Tuesday, 15 August 2017

It's never too late ...


It's a little over two weeks since I posted my last blog. This is because I have been travelling for celebration of a special family event which is held on yearly basis. It has been a memorable event and this is what we look for as we catch up with our age. I could see, feel and be a part of the happiness which swept all of us. Time flies...Isn't it ?
Hotels.com CPA
But I also observed the changes in our physical appearances, the health related issues and other things which all of us are confronted with one way or the other.
This brings us to a very important topic of healthcare for senior persons.
In this blog of mine I continue on my favourite but very important ongoing topic of financial planning and security. And this blog is to do with health insurance.
Fernsnpetals CPS
With no formal training in the earlier days and even now to a large extent for that matter, many of us are not equipped to lead a comfortable post retirement life when the basic needs are confined to day to day living and health care apart from other activities which may vary from person to person. 
Jabong Mailer (CPA)
As we approach our retirement we are faced with possible monetary and emotional anxieties during impending retirement years. We are deeply concerned about funds for healthcare even though many  of us may be having guaranteed pensions for life. We have to accept that old age comes with high probability of medical needs and here comes the health insurance into picture. Nobody wants to be dependent on their children for this need because they themselves have to look after their own selves and their families. Moreover social security is not available everywhere and hence most of us in India are on our own when it comes to health insurance.
But this is one part of the story. The other part relates to what we have to offer to such people. 
It is not easy to get a fresh health insurance policy without a number of restrictions and exemptions and with affordable premiums. Also there are not enough insurance plans to cater to unexpected requirements. And to top it all there can be major ailments which may not have adequate protection in terms of insurance.
Create a professional-looking website today!
Though some changes have taken place in the last few years but there is still a lot to be done to help senior persons in their sunset years. What really is needed is to understand the real issues and bring in laws to make it convenient and with affordable premiums.
In many countries we can find insurance companies offering long term health care policies. The premiums are required to be paid during entire working life of a person enabling him or her  a secured insurance cover post retirement. This is what can be introduced everywhere for the benefit of elderly human beings.

The best way forward in my opinion is to keep a check on our health right from the very beginning so that the requirement of medical care other than routine is minimized. Also let us decide not to switch over to total retired life immediately after retirement but get involved in mental and physical activity like yoga, walking, reading, travelling etc. which will certainly go a long way in keeping ourselves fit. In fact this must go on even till our last breath. This apart we must have suitable health insurance policy, renewed every year in time.

And above all we should be in constant touch with ever evolving world and use it to our advantage if need be.



It's never too late to make a beginning ...
Enjoy life till the last breath ...



My blogs can be viewed on
https://familyisreal.com
kumarskumar.blogspot.com
My blogs @ SK1955 on FB
@skumar272010 on Twitter

It's never too late ...


It's a little over two weeks since I posted my last blog. This is because I have been travelling for celebration of a special family event which is held on yearly basis. It has been a memorable event and this is what we look for as we catch up with our age. I could see, feel and be a part of the happiness which swept all of us. Time flies...Isn't it ?
Hotels.com CPA
But I also observed the changes in our physical appearances, the health related issues and other things which all of us are confronted with one way or the other.
This brings us to a very important topic of healthcare for senior persons.
In this blog of mine I continue on my favourite but very important ongoing topic of financial planning and security. And this blog is to do with health insurance.
Fernsnpetals CPS
With no formal training in the earlier days and even now to a large extent for that matter, many of us are not equipped to lead a comfortable post retirement life when the basic needs are confined to day to day living and health care apart from other activities which may vary from person to person. 
Jabong Mailer (CPA)
As we approach our retirement we are faced with possible monetary and emotional anxieties during impending retirement years. We are deeply concerned about funds for healthcare even though many  of us may be having guaranteed pensions for life. We have to accept that old age comes with high probability of medical needs and here comes the health insurance into picture. Nobody wants to be dependent on their children for this need because they themselves have to look after their own selves and their families. Moreover social security is not available everywhere and hence most of us in India are on our own when it comes to health insurance.
But this is one part of the story. The other part relates to what we have to offer to such people. 
It is not easy to get a fresh health insurance policy without a number of restrictions and exemptions and with affordable premiums. Also there are not enough insurance plans to cater to unexpected requirements. And to top it all there can be major ailments which may not have adequate protection in terms of insurance.
Create a professional-looking website today!
Though some changes have taken place in the last few years but there is still a lot to be done to help senior persons in their sunset years. What really is needed is to understand the real issues and bring in laws to make it convenient and with affordable premiums.
In many countries we can find insurance companies offering long term health care policies. The premiums are required to be paid during entire working life of a person enabling him or her  a secured insurance cover post retirement. This is what can be introduced everywhere for the benefit of elderly human beings.

The best way forward in my opinion is to keep a check on our health right from the very beginning so that the requirement of medical care other than routine is minimized. Also let us decide not to switch over to total retired life immediately after retirement but get involved in mental and physical activity like yoga, walking, reading, travelling etc. which will certainly go a long way in keeping ourselves fit. In fact this must go on even till our last breath. This apart we must have suitable health insurance policy, renewed every year in time.

And above all we should be in constant touch with ever evolving world and use it to our advantage if need be.



It's never too late to make a beginning ...
Enjoy life till the last breath ...



My blogs can be viewed on
https://familyisreal.com
kumarskumar.blogspot.com
My blogs @ SK1955 on FB
@skumar272010 on Twitter

Sunday, 30 July 2017

The Power Of Emotional Intelligence....


Hello friends



                                                             In today's world Financial Management is a key aspect of our lives and I always love to share my experiences on this subject. In fact this is what I have done in my last few blogs. But today I would like to dwell upon another important subject which impacts life of our younger generation.
                                                             It is Emotional Intelligence.
                                In simple words it is the capacity to be aware of, control, and express one's emotions, and to handle interpersonal relationships judiciously and emphatically. For most people, emotional intelligence is more important than one's intelligence in attaining success in their lives and careers. As individuals our success and the success of the profession today depend on our ability to read other people's signals and react appropriately to them. Hence it is imperative for us to develop the mature emotional intelligence skills required to better understand, empathize and negotiate with other people, particularly because the economy has become more global. Otherwise success will elude us in our lives and careers.
Fernsnpetals CPS                                                             
 There are five categories of emotional intelligence :
1. Self awareness - This is the ability to recognize an emotion as it happens. Developing self awareness requires requires tuning in to your true feelings. If you evaluate your emotions you can manage them.
2.Self regulation - You often have little control over when you experience emotions. But there are number of techniques to alleviate negative emotions such as anger, anxiety or depression. a few of these techniques involve recasting a situation in a more positive light, taking along walk or meditation or prayer.
3.Motivation - To motivate yourself for any achievement require clear goals and a positive attitude. Although you may have a predisposition to either a negative or positive attitude, you can with effort and practice, learn to think more positively.
4.Empathy - The ability to recognize how people feel is important to success in your life  and career. The more skillful you are at discerning the feelings behind others' signals the better you can control the signals you send them.
5.Social skills - The development of good interpersonal skills tantamount to success in your life and career. In today's always connected world, everyone has immediate access to technical knowledge. Thus people skills are even more important now because you must possess a high emotional intelligence to better understand, empathize and negotiate with others in a global economy.
Happilly unmarried IN                                                But the million dollar question is are we really aware of it ? Are we inculcating this trait in our children ? In fact do we ourselves realize the importance of it ? Is there any opportunity for a formal training on it ? Unfortunately the answer in most of the cases will be a NO. Let's try to understand a more about it.
Zoomcar CPA                                                Emotional intelligence plays an important role in developing social skills and creating healthy classroom environment through positive interpersonal relationships between teachers and students. It can facilitate the process of learning through harnessing the energy of positive emotions and controlling the adverse effects of negative emotions.
Biba CPS                                                It is highly beneficial in the areas of education, work and mental health. There are research evidences which prove that the success in varied life situations and academic achievement depends largely on emotional intelligence. Being high in emotional intelligence is more important than being high in academic abilities.
Adidas CPA                                      School and college education is a phase in life which shapes up a personality and it is important for us to understand the psychological development of students during this age. The current indicator of intelligence for any student is measured by the academic performance and it becomes difficult to know if the performance of the student in academics is driven by any other factor or not. Academic achievement is the extent to which students acquire the knowledge, skills and proficiency that is taught to them.
GearBest.com INT                                      Emotional intelligence can be classified as the ability to perceive and express emotion and thoughts of self as well as others. In simple words, emotional intelligence can be understood if an individual fits into the dimensions life self - regard where he or she can accurately perceive, understand and accept oneself, interpersonal relationship where a person is able to establish mutually satisfying relationships and relate well with others, a person who can control impulse, solve problems of a personal or inter personal nature, is aware of his or her emotions, is flexible enough to adapt and adjusts one's feelings and thinking to new situations, can introspect, can mange stress, and is assertive in effectively and constructively expressing one's emotion and can empathize with others.
                                                 In the present educational set up where students are expected to perform multiple roles with efficacy and effectiveness, it is imperative to develop in them the right attitude and emotional intelligence towards the complexities of life which are unknown and they must not be taken by surprise when confronted with.
                                                                                         The students actually play no active role in the attainment of knowledge. Their entire education is passive and mechanical. To create confident students and to assure certainty of successful academic achievement , it is very important to develop their personality with emotional intelligence including stress handling traits. It would not only make them competent but also they will be able to analyse the reasons of failure and initiate corrective action as required..
Download an eBook today                                                                Emotional intelligence is considered as a successful predictor of academic achievement. It has been claimed by the researchers that emotional intelligence predicts achievement at schools, colleges and universities.
Daily Deals Up to 50% Off - Shop Now!                                                  It is also found that emotional intelligence abilities lead to superior performance even in the most intellectual careers. As a measured construct, emotional intelligence is predictive of academic achievement as well as success in the workplace.
                                                  It is also seen that relatively high anxiety improves performance on simple and well practiced tasks but lowers performance on new or difficult tasks.
                                                  By understanding emotions and how to control them, they will be able to express own feelings and others' feelings better. This will help to interact and communicate more effectively and forge stronger relationships, both at work and in their personal life.
HepFly Mobil [iOS&Android,non-incent,TR]                                                   The need of the hour is to formalize and impart a well structured training on emotional intelligence by including it in the curriculum. But most importantly the onus lies on the parents to demonstrate it to their children on a sustained basis, for them to emulate and imbibe.



Excited to keep on learning new things
Gratitude


My blogs can be viewed on
http://familyisreal.com
kumarskumar.blogspot.com
My blogs @ SK 1955 on FB
@skumar272010 on twitter

The Power Of Emotional Intelligence....


Hello friends



                                                             In today's world Financial Management is a key aspect of our lives and I always love to share my experiences on this subject. In fact this is what I have done in my last few blogs. But today I would like to dwell upon another important subject which impacts life of our younger generation.
                                                             It is Emotional Intelligence.
                                In simple words it is the capacity to be aware of, control, and express one's emotions, and to handle interpersonal relationships judiciously and emphatically. For most people, emotional intelligence is more important than one's intelligence in attaining success in their lives and careers. As individuals our success and the success of the profession today depend on our ability to read other people's signals and react appropriately to them. Hence it is imperative for us to develop the mature emotional intelligence skills required to better understand, empathize and negotiate with other people, particularly because the economy has become more global. Otherwise success will elude us in our lives and careers.
Fernsnpetals CPS                                                              
 There are five categories of emotional intelligence :
1. Self awareness - This is the ability to recognize an emotion as it happens. Developing self awareness requires requires tuning in to your true feelings. If you evaluate your emotions you can manage them.
2.Self regulation - You often have little control over when you experience emotions. But there are number of techniques to alleviate negative emotions such as anger, anxiety or depression. a few of these techniques involve recasting a situation in a more positive light, taking along walk or meditation or prayer.
3.Motivation - To motivate yourself for any achievement require clear goals and a positive attitude. Although you may have a predisposition to either a negative or positive attitude, you can with effort and practice, learn to think more positively.
4.Empathy - The ability to recognize how people feel is important to success in your life  and career. The more skillful you are at discerning the feelings behind others' signals the better you can control the signals you send them.
5.Social skills - The development of good interpersonal skills tantamount to success in your life and career. In today's always connected world, everyone has immediate access to technical knowledge. Thus people skills are even more important now because you must possess a high emotional intelligence to better understand, empathize and negotiate with others in a global economy.
Happilly unmarried IN                                                 But the million dollar question is are we really aware of it ? Are we inculcating this trait in our children ? In fact do we ourselves realize the importance of it ? Is there any opportunity for a formal training on it ? Unfortunately the answer in most of the cases will be a NO. Let's try to understand a more about it.
Zoomcar CPA                                                 Emotional intelligence plays an important role in developing social skills and creating healthy classroom environment through positive interpersonal relationships between teachers and students. It can facilitate the process of learning through harnessing the energy of positive emotions and controlling the adverse effects of negative emotions.
Biba CPS                                                 It is highly beneficial in the areas of education, work and mental health. There are research evidences which prove that the success in varied life situations and academic achievement depends largely on emotional intelligence. Being high in emotional intelligence is more important than being high in academic abilities.
Adidas CPA                                       School and college education is a phase in life which shapes up a personality and it is important for us to understand the psychological development of students during this age. The current indicator of intelligence for any student is measured by the academic performance and it becomes difficult to know if the performance of the student in academics is driven by any other factor or not. Academic achievement is the extent to which students acquire the knowledge, skills and proficiency that is taught to them.
GearBest.com INT                                       Emotional intelligence can be classified as the ability to perceive and express emotion and thoughts of self as well as others. In simple words, emotional intelligence can be understood if an individual fits into the dimensions life self - regard where he or she can accurately perceive, understand and accept oneself, interpersonal relationship where a person is able to establish mutually satisfying relationships and relate well with others, a person who can control impulse, solve problems of a personal or inter personal nature, is aware of his or her emotions, is flexible enough to adapt and adjusts one's feelings and thinking to new situations, can introspect, can mange stress, and is assertive in effectively and constructively expressing one's emotion and can empathize with others.
                                                 In the present educational set up where students are expected to perform multiple roles with efficacy and effectiveness, it is imperative to develop in them the right attitude and emotional intelligence towards the complexities of life which are unknown and they must not be taken by surprise when confronted with.
                                                                                         The students actually play no active role in the attainment of knowledge. Their entire education is passive and mechanical. To create confident students and to assure certainty of successful academic achievement , it is very important to develop their personality with emotional intelligence including stress handling traits. It would not only make them competent but also they will be able to analyse the reasons of failure and initiate corrective action as required..
Download an eBook today                                                                Emotional intelligence is considered as a successful predictor of academic achievement. It has been claimed by the researchers that emotional intelligence predicts achievement at schools, colleges and universities.
Daily Deals Up to 50% Off - Shop Now!                                                   It is also found that emotional intelligence abilities lead to superior performance even in the most intellectual careers. As a measured construct, emotional intelligence is predictive of academic achievement as well as success in the workplace.
                                                  It is also seen that relatively high anxiety improves performance on simple and well practiced tasks but lowers performance on new or difficult tasks.
                                                  By understanding emotions and how to control them, they will be able to express own feelings and others' feelings better. This will help to interact and communicate more effectively and forge stronger relationships, both at work and in their personal life.
HepFly Mobil [iOS&Android,non-incent,TR]                                                    The need of the hour is to formalize and impart a well structured training on emotional intelligence by including it in the curriculum. But most importantly the onus lies on the parents to demonstrate it to their children on a sustained basis, for them to emulate and imbibe.



Excited to keep on learning new things
Gratitude


My blogs can be viewed on
http://familyisreal.com
kumarskumar.blogspot.com
My blogs @ SK 1955 on FB
@skumar272010 on twitter

Sunday, 23 July 2017

Art of managing retirement corpus...


Hello,


Financial planning and the art of managing our post retirement corpus is a fascinating topic to me and I am going to dwell upon it in my today's blog.
https://www.admitad.com/en/webmaster/offers/16495/
Retirement is the act of  retiring or of leaving one's job, career or occupation permanently, usually because of age or early retirement because of critical illness and/or disability.  It's not an event but a long phase in your life that can last up to three to four decades  Your financial situation will certainly undergo a sea change when you retire. Your income is likely to fall and spending patterns often change as you grow older, for example you have paid all the loans etc which you might have taken for buying a house, child's education, child's marriage etc.
https://ad.admitad.com/g/q38i489917df57e284d29abd4df56e/?subid=551424
During those decades, your corpus will be subjected to inflation which, in turn, will adversely affect  the value of your savings. If your savings do not give you enough return, you are going to run out of them within your lifetime and left high and dry on the financial front . 
https://ad.admitad.com/g/ttefnvo3nudf57e284d29889a1a15e/?subid=551424
But there are ways and means to prevent this from happening. It would have been of immense help if this would have been a subject of teaching in schools and colleges but it's not so as of now. You can take help of experts and experienced people in this field which is not difficult to find. Yours truly is one such person having lived and experienced my financial journey and now trying to help people.

The first part is to save enough during your working years and invest the savings wisely. 
Don't wait until after you have retired to deal with changes to your financial circumstances. Many of these changes can be estimated and prepared for in advance. By drawing up a budget for your expected income and spending as early as possible you will give yourself a much greater sense of control over your situation. 
http://www.interserver.net/index.html
You can always revise your budget later to reflect any areas where your estimates were wrong.If your budget reveals a gap between your spending and your income, then you need to look for ways to increase your income, cut your spending, or both.
Your budget of income and spending might identify areas where you are spending more than you might have expected, and where you think you could easily spend less.

If you haven't retired yet, you might still have time in the last few years before retirement to boost your pension income by increasing your contributions by as much as you can afford. The option can be especially attractive if your employer will partly or fully match your extra contributions.
http://www.interserver.net/index.html
Another option might be to defer the date on which you start taking your pension income which can increase your income because your savings have longer to build up  and your pension will be payable for for a shorter period.
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The second part is about deriving income from these savings after you have retired.
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The basic requirement is self - evident: you should spend only that part of your investment returns that exceed the inflation rate. The single most important thing to understand is that you must reserve the real, inflation-adjusted value of your principal, and not just the nominal face value. So how do you do this ? One such instrument is equity backed mutual funds.
https://ad.admitad.com/g/scfupgazc5df57e284d22ad3f2c5ae/?subid=551424
Let's take a simplified example. Suppose you retire today with  Rs. 2 crores as your retirement savings. You place it in a bank fixed deposit. A year later, it is worth Rs. 2.14 crores. So you have earned Rs. 14 lakhs, which you can spend. But there is a twist here. Assuming a realistic inflation rate of 5%, if you want to preserve the real value of your principal, you must leave Rs. 2.10 crore in the bank. That leaves Rs. 4 lakh that you can withdraw to spend over an year, which is Rs. 33333 a month which is surely not enough for a middle class person. 
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The interesting thing is that this calculation does not change even when interest rates rise because inflation and interest track each other quite closely. But very few people in middle class will have a retirement corpus of Rs. 2 crore. So it can be very will imagined what will be the plight of those who have a corpus of say, Rs. 1 crore or 50 lakhs or even less.
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Further, there have been periods of time when the fixed income interest rate has been below the inflation rate. Moreover, income tax has to be paid whether you realize the returns or not. There can be a situation when the interest rate barely exceeds the inflation rate and the income tax on the interest effectively reduces the value of the money.
https://ad.admitad.com/g/k5zrtrri4qdf57e284d247e39e9055/?subid=551424
The situation is quite different in equity linked mutual funds. Unlike deposits, they are high earning but volatile. In any given year, the returns could be high or low, but over 5 to 7 years or more, they comfortably exceed inflation by 6 to 7% or even more. The returns may fluctuate in individual years, and that's something which you have to put up with, but the threat of old age poverty does not exist. 
In such funds, one can comfortably withdraw 4% a year and still have a comfortable safety margin. On top of that, there is no income tax.
Clovia CPS
 As long as the period of investment is greater than  one year, returns from equity funds are completely tax free. This means that to have a given monthly expenditure through equity funds, you need just half the investment that you would make in deposits. An additional advantage in this case is, no matter how high your savings and expenditure, it's all tax free.
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People are gradually learning to appreciate  this idea and have started doing it.
They tend to be those who have used equity funds to their advantage as their savings vehicle anyway and are used to the idea of ignoring short term volatility in the interest of long term gains. However, the vast majority of Indian retirees are still wedded to  the mythical safety that deposits provide and end up facing tragic problems as they grow older. 
https://ad.admitad.com/g/jqvq0rzz8pdf57e284d25c7d2eed69/?subid=551424
Do you realize that there is no need for you to be one of them ?
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What one should do in today's scenario ?
1. Take help of experts for your financial  planning
2. Save 30% of your earning right from day one
3. Start planning for your retirement the day you start earning
4. Remember it's not only you but also your spouse which you need to consider for planning
5. Do not plan to depend upon your children or anybody for that matter for your post retirement needs because they have their own needs and in most cases they will not be in a position to accommodate you even if they have the intention to do so
6. Follow 100 minus age allocation rule which is a rule of thumb developed over the years in the attempt to provide guidance for equity and debt allocation decisions.
a) Subtract your current age from 100 and  the resulting number is the percentage that you must allocate to equities and remaining to the debt asset class. This means that if your current age is 30 years, you should put in 70% in equities while 30% should go to debt.
b) As the age increases the allocation to equities keep declining, reducing volatility and risk of the portfolio.
c) This rule might be a good starting point, but it is not aligned with the financial goals which are the actual purpose of creating a financial portfolio and building a corpus.
7. Always have a diversified portfolio
8. And above all life insurance has to be the first instrument when you get your first pay cheque
https://pafutos.com/g/bd7a1b8337df57e284d28b0fa31d56/?subid=551424


Wishing you all lots of financial planning, real planning...
God bless !



My blogs can be viewed on
http://familyisreal.com
kumarskumarblogspot.com
My blogs @ SK 1955 on FB
@skumar272010 on twitter



Art of managing retirement corpus...


Hello,


Financial planning and the art of managing our post retirement corpus is a fascinating topic to me and I am going to dwell upon it in my today's blog.
https://www.admitad.com/en/webmaster/offers/16495/
Retirement is the act of  retiring or of leaving one's job, career or occupation permanently, usually because of age or early retirement because of critical illness and/or disability.  It's not an event but a long phase in your life that can last up to three to four decades  Your financial situation will certainly undergo a sea change when you retire. Your income is likely to fall and spending patterns often change as you grow older, for example you have paid all the loans etc which you might have taken for buying a house, child's education, child's marriage etc.
https://ad.admitad.com/g/q38i489917df57e284d29abd4df56e/?subid=551424
During those decades, your corpus will be subjected to inflation which, in turn, will adversely affect  the value of your savings. If your savings do not give you enough return, you are going to run out of them within your lifetime and left high and dry on the financial front . 
https://ad.admitad.com/g/ttefnvo3nudf57e284d29889a1a15e/?subid=551424
But there are ways and means to prevent this from happening. It would have been of immense help if this would have been a subject of teaching in schools and colleges but it's not so as of now. You can take help of experts and experienced people in this field which is not difficult to find. Yours truly is one such person having lived and experienced my financial journey and now trying to help people.

The first part is to save enough during your working years and invest the savings wisely. 
Don't wait until after you have retired to deal with changes to your financial circumstances. Many of these changes can be estimated and prepared for in advance. By drawing up a budget for your expected income and spending as early as possible you will give yourself a much greater sense of control over your situation. 
http://www.interserver.net/index.html
You can always revise your budget later to reflect any areas where your estimates were wrong.If your budget reveals a gap between your spending and your income, then you need to look for ways to increase your income, cut your spending, or both.
Your budget of income and spending might identify areas where you are spending more than you might have expected, and where you think you could easily spend less.

If you haven't retired yet, you might still have time in the last few years before retirement to boost your pension income by increasing your contributions by as much as you can afford. The option can be especially attractive if your employer will partly or fully match your extra contributions.
http://www.interserver.net/index.html
Another option might be to defer the date on which you start taking your pension income which can increase your income because your savings have longer to build up  and your pension will be payable for for a shorter period.
http://affiliate.flipkart.com/install-app?affid=skumar272
The second part is about deriving income from these savings after you have retired.
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The basic requirement is self - evident: you should spend only that part of your investment returns that exceed the inflation rate. The single most important thing to understand is that you must reserve the real, inflation-adjusted value of your principal, and not just the nominal face value. So how do you do this ? One such instrument is equity backed mutual funds.
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Let's take a simplified example. Suppose you retire today with  Rs. 2 crores as your retirement savings. You place it in a bank fixed deposit. A year later, it is worth Rs. 2.14 crores. So you have earned Rs. 14 lakhs, which you can spend. But there is a twist here. Assuming a realistic inflation rate of 5%, if you want to preserve the real value of your principal, you must leave Rs. 2.10 crore in the bank. That leaves Rs. 4 lakh that you can withdraw to spend over an year, which is Rs. 33333 a month which is surely not enough for a middle class person. 
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The interesting thing is that this calculation does not change even when interest rates rise because inflation and interest track each other quite closely. But very few people in middle class will have a retirement corpus of Rs. 2 crore. So it can be very will imagined what will be the plight of those who have a corpus of say, Rs. 1 crore or 50 lakhs or even less.
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Further, there have been periods of time when the fixed income interest rate has been below the inflation rate. Moreover, income tax has to be paid whether you realize the returns or not. There can be a situation when the interest rate barely exceeds the inflation rate and the income tax on the interest effectively reduces the value of the money.
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The situation is quite different in equity linked mutual funds. Unlike deposits, they are high earning but volatile. In any given year, the returns could be high or low, but over 5 to 7 years or more, they comfortably exceed inflation by 6 to 7% or even more. The returns may fluctuate in individual years, and that's something which you have to put up with, but the threat of old age poverty does not exist. 
In such funds, one can comfortably withdraw 4% a year and still have a comfortable safety margin. On top of that, there is no income tax.
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 As long as the period of investment is greater than  one year, returns from equity funds are completely tax free. This means that to have a given monthly expenditure through equity funds, you need just half the investment that you would make in deposits. An additional advantage in this case is, no matter how high your savings and expenditure, it's all tax free.
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People are gradually learning to appreciate  this idea and have started doing it.
They tend to be those who have used equity funds to their advantage as their savings vehicle anyway and are used to the idea of ignoring short term volatility in the interest of long term gains. However, the vast majority of Indian retirees are still wedded to  the mythical safety that deposits provide and end up facing tragic problems as they grow older. 
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Do you realize that there is no need for you to be one of them ?
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What one should do in today's scenario ?
1. Take help of experts for your financial  planning
2. Save 30% of your earning right from day one
3. Start planning for your retirement the day you start earning
4. Remember it's not only you but also your spouse which you need to consider for planning
5. Do not plan to depend upon your children or anybody for that matter for your post retirement needs because they have their own needs and in most cases they will not be in a position to accommodate you even if they have the intention to do so
6. Follow 100 minus age allocation rule which is a rule of thumb developed over the years in the attempt to provide guidance for equity and debt allocation decisions.
a) Subtract your current age from 100 and  the resulting number is the percentage that you must allocate to equities and remaining to the debt asset class. This means that if your current age is 30 years, you should put in 70% in equities while 30% should go to debt.
b) As the age increases the allocation to equities keep declining, reducing volatility and risk of the portfolio.
c) This rule might be a good starting point, but it is not aligned with the financial goals which are the actual purpose of creating a financial portfolio and building a corpus.
7. Always have a diversified portfolio
8. And above all life insurance has to be the first instrument when you get your first pay cheque
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Wishing you all lots of financial planning, real planning...
God bless !



My blogs can be viewed on
http://familyisreal.com
kumarskumarblogspot.com
My blogs @ SK 1955 on FB
@skumar272010 on twitter



Monday, 17 July 2017

Art of building wealth ...

Good evening

In my last blog I touched upon financial security and planning.
Today I would like to share my experiences on the art of creating wealth.
At a young age when you have just gone through your campus interview and got your dream job, you are excited and the urge to indulge in lavish spend is hard to resist. It goes without saying  that starting out on your first ever work assignment in a new work place and receiving that first ever monthly cheque gives one a strong sense of mental independence and freedom.
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But once you reach there you have to be ready to handle your responsibilities which many of the young adults even are apprehensive of discussing, leave aside the planning part. It will be totally incorrect on my part to blame anyone of you but it is people like us who should take the lead and educate their children about this very important phase of life without thrusting our views on them. I always believe that today's generation is much more enlightened but need help and guidance to channelize their energy and creativity.

This is the phase when one makes important life choices, not only in personal life but in matters relating to finances too. These choices involve various desires; to be rich, to buy a car, to buy a house, to start a family, travel to exotic places around the world, safety of the family and yourself, children's education & marriage, to do something for your parents, to have a comfortable  retired life without compromising on lifestyle etc.


Some of these needs may seem too far fetched right now, but sooner or later you will be compelled to start thinking of them which is inevitable. And the sooner you finalize them the better it will be for you in future.

Always remember your desires are end goals and to achieve these there are some basic principles which must be followed.
* Needs and desires:
1. Write down your financial goals, take help if need be.
2. Include factors which may impact on it, like how much and where you are going to invest, the investment time horizon, the risks you can afford to take etc.
3. Specify action plan for each goal.
4. Get it concurred by those who know about it and matter to you
5. Implement in Toto
6. Follow up and review
7. Introduce corrective measures if required
8. Resist immediate gratification as it never pays in the long run
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* Go from the day you start earning with long term perspective:
The earlier you start, less is the amount required to earn better returns. For example, you are 25 years old and start investing Rs.  10000 every month, at 12% average yearly rate of return, At 55, you could land up with a Rs. 3.5 crore corpus. Now if you had started 10 years later, that is at 35 years of age, at 55, your corpus will nearly be Rs. 1 crore. Your corpus shrinks by two - third just because you missed those 10 golden years of investing.
This is because of compounding of your investment. .

* Always start with insurance first :
As I said earlier this has to be  the most important part of your portfolio. Gone are the days when people in this field used to talk about death, some still do, but it's now life we refer to in insurance.
 This also includes health insurance apart from mandatory vehicle insurance.You need to enjoy your investments and live life king size as long as you live.
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* No amount is too small :
You can always make a beginning by investing as little as Rs. 500 in a mutual fund, which works as a great tool for investing into asset classes like stocks, bonds and gold. And the most important aspect is that you develop a  habit of saving and investing consistently, and discipline in the long run.
One must not forget that there is always a need to move on from 'investing what is left after spending' mindset to 'spending whatever is left after investing'. This philosophy will certainly ensure long term wealth creation. And never forget that as your income grows, start allocating more money towards achieving your goals.
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* Risk management :
It is always advisable not to park your money only in one or two instruments. Always  invest in different financial instruments which allows  your risks to spread across the risk return spectrum. This will also help you to get a chance to understand various instruments and also gradually increase your returns by concentrating on the allocation. Remember, the advantage of being young is that you can take on maximum risks considering you don't have many dependents in most of the cases. But it's equally important to have the appetite for it.
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* Learn from experience of others
You being a young and excited investor are bound to make mistakes and learning from such mistakes is a continuous process. It always helps to join a group of  like minded people with similar financial position and aspiration where you can use the platform to share and learn from each other's mistakes.
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* Shamelessly seek help :
Great people on this planet earth have never been shy of asking for help from anybody and everybody which pays without an iota of doubt. Why should we ? Never shy away from asking for help, especially when it comes to investing for your future. If you are busy with your job or unable to do time management or don't have enough information to plan your finances, take the help of a qualified financial adviser to do so.
There are many experienced brains to provide help and guidance.

* Trust yourself :
And, last but not the least, trust yourself once you have accepted the philosophy. Don't get deterred by obstacles which are bound to be there during the journey, as long as your goals are well defined and you never loose sight of them.
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* Extent of information :
          Now let me share a case study to throw more light on the subject.
Two competing explanations as to why consumers have trouble with financial decisions are gaining momentum day by day. One is that people are financially illiterate, lack understanding of simple economic concepts ahttp://www.kqzyfj.com/pb115iqzwqyDMHHINIKDFEIKKKGGnd cannot carry out simple exercises such as computing compound interest leading to sub optimal financial decisions. That is, some people persistently choose immediate gratification, instead of taking advantage of larger long term payoffs. This is because it has never been taught anywhere in school or college and you are suddenly up against the challenges at a young age.
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Experiments show that the measure of impatience is a strong predictor of wealth and investment in health. Financial literacy is also correlated with wealth though it appears to be a weaker predictor of sensitivity to framing in investment decisions.
A study was made on the behavior of a bunch of MBA students in managing a small endowment portfolio that invested in a simulated financial market, in two mutual funds, under a set of pre-decided rules. Before the game began, one had to choose how often he would like to receive information about performance of the fund i.e.every moth, every year or five years. And  then only he could change the allocation.

After 25 years of simulation, those who got performance information every five years earned more than twice than who got monthly feedback.The answer lied partly in the nature of the two funds money was invested. The one which invested in bonds, had low average rate of return but also a much higher variance, losing money in 40 of the months in five years. In the long run, the best returns resulted from investing all of the money in the stock fund, since the higher return made up for the losses.

This fund rarely had a losing year and never had a losing five year stretch. People who got monthly feedback, got a lot of information but it was short term information that was not representative of the true, long term pattern of performance for the two funds. The short term information created an illusion of knowledge that the equity fund was too risky. More information may have led to less understanding for the investors.

* What Young Adults Should Know ?
1. Where does your money come from ?
2.Where does your money go ?
3.Learning the difference between needs and demands
4.How to budget with the money you have ?
5.Save some money for a rainy day
6. Difference between saving and investing
7. How compounding works ?
8. Why taxes matter ?
AND ABOVE ALL
9. 30-70  mantra - Save 30% of your earning consistently come what may happen and manage lifestyle with 70%. Remember it is your money.
10. Plan for your retirement the day you start earning



Wishing you all a great beginning on achieving financial freedom...




My blogs are available on

http://familyisreal.com
kumarskumar.blogspot.com
My blogs @ SK 1955 on FB
@skumar272010 on Twitter

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