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Showing posts from April, 2015

Retirement planning for salaried individuals

Starting early would ensure that your salaried clients are able to build a sizeable nest egg for their retirement. Unlike self-employed individuals or entrepreneurs who have the flexibility of deciding their retirement on their own, salaried individuals need to plan their retirement more diligently. The first step in retirement planning is identifying the corpus required for retirement. Advisors say that least 10% of annual income should be set aside to build a nest egg for retirement. If the income keeps increasing, it is advisable to increase savings as your clients may desire to maintain the same lifestyle during retirement. Financial advisors suggest that one should ideally plan their retirement in their 30s. Starting early would ensure that your clients are able to build a sizeable retirement kitty. “Retirement planning is not a priority for many. They are more focused on meeting their short term goals like buying house, car, foreign tour, etc. Salaried individuals s

How Debt Mutual Funds Work

Debt Mutual funds invest in fixed-income instruments like bonds, but that doesn't mean they are immune to ups and downs. Debt funds are a type of mutual funds that generate returns by investing in bonds or deposits of various kinds. This means that they lend money and earn interest on it. The interest that they earn determines the basis for the returns that they generate for investors. A bond is like a certificate of deposit that is issued by the borrower to the lender. Even individual investors do something similar when they do something as simple as make a fixed deposit in a bank. When you make an FD with a bank, you are basically lending money to the bank. One, they are able to invest in many types of bonds that are not available to individuals. For example, the Government of India issues bonds. It is in fact, by far the largest borrower (and thus bond-issuer) in the country. Individuals cannot buy government bonds. Bonds are also issued by many large and medium sized

Essential things to do in the new financial year

1) Re-balance the Portfolio The most important step is re-balancing of the portfolio. You may have started the year with a 60% allocation to equities, 30% to debt and 10% to gold. But, equities shot up 30-40% in 2014-15, while debt went up by 9% and gold fell by 5%. So your portfolio is now 65% in equities, 26% in debt and 9.5% in gold. To return to the allocation preferred by you, sell some of your equity investments and invest the proceeds in debt and gold. It is a fact that investors who periodically rebalance their portfolios get the best returns 2) Review Progress of Goals Along with rebalancing, you also need to review your financial goals. If some investments have not done as well as estimated, there would be a shortfall in the target amount set for that goal. You need to make additional investments to cover that gap. In some cases, the target itself may have moved up. For instance, if the surge in the dollar has pushed up the cost of your child's foreign education, yo