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

SIP Role in Financial Planning

SIP Role in Financial Planning

When we make our financial plan, we set some future financial goals and to reach those goals we also make some investment strategy. Systematic Investment Plans (SIP) is the best way to invest for your goals. In SIP investment we invest a fix amount in predefined regular time frame. The amount would be deducted from your bank account on the fix date of your choice. You can choose any mode of payment like monthly, quarterly or your specified mode. Here we will discuss some SIP related points which will be beneficial for you.

Assign your financial goal:

As we have discussed about in earlier post that every investment should have some purpose. Link your each SIP to a particular financial goal like children’s marriage and education, your retirement corpus, purchase new vehicle or house, foreign holiday tour etc. Your asset mix should have according to your investment time frame like if your goal is more than 10 year far from now then your asset allocation more tilted towards equity.

SIP Timing:

Many investors want to time the share market, however it does not make any sense in the view of return. If you invest in 4 different funds then divide your SIP date in different weeks in a month. Doing this you will take benefit of the volatility of the market. Monthly SIP is the best mode for salaried person. There are many modes available in the schemes like fortnight, daily quarterly and half yearly etc.

Increase your SIP Amount:

Every year when your salary increase, your SIP amount also should increase in line with increment. Most of the investor miss it and stay invested as per earlier mandated amount. With each increment in your salary you should increase your SIP amount also. It is called step up SIP. If you do not have a particular amount for SIP in current situation for a particular future goal the go with step up SIP and increase SIP amount every year to achieve your goal.

Portfolio Revision:

Every year you should review your portfolio. It does not means that the changes in investment strategy. It means if you are approaching near to your goal then decrease your equity portfolio and transfer it towards debt to avoid market volatility. If a particular asset class has performed very well then you can rebalance your portfolio according to your time, age and goal.

Invest in SIP is the best strategy to achieve your financial freedom. If you have any query or doubt, feel free to ask us.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

www.artofinvest.com

Retirement Planning

Have you planned for your retirement ?

Retirement planning is very important part of the one’s financial planning. We should not ignore it. In our country joint family system was very much popular and due to this system most of people often did not made any proper retirement planning and was totally depend upon their family member. In last two decades due to massive urbanization, social norms are changing very rapidly and nuclear family system is spreading day by day. People are settling in big cities from villages. So there are very big question is who will take care of the people in their old age and from where they will get  financial support for daily living.

Now it has become very clear that retirement planning is very essential for all of us. Most of financial advisors suggest that you need less money for post retirement expenses. According to these advisors, you need only 70%-80% of your pre retirement expenses in your post retirement period. When you are preparing your financial plan don’t forget to factor inflation.

But there are one different opinion also exist that we may actually need 135% to 140% of our pre retirement expenses. Instead of asking expert first ask to yourself “How much do you need for retirement,” or “How do you want to live in retirement?” and “What activities do you want to engage in?” There are significant difference between need and desire. If your keep your need less than 70-80% of pre retirement expense figure is right but if you want to enjoy retirement to the fullest in style without  thinking of any financial constraint then you need more money for expenses than pre retirement expenses.

There are no fix formula of your needs, only estimate what your wants are. So how much you plan to save should be a factor of what kind of lifestyle you would like to live post retirement. It is not necessary that you would be requiring only 135% or 70% of pre requirement expenses. The whole idea of retirement planning to plan to create a corpus that would make you live a life that you want to.

For example if your wish is long world tour or any other activities to fill free time during retirement then you need bigger retirement corpus. To accomplish these wishes you would need a plan. Make out list of activities you would like to take up post retirement, check current cost and factor in inflation to find out how much it would be cost you after your retirement. Try to establish a fine balance between need and desire and do realistic assessment.

Now a days many retirement calculator available online. You can use it at free of cost. It is essential that estimate conservative projection of your returns for retirement corpus. If you don’t adopt conservative projection then you may not achieve your target corpus.

A safe and in smart way is that begin saving from today as much as you can, as soon as you can for your older days. Start early & save as much as you can is the best strategy for retirement planning.

Regards,

Arvind Trivedi

Certified Financial Planner

Prepation for after retirement

How to prepare Retirement Plan

In previous blog, we have discussed about the importance of retirement planning as the changing social and economic scenario. Today we will discuss how we should prepare retirement plan and what is the crucial factor should consider during the preparation of retirement plan. The most important thing it should start as early as possible at the beginning of the career.

First, we should make a list of current monthly expenses and annual expenses. After making list one should analyze how much these expenses are likely to increase or decrease after the retirement. After this consider inflation rate to these expenses to arrive approximate figure at the time of retirement. Estimate your and your partner’s life expectancy and calculate how much corpus needed for you after retirement till death to support your expenses.

Once we arrive to the corpus figure, now the question where we have to invest and how much amount have to invest for achieving this corpus figure. Evaluate the amount you need monthly or yearly to achieve target corpus. The most suitable invest avenue is mutual fund. Use the power of compounding by investment systematically in mutual fund through SIP plan. With the right mix of debt and equity one can successfully achieve the required retirement corpus. As your age reach near about to retirement age, reduce your equity exposure and shift it to debt systematically.

After making investment don’t divert from the plan, be disciplined and make investment regularly. In some time interval like annual you should revisit the plan and make sure your investment is on track. The most important thing is not to use your retirement corpus for your other requirement or before your retirement. Planning for retirement is not a rocket science. It is very simple step by step plan but this required only discipline and regular investing.

If you find difficulties to make your retirement plan then involve your Independent Financial Planner/advisor. Be in touch with your financial advisor during the entire investment period and clear your doubt investment and financial planning.

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

 Regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

Retirement Planning - Its Importance

Have you prepared your retirement plan ?

We all work hard entire life for our daily needs and responsibilities. Our daily essential expenses has become costly day by day and the common man are in trouble to match the income for their current daily life expenses. During this daily life income generation struggle, somehow we are ignoring our after retirement plan. All of us expect a stress free retirement life and for that we need a suitable corpus. This corpus is nothing but replacement of your income when you stop working after retirement. The importance of building retirement corpus you can imagine that even today we are earning and hardly fulfil our needs and when we will stop earning then how can we expect stress free life. Migration of children, weakening joint family system, increased life expectancy, increasing medical bill, increased cost of living are the main factors which forced us to think about retirement planning in very serious.

One more crucial factor is inflation we should consider at the time of making retirement plan. It makes life worse more for retired person. For example if average inflation rate for next 25 year is 8% and our monthly expenses is Rs 15,000. So we need around Rs 1,00,000 per month with the effect of inflation.

Most of young people, at the beginning of their career completely ignore thinking about retirement plan. But please note down retirement is reality for every working person and for comfortable life style after retirement should make planning at the very beginning of the career. In most cases we have roughly 30 years for building the retirement corpus. As age of around 25 the person get job and around 55 take retirement. It means we should invest for some part of our saving for comfortable retired life during our working years.

So now it has become clear that how important to plan for after retirement life. If you find it is difficult to make retirement corpus then contact any independent financial advisor ( IFA).There are many ways to build retirement corpus like SIP in equity mutual fund, regular investment in government sponsored NPS (New Pension Scheme), PPF (Public Provident Fund), Provident Fund for employee, Annuity Schemes etc. We will discuss about these options in upcoming blog.

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

Regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com