Be disciplined and grow rich!

Building a good habit takes time, nurturing and care. Determination and discipline takes you a long way. One of such habits we have inherited from our wise elders is 'savings'. I must also accept that the world has changed incredibly in last few decades and so the way we save money has also seen a major shift. 

In this ever changing world, the savings have shifted from real estate and gold to PPF and mutual funds, for few lucky ones its private equity and bitcoins! What I would like to focus in this post is not the tool but the discipline by which wealth can be created and enjoyed. A discipline of regular savings, discipline of curbing frivolous expenses can not only make you richer, it also makes you a responsible  and a content individual. The following 5 habits would definitely make you richer next year, if you follow them with sincerity, wether or not you get a salary hike! 

Basics of choosing mutual funds 

Spend as much is required 

The famous investor Warren Buffet, who has created huge wealth almost equivalent to GDP of a small country is frugal. He stays in 3BHK apartment since last 30 years. And he openly endorse the concept of 'being frugal'. One of his famous quote is "if you buy something you donot need, soon you ll have to sell something you need".

When you itch to buy that iphone latest series, just ask yourself, is it worth it to spend 80 thousand on the gadget. What would be its resale value. How long are you going to use it? What is the purpose of the phone. What is the value is it adding to yout life and what are the 5 important areas you need to spend on where those 80 thousand will make a big difference.

Follow a discipline in saving

How about chucking that hollow calorie filled grilled sandwich you eat daily for Rs. 50. Just shifting to a health snack of a fruit or a box of munchies from home would save the whole money. Do you travel that walkable distance from home to railway station for Rs. 18 each side making it Rs. 36 daily while commuting to office. Does your extra cup of sugary cutting chai cost you 20 bucks a day? If you calculate, cutting some of your unhealthy habits and walking that extra mile would save you a neat 100 bucks daily. 22 wotking days make it to about Rs. 2200. Do you know a one NCFM certification in financial markets cost you less than this. And you can add that in your CV too! 

And saving 2200 bucks per month would make you richer by Rs. 26,400 a year.

First Save then Spend 

In some personal finance book I read this- first pay yourself. You are definitely wrong if you think I am talking about shopping. 'Pay yourself' here signifies securing oneself financially. Protecting with future income, insurance from risks and contingency for uncertain situation. You should also take out some money for personal upliftment, skill development and nurturing yourself. You are your biggest asset.Investing in yourself will yield you much more return than any external investments.

NPCI - Enabler of the Indian cashless dreams  

Give back to the society 

The most common traits of the richest people in the world are they are also biggest philanthropists, be it Bill Gates or Warren Buffet or Mark Zukerberg, all of them have pledged large part of their fortune for noble cause for humanity and world at large. 

You may argue and you are right at that. You are not Mark Zukerberg. But you have a way. And a great way. The money you saved cutting your everyday expense, can be used in some productive way, like providing for needy, sponsoring education for maid's children, helping your maid with some medical expenses etc to name a few which can be done way within your means. The immense satisfaction it gives, can fill you with whole new enthusiasm of growing rich to give it back! 

Recycle

Wealth is not only bank full of money. Wealth signifies sustainable and balanced life, where needs are fulfilled at ease and there is always more than required. Recycling is one way of doing it. Recycling goods doesnt only help saving environment, it also can help reduce a chunk from your monthly budget.

Earning big money is onething. But rich is whose expenses are much less than income. You can only become rich when your expenses are in control. A person who is earning a million dollar and spends the whole money is not riche than someone who earns 10 thousand and saves 2 thousand.

Your water tank will never fill if it has a big hole at the bottom.  It is about managing money and not only earning. 

Top 10 common exclusions in health insurance policies

Often I hear from family and friends that '#health insurances plans are bad, as they don't pay'. It gets very difficult to reason with them as they themselves have gone through some bad experiences on claim settlement under #health insurance policies.

With growing healthcare cost, #Health insurance has become unavoidable part of financial planning. It helps us plan for unforseen medical emergencies. Not only financially, health covers acts as an emotional support system. So, it is prudent to check few medical insurance options before finalising a health cover which suits your needs and fits well with medical history of the family. All health insurance products have different sets of offerings, sub-limits and exclusion clause. Here, in this article my idea is to share some of these common exclusions in the health insurance policies.
When you decide to buy a health cover, it is an agreemeent you are about to sign based on mutual trust, that you are disclosing correct information about yourself for an agreed premium, and in return, the insurance company is bound to help you with financial support based on agreed terms and conditions. You may take the cover from private health insurer or public insurer. Check the contract twice or more to confirm on all the details.

Top 10 common exclusions in health insurance policies

1. Complete exclusion on diseases - There are certian diseases which are permanently excluded from the lists. Diseases which are sexually transmitted like HIV infection or AIDS, and others. Diseases caused by alcoholism, drug abuse etc. This is applicable for individual insurance as well as group health policies

2. Pre-existing conditions - Health Insurance companies have clause set for treatments on pre-existing diseases. It also dont cover pre-existing bodily injuries of accidents. It can very from 1-4 years depending on the insurance company and the particular policy in question.

3. Sub-limits on expense heads - Though the insurance company is liable to pay upto complete sum-assured of the insurance policy, certain expenses like room rent, doctor fee, medicine expenses may come with a cap of certain percentage of the sun assured. For example, if any policy has a cap of Rs. 2000 on room rent per day, and the actual rent paid is 4000, the policy holder has to cough up the extra Rs. 2000, even if the total treatment cost is below the sun assured.

4. Hiding medical/family medical history - this is considered to be breach of trust by the insurance company. If any existing disease or medical history undisclosed in the policy contract, insurance company has the authority to completely reject the claim settlement application.

5. Alternative treatments - ayurveda/homeopathy/Unani- Though IRDA is taking more inclusive approach towards the alternative based on growing demand on Homeopathy, ayurveda etc, still many insurance policies don't provide for it or come with cap on the expenditures.

6. Pregnancy and childbirth - Insurance as a financial product is designed for emergency/un-prepared events, pregnancy doesn't come under that. Hence, insurance policies don't cover pregnancy, miscarriages, child-birth untill otherwise specified. Few policies do cover this with a higher premium and a minimum waiting period of 2 years.

7. Cosmetic surgery - Any cosmetic corrective surgery etc is not covered by insurance companies.

8. Injuries during war, neuclear radiation - The insurance company protects itself againstassive losses arising from major threatening situations like war/ public agitation related injuries etc.

9. Treatment for weightloss/gain, and other corrective dental or eye surgeries - surgery or treatment related to weight loss is gaibs are excluded for  the list. Any corrective dental surgery or are surgery unless from accidental injuries are not covered under health insurance.

10. Injuries related to proffesional or hazardous sports - injuries caused in proffesional sports are not excluded from the cover.

Depending on your comfort-level you may buy online health plan or opt to call your financial advisor.

#Health insurance being one of the top three priorities in #financial planning, it deserves a certain amount of attention from the policy holders more than just financial security.

http://www.mymoneystreets.com/2016/12/ladies-yes-you-can-buy-mutual-fund.html?m=1

#health insurance #financial planning 

Woman Entrepreneur who dared to follow her dreams and dig into her Savings to build her Business

Investing right can help you follow your dreams, the following interview just reiterates that.

Few stick to their jobs, few take breaks and few daring souls follow their dreams to be an entrepreneur! While writing on various aspects of personal finance, One day I felt that a first hand account of financial planning would be better absorbed by all than any gyan session. So, I planned to interview some Women Entrepreneurs, who left their settled jobs, used their own savings to start new ventures and continued the journey through ups and downs and business cycles. It is not only about managing money or registering growth numbers, it’s also about taking that first step and trusting one's ownself. This would be a monthly interview series dedicated to budding Women Entrepreneurs around us. 

This is a story of lively Gunjan Varma, a loving daughter, a doting sister, a pretty wife and a caring daughter-in law, who started her career as Marketing Trainee at DNA in 2007, fresh out of Symbiosis Institute of Management Studies and launched her own business after 5 years, “Something Else” in 2012, now established in North and Western India.

Tell us about your journey from DNA to Something Else

Gunjan: I completed my MBA from Symbiosis Institute of Management Studies and joined DNA Newspaper in 2007 in Corporate Sales and Print Innovations, Mumbai. I moved to Fever 104 FM at Delhi post that as Manager, Corporate sales in Radio. Both these jobs gave me a small company environment even though they were backed by established Media Houses. 

I made an inter sector and function move with Citibank. I joined them as Acquisition Marketing Manager for their S&D Division. The move from Sales to Marketing & Planning and Media to Banking was quite a feat but wasn’t as smooth. I had a team of 10 Sales Managers aligned to me with 15-20 Sales Executives under them. My profile was to create “Sales opportunity Points” for these sales executives on a daily basis through various channels. It was a heavy task but over a 2.5-year period, our division broke-even with the help of an amazing and hard-working team. During this time I had good exposure on Sales & Promotions and to vendors and chanced upon the idea of Gifting which culminated in to “Something Else”. Now, 4 years on, we plan to look at new avenues in to gifting with our Handmade and Handicraft products, Collaborations with various other partners and Consulting. 

How did your seed funding come along ?

Before taking the leap, i worked in the corporate sector for 5 years which helped me gain experience and also save. I used my personal savings from here to start my venture and boot strapped it. Its only now that i am seeking external funds. 

Who were your pillars of strength during trying times?

My parents have been the reason for where i am today professionally and otherwise. They have always supported me in my decisions and stood by me in good and tough times. 

I am fortunate to have met my husband, Kaustav, who changed my perceptions, broke mindsets and made me experience love and life. He is also my strongest critique which pushes me to get better at my game. Along with that, i am lucky to have a few close friends/mentors who just emerge from nowhere whenever i need them in life. 

Tell me more about "Something Else"  What do you offer?

Something Else is a #corporate gifting firm operational in Delhi and Mumbai catering to clients across India. We have a strong vendor base in North and West India and a steady stream of regular clients.

Our products range from Office Desktops to Promotional Products to Electronic products to Luxury Items and Gourmet Hampers to Handicrafts to Merchandise. 

Are you insured? 

I do have Health Insurance and a ULIP. I personally do not believe in Life Insurance

Do you invest? What are the avenues?

I started investing early on in life, which i feel is was a smart move i made courtesy my dad. I started my PPF account with in a year of starting work. It is a safe long term 15 year investment which gives best returns and tax saving. I also invest regularly in SIPs, Mutual Funds, Bonds and Fixed Deposits. 

For my company, i utilize Liquid Funds which i can access within 24 hours.

What are your long term goals? House/cars/vacations? 

I would like to have enough disposable income to live comfortably and be able to travel for atleast 15-20 days, twice a year. We also plan to have a cafe/ retreat in the hills somewhere in the long term. I also want to do philanthropic work for a few causes close to my heart.

Are you saving/investing for it? How?

I have been saving in various financial instruments but the key is to not just save more but rather create more wealth. I believe in creating multiple sources of income, both passive and active. My company currently is my active source of income. I am trying to create other sources through Writing, Public speaking and investing in property. 

Any message for the women investors?

Do thorough research from all sources, talk to people and get all facts together to form an opinion about any financial instrument before investing. A lot of times we tend to put our full faith in recommendations by people without fact checking ourselves. 

#womenentreupreneur #somethingelse #financialplanning #giftingideas

Women! Be financially aware, even if you are non-earning member

Financial freedom hidden in 10 questions

It's been a common feature with women friends across, they are updated with the latest accessories, dresses, perfumes, best hobby classes for their children, best smartphones, best discount shopping sites, best restaurant apps, deals for everything under the sun and the moon! But, ask her about what is she doing with her hard earned salary? the reply will be simple - let it go please, my husband takes care of all that.

Great! if your husband is sharing this great responsibility, even better if he is independent and not influenced by the brokers and insurance sellers, but isn't it high time that you give financial planning a chance or do atleast some basic transactions to get a perspective of things? What if you need to make some financial choice in his absence?

In this post I request all women out there my full time working friends, full time home maker, part time bakers, yummy mummies, aunts and the cute little freshers at work, you all do the hard work of earning money, saving it, managing it as well as spending smartly, you all have the basics of home budgeting on your fingertips, isn't it necessary to look at your future goals and actively take part in financial planning hands on. I know and understand that things are easier said than done, so we can always take small steps toward a it.

If you are not hands-on, ask your partner/ father/son these 10 QUESTIONS

1. Do you have a contingency fund? where do we look in emergency?

2. How are we saving for future education of our children? what is the investment vehicle? would the investment yield adequate return? What are life goals and time frames- buying property, child education, child marriage, vacations etc

3. Are you a working women, do you have a term-insurance plan?

4. if you are a non-earning member why you require a life insurance? in this case it is an unneccessary expense.

5. Does your aging parents, you, your children have health insurance?

6. Do you use credit cards? what are the due dates? Are you aware of the charges it attracts as penalty on delayed payments?

7. What are the EMI dates for home/personal loan repayments?

8. What are the regular/ monthly investments through mutual funds, reccuring deposits, insurance premiums, PPF contribution etc.

9. Which asset to liquidate first and when? In simple terms which fund to withdraw first from the various investments you have made?

10. Do you know how to invest in mutual funds, fixed deposits, recurring deposits, paying insurance premiums, buying health insurance online?

If you have affirmative answers for the 10 questions above, you are well aware of many things in financial management and well equipped to take informed financial decisions.

If you see scope for improvement, which we all have, we all are human beings, work on it. Do write to me incase you would like me to elaborate on specific topics. In my next post, I will explain the easy way to invest and track your mutual funds.

Stay good. Stay healthy.

#empowered women #financially aware, #financial independence, #moneymanagement #financialfreedom

Create wealth with conviction and planning, guess work only lead to fear and greed

It is a general and well accepted belief that now(early) is the best time to invest, equity is the best investment vehicle and S-I-P in #Mutual Fund is the best discipline for  the investors. But, there is more to it. Factor which is important element of investment  or financial planning for that matter is the mindset of the investor. Fear factor and lack of planning can lead to massive mismanagement and wealth erosion. The factors including emotion and goal setting are important to make a risk proof investment portfolio. In the next two paragraph I intend to elaborate on the same.  

Detach yourself from emotions like ‘Fear’ and ‘Greed’

RISK remains a common constant factor in every sphere of our lives, so is investments. We do not stop boarding flights after hearing many hijacks, neither we stop traveling by train when we hear about train accidents, nor even we stop praying to rain god despite suffering floods year after year in various part of the country.

Life gives us choices, and we hope for everything to be in a particular fashion to enjoy life to the fullest,  so does investments, with which we create our estate, wealth pool, our pride. Often we talk about risk profile of investor and planning investment accordingly. So, what defines the risk profile of an investor? – It is his age, health, responsibilities and timelines. Similarly investments too come with various risk factors. And, NO investment is risk free, not fixed deposits, gold, land, equity, commodity, dollar or anything. 

Every investment has its own share of risks and rewards associated with it. For example, we can have a fixed and assured appreciation on our wealth in a short span of time through fixed deposits, company deposits, for long term it may not be able to give inflation adjusted returns and the sum my look tiny compared to the needs of future. In similar fashion, it is not mindful to invest in equity/ related instrument for an year if you already have a set deadline and amount requirement, market may just crash and your investment may show an enormous negative return. So, choosing an instrument should depend on the requirement and timeline. FEAR is only when the expectations areunrealistic. 

But still, we invest and grow. And we like to grow despite all risk factors. Rather than focussing on the risks, a smart investor looks at the possible risk mitigation tool, a plan which helps distribution in asset classes, setting measurable goals and simple execution.  

Why do we create Wealth – Set measurable Goals

Wealth creation is a function of setting goals and plan a disciplined action. We need wealth, but without a purpose wealth cannot be enjoyed. We need wealth for certain purposes, namely post retirement life, vacations, medical emergencies, child education, buying Home etc. There are numerous dreams human have, for a few, we can plan our investments. Planning can include simple S.M.A.R.T formula.

S  - SPECIFIC- To attain something we need to have a specific desire, namely buying  car/ Europe vacation/ education/sabbatical

M – MEASURABLE – Clarity on the expectation and exact outcome. If we know the price of the car is 4 times our monthly salary, we need to know in how many months you will be able to save the amount, or if you will take it on loan, how many EMIs you can finish your loan comfortably without stretching limits.

A-ATTAINABLE –  We can dream of moon, but we need a NASA rocket for that. We need to be able pool in the investment within the current inflow

R- REALISTIC – Expectation of returns should be realistic. If you are investing in fixed income product, you need to know, that the income will be on single digit percentage point and equity will be volatile.

T- TIMELY – Goal need to have a timeline. If your child is 5 year old, it is likely he will go for higher studies in 15 years time, so the investment plan need to pan out in a manner that you have your kitty ready to go within that time period.    

Happy Investing!

With the new hike in salary and the yearly bonus, plan tax saving before the Indian festivities blow your pockets

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Tax saving instruments and avenue especially for salaried individuals

We are almost halfway through this financial year 2016-17, however, many of us has got the revised paycheques with increment and bonus only in July/ August. The accounts team have given reminders for tax declaration forms. Let us quickly look at the lists of investment options where we can save some tax as well as utilise the fund in building wealth and help good cause.

Tax saving investments can be divided in 4 parts – 1. #Investments  2. #Insurance 3. Expenses 4. #Donations and social causes. In this post I intend to only identify the areas of investments. The next post will elaborate on the best ways to manage tax savings.

Tax savings instruments are introduced by government to promote savings practices, participating in the overall economy growth, encourage donation and charities for good causes and also rewarding investing in environmental-social sectors. It is not to be used as tax evasion tool in any form.

In the Income Tax act of India act, section 80C to 80U covers the tax exemption areas.

Tax saving eligible investments options

Categories	Details	Lock-in period	Minimum and maximum investment per year	Other benefits	Tax benefits
EPF	The amount is deducted from the salary by the employer. Employer also for makes equal contribution to the fund. This is a compulsory contribution.	As per new laws, one need to mandatorily keep the fund until 58 years of age	Minimum if 12% of Basic and DA. Benefit upto Rs. 1,50,000 investment per year	Employee can avail loan benefits and partial withdrawal allowed on resigning job. This account is transferable on job change	Maturity amount is complete tax free above 5 years Find more
VPF	Voluntary Provident Fund, can be opted by an employee, carries same interest rate as EPF		The lower limit not specified, however, upper limit is at 1,50,000	Loan facility/ partial withdrawal facility available	Tax free on maturity
PPF	Long term saving scheme by banks, return over 8% annually	15 years	Minimum Rs. 500 a year and maximum Rs. 1,50,000	Enjoys triple tax benefit. Partial withdrawal allowed 6th year onwards	Enjoys triple tax exemption benefit.
NSC	Eligible for deduction in the year they are purchased.	5 years, 10 years		The interest earned is non-taxable except last year	The interest earned in the last year is taxable.
Sukanya samridhi Yojana	Special saving scheme promoting development of girl child, enjoys higher interst rate than PPF	Until daughter turns 18 years	Minimum investment of Rs. 1000 year, upto 1,50,000	Enjoys triple tax exemption benefit. No tax on interest earned	Enjoys triple tax exemption benefit.
Tax Saving Fixed deposits	Eligible for deduction n the year purchased, banks and post office have this facility	5 years	Maximum Rs. 1,50,000		Interest earned is taxable on maturity
Senior citizen savings scheme	Deposit schemes in banks for senior citizens			Also enjoys higher interest rate
Insurance/ annuity plans (80CCC)	Premium paid for deffered annuity plans, life insurance schemes	NA	The upper limit is at 1,50,000	Enjoys triple tax exemption benefit
ELSS	Mutual Fund scheme, with 3 year lock-in period	3 year lock –in period	Minimum 5,000 Maximum investment 1,50,000 per year	Enjoys triple tax exemption benefit	Rs. 1,50,000
Contribution towards pension account 80CCD(1)	Maximum deduction allowed is 10% of salary, and 10% of gross income for self-employed,		limit – Rs. 1,50,000		Upto Rs. 1,50,000
Self contribution - Pension Fund/ Atal pension Yojana- 80CCD(1B)	Towards NPS/ Atal Pension Yojana		Deduction is allowed on contribution up to Rs 50,000. (This is additional to the available 1,50,000 limit)		Rs. 50,000
Employer’s contribution -Section 80CCD(2)	Deduction is allowed for employer's contribution to employee’s pension account up to 10% of the salary of the employee.		There is no monetary ceiling on this deduction.		Upto 10% of employee's salary
Equity Savings scheme 80CCG	A 50% deduction on tax on the investment. Person with salary less than 12 lakh		Rs. 50,000 is the upper limit		50% deduction on the investment year

Other earnings eligible for tax saving

Categories	Details	Benefit
Interest earned from savings account	Tax savings claimed can be made on interest earned on savings account	Exemption upto Rs. 10,000 per year

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Expenses eligible for tax exemptions (Insurance and expenses) 

Categories	Details	Benefit
Life Insurance premium	Premium paid is eligible for tax benefit (for self, spouse, child)	valid on insurance policies if the premium is less than 10% of sum assured
Premium paid for medical insurance	Benefit upto 15,000 for self, spouse and children. Can be upto 20,000 if self/spouse is above 60 years	Additional deduction for 15,000 for parents and 20,000 if parents are above 60 years
Medical expenditure on handicap relative (80DD)	Expense on treatment, maintenance, rehabilitation and care	For 40-80% disability, fixed deduction of 50,000 Severe disability over 80%  - 1,00,000
Medical expense of self/ dependant (80DDB)	For the diseases specified in Rule 11DD. A certificate in form 10 I is to be furnished by the taxpayer from any Registered Doctor.	The maximum amount of deduction allowed from gross total income on condition that no medical reimbursement is received from any insurance company or employer for this amount
Person suffering from physical disability (80U)	Individual who suffers from a physical disability (including blindness) or mental retardation	Deduction of Rs. 50,000/-
Tuition fee	For children of the tax payer, school, college, university or any other institute within India	Capped at Rs. 1,50,000
Home loan	Principal repayment of home loan	Capped at Rs. 1,50,000
Home loan interest payment (80EE)	First time home buyers can avail this facility for self-occupied property	The value of the house should be less than 50 lakhs and loan amount is less than 35 lakh. This is over and above the 2,00,000 limit
Stamp duty and registration for home buyers	Allowed under 80 C	Capped at Rs. 1,50,000
Deduction on house rent (80 GG)	This is available in case no HRA is attached in the salary structure and  not allotted accommodation by the employer	Maximum of Rs. 60,000 per annum can be claimed
Education loan for higher studies (80E)	Interest on the loan is eligible for tax benefit, can be upto 8 years or the interest payment completed whichever is earlier	Capped at Rs. 1,50,000

Social causes and donations

Categories	Details	Benefit
Donation towards social causes (80G)	Deduction up to either 100% or 50% with or without restriction as provided in Sec. 80G. click here for details	Donation over 10,000 cannot be by cash
Deductions on Contribution by Individuals to Political Parties (80GGC)	Political party registered under section 29A of the Representation of the People Act.	Cash contribution not allowed
(80RRB)	Deductions on Income by way of Royalty of a Patent	up to Rs. 3 lakhs

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information used/referred from bankbazaar, cleartax, taxguru etc.