Different Financial Goals

Different Financial Goals

What are financial goals? When an individual make financial plan for self then he/she try to find out what responsibilities in future he/she has to fulfilled. To set the financial goal is very important process of one’s financial planning. It should be practical and achievable.

Although, Indians are good savers but not so smart in investment. Only 4% of household saving comes into stocks and mutual fund. It is because of lack of awareness. Systematic Investment Plan (SIP) route is the best way to achieve your future financial goal. For example if you invest Rs 33,000 per month in equity SIP till 20 years, it would be Rs 5 crore with 15% CAGR. It is a good retirement corpus at the time of you will get retirement. The important factor is time. If you delay 5 year to start a SIP for your retirement, then you have to invest Rs 66,000 (just double from above mentioned Rs 33,000) per month till 15 year to achieve the same Rs 5 crore retirement corpus.

Another important financial goal is child education which is equally important for every person. I will give you a simple example to achieve your child’s education goal. Please start Rs 5,000 every month till 15 year you will get around Rs 30 lakh with 15% CAGR return and if you invest the same amount 5 more years means total 20 year then you get around Rs 66 lakh with the same rate of return.

In general, parents spend more than half of their income on their children’s education and it prove significant burden on their family budget. According to a survey, majority of parents spend on average more than 18-20 lakh for raising a child from 10^th standard to graduation.  

So it would be better if you plan for the same before the time in prudent manner.

There may be many financial goal for a person so make investment separate for each financial goal with the help of financial expert.

If you have doubt about investment product and 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 conducting seminar in your city, just drop the mail.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

Gold : For Wealth Creator or Beating Inflation ?

Gold : For return generation or beating inflation ?

After discussing about equity and debt asset class, we are now going to talk about gold. From ancient time gold has a prominent position in our country. Gold is a precious metal. Almost every Indian has stored it no matter of the quantity. In India, we are gold obsessed people and the largest gold consumption country in the world. It is the reason after global decline in prices of gold its price has not gone down in India. The demand is still high after many efforts done by the government to curb the demand of it. 

Uncertain global economic market has also increased the demand of gold. Many of wealth managers now took it as a part of their portfolio. In my opinion gold as an asset class is hedge against the inflation.  One can take a limited exposure of gold in their portfolio. When equity and debt market not generate the return and even not beat the inflation then it comes to rescue for portfolio value. 

After 2007, the steep rise in gold prices has lured many investors and many of the investor has purchase significant quantity in their portfolio. I have repeatedly said to the investors and through my blogs for limited exposure of gold in the portfolio. Equity derives their value from companies, real estate derives their value from rental income but gold has no commercial use and produce nothing except gold ornament. There is nothing to evaluate the value of gold. Its price only depends on demand and supply. A very famous line about gold has said someone that the value of gold is in the eye of buyers. We cannot evaluate its true value.

Uses of Gold:

• Worldwide central banks and governments hold gold as a reserve currency in uncertain economic condition. Gold can help hedge such risk of devaluation of money, inflation and deflation.
• Many companies and banks are providing loan against gold. People pledge their gold and get loan instant. 
• In India gold mostly uses in ornament form. People in India have special emotion for gold. The buy gold for many auspicious occasions like marriages, functions, festivals and etc.
• Many fund managers buy it for portfolio diversification purpose.

Traditionally, in our country gold are purchased in the form of jewellery, coins and gold bar. It has many disadvantages like storage cost, making charges, quality issue, purchase at a premium and resell below market price. Due to these disadvantages people now adopt unconventional way to purchase gold like Gold ETF, Gold Mutual Fund, It offers lower storage cost, no quality issues, and better pricing.

If you want more information regarding investment realted 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

www.arvindtrivedicfp.blogspot.in

Asset allocation : Importance in financial planning

Asset Allocation : How much Important..?

This word is very familiar in today’s investment world but often the investor or general public confuse or not very clear about it. The main purpose of asset allocation is to minimize the risk involved in achieving a target return or maximize returns with managing risk in prudent way. Asset allocation works on a very famous proverb “Don’t put all your eggs in one basket”. It also play very vital role in any comprehensive financial planning.

We have mainly these types of investment assets:

• Cash
• Equity
• Precious Metal
• Real Estate
• Bonds

Among many of the the asset classes, mutual fund provide the well diversification and professional management. Asset allocation through mutual funds gives you the opportunity to get maximum benefit through diversification and reduce overall portfolio risk. Mutual funds provide better asset allocation in cash, equity and bonds asset class.

Before making any strategy to achieve long term financial goals through asset allocation there are some important points given:

• Asset allocation helps you to make fine balance between return and potential risk. It provides also a disciplined investment plan.

• It also protects your portfolio against declining market through rebalancing and diversification.

• The most important thing is that your personal asset allocation strategy may not similar than others. The financial goal and risk appetite different for person to person. It based on mainly your age, risk tolerance level, liquidity needs and time horizon.

• Please remember that asset allocation does not guarantee the best return but it offers the balanced return with managing the risk which is good enough to take care of your all future financial needs.

• The main aim of asset allocation or financial planning is to achieve your future financial goal and peace of mind. It is not much important that gain a maximum return from the investment but to achieve a peace of mind with achieve a financial goal through risk management.

For more detail and any other query related investment, you can contact me through my email.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

Some Important Points for Investors

Since last 4-5 year the retail investor has been losing money in equity market as market is not performing well. But not only in equity the so called advisor are fooling the investor from last so many years. I have earlier written so many times in my blog that if you have not much time and knowledge about market or investment please find a well knowledge filled financial planner. Set your financial goal and save before spending. Here I am sharing some basic tips which is very important for every investor before taking investment decision.

The most important thing is to protect your capital first. Take moderate risk for getting decent return. It is said that high risk give high return but before taking high risk assess your age, need and goal.

Never expect unrealistic return. Always try to get the return above average of the particular investment category. You cannot compare a single script return with any type of equity mutual fund. If anyone tell you about extra ordinary return please beware and alert before investing. I want to say only that keep reasonable expectation from any investment avenue.

Try to well diversify your investment portfolio according to your investment horizon and risk appetite. A well diversified portfolio reduces loss in other word say never put all eggs in one basket. Diversify your portfolio among different asset classes.

Keep away from any market rumors or news hype. Give proper time to your investment to grow. The process of investment is like sowing seeds. It need proper time to grow according to investment avenue. There is no rocket science to get multi-times return in short period.

There are other important things regarding investment which you will know in coming blogs. If you have some query about investment or financial planning please contact feel free to me

Regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com