Financial Adviser Fee: A true story

Financial Adviser Fee : A true story

Today, I am not going to talk about any financial plan or financial and investment product. It is about financial planning fee. In our country, investors are not used to pay any fee to advisor. I other country there are many fee model for financial planning according to the advise and investor satisfaction level.

Now the scene has been changing slowly and now the investor are willing to pay for right advice. Before going in deep, I would like to share one true story. That story honestly reflects the investor’s need. One of my close friends named Mr. Alok sachan had come to me 5 year back and asked me some suitable financial product for investment. Please mind he has asked me only financial products not financial planning.

As he is my close friend so I have made a small financial plan and discussed it with him and his wife. In beginning they were not much convinced but they had done investment as I had told them in that time with some doubt. I had not charged any fee for financial planning that time but during the conversation I had shared about financial planning fee with them.

According to my investment plan they have started monthly SIP in 3 equity mutual fund schemes. These schemes have generated around 19% CAGR return till date. Yesterday, I was with him his home for dinner and he has paid me financial planning fee Rs 5000. I had never expected this and was not expecting any fee from him. It was surprise event for me but the more important thing is his remark on financial planner advice. He told me that this amount is nothing if I compare your valuable advice with financial planning fee. With the help of your advice I have saved many lakhs and able to fulfill my future plan successfully. It is more dangerous to invest in wrong product without financial planning. Investing without proper financial plan may not fulfill your future plan.

He further said that it is more prudent to pay some fee for right advice before any investment. It can save your money in future and your future goal will be also fulfilled and the more important you will enjoy life more without any stress and tension.

It is true event and if anyone wants to meet the investor and verify the facts then you are most welcome. If you want more information regarding investment or you need investment services, feel free to ask us. We also conduct the seminar on investment and financial planning. If you are interested for seminar in your city just drop the mail.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

www.artofinvest.com

Desire V/s Need and the role of financial planning

Desire V/s Need and the role of financial planning

I have been in financial planning since last 5 year and I have noticed one thing that the average investors are not able to differentiate desire and need. In this world, every human being have some needs and responsibilities. Everyone has to fulfill basic need like bread and butter, clothes and residence. After fulfilling these basic needs, there are some other responsibilities like take care of family members and social responsibilities towards relatives and society. Here from family members means include mother and father also. As many people in India are also adopting the western lifestyle and planning only their wife and kids.

In the above paragraph, I have discussed about only human needs. These needs may be different for person to person. I have seen many person who have immense wealth but not happy as they have not separated their need and desire. When the word “Desire” comes in picture, then the peace of mind and happiness go away from human life. As there are no limit of desire and for fulfill your all desire one human life is not enough. You have to take birth many many times to fulfill your desire but it does not complete and it is the main cause of sadness and the common person are not able to enjoy the life in today’s world. As long as desire increase in your life, the other very dangerous and new element comes in your life that is called “Greed”. Once greed enters in your life you cannot be live happy life and satisfied life.

Now you are realizing that the main cause of our sadness in life is greed factor and we should completely avoid it but it is not possible. Every human being is in within influence of some amount of greed. We cannot avoid it but we can control. How it should be control? The answer of this question will give you by your financial planner. In this article I will not discuss about how to make financial plan but tell you only why and how important is it for you.

By making financial plan you will be able to draw a line between your need and desire. You will set your future goal and priorities. To fulfill your future commitment where should you have to invest that will be take care by your financial planner. Financial plan is nothing but some pieces of paper where you have described your priorities and goals and it also have the strategies how to achieve your future goal successfully. By fulfilling your commitment and goals I think most of us can live peacefully and filled with joy life with control of greed and desire.

How to make plan and what other factor play important role in financial planning, we will discuss in our other blogs and articles.

If you want more information regarding investment or you need investment services, feel free to ask us. We also conduct the seminar on investment and financial planning. If you are interested for seminar in your city just drop the mail.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

www.artofinvest.com

Important Things in Financial Planning Process

Important things in Financial Planning Process

I have always recommended to all my friends and clients that make a well financial plan and live a life filled with enjoy and peace. Financial plan consist from some process like recognizing the goal, make a income and expenditure statement, projection the needed amount of money in the future for fulfill the particular goal, deploy the money according to asset allocation and risk appetite with the investment timeframe etc.

During the process of financial planning the investor and planner discuss about some numbers like a rate of return of the different asset classes, expected inflation no. and monthly expenses after retirement. It is very important to agree on a particular numbers after discussing the plan. There are things like inflation and return of the assets you and planner may be have different opinion. There are also things where you or planner can predict no. very easy.

For example, if you discuss about current assets, a financial planner can tell you that whether it is good or bad based on their market knowledge and in majority cases there is no more room left for debate or discussion for the asset quality. In other side, to decide whether your monthly expenses Rs 50,000 or Rs 1 lakh per month, the investor can arrive to the final no. and there or no more room left to argue for the planner.

To decide the inflation no. for next 20-25 years there may be different opinion of investors and planner. Even 1% - 2% different in the no. makes a big difference due to compound effect. It is better to adopt conservative approach to decide the return of equity or debt asset. After all it depends on your knowledge and experience of the market. Financial plan review is also the important part of any financial plan. If any changes happen in income, expenses, market or financial goal then there should be a review of plan.

If you want more information regarding investment or you have any other query about investment feel free to ask us.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

www.artofinvest.com

Systematic Withdrawal Plan

SWP (Systematic Withdrawal Plan)

Many of you have must hear about SWP (Systematic Withdrawal Plan). You can implement it in many ways. If you have sizable amount of sum for invest and want to invest in equity capital appreciation for long term but you are not sure about market in short and medium term. You can invest your sum in debt mutual fund and through SWP you can keep SIP in equity mutual fund.

Before understand use of SWP for retirement planning let us first understand about annuity. Annuity schemes are often aggressively promoted by life insurance companies. In annuities plan people receive a fixed sum per month over a period of time against lump-sum investment.

The yield of these annuity plan issued by life insurance companies hardly 7% and post tax it reduces further. You can apply SWP in smarter way in debt mutual fund for your post retirement income. For this you should invest lump-sum amount in debt schemes of mutual funds after consulting qualified certified financial planner. Use SWP facility to get a fix sum every month on specified date. In pre specified date you will get credit pre specified amount in your bank account.

If you compare it with life insurance promoted annuity scheme you will get much better return to apply SWP in mutual fund debt schemes.

For more detail about SWP or if you have any other query related investment you can contact me through my email.

Regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

Basic rules for investing

New Year, New Hopes and revisit some basic investment rules

First of all Very Happy and prosperous year 2013 to all of you. New year has already begun with new hope and optimisim in equity market. Yesterday, Nifty and Sensex were closed at 2 year high and now the market sentiments appear quiet positive in near term. Today I will not write lengthy article. At the beginning  of year, it is important to make some financial resolution and don’t repeat past mistakes.

There are few basic investment rules of investing and I am sure many of those rules you already know. I am attempting here to those rule revisit in very compact manner.

1)   Before make any investment decision, first know your networth.

2)   Be clear about your financial goal and honestly asses your needsand income

3)   Don’t investment in hurry and never investment in those products which you don’t understand

4)   If you have not properly insured then calculate your actually needed insurance cover and purchase term insurance online if possible

5)   Purchase mediclaim policy and personal accident policy also as it is very important

6)   Understand your risk appetite. If you cannot see 25% value erosion of your portfolio then stock market is not right place for you.

7)   If you are near about retirement please keep away from ULIP and insurance like product and reduce your equity investment and increase debt portfolio.

8)   Track your portfolio time to time and change your asset allocation according to time frame of your goal and market condition.

9)   Always pay your credit card bill on time as it has very high interest charges.

10)                If you feel any problem to understand or you have not enough time to take care of your investment find one financial planner and discuss with him about your financial planning and doubt.

There are much more basic rules and we will discuss about them this entire year in detail. Once again I wish for all of you a very happy, Healthy and prosperous year.

Regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

Mantra for wealth creating in long term

When you have read the above heading before read the entire article it seems very exciting. Most of the person may think that there would be a unique formula for wealth creation in this article but I would share some important guideline and principle which seem very simple but I am sure implementing this is not so simple. For implementing these mantras of growing wealth, one need to understand the logic and the concept of wealth creating from root level. So now I am going to share with you some principal to become successful investor.

(A) Find a good financial planner and discuss with him about your near and future financial goal, your current asset and liabilities and other vital information asked by the planner. A financial planner will definitely help you to educate about basic money management, to know your risk profile, make financial plan, informed  investment decision and goal based financial plan.

(B) Make regular investment through SIP (Systematic Investment Plan) and get benefit of rupee cost averaging. Recommended SIP by your financial planner will help you to create wealth in long term. Patience is the key to successful investing. Stay invested through entire market cycle whether bull or bear. Never try to time the market, invest in both bull and bear market and reap the benefit of wealth creation.

(C) Be in touch with your planner and discuss about the market environment. If need then rebalance your portfolio according to market phase after discussing with your planner. 

(D) Stay away from complex product like ULIP. Keep simple approach towards investment, not indulge with these product which you don’t understand properly. Invest in those products which are transparent and you understand better.

(E) Never mix your insurance and investment need. There is not a single product in the market which fulfill your insurance and investment need both.

(F)  Choose your financial planner very carefully because it is like your family doctor. Ask educational and professional qualification and assess the knowledge of your planner.

(G) Start investment as early as possible. If you delay one year your investment you will loose as much as you cannot imagine. For understand it better discuss it with your planner.

(H) Don’t invest not only for tax deduction purpose, understand risk, return and your need also. Make your tax plan at the beginning of financial year and avoid march month tax saving race.

The above mentioned few mantras are essential for every successful investor. For understanding it in detail contact any qualified financial planner. Keep it in your mind and think about this before you going for any investment.

If you have any query regarding investment please feel free to ask.

Regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com