Vijaibabu's Blog - Personal Finance Guide for Financial Freedom

Seven out of ten Indian parents say that planning for their child’s education is the best investment they can make , according to a HSBC study called ‘value of education - springboard for success’. The research explores parent’s attitude and behaviors towards children’s education. Suresh Sadagopan of ladder7 financial advisories agrees with the findings and says that many clients have two major goals – child education and retirement. He suggests financial advisers to keep education inflation in mind before recommending any products. “ Typically, education inflation is much higher than CPI and WPI. Also, if parents aspire to send their children abroad, advisers should factor in currency risk. It’s better off to recommend a combination of equity funds, debt funds and term insurance plan which covers equal liability. Child plan offered by insurance companies are expensive for your clients .” “In India, parents feel funding for their child’s education is one of the major respons

Have you ever wondered how a simple housewife, from any society, can manage her household in whatever budget she has? Why do banks and micro finance institutions lend money to the woman in the household? Simple, women have inherently been better money managers on a small scale. Yet, many women, including working women, seem comfortable leaving their long-term finances and retirement planning to their fathers or husbands. On the occasion of Women’s Day, it will be worthwhile to take a look at simple measures that women could take to plan their finances for a secure future. The first and most important step is to understand her financial needs and develop a suitable plan . For this, a good start would be to calculate the inflows and expenditure and the level of savings possible. As many personal finance managers recommend, she must keep emergency funds in the form of ready cash to the tune of 3-4 times her monthly salary/ allowance . When this level is achieved, she can then take the ne

 It becomes doubly important when we realise that one of the major factors that is drawing global attention to our country as a key emerging market is India’s young population: nearly 50% of our population is below the age of 25 (2011 census). Today’s youth are typically interested in leading a fast life, large spending and quick gains.  Few are averse to spending most of their income to follow a trendy lifestyle. To generate quick returns, they often do not realise the risk involved in investments such as equity derivatives, commodities trading, etc. So, it is important they learn early on in life about the importance of saving and spending wisely. Start early The first and foremost rule is to start early. For example, Rs 1,555 saved every month from the age of 25 would return Rs 1 cr at 60 assuming portfolio returns of 12% (See Table 1). However, a delayed start is likely to lead to higher outflows to achieve the same target. A 5-year delay almost doubles the monthly saving req

Work out a financial plan according to your needs and goals If you want your dreams to come true, there is no running away from taking small, but steady, steps in the right direction. Different people have different needs, therefore, a financial plan that works for someone may or may not necessarily work for you. The right way to go about building your wealth is to create your own financial plan aligned with your future goals. This discipline needs to be adopted in any investment. When you invest in mutual funds, work out the right amount to be invested in a Systematic Investment Plan (SIP) that fits well with your financial plan than blindly follow someone. SIP is one tool that can help you build investment corpus for the long term by investing in mutual funds. Thanks to the volatility, more often than not, investors find it hard to time the market.In a turbulent market, if you wait for the opportune moment to invest, you might end up not investing at all. This

Children’s education has always been among one of the top priority goals for everyone. Every parent wants to provide the best of education to their kids and better than what they themselves had got, which makes this a very emotional goal too. Children’s education is a time bound goal. You have specific number of years during which you need to save enough to achieve the desired result. You cannot postpone this goal.  Though you cannot be sure which way the child’s interest will develop and which specific field she’ll get into, still you would want to be prepared to provide for this responsibility as much as you can.  am going to point out some of those mistakes which if avoided can be beneficial to your financial planning at large.  1. Get your basics right :  You should understand that good education is not only about studying in a big reputed college, it is about building character, learning to earn and give respect and all this starts from home. Though good schooling is import

Here is how a first time investor should look at starting investing in mutual funds- 1. Define your horizon - Any investing avenue cannot be selected till you are not aware of your investment horizon. Many a times when you when you make investment without any specific goal behind it you get inclined towards the returns and so you get lured by the best funds of today. Such decisions has higher probability of going wrong. So it’s wiser to define clearly what is the time period you can hold your investments i.e. when you will liquidate this money. This  specification will tell you whether you are looking for a short term, medium term or a long term investment. 2. Assess your risk tolerance-  Each one of us has our comfort ability with volatility of markets. We may divide it into aggressive, moderate or conservative but there are host of factors which decide this. While making your first investment if you have dependents or liabilities then you may not be too aggressive. Similarly if yo

Avoiding  spending several hours researching which funds to invest in from the 1800+ funds in the market Signing up for different fund houses (Takes several days including paper work and to and fro communication) Getting KYC compliant if you are a first time investor in equity markets (Normally takes several days after doing necessary paper work) Making RIGHT investments Tracking your portfolio manually across different funds you have invested in Review of mutual funds every year to ensure you have the best funds Rebalancing to get market-beating returns