Tuesday, 8 August 2017

5 most common Savings Hiccups: And how to avoid them



Hiccup No. 1: Let my salary grow

We always wait for our salaries to grow to start saving, but that day seldom comes. We all have commitments, and we as individuals keep our commitments before our savings which obviously is a wrong thing. Even if we start saving we don’t increase our savings not keeping them at par with our increasing salary.

Solution: Later you start, lesser will be your savings growth. You can actually accumulate more wealth if you start saving early. Even if you have less money left after you are done with your expenses, try to save. You can start from as low as Rs. 1000/-. This will not only help you in kick-starting your savings but once you see your savings growing, you will feel like adding more to your regular savings kitty.

Hiccup No. 2: I am earning enough to serve my needs, why should I save

If we are earning a comfortable salary and are able to meet ends, and still there is some amount left at the end of every month, we assume that we will be in this comfort zone for all our lives. We don’t think of situations we might get in like sickness, job-loss, old age. We always think nothing would ever happen to us.

Solution: Nothing is permanent. Some understand it in earlier stage of their lives while some take time. However, it will do no harm if you plan for your future and save accordingly even if you think you are earning sufficiently. Because we often tend to miss inflation and the way it will haunt us once we retire.

Hiccup No. 3: Let my loans get over

When we have any of the loans on us, we think of it as a burden and try to get rid of it as soon as possible. Even if we get a very good investment opportunity, we think of first clearing our loan and then start the investment.

Solution: All loans are not bad. You should see the interest rate you are paying on your loan. If the investments you are doing are fetching you better rate of interest than your loan, it is better to start your investments as well. For e.g. For someone having a home loan at 8% interest rate gets an opportunity to invest in long term equities where he can easily get 10-12% on his investments (long term). He should start his investments along with, as they are fetching more returns on his money and also, he is getting tax rebate on his home loan.


Hiccup No. 4: I don’t know where to save

‘Give me too many options, and I get confused.’ This situation is true for everyone. The moment we get too many options, we get confused and delay our decisions which might result into inaction. Many a times since there are too many financial products on offering, we all prefer inaction rather than any action at all.

Solution: Ask a Financial Planner. It is true, that there are many financial products available but each product is defined/designed keeping a set of investors in mind, some might be aggressive, some might be long-term investors, or others might be regular savers. One needs to know, what category he/she falls in and invest accordingly. And none other than your financial planner can help you on defining your financial aspirations. Here we are talking about a financial planner and not a distributor.

Hiccup No. 5: I am waiting for the right opportunity

When the market goes down, our dialogue is, it will fall further, I will invest then. When the market goes up, we say it has gone too high, let me wait for a fall to invest, and the vicious cycle continues. Even if it is a debt product, we don’t invest much because the lock-in is too high or some other cause comes to our rescue as a reason for not investing.

Solution: Start with Systematic Investment Plan (SIP). No one can ever time the market, we all make assumptions, sometimes they are correct and sometimes they are wrong. But the key is to START. And what better than investing systematically at regular intervals, and trust me you wouldn’t even know how well you have accumulated once you start your regular investments.



Charu Hastir, CFPCM is founder of http://www.theriteplan.com/. Rite plan is an online financial planning portal created to achieve a single objective of providing easy and Do It Yourself Financial Planning to netizens. Rite Plan is wholly owned by Tikkun Olam Financial Planning Services LLP. Please visit: https://theriteplan.com/index.php?route=common/home/

Thursday, 22 June 2017

How Financial Planners plan your Retirement expenses?

If you are 30, married and living in some Metro, chances are that you are spending close to 30,000/- every month on your household. You pay every month for services like phone bill, dish TV, maintenance, groceries, milk, maid expenses, and so on. While the rule of thumb says that we should save close to 30% of our monthly income but the truth is that something or the other keeps coming up and we end up saving very little. And on top of it majority of us have loans on us, be it a personal loan for maintaining our life style or a home loan for that dream home of ours.


Chances are that as your family grows and your lifestyle improves, these expenses will also grow along with. As a matter of fact, your growing salary will compensate for your growing monthly expenditure. But, what will happen when you stop working. How will you adjust your increasing monthly expenditure with your never growing or static pension?

Let’s assume your expenses are Rs. 30,000/- per month and will grow at only 7% every year. For a 30-year-old, this is how the numbers will be when he turns 60.



If today, a 30-year-old is spending Rs. 30,000/- per month, he/she will be spending 2.28 lacs per month in the year 2047 when he will be 60 years old. Don’t confuse expenses with inflation which is currently at 2-3%, because our expenses vary on other factors also like our lifestyle, growing kids, aging parents. So, inflation is not the only parameter.

If he lives till 80 years for your age, how much lump sum will he need at his age 60 to maintain the current lifestyle (30,000/- p.m.)? And, let’s assume that his expenses will get reduced to half once he retires. For anyone a clean guess would be: maybe 1 – 2 crores.
But, In Actual the Total Lump sum corpus which he will need to sustain his retirement is 3.7 crores.
And, how much should be saved monthly to achieve this amount. It can be easily achieved by saving Rs. 11,000/- per month for the coming 30 years (assumption: saved in an instrument which has 12% rate of return).



What we just discussed above are assumptions based on one scenario, and cannot be applied to each and every one. Every individual is different and has different spending pattern, life goals, etc. Hence, there is no size that fits all in case of financial planning. Some might be spending more than the assumed scenario of Rs. 30,000/- per month or for some the needs might be less during retirement years like there won’t be any rent or EMI, or kid’s expenses. So, the right approach is to get your financial planning done as per your aspirations and situation.

There is no doubt that you need to plan your finances well in advance to avoid any major setback which might jeopardize your retired life. There are two things where everybody gets stuck – WHOM TO ASK? And another thing is INACTION. We leave it until tomorrow which never comes.

For the first question, you can check with any practicing Certified Financial Planner who knows his maths well to understand your queries and resolves them amicably. For your INACTION, only you can be the driving force for your secured financial future.


Charu Hastir, CFPCM is founder of http://www.theriteplan.com/. Rite plan is an online financial planning portal created to achieve a single objective of providing easy and Do It Yourself Financial Planning to netizens. Rite Plan is wholly owned by Tikkun Olam Financial Planning Services LLP. Please visit: https://theriteplan.com/index.php?route=common/home/

Thursday, 15 June 2017

Best Father’s Day Gift


It is a well-known fact that Fathers are their children’s first Hero’s. We all love our father and treasure the things they did for us during our childhood and even now when we are parents ourselves, they still love us like kids and are ready to help us in any situation we face. These are Online times, where you can get almost all the stuff at a click of button. Not only products but if you look at the services also you can finish most of the chores online, be it paying electricity bills, paying your phone bills, or even banking. Gone are the times when our parents had to stand in the long queue waiting for their turn to pay the bills. We are the ones born in the digital era, where we finish all stuff on our smart phones itself. But have we ever wondered that our parents are the ones who still struggle doing all these things physically. How many times have you received a call from your dad asking you about how to operate something online? And we get irritated and tell them to call later. While many of us must be helping their parents becoming digitally literate, most of us ignore it with open eyes. Remember the times when you were small and were unable to ride your bicycle, how many times did your dad help you riding that very bicycle until you became expert. Not only bicycle riding, it could be anything your parents had helped you with during your childhood. Let me give you an idea – don’t buy fancy gifts, or a bouquet of flowers for your dad this Father’s Day, but try to help them on digital front. Teach them how can they complete various tasks just by sitting in the front of their computer screens for few minutes.

Teach them how to pay their Bills online
These days all service oriented companies accept online payments, and we pay most of our bills online but same is not the case with our parents. They still go out in the scorching heat, and stand in the queues to pay the bills. With demonetization and Digital India drive, things have become more difficult for them. There are so many digital wallets like paytm or freecharge and even apps like BHIM which makes money transfer/transactions easier, but our parents either don’t know about them or don’t know how to operate them. This Father’s Day, we can teach our dad how easily can he pay his bills online or through digital wallets/apps. This will not only help him save his time but also make him more digitally inclined.

Teach them Internet Banking
I don’t remember the last time when I had visited my bank, must be a couple of years back. Banks have become so digitized that there is no need to actually visit the branch for any bank related transaction. You can easily manage your account online. We can teach internet banking to our parents. They still visit the branch for most of their queries. Yes, they must be having accounts with the nationalized banks, but nationalized banks are at par with the private banks when it comes to internet banking. So, you can help them understand it better.

Help them with their Old Investments
Many of our parents would be holding their investments in physical form which can now be stored in a digital format. It could be anything – Insurance, physical shares, mutual fund holdings, or Fixed Deposits. You can check the process of digitizing these investments and help your father in arranging all these investments in a systematic manner online. Your father might get irritated initially, but at the end, the pleasure of seeing all his investments and their current values in a click of a button will make him forget all the trouble of giving you his investment details.

Tax Filing
If your parents are filing their taxes and are following the old model of going to CA paying him to file their returns, you can help them here as well. There are numerous websites available where you can file your taxes in a matter of minutes, you can do that on Income Tax India portal also without any charges. Even those CA’s file the taxes online post taking details from your parents. Plus, there are so many things that have come up like linking the Aadhaar with the Tax applicant’s PAN. Your parents will surely appreciate a helping hand in this zone. So, help them manage their tax filing online.

Many of us would just send gifts to their parents on occasions like Father’s Day or Mother’s Day, but there would be very few who will spend time with their parents telling them about new technologies hence enabling them to face this new Digital era with confidence. And parents will definitely appreciate the latter better than any of the other gifts. For parents, time spent with their dear children is the best gift they could have ever received. So, what kind of gift have your decided to give to your Dear Dad on this Father’s Day?


Charu Hastir, CFPCM is founder of http://www.theriteplan.com/. Rite plan is an online financial planning portal created to achieve a single objective of providing easy and Do It Yourself Financial Planning to netizens. Rite Plan is wholly owned by Tikkun Olam Financial Planning Services LLP. Please visit: https://theriteplan.com/index.php?route=common/home/

Tuesday, 6 June 2017

You won’t retire as your parents did


My Dad sits comfortably in his rocking chair and thinks I’m running too fast for my age. Yes, the times have changed, but the thing which hasn’t changed is our Old Age. Everyone or should I say everything around us will grow old one day including us. But there is a difference in the manner our parents retired and the way in which we are going to retire. Let’s discuss some of those differences for us to plan our old age better. 

1.     Way of Life


Our parents had a very systematic way of living and far less distractions around. They were able to manage their income and expenses in a very beautiful manner. Plus, we as kids were far less demanding than our kids. But now, the scenario has changed, we want everything ranging from fancy gadgets to lavish international holidays. And to achieve all this we spend lots of money which results in lesser savings for old age.

2.     Longevity


With advanced lifesaving technologies, the average life span has increased today and will increase further. Medical treatments which never existed 20-30 years back are very well available for us. And, not to forget the cost of medical treatments which has seen huge upsurge. We need to add all of these in our retirement planning otherwise we will be left with much less than what is actually required.

3.     Dependence on Joint Family


We as kids used to live together in joint families with our uncles and aunts. In times of trouble there was always a helping hand. But now that we have grown up, we live tugged up in an apartment with our kids seldom meeting their cousins. We don’t have any relative helping us in times of our needs, we have to pay to external vendors for any of the services be it medical care, or our child’s day care. These are the costs which never existed during our parent’s time and we need to account for that if we have to save appropriately.

4.     Expectation from Children


Though most of us have parents who are living their retirement life with their savings, but still there are some of us who take care of our parents financially. Can we expect the same from our children? Times are changing very fast, and not saving for one’s retirement thinking of our kids as our retirement plan might backfire. Hence, it makes sense to save for your retirement rather than living in some gloomy old age home.

5.     Inflation


Though our Inflation data has been showing very low figures from the past couple of years but the inflation numbers for facilities like hospitalization, education, vacation, etc. is hovering at almost double digit. This definitely is a much different scenario than what our parents faced and again calls for prudent planning from our end.

As they say, “The Bad news is: Time flies, and the good news is, you are the PILOT”. Yes, times are changing, and so are our ways of spending or rather saving. If we don’t put planning in place, then we might not even get a chance. And, we won’t have anyone else to blame but ourselves. So, It is better to take these factors in account while planning for your retirement because Time actually flies.  


Charu Hastir, CFPCM is founder of http://www.theriteplan.com/. Rite plan is an online financial planning portal created to achieve a single objective of providing easy and Do It Yourself Financial Planning to netizens. Rite Plan is wholly owned by Tikkun Olam Financial Planning Services LLP. Please visit: https://theriteplan.com/index.php?route=common/home/








Wednesday, 15 March 2017

5 points why Tax Planning in March is not a great idea



Yet again the time has come for all of us to invest to save taxes or by the next month we won’t be able to do so as new financial year will start. But, the question that keeps hanging over is, why do we need to wait for the last month to do savings for our Tax Planning. Why don’t we start this exercise in the beginning (April) only so that we are on track? What we fail to understand is that Tax Planning is a part Financial Planning and the investments we do in the name of Tax Saving should be aligned to our Long Term Financial Goals. And it is not possible to plan adequately if we wait till the end of financial year to invest for our tax savings. Let’s keep in mind these common mistakes which an investor might commit while doing tax saving in the month of March.
1.       Investing all money into Insurance Plans: Insurance by definition itself means insuring your risks. Investments in Insurance should be really done after careful evaluation as the returns will be lesser and commissions paid to the distributors are higher. And most of the time insurance products come with longer term periods of 15-20 years which might not fit into overall frame of your long-term goals as the returns are way much lesser if we have to beat inflation.
2.       Investing in 5-year Tax Saving FD: You might be a conservative investor but it doesn’t mean that you invest all your money into Fixed Deposit which in actual is giving negative real return if we consider inflation. Yes, you can invest in debt instruments, but you can choose PPF or even EPF which give better returns as of date in comparison to Fixed deposits.
3.       Not utilizing all benefits: Section 80 (C) is not the only section where you can save taxes. There are various sections under Income Tax Act wherein you can save taxes be it Section 24 or Section 80 D. If you are doing Tax planning in the end of financial year, you might not get time to utilize it to its maximum and hence will have to pay more.
4.    Putting Lump-sum in equities: You can invest in Equity Linked Savings Schemes (ELSS) of Mutual Funds to save taxes and they have a lock-in of 3 years. But, if you invest lump sum in the last month, you are not using equities in the right manner. Only God knows what will be the market levels, whether you are buying at right price or are paying more than the intrinsic value. It is true that nobody can time the market, but then we have SIP (Systemic Investment Plan) to counter such issues.
5.       Inappropriate Asset Allocation: When you do tax saving in panic mode, you often forget to have right asset allocation mix as per your risk appetite. There is tendency to go high either on debt or on equity side without having the right mix due to which the overall portfolio might not perform as per expectations.

Above All, biggest disadvantage of doing Tax Planning in the end is that it causes dealignment of your investments with regards to your Financial Goals. One should not forget that Financial Planning is a Bigger Picture and Tax Planning is just one part of it. And if every year we do our Tax Planning in a hurry, we are kind of making new puzzle every time rather than solving the real and bigger one.


Charu Hastir, CFPCM is founder of http://www.theriteplan.com/. Rite plan is an online financial planning portal created to achieve a single objective of providing easy and Do It Yourself Financial Planning to netizens. Rite Plan is wholly owned by Tikkun Olam Financial Planning Services LLP. Please visit: https://theriteplan.com/index.php?route=common/home/

Sunday, 19 February 2017