preferences and relax.

About Bajaj Allianz Goals Assure – Find the brochure

A life goal based investment plan (ULIP) that gives you the opportunity to plan once in a lifetime experiences with one investment. It offers choice of eight funds which can be invested through four investment strategies. The highlight of the plan is return of life cover charge on policy maturity, tax free returns on your investment and life cover. Investor also have an option of receiving the maturity benefit in instalments and receive the benefit of Return Enhancer, which is an addition of 0.5% of each due instalment. Funds continue to be invested during this time.

Important features of Bajaj Allianz Life Goal Assure–

Option to take maturity in installments
Return Enhancer benefit
Return of life cover charges at maturity
Choice of 4 investment portfolio strategies to meet your financial goals
Unlimited free switches between funds, choice of eight (8) funds to achieve your financial goals
Tax benefits under section 80C

Step by Step process to invest in this PLAN – with some screenshots to make your investment decision smooth.

To begin, Please Open

Step 1

Click Invest now.

Fill up the personal details like name, age, mobile, email and other mandatory fields.

It also gives you an option to choose your life goal – buying a house, child’s education, earn your first crore to name a few, you may also choose a different option by choosing ‘others’ as an option.

Step 3. Choose yearly premium

On filling up and submitting the details, you reach the next page which asks about how much you wish to invest.

Step 4. Choose your plan

I chose planning for child’s higher education hence to me the goal is 20 years away. I choose the payment term of 20 years and monthly premium of Rs. 5000. The payment term can vary between 15- 20 years basis your comfort, and the premium also can be chosen as per your wish and goal. You have an option here namely ‘multiplier’ it gives you a flexibility to choose the life cover on the premium you pay annually. In this the minimum life cover you are assured is 10 times of your annual premium. You can also increase it up to 20.

In the same page you will be given an option to choose your investment style. You may consider wheel of Life or Trigger based portfolio if you want to just enjoy the returns without much of involvement.

If you are a savvy investor, you have options of choosing your funds actively. You will have range of funds to choose from, bonds to be the safest ones but lowest on returns. Depending on your age, risk appetite you may choose this. If you have a horizon below 10 years you may consider having an exposure to bond funds, more no. of years you have on your side you may choose to have higher exposure in equity. If you have invested in markets before and like the long term growth story of equity markets, you may have higher allocation in the Pure Stock fund II and Accelerator MidCap funds. If you see the window, you can choose multiple funds upto 6 funds. However, personally I want to have a complete equity exposure in 3 of its funds in equal proportion as I have 20 long years in hand, and I have an option to switch freely later.

how to buy ULIP, Invest in ULIP, Save tax with ULIP, Bajaj Allianz G

Step 5. Verify details

You check and verify the details you filled up so far.

Step 6.

Enter the payment mode

how to buy ULIP, Invest in ULIP, Save tax with ULIP, Bajaj Allianz G

Step 7.

Make the payment with Net banking or credit card or online wallet.

Documents required

1. Your PAN Card

2. Adhaar Card

3. Demat account (Optional)

4. Address proof

5. Bank account details

This is a simple process to invest in ULIP which is emerging as one of the best option for long term investment like buying house, child’s education, earning your first crore or funding your start-up. etc.

The website also features and Return calculator to help you get a sense of return you may get in your investments. Though the illustration shows a return on 4% and 8%, in real term with equity funds, the returns can go above 10% easily over 15-20% making it a substantial gain in compared to the traditional saving products.

I will come back to you with similar investment step-by-step guide for other investment products. Keep saving, Keep investing and do spend on yourself.

Live a stress free life with goal based investing.

how to buy ULIP, Invest in ULIP, Save tax with ULIP, Bajaj Allianz Goal Assure

February 10, 2018

Systematic Withdrawal Plan will be the instrument to fight Long Term Capital Gain Tax

Its been about a week that our finance minister read out the budget to the nation, but I still cant get out of the angst of levying 10% tax on #long term capital gain on equity and mutual funds investments.

Though the markets have reacted in the expected lines by shading about 500 points on Nifty, I expect it to settle at some point in about few months depending on the course of action decided by the large institutional investors. The sudden shock of introducing #LTCG after 14 years on Equity will be hardest on the small investors, who have been told continuously over the years that equity is the best investment option and investing through #SIP in Mutual Funds is the best option.

What is long term capital gain tax on equity – When an investor buys and keep his equity investment over a year and withdraws, the profit generated on the investment is subject to taxation if it is above Rs. 1 lakh. This is applicable to all investors including individual, HUF, FPI. Mutual Funds have been exempted for this, as this is taxable in the hands of Investors.

Also, Mutual Funds will levy 10% dividend distribution tax on dividend options under various equity schemes.

(Short term tax on equity and equity based mutual funds stand at 15%)

#SWP Calculator

Things were different until 5 days back, when capital gain tax was zero over 1 year, but now we have to learn and adjust to the new normal. What we understand basis the announcement is if we make profit over 1 lakh in a financial year on equity or equity based mutual funds, we have to pay tax on the money over 1 lakh on the long term capital gain (over 1 year). Refering to the chart below on illustration, the tax is applicable to the profit generated over and above 1 lakh. Also, as the budget will only come into effect from April 1, returns above 1 lakh wont be taxed.

Long term capital gain calculation sheet

Investment	Investment amount	Entry date	Exit date	Gain = Amount – Investment (Hypothetical)	Tax applicable	Net Profit
Stocks	1,00,000	1^st Jan 12	1^st Mar 18	3,00,000	None	3 lakh
Stocks	1,00,000	1^st Jan 12	1^st Mar 22	6,00,000	10% of 5 lakh = 50 thousand	5.5 lakh
Equity MF	1,00,000	1^st Jan 12	1^st Mar 18	2,50,000	None	2.5 lakh
Equity MF	1,00,000	1^st Jan 12	1^st Mar 22	5,00,000	10% of 4 lakh = 40,000	4.6 lakh

Incase of #SWP, profit will be spread per unit basis. Spreading out the withdrawal over a period will be beneficial for tax saving.

What is SWP?

SWP Is a disciplined approach towards investments withdrawal. From a mutual fund scheme investor can chose to withdraw a fixed sum of money or pre-decided number of units of units every month. (This is not dividend scheme). This is nothing but selling investments, booking profit but just in staggered manner.

Recommend highly as post-retirement earning or for people on sabbatical. It also work out well for second income generation. To illustrate the benefits on a table, I have taken a hypothetical investment of Rs. 5 lakh in 2013, in an equity scheme.

I have made an illustration on SWP for better understanding on the same. The table is drawn with an assumption that the fund value has grown to Rs. 10 lakh. The sum of Rs. 15 thousand to be withdrawn from the period of April 2018 to March 2019.

In the above case, the investor have to pay any tax on 10% Tax on three thousand eighty three that is Rs. Three hundred and eight only on his withdrawal.

By no mean I am portraying tgat you can escape LTCG Tax completely by following this method. It can be used as a method if you dont require the money at one go. It can work like a pension and can be withdrawn to be tax efficient. One may also consider having other pension options which are tax efficient in nature.

The benefits of SIP have been spoken about a lot. It is about time that we start taking a view on SWP as a tool for withdrawal to make most of the mutual funds investments. SWP Mutual Funds reminds us time and again about discipline. It can beautifully work as a pension or work like extended salary in time of need. It is not required to be a market specialist to invest in it. Choose an equity fund and keep investing for the long term.

This is only applicable to open ended equity and equity based hybrid mutual funds.

systematic withdrawal plan, SWP Calculator,

Keep investing!!

Tweet me at debashree_ad for any clarification.

January 23, 2018

Life is all about goals, with discipline, we can reach there with ease!

Our life begin with goals. I may not recollect my #LifeGoals of my toddler days, but I do remember my goals beginning the age of 10. I had a dream of earning money and gifting my parents, aunts a lot of things, I used to note my wishes down in a diary about my wish-list. When I grew older, I realised, to fulfill those desires, I must earn my own. So, my full attention went towards making my academic efforts towards a career building process. I told myself, every page I am reading is adding towards my #LifeGoals of getting a decent job and saving-up. People of my age may not be as money minded I was back then, but if I look back, it was nothing but having a goal and planning towards it knowingly or unknowingly.

Cut to 2018. I am sorted with my financial planning, and revisit my portfolio and contingency plans on regular intervals. However, I realise, with sound understanding about various financial and other asset classes, only my contingency fund and term insurance plan I am satisfied about. I started working 10 years back, but I am yet to plan for a Europe trip, a house of my own and my dream car. I wonder, though I kept saving and investing a sizable portion of my salary each year, I never bucketed them under heads. So, now, my savings may allow me to withdraw from any investments and execute some of my plans but I don’t feel comfortable.

So to not make the mistake I committed, here is what you can do. As you start earning, divide your monthly income* under few heads – first priority should be buying adequate Life Insurance, a health insurance and start creating a contingency fund.

All our goals can be bucketed broadly under 4 categories.

1. Short-term goals

2. Medium-term goals

3. Long-term goals

4. Post retirement planning

Short-term goals

Depending on your age the goals can vary. To keep it short and crisp, I am assuming you have just started working, and about 21-25 year old, your short-term goal, may be buying a Mac-book, International trip with friends and paying off education loan etc. To attain this goals, you may consider a bank fixed deposits, bond funds, debt-oriented hybrid funds etc, it has certain amount of stability with limited return on investment, main aim of these investments is to accumulate and block the amount for the goals.

Medium-term goals

For a 21-25 year old, medium term could be 4-7 years. In this span, one may like to save-up for the down payment of housing loan, kitty for marriage expenses, honeymoon abroad and buying the first car. I am of an opinion that saving-up the installments is much better than buying on EMI. One may consider buying Hybrid mutual Funds in SIP, which will have upto 30% debt exposure to cushion equity market volatility. You may also consider large-cap equity funds if you have better risk appetite. These investments are likely to give much higher return compared to fixed instrument. One may see 10-12% upside on the capital invested. Monthly SIP is highly recommended in this scenario

Long-term goal

Typically over 7 years is considered long term in financial asset classes. For the goals like Child-birth, Children education, upgrading lifestyle, house and cars, medical expenses are highest at this phase. One may consider buying #ULIPs or equity mutual funds to substantiate the take-home salary or cushion as a second income.Fo this phase, one may consider buying aggressive portfolio of 100% equity linked products. Mutual Funds and ULIP both allows this. A sizable portion, atleast 10-15% of your income should be allotted in this category. Most of the Open-ended equity mutual funds and ULIPs allows the flexibility of partial withdrawal. Hence, the long-term investment can go on parallel with withdrawal benefits.

Retirement planning

Last, but the most important of all goals, we may call it as an Ultra long-term plan. Though many big companies provide PF facility for the employees, which accumulates alongside through the employment tenure, the low return may not be lucrative enough to completely depend on this for entire retired life. With inflation at high levels and growing living standards, we must plan start planning early for retirement.

ULIP comes as the best option for this category. With IRDA’s initiative, #ULIP products have capped the fund management charges at 1.35%, (lower than direct mutual Funds) and with mortality charges the products are capped at 2.25%. (lower than regular funds) The new wave of the ULIP products are investor friendly and for long-term commitment, when you have 15-20 years goal, you should consider this product in your portfolio. ULIP is nothing but insurance-cum-investment product. With stringent norms and zeal of the dynamic insurance companies, it has become a lucrtive investment product, which also provide insurance. With a long term disciplined investment, it helps create a sizable portfolio to take care of the post-retired life. You may consider shifting the corpus in an annuity plan or simply take interest payout on a senior citizen deposits. Life likely to be much more easy. Its #InvestBefikar

Few key features of this product you must know –

1. The investment amount is eligible for 80C investments

2. It has low lock-in of 5 years (you must not withdraw at that point until you have a dire need)

3. The Insurance cover in this product is atleast 10 times the annual premium

4. Incase of death of the policyholder, he/she shall get Fund value or the sum assured which ever is the higher

5. ULIPs have choice of fixed income and equity funds under them to choose from

6. You need to pay a fraction of service tax upfront on each premium

7. Maturity amount is tax-free

8. Post 5 year lock-in period partial/ complete withdrawal is possible (may be with surrender charges and penalties)

9. It can be bought online as well as offline

The importance of goal based planning became all the important for me, after attending the bloggers meet recently organised by Bajaj Allianz Life Insurance. With a few quiz and games, it opened up the unexplored part of planning, which I wrote above as a note for my readers. The event organised by the Bajaj Allianz Life Insurance reiterated their commitment to create wealth for their investors along with the life insurance. They realise and advocate goal based planning to promote #InvestBefikar with #ULIPs. Really liked their investment orientation for goals of life and not vice versa.

To conclude, the moving dart board at the #BajajAllianzLifeInsurance bloggers meet, reminded me, life keeps moving. You can throw the dart at the right place only with planning and practice.

January 2, 2018

How to start investing – Chapter 1 – popular Bank deposits

Wish you all a very Happy New Year. Am sure you all have had a good party and a host of new year resolutions. I am eager to share mine. With full of excitement and commitment, I would like to make the topic ‘finance’ easier, and help you become wiser to check on your financial health and get better. The first of the year, I am dedicated to understand what are the simple things you need to do to begin the process of investments.

To begin, needless to say you may consider the following things for smooth execution.

Edelweiss ULIP Rewards the Policyholders for Making Disciplined Investment and Staying Invested

Since IRDA started a mission to protect consumer interest, Insurance companies adjusted to the new normal and are now getting a step ahead to service their policyholders in lower cost and efficient claim management. Also, the disruptive technological space has helped them to lower their overall costs. However, it is truly the customer obsession approach, which has enabled Edelweiss Tokio Life to come up with a unique ULIP product, whose cost claims turns out to be lower than direct mutual funds (equity), if one chooses the 20-year pay term for 20-year policy at below 1.5%.

While this looks too good to be true, the Edelweiss team calls it #Unyakeenable. In this post, I intend to write all the nuances you must know about the plan, and the best option available in the plan.

Edelweiss Tokio Wealth Plus – This is an insurance-cum-investment plan which invests the premium. The feature of the policy is they invest 100% of the premium into the investment and charges less than 2% over a 20 year period for the fund management fee and mortality charges. The aim of this insurance plan is to give superior investment return while covering ten times the annual premium as the sum insured.

The cost and the investment returns are comparable to direct Mutual Funds returns.

Features of the Wealth Plus

· Entry age – 1 year onwards

· Policy term – 10 year to 20 years

· Payment term – 5 – 20 years

· Payment frequency – monthly, semi-annually, half-yearly, and annually

· Minimum premium – 48,000 a year for a minimum of 10-year payment term

60,000 Rs. A year for more than 10 years term

· Investment options – Investors have an option to choose one of the following investment strategies based on your profile and risk appetite:

– Life stage and duration based strategy – Company manages the asset allocation based on the policyholders’ age and remaining years to policy maturity

– Self-Managed Strategy – For a savvy investor, money will be allocated to your choice of fund(s)

The funds the plan invests in are highly rated (4 STAR and 5 STAR) by the international rating agency Morning Star.

Highlights of the plan

· 80% of the annual premium is reinvested by the insurer in what can be termed as loyalty program by the common man. Every year, for the first 5 years, the insurer adds 1% of the premium to the investment. From the 6^th year to 10^th year, the company adds 3% each at the end of the year. 11^th to 15^th year, 5% of the premium is added, and 15^th to 20^th year, 7% of the annual premium will be added

· Top- up facility available, minimum amount Rs. 5000

Point to Note – This feature is applicable depending on the payment tenure decided by the policy holder. Higher payment term one choose, higher return one get

Rising Star Benefit

The best part of the plan is their Rising Star Benefit. While it is a long-term commitment, one may choose it for protecting their child’s future. In this option, both the parent (policy holder) and child are insured.

Who Should Buy this Product?

It is important to know what are you buying and why. This is a great investment product if you have a long-term commitment and minimum Rs. 48,000 a year. This plan is a great buy for goals like child education or marriage plan or retirement. To make maximum of this insurance plan, start early and choose the 20 years premium term and 20 years policy term.

What is in it for the Insurer?

One should ask this question to oneself when any investment offers return higher than usual industry standards. In the current scenario, ULIP charges 3-5% on the investment yearly to manage various expenses like management fees, brokers/agents, marketing channel, and even customer acquisition activity, paperwork, etc. To minimize the cost, Edelweiss has come up with a win-win situation; they are rewarding the customer for continuing investment for 20 years, by incentivizing them with extra units every year – 1% for the first 5 years, 3% from the 6^th to 10^th year, 5% from 11^th to 15^th year, and 7% from 16^th to 20^th year. This means, the longer you invest, the higher the percentage loyalty addition you get.

Through this plan, the insurer is able to give the best in class return as they reduce customer acquisition cost. It is only available online on Policybazaar and Edelweiss Tokio website.

November 29, 2017

How to use your accumulated wealth systematically for retirement or sabbatical

The discussion is always on planning a new thing, making a new investment, buying a new car, seldom we think or plan on how to wrap-up. What to do with the proceeds of fixed deposit maturity amount or an insurance payout. Planning helps, not only in beginning also in wrapping up and moving on. What after we reach the goal, after our equity investments hit the target, it is equally important to have systematic process to sell-off your investments utilise the proceeds.

how-to-use-your-accumulated-wealth

Everything has a shelf life or an expiry date, however rude may it sound, human too are born with an expiry date. We don’t see things ending, we dieing, losing, we like clinging to our stuffs and dont make most of our investments. If we take a case of the investment world, we don’t often refuse to see the asset class dooming. We love to ride the bull, and anxiety bites when bear strike! Every asset class has its performance cycle and as an investor aligning our goals with the performance of the asset class is important. Even financial investments too have expiry dates. Like life insurance comes for a term and fixed deposits come with maturity date.

#how-to-use-your-accumulated-wealth

For the instruments which doesn’t have an expiry date need to have a periodical review on their returns. I am not here getting into the physical assets like gold , yet will have a pointer on real estate investments. I am focusing on financial assets like equity and open ended mutual funds especially.

What do you do with asset class which are perpetual in nature like equity, open ended mutual funds and even ULIPs with long term 20 year maturity period. Return on the equity is amazing on the long term. But how long is long for you is purely upto your goal and comfort level. Also, equity market with its long term wealth creation is known for its volatility. Any investment should be attached with a goal. It could be retirement planning, child’s education or summer holiday in europe. If we use-up the sum for a particular goal, we are sorted. But if the sum is saved-up for a retirement or a sabbatical, here are few ways you could look at –

We could have few systematic process to make the most of financial plan at every stage of life.

Few ways to use the accumulated wealth–

Systematic Withdrawal Plan – Exactly the same concept of SIP, in this process you could chose a specific sum or units for withdrawal from your folio, which will be credited into your designated bank account, with this you will have a regular income every month. chosing a hybrid or short term debt fund is an ideal option for this.

Monthly income plan – A lump-sum amount, proceed from PPF/ EPF or full and final settlement can be put under such scheme. MIP schemes are debt heavy funds, with marginal equity exposure upto 30%, making it more consistent on returns. However, the dividend is not guaranteed, subject to the performance of the fund.

Deferred payment on Insurance proceeds – Incase of unfortunate demise of an earning member of the house, assuming he/ she would be insured, the nominee is entitled to get a lump-sum amount of the sum-insured. Often the nominees are unaware bout how to prudently use the money, it is a good option to chose deffered payment options to secure regular income for a long period of time.

Reverse mortgage of house – This is still unconventional concept in India, but it is taking shape. For anybody above 58 years, this is an option for regular monthly income. In simple words, this is exactly opposite to conventional home loan. Ideally for senior citizen, is the borrower pledges the property to a bank and get a regular income till the end of his life. The bank in this case disburse loan periodically to the house owner, end of the term, bank takes the house or sell it, additional amount if any from the proceed of the sell is passed onto the legal heir.

It takes sweat, blood and discipline to create wealth, but once it is created, we must be prudent in-terms of utilising the proceeds with prudence. Happy investing, happy spending. For any query on money management I am accessible at mymoneystreets@gmail.com #how-to-use-your-accumulated-wealth

November 14, 2017

Do you have the Moolah to buy your desires? Budgeting will help

This article is written by Guest Author Ms. Nayan Thapar, a personal finance enthusiast and pursuing post graduation in communications. Views are welcome at mymoneystreets@gmail.com

You wish to buy a house? A car? Or let’s say you are this “I love to travel so let’s pack our bags and go on an adventure trip” kind of a person. But, the fact that there isn’t enough money in your bank account to fulfil your whims and fancies, you cease to live life the way you want to live. You somehow always end up restricting yourself and ultimately, just get used to the life that lacks impulse.

From the blog – Create wealth with conviction and planning

In order to provide a cushion to your dreams, here are some tips that could ease your financial pain in no time. So to be precise, let’s talk about the ‘B’ word: Budget

· The little things; #thatmatters

We joke about these little things but at the end of the day, these Lilliputian efforts that you put in, really matter. Giving an example would make a difference. As a student, you are always late to catch the college bus that you get as a service and instead you end up taking an Uber or an Ola because you want to be in class before 10 am. Now, that costs you around 30 bucks which is insignificant but when we calculate it in our monthly expenses, it sums up to about 900 which “could” have been used as your bus ticket to the next destination on your travel bucket list. Does it make sense? I think, it does.

From the blog – Top reasons for claim rejections

· Confessions of a shopaholic

Everybody understands when we talk about impulse buying because everybody has gone through that phase at some point in their life and everybody has gone on a major guilt trip now and then. The question is how do we curb this feeling? Well, now that we are staying in a world full of digital heads, there are so many apps which can help us keep a check on the kind of purchases that we make and in which areas we end up splurging on. Apps like Walnut, MoneyManager and Monefy can actually curb your urge to splurge!

· Get set Goal

Set a monthly as well as an annual aim or a short term and a long term goal, according to your suitability. It just makes things a lot simpler. You already have a pathway on how you have to go about throughout the month and it won’t come out as a shocker unlike the times when you suddenly realize that you are underpaid or you fall under the ‘urban poor’ bracket.

· Strike a happy medium

Balancing your way through is essential. Every month, when you plan your checklist, categorize on where you want to extravagantly indulge and where you can cut down on your expenses to balance out your expenditure.

If you make these miniscule changes to your financial calendar, then there is a definite chance that you might bag some bonus trips and getaways or might end up purchasing more than what your pocket allows (but that is helpful sometimes and not all the time).