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Smitha Hari
Vidya Kumar
Personal
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Mr. Busy
GettingYouRich.com
Version 1
Published: January 2014
About GettingYouRich.com
We specializes in financial planning for Executives, Directors, VPs, Owners, Business Heads and Senior
Professionals. We are Liked, Followed or Read by 2,500 Friends all across the world.
Publisher:
GettingYouRich.com
Shah Rohit Financial Services Pvt. Ltd., Mumbai
Website
: www.gettingyourich.com
Email
: listen@gettingyourich.com
Authors:
Rohit Shah is a Personal Finance coach and a social entrepreneur. Rohit has co-authored four
Personal Finance eBooks. Rohit is Founder & CEO at GettingYouRich.com. Prior to starting
GettingYouRich.com, Rohit was a Corporate Executive. He worked for 14 years with IBM, Citigroup &
Sterlite and handled Finance, Project Management and Technology assignments. Rohit is a CFP CM and
Post Graduate in Finance.
Smitha Hari is an MBA and has 7+ years experience in investment banking, equity research and
consulting. She has Co-Founder a Financial Consulting Firm. Smitha works as Personal Finance Blog
Editor at GettingYouRich.com.. She has co-authored four Personal Finance eBooks. She is listed as a
personal finance expert on moneycontrol.com
Vidya Kumar writes regularly on our Personal Finance Blog. She is a management graduate with an
experience of 6 years in personal finance writing on various websites & blogs. She has co-authored
three eBooks on Personal Finance.
Credits: The contents of this eBook have been originally written by the Authors as mentioned above.
Our knowledge in the personal finance area has been shaped over the years through research and
reading through various magazines, books, newspapers, conferences and thought leadership of
veterans in the financial services industry.
Rights: All rights are reserved by GettingYouRich.com. This eBook is made as a part of our Corporate
Social Responsibility Program to spread financial literacy. A FREE copy of this eBook can be
downloaded from our website under the FREE section. This eBook can be freely used by any one for
personal and educational purposes. However, any commercial usage is prohibited.
Disclaimer: The articles in this eBook are compiled & edited from the various articles written on
GettingYouRich.coms personal finance blog. While care has been taken to include latest and a
concurrent analysis, readers should engage a Financial Planner for a formal advice. This eBook is not
an investment advice. Errors & Omissions expected (E&OE). There is no warranty on accuracy & we
do not accept any liability for any error, omission or any loss in this regard.
Dedication
This eBook is dedicated to all Personal Finance websites and
resources, Financial Planners and Advisers, Personal Finance NGOs
and various associations and Regulators on this planet, working for the
cause of Personal Finance Literacy.
Contents
1. Can't afford financial planning? Do it yourself with these resources ............................................ 5
2. All about Retirement Planning ..................................................................................................... 7
3. 11 Smart Tips to buy your Life Insurance ..................................................................................... 8
4. 6 Smart Tips to take your health cover ...................................................................................... 10
5. So what's the right way to invest in Equities? ............................................................................ 12
6. Top 5 Investment Mistakes to Avoid .......................................................................................... 14
7. 6 Smart Ways to Deploy your Surplus Money ............................................................................ 15
8. How to leverage your Salary Structure to minimize Tax Liability ................................................ 17
9. Everything you wanted to know about Estate Planning ............................................................. 19
10. 20 Tips To Come Out Of Liquidity Crisis ..................................................................................... 21
11. FREE Personal Finance Resources .............................................................................................. 23
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too has an initiative for Financial Wellness sessions. You can check more details about our sessions
and schedule by clicking here.
Personal Finance Websites: There are innumerable personal finance websites and blogs available
which can give you a wealth of knowledge and information. Blogs by SubraMoney, Manish Chauhan,
Hemant Beniwal, OneMint and TheWealthWisher are some such resources*. Goodmoneying, FPG
India, Network FP and the blog by Ranjan Verma also carry a wealth of information. Our own blog has
a wide range of articles on various areas. You can read all our articles by clicking visiting our Blog
section. Websites and blogs can give you knowledge, but again, like books, not the personal touch
required to put your finances in order. You must also be wary of the credibility of the website, as any
wrong advice followed can upset your finances.
Personal Finance Software: There are some personal finance software and Do-It-Yourself websites
available which can help you either partially or completely do financial planning.
IMyGoals website allows you to understand your financial profile and build a plan.
Rupee Managers financial planning toolkit helps in recording your current situation, goals, risk
cover and financial plan.
The software by InvestPlus looks at different facets of personal finance.
MProfit, a desktop portfolio management software helps you to manage assets online.
Other Sources:
There are various small tips which we display on our social media page from time to time to help
you in planning. Our Dilberts post for example, is uncomplicated and highlights all important
parts of a financial plan you must follow.
Independent agencies like Money Life, which promotes financial literacy and consumer and
investor initiatives, can help you in specific issues.
Independent financial advisors do product based financial planning, where you don't have to pay
the advisory fee, but the commissions from the product suffice for the adviser. However, we
don't subscribe to this view.
Another source of help can be your friends and relatives. However, the help provided from this
source is not professional and therefore must not be followed blindly. Further, friends and
relatives would advise based on their own experiences and this may not be applicable to your
financial situation.
The above Do-It-Yourself resources may not give you the advantages which a professional planner
brings to the table. Nevertheless, these can be good starting points and can enhance your knowledge
considerably. Start today and use these resources to understand your finances.
* Source: Ranjan Vermas blog on Top 10 Personal Finance Resources in India
Disclaimer: We do not have commercial interest in any of the products mentioned above.
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total cost. Based on this, the level of services being provided and value being added, you could
decide if you need an adviser to assist you.
7. Which Policy to buy? Study the comparison of leading insurance policy on various websites on
internet. Compare your requirements against the product features and narrow down your search
to 2-3 good policies. Consider visiting 2-3 websites and review their recommendations. Avoid
depending upon a single source of recommendation. Review benefit illustration table before you
finalize a policy. For a term plan, there is obviously no benefit if you survive the policy maturity.
However, we still recommend you to review the benefit illustration table as you will be able to
identify any hidden costs.
8. Insurance and Investment. Normally, treating your insurance and investment separately works
out far better for you. When Insurance and Investments are combined, you are likely to be going
in for a complex product structure like ULIP. These are also likely to be expensive. In the best of
your financial interest, taking an online term plan and using rest of the surplus for goal based
investments as per your risk profile, is likely to be a far better option.
9. Buy Online or Offline? We strongly recommend you to buy an online term plan from any of the
top players. Buying online is convenient, efficient and likely to save a lot of money for you.
10.
MWPA. Getting a policy issued under Married Womens Protection Act (MWPA) will ensure
that upon your death the insurance proceeds go to your family and cannot be used to pay your
liabilities, if any. This is helpful when you are a businessman or a professional with a liability
exposure.
11.
Regular Premium or Single Premium. Regular premium is likely to give you a better
opportunity to absorb the tax benefits. In a single premium policy, your effective cost of insurance
may work out higher if you die in the early years as you would have paid in advance for all the
years. You may have a better use of money for other financial goals. With more and more
innovative features coming in, it makes sense to retain the flexibility with you. So normally it
makes sense to go for regular premium policy. In case you do not have a regular income source
and would conservatively likely to ensure that insurance is in place, once and for all, then single
premium policy may be your preference.
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can be a constraint. We suggest you to study the comparative analysis available on many personal
finance blogs.
6. Prioritize: You are likely to be Mr. Busy At Work. We normally recommend you to prioritize
Health Insurance before Term Plan (Life Insurance) as the probability of hospitalization is higher
than death and with increasing age the entry becomes difficult. Again this depends on client
specific situation but we normally recommend the personal finance actions in this order:
1. Obtain health cover
2. Setup emergency corpus
3. Take term plan
4. Setup SIPs for Goal based savings
5. Take satellite covers (e.g. Critical Illness, Personal Accident, Hospital Day Cash)
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6. Keep a regular check on your MF portfolio: Assign Buy, Hold or Sell ratings to your MFs at
least once in six months. However, avoid shuffling your portfolio very often. If your Fund is
not performing well, you can stop the SIP and see if the fund recovers in next few quarters.
You should also check the risk (fluctuations). Continue investing if your fund is giving returns
higher than the category average & if you are comfortable with the volatility. We believe that
12% CAGR is a reasonable return expected from Equity MFs in the current scenario.
7. Hire an expert: Equity investments are not a rocket science. Following above steps, you are likely
to get on a good start. That said, consider outsourcing this job to your Financial Planner if you are
unable to dedicate time or if you have a large size portfolio.
8. Manage logistics: Invest time in getting access to transact online & getting monthly email updates
from your fund houses. You may have to fill in additional forms. This can save lot of running
around.
Happy Investing!
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We all know that making sound investments as per our goals is important. Here we list out 5 deadly
investment mistakes that one should stay far away from.
1. Lack of Financial Plan and Budget: Some of us make random investments with no sound plan in
mind. We buy some stocks on the basis of some friendly tips, make some last minute tax
investments on 31st March without really understanding what those investments are and whether
they are suited to our financial profile. We should make a financial plan listing out goals, income,
expenses, dependents etc. on the basis of our risk profile and then execute the financial plan. It is
also important to have a budget in place and stick to it. Otherwise, we could spend beyond our
means and will not have money for important things.
2. Making Investments without really understanding them: Of course, you do not have to be an
investment whiz, but you should be aware of the instruments, assets or businesses that you are
investing in. Understand the returns expectation or how the business is organized. If you are not
aware, you should make an effort to learn more or avoid investing in it.
3. No Diversification of Investments: You need to make investments in different kinds of assets
depending on your returns expectation and financial goals. If you invest only in 1 or 2 types of
assets, and there is a downtrend in that asset market, your financial plan will backfire.
4. Family is unaware of the financial state of affairs: More than one person in the family should
know all financial details like insurance claim and medical claim details. Physical assets like
investment documents, gold, bond certificates should be kept safe and secure. Banking and Demat
account passwords should be kept secure but there should be a way for someone trustworthy to
be able to access them if required.
5. Holding on to non-performing investments: Our investment may not perform as per expectation.
It could also happen that the asset class was on a bull run for a temporary period and then is
priced by the market to its real value. Many times we hold on to such loss investments, thinking it
will bounce back in the long run. It is better to sell the non-performing investments and use that
money to invest in some better quality asset.
Investment of our hard earned money is critical for our as well as our familys future and we should
ensure that our investments work just as hard as us. Therefore we should avoid costly investment
mistakes.
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Pay off Debts: It is a good idea to pay off some part of your loans- educational loans, housing loans.
Lower debt in your portfolio is always better. It also is a feel good factor to know that you have paid
off your loan installments in advance. You should target the high interest loans first. Of course you
should check the clauses/penalties/processing fees etc. for prepayment and then decide if the pre
payment is profitable or not. You should also remember to consider the tax benefits you receive from
certain loans like home loan and education loan and balance prepayments accordingly.
Invest in yourself and family: You should reward yourself for managing to earn more money as well.
You can indulge in something that you always wanted or an experience that you always wanted to
have. You can spend it on your family as well. You can acquire a new skill that you always wanted to
have. You can pursue a hobby or two more seriously. You could also take up a course for inner
healing like Vipassana. You could also take up courses or certifications that will update your
professional skillsets and enhance your career. If you are an IT professional, you can consider PMP
certification. You could take up executive MBA programs. This kind of investment will definitely
enrich your life and career.
Give back to Society: Another way to utilize excess cash well is to give back to the society. You could
support a cause that is dear to your heart. You could donate money to charitable institutions and/ or
orphanages that work towards noble causes. If possible, you could take a break from your daily job
and participate in some voluntary work for the benefit of the society. For example, you can sign up
for short-term assignments with (UN) United Nations or volunteer for some time at Teach For India
to teach Indias underprivileged children. These steps will lead to a more fulfilling life.
Take a break: Consider going on a nice vacation with your family & friends. Give them a surprise. Go
read the book that you always wanted. Go close to the nature. Spend some time and rejuvenate
yourself. Listen to your favorite music. Relax & unwind. You will be back with far more energy and
positivism.
The bottom line is that extra income should be saved, invested, used to pay off some loans and also
should be used to reward yourself once in a while as you have earned it and therefore deserve it. You
can also utilize it to give back to the community.
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Superannuation Scheme: Senior level employees get the benefit of a superannuation scheme in
which he or she makes a contribution and the amount exempt is up to Rs. 1 lakh.
It is important to ensure that one submits proper bills and does not misuse the facilities provided by
the company.
Your employer may or may not be offering the above allowances and perks to you. Hence it is
important to discuss with your HR department, take a look at your tax structure and the various
salary components available from your company as part of the salary package and analyze if you have
an optimum salary structure.
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It is important to have an estate plan in place. Otherwise the estate would be given to legal heirs, as
per the existing laws of the state, and not in the manner you had in mind. It has to be in place so that
there are no complications on how your wealth should be distributed after your death.
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for investment purpose? Any pending refund from Income tax? Old physical shares? Any loan
you gave to a friend?
Increase your income
1. Are you taking all tax benefits? Can you restructure your package with your employer? Any
claims pending for reimbursements? Can you stop your Voluntary PF contribution, if any?
2. Is there a way you can increase your income? Can you take part time tuitions or write on
blogs? Check out freelancer websites for opportunities.
3. Can you change your profile and earn more, say by joining sales team? Time to change your
job? Working abroad is generally very lucrative. But you will first have to create an emergency
corpus.
4. Can your spouse earn more by changing the job? If she is not working, can she work part time
and earn? Check out freelancer websites for opportunities
Best Practices
1. While you make these efforts, below best practices are worth keeping in mind.
2. Take a few days leave from work & focus fully to achieve your liquidity goals.
3. If you have multiple loans and multiple sources of funds, make a mapping table. Take the
most expensive loans and map them to the cheapest source of funds.
4. Take one step at a time. First, get from deficit to neutral situation. Then move from neutral to
surplus situation.
5. Have Plan A & Plan B & Plan C. One of them has to work in your favor.
6. Use Personal Finance Ratios. As an example, as you progress, your debt repayment as a % of
monthly income has to come down. Your savings ratio has to go up. Your solvency ratio has to
improve.
7. We wish you a best of luck, on your way to prosperity
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This eBook is your best way to get started on Mutual Fund Investing. It has 18
articles written by Personal Finance experts on various areas.
eBook on Insurance
Planning
If you need help with comparison of major products for Life, Health, Critical &
Personal Accident Insurance, then this is a right guide for you.
Personal Finance
email list
If you like to stay in touch with Personal Finance updates, we suggest you
sign up for our email list. We normally send only one email every week.
Sample Financial
Plan
No
Link
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10
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We have a dream
One day, everyone on this planet will be free from all financial
worries. We will save money. We will manage our financial risks. We
will plan for our financial dreams and we will save for our goals. We will
save taxes and make our will. We will spend what is left after saving
and not the other way. We will save for our retirement. We will have an
emergency corpus. We will continue to love Mr. Fixed Deposit, Mr.
Gold & Mr. Real Estate but also romance with Mr. Mutual Fund. We
will not buy an insurance policy to help our relative.
We will not reject term plan because it does not give any returns. We
will measure real returns and track our asset allocation. We will not
continue the job just because we dont have a secondary health
cover. We will not chase that extra returns. We will not wait till 31March for tax investments. We will not sign on any blank forms. We will
ensure all our documents are with us and not with the agent or CA. We
will not buy that emotionally sold Child Plan. We will not buy when
everyone is buying and we will not sell when markets are crashing. We
will worry about Time in the market and not Timing the market.
We will be financially fit, and Happy Happy