Vijaibabu's Blog - Personal Finance Guide for Financial Freedom

§   Buy life cover of 6-8 times your annual income §   Buy health cover of at least Rs 5 lakh for full family §   Save at least 10% of your income for retirement §   Keep contingency fund to sustain 3-6 months' expenses §   Start saving for kids' education when they are born §   Take personal accident, disability cover of at least Rs 25 lakh §   Your EMIs should not exceed 40% of your take home income §   Insure home and other assets against damage and theft §   Earmark savings for specific financial goals §   Increase savings in line with rise in income §   Establish a diversified portfolio and asset allocation §   Rebalance your portfolio at least once a year §   Don't go after extraordinary returns §   Match investment horizon with asset class §   Differentiate your wants from your needs §   Ensure timely and regular repayment of loans   §   Avoid investments that offer extraordinary returns §   Understand features of insurance polici

I am happy to share my answers on investments are published in Nanayam Vikatan's 2nd Aug'15 edition.

Equity mutual funds let accumulate retirement funds at a double digit rate of returns through systematic investment plan. Debt funds can be used to protect the kitty once investor reaches age of retirement Retirement is that stage of life where everyone wants everything to be perfect. Be it regards to life or finance. To have a perfect life one needs to have perfect control over finances. A person opts for retirement to get free from work life but not from financial responsibilities. One still needs to take care of family expenditure and that’s why every single person should plan for the retirement to lead a peaceful retired life.  Planning for retirement is considered difficult these days due to fast changing economic conditions, life styles, and medical advancement. However, fact is that, if not planned then living post retirement could be even tougher.There are many financial products flooding in the market which an investor can choose to invest for retirement, however, investors

There's more to successful portfolio building than picking good investments.Putting together a portfolio of investments is like building a home. Even if a house is filled with beautiful rooms that may not be enough: All those rooms need to work together to form a pleasing and useful whole. Investment portfolios work the same way. 1)   Have a blueprint. Just as building a home begins with a blueprint, you need a pattern for your portfolio. The blueprint tells the builder to build a structure of a particular size and shape, with specific features, to suit the needs of its future owners. Similarly, your portfolio should suit your needs and specifications. The best starting point is to think about why you're investing in the first place. Maybe you're investing for retirement, for your child's education or marriage, or for the down payment of a home. Get specific. How much money will you need for each goal? How much time do you have? Whatever your goal, it gives y

Regular review and rebalancing allow investors to identify gaps, pin down the under performers and position portfolio in such a way that financial goals can be achieved in the desired time frame or earlier. Constructing a financial plan involves a process which considers various factors of an individual like income, expenses, savings, future goals and risk appetite of an investor. However, it must be noted that these factors are dynamic in nature and change over a period of time. When a significant change happens in one of the factors, it can impact the future course of your investments.  Regular reviewing and rebalancing of the portfolio would make sure that these changes are well adjusted in the portfolio and investments continue to give better returns throughout. Below are some benefits of reviewing and rebalancing the portfolio  1) Lifestyle Changes  Over a period of time an individual faces a lot of changes in his financial life. For instance, a salaried employee would exper

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

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