Vijaibabu's Blog - Personal Finance Guide for Financial Freedom

It not only allows you to invest at regular intervals but also enhances returns as the cash is invested in liquid funds, which generally offers better returns than savings bank account. As a mutual fund investor, what do you do when you have large sum in bank account and equity markets become attractive day by day, a scenario that we are going through for almost last three months? Some of you may want to write a cheque immediately. The wiser lot will opt for a systematic investment plan (SIP) to benefit from ongoing volatility but the bit smarter lot opt for systematic transfer plan (STP).  STP allows an investor to invest lump sum amount in a scheme and periodically transfer a fixed or variable sum into another scheme . It is quite similar to SIP which is more widely known and popular of the two among the mutual fund investors. While in a SIP you invest a specified amount in a scheme at pre-specified intervals and the investment amount for every SIP tranche comes directly from you

All of us must have some debt investments .  Some of us would like to know answer to the below questions.   “I live frugally, and save all the money that I can in Fixed Deposits, Public/Employee Provident Fund, and National Savings Certificates. When do you think will I get rich?"  the answer to this is: 1. Debt instruments preserve your money:  Yes, and they preserve it exactly as it was! Your money does not grow in a debt instrument. 2. The ‘interest’ that you get in a debt instrument is equal to, or less than inflation:  Over a long period of time, the interest is equal to inflation, that is all. That means the money is preserved, if at all. 3. The interest that you receive, howsoever meagre, is taxed at regular rates:  So, if you are a tax payer, a small part of the interest received is lost to taxation. In fact the bank may deduct about 10 per cent tax, and the balance tax will have to be paid by you as an advance tax. 4. The impact of the taxation is so bad that comp

§   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