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

Are you first time MF investor?

Are you first time MF investor?

I dedicate today’s blog to my new mutual fund investors. India has less invested in mutual funds if compare with other asset class like fix deposit, real estate, post office saving etc. Although the mutual fund has been the great wealth creator in long run and outperformed to all asset class but still it is not very famous among investors.

Since last 2 years the scenario has been changed, many new investors have started to invest in mutual fund. The problem is many investor do not know the basic of mutual fund schemes and often choose wrong schemes, so now it is more important to educate the investors about mutual fund which is new to these investors. There are many types of mutual funds are available in the market but what is your requirement you should know first.

First of all if you are planning to invest for 1-5 years, never go with pure equity plan. You should go with debt mutual fund or balance plan depend on your time horizon and risk appetite. In debt plan, there are many types of plan which are good for different time horizon investor. So investment time plays vital role to decide the mutual fund scheme.

After deciding the investment time frame, you should also know the expected return, fund’s track record, fund manager and where the fund investing your money. All the information is also available with your adviser and online also. You should know the real rate of return after adjusting taxes and inflation. After all, your investment must beat the inflation at all.

Never go after scheme’s NAV. It does not mean that the lower NAV scheme is better than high NAV scheme. Old schemes often have higher NAV and new investor think it is very costly. It is wrong assumption after all rate of return is important not the current NAV figure. Always choose growth option if you are going for long term investment.

When you plan to invest in mutual fund, please follow the old golden rule that never put all eggs in one basket. It means never invest all money in one particular scheme. You should diversify your portfolio and review it time to time.

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

Investor's Investment Knowledge

Investor’s Investment Knowledge

I still see in our country that people do not have financial literacy. They do not know the proper process for investment. They still believe in fix deposit, purchasing land or LIC policies etc without any knowledge of any investment objective. The worst thing is that they still believe LIC endowment policies are the best option for long term investment. There are need for each investor to know about the investment product in detail in which they are going to invest.

For example in most of cases people who have LIC policies do not know about their risk cover and expected return at the end of tenure. It is my personal experience that 90% of policy holders do not know about their sum assured and expected return. Only they know about that premium amount which they are paying every year. They even do not serious about to know about inflation and real rate of return. Many investor invest in land for short term period like 6 months or 1 year without any idea of capital gain tax and liquidity.

The proper way for investment is that first, you should clear about your investment horizon after that check whether your investment will beat the inflation. After deduction taxes and adjusting inflation what will be your real rate of return? These type of question should be answered by your financial adviser or company agent.

Please keep in mind there is huge difference between company agent and financial adviser. Financial adviser will help you plan to your investment and future goal in realistic and prudent way. Other side the agent will be more interested for their commission only. The agent has not much concern about your hard earned investment or your future goal. Their main objective is to take your sign on the form, collect the investment amount cheque and get the commission in their pocket.

The agent, only advise you about the product for a one particular company. In other side the financial adviser will suggest you the best option available in the market. The reason for this that the adviser do not work for any one particular company.

My suggestion for all of you is that when you plan for your investment, please never go after emotional advertisement and you should have fair idea about liquidity, time frame, inflation, real rate of return and your future goal of investment. It is responsibility of all advisers and agents that they should give the proper detail of financial product to the investors.

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

Mediclaim Policy: Have you got your claimed?

Whenever you or your family member suffer with any decease or hospitalized then health insurance gives you a big relief. The wholesole purpose of health insurance is to cover your medical bills and other health related expenses. Most of people assume that purchasing the mediclaim policy and paying premium is very easy but to get claim is very difficult. They feel the process of claim is very tedious and very complex. So you need to understand the fact about the health insurance claim.

In general, when insured person admit more than 24 hours in hospital then we claim our medical bill. However some day care treatment like eye surgery, chemotherapy, ligament repair process etc. are also listed in today’s health policies. Please read very carefully that health care treatment list at the time of purchase of policy. Mediclaim policy also cover those all charges like hospital room charges, medical test, expenses before the admitting in the hospital within specified limit.

It is very important to read very carefully policy documents what is included or what is included not. Some policies also cover ambulance charges and expenses of attendant of patient.

Many hospitals has tie up with health insurance companies for cashless facility. Under this facility hospital receive the healthcare expenses of insured person from health insurance companies directly and patient do not pay anything to hospital within amount specified in mediclaim policy. To avail benefit of cashless facility you have to inform hospital before 24 hours from admitting day.

If you do not avail cashless facility then you have to contact your insurance company before 24 hours from admitting day. After relieving from hospital you will have submit all the medical expenses bill to insurance company or TPA with all diagnostic report and discharge summary. After assess the insurance company team you will get your claim amount.

Many people have doubt whether company pass their claim or not. If you have not hide any health related problem or hobbies and habits at the time of purchasing the policy, there should not be any problem at the time of claim. Before purchase any insurance policy you should have read and understand the policy document and mention all the facts about you with honesty on proposal form.

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

Are you feeling "Panic" ?

Are you feeling "Panic" ?

Yesterday, Indian market witnessed a shocking wave in share market. The Asia’s oldest market benchmark was down by 1624 point down. The investor’s Rs 7 lakh crore wealth wiped out in single day fall. Many investors feel panic and many see this is a good opportunity for investment. It is always good idea to buy in panic. At least you can find good company in fair value or below fair value.

Is the yesterday’s market fall just the beginning of a global recession or it is temporary blip with great pick opportunity? In my view, it is opportunities for those who have not plunged in the market till now. For those who have already invested in the market, need not to be panic. The India growing story is still intact and stay focused on. Savvy investors are investing millions of dollars into Indian companies. Indian Market is going to be huge, growing and world leading market. For traders, market always risky if their bet goes wrong so for them that does not matter whether market up or down. They totally play a gamble.

China have an economic problem so some impact is obvious on Indian market. Our CAD (Current Account Deficit) remains around 1.5% of GDP in comfort zone. We can convert worldwide crisis into an opportunity. Global development cannot impact India after beyond a point. Except for currency and stock market all other parameters are in right direction.

For investors who is looking good opportunity for investing in direct companies or in mutual fund can send mail for help. Please feel free to ask if you have any query.

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

ULIP or Equity MF- Which one better?

ULIP or Equity MF – Which one better?

I have often seen very confused investor for which one is good for investment either ULIP or Equity MF. Both are long term investment product. Investors often lure with the ULIP for very catching word insurance. Whereas equity mutual fund do not offer any insurance but great return as the efficient wealth creator in long term.

Although, Unit-linked insurance plans (ULIP) offers many types of funds from equity to debt segment. If you compare its return over the five year period, it has performed very bad when we compare it with equity fund return.

Recently a very informative financial magazine has done a study about the return of ULIP and equity mutual fund schemes. The Top 10 ULIP funds has given an average anuualised return of 16.61% while mutual fund schemes has delivered an average return of 22.20%. If we compare top 25 ULIP funds and top 25 equity mutual funds, ULIP delivered an average return of 15.28% and MF schemes return has been 20.71% in the same period.

ULIPs published their NAV before adjusting fund management cost and other cost while equity mutual funds published NAV after adjusting all cost. It is the reason investors are not getting right comparison between ULIP and equity MF funds. Returns from ULIP would be more worst after deducting charges like premium allocation charge, mortality charge and other charges. These charges are different for ULIPs managed by various financial entities. Only fund management charge is adjusted in unit price of ULIPs funds. MF schemes unit prices are calculated after deducting all expenses. This makes equity mutual fund return more superior than ULIP funds.

The fund management charge, of around 1.35% may attract investor towards ULIP as it appears lower than expense ratio of equity mutual funds. But when we consider other costs of ULIP- in most cases- it goes up to above 3% in the initial years of investing in ULIP. In an analysis of 237 ULIP funds, more than 50% of ULIP funds underperformed the Sensex over a period of 5 year ended in Feb 2015.

IRDA has put some cap on various charges after 2010. But still the costs of ULIP are much higher than equity MF. If you are looking for good long term investment option with low cost, equity mutual funds are still good choice.

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 Trading in MCX

Gold Trading in MCX

Trading in gold and silver are getting higher in day by day. We Indian are much obsessed for gold. In India, MCX facilitates for gold trading. Short term trader do trade with very low margin and get the gain from momentum in the respective prices.

In the open gold market, gold trading happens in per 10 gram rate. It means if gold rate says Rs 25,000 then it means 10 gram gold’s price Rs 25,000. In MCX the gold trading rule of trading is different. First you have to open account with MCX through any registered broker. After opening the account, you have to kept some margin with exchange for trade in gold. Commodity exchange fixes the margin amount on the basis of the momentum of the commodity rate.

In India, commodity exchange MCX provides 3 types of gold lot – 1 Kg (Gold Bada), 100 gm (Gold Mini) and 8 gm (Gold Gunia). For example if gold is trading at Rs 25,000 per 10 gm then the total value of 1 kg gold would be Rs 25 lakh. If you want to buy 1 Kg gold in commodity exchange then you will have need only Rs 1.25 lakh and if you buy it physical market then you will have to pay Rs 25 lakh full payment.

So you can purchase 1 kg gold worth Rs 25 lakh only paying Rs 1.25 lakh margin amount approx at present. The margin amount may be change it subject to MCX guideline. If you purchase Gold Bada (1 kg lot) then for Rs1 movement in gold price incurred you Rs 100 profit or loss. If the rate increase by Rs 1 then you will get Rs 100 and if it the rate goes down then you will have to loss Rs 100.

For gold mini (100 gm lot) the margin requirement is Rs 12,500 and for Gold Gunia (8 gm lot) the margin requirement is only Rs 1,000. By Rs 1 movement in gold prices, the mini gold gives you Rs 10 profit or loss and gold gunia gives you Rs 1 profit or loss.

Many traders are very active in gold trading through the MCX. However, it would be good if you have some extra margin kept with your broker in case of price goes against your trade. As I always say that trading have more risk than investment. You can also take delivery of physical gold. For this you will have to inform exchange before 5 days of gold contract expiry date.

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