SUKANYA SAMRIDDHI YOJNA

SUKANYA SAMRIDDHI YOJNA

Modi government has launched campaign ‘Beti Bachao Beti Padao’. Under this scheme the government has launched Sukanya Samriddhi Yojna Account. It is a small saving deposit scheme for the girl child to support her education and marriage. This account can be opened in the name of girl child from the time she is born till she becomes 10 year old. It can be opened in a post office or any public sector bank.

It can be opened with a minimum amount of Rs 1000 and maximum of Rs 1.5 lakh. The money can be deposited till 14 year from the date of account opening by parents or guardians. The interest rate will be decided by government every year. For FY 2014-15, the interest rate is 9.1% and it is compounded annually. The interest will be tax free. You can avail section 80C tax benefit, the amount deposit in this account till Rs 1.5 lakh in each financial year.

The account will mature after 21 years from the date of account opening. 50% fund can be withdrawn after the girl turns 18 year old. The premature closure of account is allowed in the case of death of girl child. If you do not deposit any amount in a whole year, a penalty of Rs 50 charged. One family can open only 2 accounts even if there are more than 2 girl child in family. Only 1 account per girl child is allowed. You cannot operate account online.

This scheme is better than post office schemes and fix deposit schemes or RD schemes. It will give the same tax benefit as PPF. It is good plan for your child because at least the government will try to meet the inflation rate at least. Interest rate will be announced every year. It is illiquid investment so invest in planned manner. Birth certificate of girl child, address proof and photo identity proof of girl child and parents/ guardian are required documents for opening the account.

It is less risky investment option and it will not give return like mutual funds or share market. As an asset allocation plan for debt investment, one can consider it. In my personal opinion, if you invest for 21 year then it is not much good option. A good mutual fund will give much better return if you compare between mutual fund and this scheme. I have still not opened this account for my daughter as I already invest in mutual fund.

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

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

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

Declining Gold Prices

Biggest Fall in Gold Price

Yesterday, India has witnessed a biggest single-day fall in gold prices in 2014. The gold price has gone down up to Rs 800. The price has fallen after RBI eased import restrictions of gold. RBI had imposed severe restrictions on gold imports to reduce current account deficit (CAD) and control the sliding rupee in July last year.

In Mumbai, the gold price has dipped to Rs 27,840 per 10 gram. In world market, since last year the gold prices also has declined around 35% from 2000$ to 1300$. In India, due to weak rupee and import restriction the falling effect was not so intense. It may further go down till Rs 25,000 – Rs 26,000 level in near term if rupee get strong in next couple of months.

I have always written in my past articles that never over invest in this asset class. I still advise that do not invest more than 15% of your saving in the gold. In our Indian tradition, the gold needed in various auspicious occasion like birth, marriage etc. Only purchase as much gold as you required for those occasions and the rest of saving invest in equity and debt according to your financial requirement. My final word is on gold investment to stay away from it and keep investing in other asset classes.

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

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

Financial Planning : Is it for you ?

Financial Planning : Is it relevant for you..?

Whenever I conduct workshop on financial planning or meet the client. It is very common doubt inside the client’s mind whether the financial planning is so important for them or not. In our country, we plan everything but not our finance. We are the largest saver country in the world. In fact we have  great saver mindset but most of us don’t understand or underestimate the need of financial planning. A common myth exist among the investor that it is only useful for only rich and elite class person. Today we will try to find out for whom the financial planning is important.

• If you don’t know where is your income going every month and always wonder about your expenses then you definitely need to make a budget for your income and expenditure. It is very basic and vital setp towards making a financial plan. Impulsive buying and lack of budget planning may be proved very costly for your long term future goal.

• If you are in the trap of debt and your liability is increasing due to loan interest amount you pay then seriously you should make a proper plan to get out from various liabilities. For the blind race to lead much comfort life style, you often use the facility of credit card, personal loan and bank overdraft facility. These all loans lead you towards a serious financial mess. A financial plan will help you to come out from financial mess.

• If your investments are scattered and you are not sure that whether it is right investment or wrong then financial planning for you. Many times we do investment on the recommendations from agents, relatives and friends without knowing the product’s risk and return ratio. Keep in mind each investments have always some degree of risk. A financial plan provides you consolidated investment statement and you can analyze it time to time in very easy manner.

• If you have a multiple life insurance policies and you are paying a hefty premium for those policies without knowing the expected return and sum assured then you must need of financial plan. Most of the people are underinsured in our country and people must know the about adequate insurance amount what they need. It is very important to know that how much life and medical cover you need. A financial planner help you to determine all these need based on your provided information. Insurance also is the vital part of any financial plan.

• If your major investment in the particular asset class and you are not sure whether it can help you to achieve your particular goal then you need a financial planner who help you to achieve your future financial goal through diversified investment portfolio with proper asset allocation. Asset allocation may be differ for person to person and you need to know which type of asset allocation you required to achieve your financial goal.

• If you don’t have habit to regular investing then you must need a financial plan. In every success goal achieving story discipline and determination is the key element. By create a financial plan with the help of expert and follow that plan religiously is very crucial to achieve your long, medium and short term goals.

Now after reading the above mentioned pointes it has become clear that financial plan is like a road map to achieve your dreams and desires to lead a happy and prosperous life. However, many of you have not any idea how to invest and where to invest or you may not have sufficient time to make financial plan and track your investment portfolio then you should must hire a expert planner lead to stress free life.

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