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Akshay Tritiya – Is buying gold still the best way to celebrate?

This Akshay Tritiya, many of us must be excited about buying gold to mark this auspicious occasion. You may need to rethink this though as the experts say otherwise. According to the experts, it is wise to liquidate any gold that you have been saving as an investment option. This may not be welcome news to most Indian years, especially with India’s obsession with gold, but it is good financial advice.

  1. Akshay Tritiya – a historic tradition

The word “Akshay” means something that never faces any diminishment. This translates well to gold y Indian standards as most Indians believe in the permanent high-worth of gold. Beginnings made on this day holy day of Akshay Tritiya or knowns to be holy if done with the purchasing of gold, as it is considered to bring good luck. It is very difficult to exit this Indian mindset and most people are dead-set on buying gold in its physical form on this day. Yet, there exist other options to invest on this day such as gold ETFs and gold bonds, if you absolutely insist to invest in gold on this day.

  1. Say no to physical gold

Do away with your physical gold investment by selling it off. The sale can be made to Muthoot and other such firms as they will always provide you with a better deal than any jewelers you may reach out to. It is never a good idea to sell gold to local and unorganized buyers, make use of respectable firms instead. There are various payment options such as instant cash for any gold value up to a maximum of Rs 20000. If the sum is higher than that then you will receive the money in your bank account.

  1. Instead invest in Gold ETFs and Gold Bonds

Gold ETFs:

Instead of gold jewelry or gold coins invest in Exchange Traded Funds (ETFs) – this way you can buy gold, but in an electronic form. In this way investors buy units of gold that you may sell at a later date to buy actual gold. ETFs get traded in stock exchanges where the core asset is gold. You may decide to invest in an amount as little as 0.5 gm by way of gold ETFs and this will be stored in your DEMAT account. Via this form of gold investment you do not have to worry about the purity of gold – making this transaction as auspicious as possible.

Over time you can invest in gold by means of small portions. These portions can be sold when you feel the need to buy physical gold, say for a wedding or any other similar occasion that requires you to be in the possession of real gold. ETF is the practical way to buy gold as it takes out the need for any kind of security or storage needs. You can buy gold on the internet in under five minutes.

Gold Bonds

Gold bonds are also a great way to invest in gold. The smallest investment that you can make in gold bonds is 2 gm, moreover the interest rate on the gold you hold will be 2.75% – a clear advantage over holding physical gold! Let us look at an example – instead of investing in 10 gm of physical gold, choose 10 gm of gold bond that can be bought at post offices, banks etc. The gold bonds have a tenure of eight years and after the period you will redeem the value of that amount of gold at that time. So over eight years you could have a gain of 25%!

Also, Sovereign Gold Bonds have a favourable taxation as compared to physical gold. The maturity benefit of SGB is tax free whereas gains in physical gold is subject to taxation. SBG’s if redeemed before maturity might attract some taxes according to the capital gain or loss.

  1. Investing in an equity SIP is equally auspicious

If an auspicious investment if what you seek this Akshay Tritiya, choose mutual funds as they are the purest form of investment. There is minimum risks in SIPs and there is diversification of portfolio. You also have the added benefit of liquidity as you can cash the funds at the current Net Asset Value. A proven and tested financial scheme, mutual funds are a great way to invest if you are looking at automated savings on a monthly basis, with good returns.

If you really are gung-ho about purchasing gold and using it as an investment tool, consider options to gold in its physical form. There are better ways to buying gold to celebrate this auspicious Akshay Tritiya. If your end objective is to make a good investment, then choose wisely instead of following the mass hysteria for physical gold!

Investing myths decoded

Trust and faith are two incredibly important factors that make a good investment. Before making any investment decisions, spend ample time going through the pros and cons of what you are considering. Investment myths are perpetuated to harm investors and they should be wary of the same. Let’s have a look at a few of these myths:

Money lost if fund house shuts down

This investment myth needs to be done away with. There is no need to get worried about your funds or fund house shutting down. Mutual funds are handled by asset management companies (AMCs). AMCs make money by way of a charge that is based on the worth of units owned by you. An AMC is not a broker or an invest bank. AMCs just handle a money from consumers in return for a small free.

The money handled by mutual funds belongs to the investors constantly; it does not mix with the AMC’s corpus. For example, SBI Capital is different from SBI bank and operates as an independent AMC. If there was to be a situation where your mutual fund house or AMC was to wind up, you would be entitled to receive your investment amount back. This amount would be calculated based on the present NAV. The amount that you have invested in the mutual fund house is safeguarded by a trust at all times.

One hindrance is that the repayment amount could take a while to reach you as the process is slow. Poor fund management can result in loss for investors. That sadly remains a possibility in spite of the Securities and Exchange Board of India’s (SEBI) regulations in regard to mutual funds. SEBI’s regulations may be strict but the best way to combat high risk levels is diversification.

You can make quick money with stocks

Most people believe that trading stocks in the share market can result in a quick turnaround and high profits. They think they can make twice, thrice amount of money by hedging their bets on the stock market. This is a huge myth as it could not be farther from the truth.

In equity investment, shares only give good returns after a long period of time. Most times it takes at least five to ten years for your stocks to bear great profits. The patient investor always excels with returns.

Also, certain stocks have a high alpha and give exceptional multi-bagger returns. But there are certain stocks which provide negative return even with good fundamentals and they just need to be in the portfolio for the long term to generate good steady income.

However, if you consider the entire portfolio of all stocks across timeframes, it will surely confirm what Benjamin Graham had said in his book, The Intelligent Investor,

“An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.”

Stock investment is a very good option provided you buy the company and not just its stock and then behave like one of the owners, owning and believing their ideology and trusting the fundamentals. So, analysis needs to be done before investing and not afterwards.

Stock market is extremely risky

Consumers associate the stock market with absolute risk. They must look at the intricacy of the markets as a tool to leverage. Even though trading in stocks may be perceived as too tough, if you follow the rules, great returns are possible. Research in the stocks you are investing in and keep your eye on the market. Diversify your holdings and be patient with your investments. Over time risk can be mitigated while trading in the stock market.

You get your money’s worth

With various diverse mutual funds, countless portfolio managers and several life insurance companies, it is difficult to guarantee that what you get is what you pay for. Most would charge the same kind of free to manage your money but you may not get the best service with all of them. Your portfolio manager could be bad, corrupt or great; the outcome depends on your due diligence and pure luck.

The true value of your fund will not be realized if it is managed by a bad portfolio manager. Hence, you always have to be vigilant to ensure your money is put to good use. Truth is, there is a possibility that you would be sold an investment service or product that is touted as being the best option for you.

The human touch is integral for investment advice

Investors believe in taking advice from those they think know better about the investment process. Often these people who they take advice from tend to be fund managers. The fund managers will often function in line with their personal interests.

To counter this you may try algorithm driven recommendations that focus on objectivity. For example there is an application called Fisdom, where the algorithm helps in creating a portfolio by allowing the investor to define objectives, filter through the fund options, analyzing performance and managing risk. These algorithms will probably replace most fund managers in the near future because of their independence from selfishness or desire for personal gain, unlike human fund managers.

Robo-advisory may or may not be able to perform better than the human interaction, but surely it will reduce the menaces of mis-selling, mis-information and wrong doings of the industry at large. So, as an investor, you need to have your basics at the right place and nothing can go wrong with your investments:

  1. Check your ideal and your current asset allocation, and yes, even at the cost of repeating, I would insist on Asset Allocation over and over again.
  2. Like Paul Samuelson said, Investment should be more like watching the paint dry or the grass grow; if you want excitement, go to Las Vegas.
  3. Investment should be analyzed before and reviewed afterwards and not the other way round.
  4. Skip the blips in the market and believe in the fundamentals of the economy and your investment analysis and continue.
  5. Review your investments yearly and change according to changing environment and needs.

Happy investing!

SIP- best mutual fund investment app-fisdom

Need guidance or do you know your stuff? Fisdom is ready for both

Fisdom believes in continuously improving your experience and broadening our offerings.

We are proud to launch the “Do It Yourself” module which enables all our savvy investors to choose from over 2800 open-ended mutual funds while sorting, filtering and adding funds to the cart – all of this right on the fisdom app. Fisdom clearly stands out as a unique platform offering fund recommendations for the uninitiated as well as an open universe set of options for the more savvy investors.
The “Do It Yourself” module allows you to sort, filter and add various funds to your investment cart. This time you would be shopping to build wealth instead of spending it away.

Along with an additional feature, we also have enabled registration for Non-Resident Indians through their non-Indian mobile numbers. This is in response to the increasing demand for such a facility.

While we are hearing you out through various channels, the system is now enabled for a more robust feedback process where you can tell  us what you need and we will try to make your fisdom experience even more productive.

We are consistently upgrading and improving our services. Do let us know if there is anything more you would like to do with your fisdom app.

Market Insights from DSP BlackRock

(Anup has been working with DSP BlackRock Investment Managers Pvt. Ltd. (previously called DSP Merrill Lynch Fund Managers) since July 1997, and has been managing the domestic funds since May 2001 to June 30, 2012. Anup was CIO at HSBC Asset Management between Dec 2005 and May 2006 before returning to DSP BlackRock Investment Managers. Between 1997 and 2000, Anup also managed an offshore fund, the Merrill Lynch India Fund which was registered in Mauritius and sold to Merrill Lynch’s clientele outside India. Prior to joining DSP BlackRock Investment Managers Pvt. Ltd., he worked with Chescor, a British fund management firm that managed three offshore funds investing into Indian equities. Anup obtained a Bachelor of Commerce degree from Sydenham College, Bombay University, in 1991 followed by a Post Graduate Diploma in Management (PGDM) from the Indian Institute of Management (IIM), Lucknow, in 1993.)

 

  • Given that market indices are already at historically high 24+ PE ratio, is there a case for a more focused sector or thematic approach?

If one looks at large cap stocks in the index, they are not very expensive considering their long-term averages from a pure valuation perspective. As you go down the chain in market cap, stocks are looking more and more expensive but in the large cap space, there are still a lot of opportunities where valuations are quite reasonable, especially in the context of much lower and stable interest rates. Hence we still stay the course on the long term view on equities overall as an asset class. Minor corrections can keep happening but the bigger call and the bigger picture is that equities still look favourable from a risk-reward perspective.

  • Which are the sectors could outperform, and what are the key drivers?

Overall, one of the underperforming sectors that we like right now is pharmaceuticals. The pharma sector has had a couple of tough years and we are hoping that will get sorted out gradually. We do not see FDA issues being prolonged.

Financial services have been a steady performer and that continues to be the largest weight in most portfolios. While as a space, the sector is expected to keep steadily performing, within it, it may be time to start looking at some of the wholesale banks in the private sector. That is an area that we are beginning to look at closely. They have been big underperformers for many years now. That could be an aspect to look at because over the next one year, we have reached a point where incremental asset deterioration would be very limited and over the next year hopefully a lot of further recognition will come through. Auto component companies could also be interesting and along with textiles, speciality chemicals and agro commodity stocks are some smaller sectors that what we feel could do well going forward.

  • What is the outlook on the participation by FIIs vis-à-vis domestic investors?

We are beginning to see FII flows coming back to emerging markets as a category. There is no doubt about the fact that there is very large potential for domestic flows to come into equities but over the past few years we have seen a large part of those flows have actually been more focused on mid to smaller sized companies and not so much the largecaps. Given the way midcaps and small caps are priced at the moment, we feel domestic flows will start spreading out away from just mid and small caps into some largecap companies as well.

But flows are also a function of market performance. It is very important that the market keeps moving up for people to derive more comfort and keep allocating more but there is no denying the fact that over maybe 5-10-year period the ownership of Indian investors in the market should probably rise a lot more from where it is today.

  • What are the triggers (upside / downside) to watch out for in the next one year? These could be global or India-specific factors

On the domestic front, corporate earnings (post demonetization) could be a trigger. Although earnings coming in higher than expected would be a positive surprise, the expectations are that it would be largely neutral. NPA resolution (over the next few quarters), windfall from the crackdown on black money and monsoons are other significant domestic triggers.

On the global front, ripple effects could be felt from measures taken by the US Fed, President Trump’s policies, elections in Europe, Middle East geopolitics, OPEC and its impact on crude. China related factors like overall economic growth there, currency outflows and strain on its banking system may also impact flows coming in from outside India

Be gilt-free, start an SIP into equity

It’s time to stop investing in gilt funds

Quite in line with expectations, the Monetary Policy Committee held the policy repo rate stable citing the global environment too risky to warrant any further easing. The Committee also emphasized on the need for bringing headline inflation closer to target range on a sustainable basis.

While maintaining status quo on the policy interest rate – the rate through which liquidity is infused, the RBI has increased the reverse repo rate to drain the system of excess liquidity.

The committee also acknowledged the fact that the southwest monsoon this year may see an el nino effect which would propel inflation higher mid-FY’18 onwards. RBI’s baseline projection suggests that inflation could rise to 5% towards the end of the fiscal year despite being conservative on crude price estimates.

Given the current dynamics of the economy, we expect the yields to harden further with no evident sign of softening in the future. It is advisable to reduce exposure to gilt funds.

What to do instead?

Invest in large-cap oriented equity funds through a Systematic Investment Plan

Equity markets are euphoric and seem to be playing well on India’s growth story. While valuations may appear slightly steep, investor sentiments and market cycle point towards a further uptrend.
Domestic investors have displayed solidarity during the previous few months where shortfalls by foreign investors due to uncertainty were matched by domestic inflows. At the moment, markets are witnessing a return of foreign funds which is pushing the indices further upwards.

Though there may be temporary hiccups due to the disturbance by GST implementation, the markets are expected to maintain an upward trajectory in the year to come. It is advisable for investors to continue investing into large-cap oriented equity funds through SIPs as corporate as corporate earnings catch up.

5 reasons why RERA brings you closer to your real estate dream

After almost 8 years of deliberation, the Government has finally agreed on implementing the Real Estate Regulatory Act w.e.f May 1, 2017.

The real estate industry in India has always been overvalued with dreams of owning a home continuing to remain a dream for many. The prices of real estate have been outracing the overall growth in income levels. For the few who took the plunge and invested significant earnings, there was another set of challenges. These challenges included problems like late deliveries of possession, arbitrary changes in property layout, illegal construction, misappropriation of money by the builder, abandoning of construction projects and many more. However, RERA is focused on setting things right.

1. Your money is used only to build your home

RERA directs all builders and developers to deposit at least 70% of project funds in an escrow account which would be released only in tandem with the projects’ completion. This is a good move to ensure that a project’s fund is not spread across various other developments which could delay or bring your project completion to a halt.

2. Financial penalties are now bilateral

To further tighten the deadline adherence, RERA would require the builders to pay an interest equivalent to the home loan interest to the buyer for the period of delay in project completion. This would dissuade the builders from intentionally delaying project completion and possession handover.

3. You get what you pay for

RERA mandates all project plans, layouts and proposals to be filed with the RERA authority and restricts the builder from making any change to the project without written consent of all the buyers involved. This ensures that no part of your property is modified to the builders’ advantage and that you receive the project as you had agreed to have.

4. No more misrepresentation

Usage of confusing terms like built-up area and super built-up area to portray a seemingly larger are than actual is proposed to be prohibited. The RERA defines “carpet area” as the only metric to measure total area being offered. This simplifies the understanding process and ensures that the buyer is aware of the real usable real estate.

5. You will now know about the land ownership

RERA is expected to introduce digitization of land titles which would require acquiring history of the land title and convert it into a registry number. This will ensure all land titles are rightly accounted for and are verifiable through a simple registry search. Once the land title is digitized and is pegged to an ID, the owner gets a land title certificate. This means lesser number of land litigations and a simple check for you to know if your money is going into a genuine project.

We expect such an aggressive stance of the Government to boost investor sentiments and clear the industry of dubious builders. We look at RERA as a catalyst to a shift from a shady and opaque industry to an efficient and disciplined industry. While investors can now confidently seek to build their homes, the price of real estate is expected to only go upwards as the act is expected to spur confidence-driven demand.

Is AadharPay actually a stepping-stone to the vision for a cashless India?

In line with the Government’s initiative to foster a less-cash culture if not a completely cashless ecosystem, Prime Minister Narendra Modi has inaugurated one of the world’s largest biometric-authenticated payment system- Aadharpay on 14 April,2017.

Background

Post the de-legalizing of higher denominations as legal tender, the Indian market has been flocked by multiple digital payment and wallet applications which also included BHIM (Bharat Interface for Money) led by NPCI. However, peer-to-peer digital payment services had seen only a short-lived spike in user activity while the trend is seen reversing gradually as remonetization brings cash back to the economy and the digital inclusion has not been able to penetrate deep enough.

Bottlenecks in existing systems

The major bottleneck in existing payment is systems is the need for a digitally able and rather sophisticated user base. While most of India, majorly the rural segment, is yet far from adopting smartphones as the normal, low connectivity and infrastructural challenges are factors too significant to be ignored. Digital-financial inclusion continues to be a huge challenge given the breadth of the Indian population and resistance by the less literate and senior population. Also, linguistic challenges makes adds to the challenge of educating such a diverse set of population

Notably, an IAMAI-IMRB report says Urban India has close to 60% Internet penetration, reflecting a level of saturation, but there are a potential 750 million users in Rural India who are far from understanding digital systems and smartphones.

An ambitious venture

Amidst such reversion of trends, the government expects to increase participation in cashless transactions by introducing AadharPay. AadharPay solves the existing bottlenecks to a great extent by completely eliminating the need for user-awareness. While bypassing the need to educate a wide base of consumers, AadharPay would need to train a relatively limited set of merchants instead. Using AadharPay is literally as simple as placing a thumb-impression.

About AadharPay

AadharPay is essentially and Aadhar enabled payment system which uses biometric information like a fingerprint to authorize transactions. The AadharPay mechanism is expected to replace prevailing PoS machines and completely eliminates the need for carrying cash and mobiles altogether.
The mechanism requires merchants to register with AadharPay and connect their smartphone to a biometric finger-print scanner (available at prices as low as Rs.2,000). Once connected, a customer just needs to feed in a 12-digit Aadhar number and select from a list of bank accounts held (in case of more than one bank account linked) and simply authorize the transaction with a finger print scan.

Challenges

Privacy

Considering the absence of an overarching privacy law in India, there are limited means for participants to seek redressal in cases of privacy infringement or data-theft.
In global context, privacy and identity theft is not new. The United Kingdom, back in 2010, had declared doing away with its plan for a National Identity Register as it crossed with basic civil liberties. The French are at loggerheads to create a super-database of biometric information (like Aadhar) citing sophisticated terrorism as a major concern. Notably, the US government has assessed identity theft as the second most reported crime with volumes increasing by almost 47% year-over-year.

Data Leaks and Thefts

Currently the program has close to 600 banks, brokerages and government departments as registrants authorized to access Aadhar data. Meanwhile, many private companies obtaining and offering services based on Aadhar data have mushroomed all over the nation. This obviously increases the chances of data leak and theft so much that there have been various petitions and litigations against the program and its expansion on the grounds of privacy infringement and rights to identity protection.

Data Management & Security

While India is aggressively marching towards growth, it still has a long way to go in terms of development and infrastructure. With such a huge database, the responsibility of storing and transmitting data securely has become all the more essential. With a huge segment of the nation still struggling to find good internet connectivity, the idea of AadharPay penetrating throughout may be a far-fetched goal.

The way ahead for AadharPay

AadharPay can be expected to gain acceptability quite fast considering the elimination of 2%-4% service charges levied by common PoS terminals.  The fact that one can pay without a card, mobile phone or even the hassles to manage multiple pin codes is quite fascinating as a thought and an indicator of thorough progress. However, the government must pay special attention to ensuring security, privacy and infrastructural convenience or else it might risk to have AadharPay as one of the largest reform efforts to collapse.

Working on-site? Here’s how to return to a financially secured life

Getting your dream job is a miracle and when that job takes you abroad, what more can you ask for? In the IT sector more and more employees get the opportunity to work abroad on short-term projects. Going abroad seems like a dream come true. Your salary might increase, you get exposure to international work culture, you broaden your experience and your resume receives a boost. What about the financial perspective? When you go abroad for the project, do your investments stop? Or do you plan your investments along the lines of your residential status?

Working on-site is a temporary affair. Sooner or later you return to your roots. In the meanwhile do you leave your investments stagnant? Here is a guide to manage your investments when you are working on-site:

  • Invest in a long-term investment option which does not need long term payment.

Onsite is a common experience for most IT employees. With a temporary onsite exposure, your salary usually goes up substantially. Although, you spend most of it living and travelling, even a small portion of savings might seem significant in the INR perspective, thanks to the exchange rate advantage you would get!

However, please ensure that you do not commit to any investment which needs payment for the long term. Though the increased salary increases your disposable income, remember that your overseas project is for a specified period of time only. When you return back, your salary might or might not remain at par with your onsite earnings.

If your salary does return to your earlier salary, then sticking to the investment commitment of a long-term instrument might seem difficult.

So, look for investments with a short-term investment commitment. For instance, SIPs of mutual funds or ELSS are a good option. Since mutual funds have the flexibility of changing the amount or discontinuing the investment while keeping the corpus invested, it is actually a very good option!

So, if you have additional income which might not be long lasting, choose mutual funds. With a shorter commitment, you can stop your investments if your salary reduces after returning from your project as well as keep your corpus invested!

  • Do not forget a life insurance coverage

A term life insurance plan is an essential requirement. If you don’t have one in your financial portfolio, buy one immediately. If you have invested in a term plan earlier, review your coverage. The amount of coverage should be sufficient enough to provide your family financial security in case of your premature death.

  • A health insurance plan is mandatory too

Did you know that medical treatments and procedures are cheapest in India compared to other developed countries? When working abroad if you require medical assistance, the cost of treatments would burn a big hole in your pocket. To protect against this financial contingency ensure to have a health insurance plan. If you buy a health plan in India ensure that it covers you at your on-site work location. If not, buy a local health plan in the country you are in.

The same is true for your family back in India. Even they need to be medically covered especially when you are not around to meet their immediate needs!

  • Use NRE fixed deposits

NRE Fixed Deposit rates are good as there is no tax liability and the yield spread is quite good. For simple, safe and easy investments with a maturity value and date, bank fixed deposits can be considered. Also, since it is fully repatriable, it is quite a preferred choice for many!

  • Consider Indian Taxes:

Even when you are earning a salary out of India, you might have some Indian income like dividends, rent, etc. So, you need to keep paying your Indian taxes for all your NRO account for income earned in India and the repatriate the same.

  • Put your house on rent:

If your family moves onsite with you and you know the specific duration for which you are moving, it makes most sense to put your own house in India on rent for multiple reasons:

  1. If someone lives in your house, it is better maintained
  2. Your housing maintenance cost, property tax, etc. can be recovered from the rental income
  3. Rental yield in India is not high, but it is good enough for additional investment, contingency, etc.

And if you come to India on a holiday, guest house or hotel is a better option than a closed house. Money is important after all!

  • Retirement planning

The importance of starting retirement planning early in life cannot be stressed enough. If you want to create a substantial corpus with affordable savings, start young. So, even when abroad, set aside a little amount regularly towards building a sound retirement corpus. The exchange rate differential will help you boost your investment.

  • Review your investments

Any existing investments which you have should be reviewed. Since you are working abroad, you might find it difficult to continue investing in instruments which require a regular financial commitment. So, review your portfolio. Make necessary changes in it according to your requirements.

Also, once you are back, do not discontinue your investments and redeem your corpus. Let it remain invested and redeem only the amount you need. That helps in building a healthy portfolio for yourself and your future.

Working on-site doesn’t mean that you have to give up managing your investments or making wrong investment choices. With a little planning and foresight, you can create and manage your financial portfolio even when working abroad. So, keep these points in mind when planning your investments.

How do you manage your money after being handed the pink slip?

With the rising inflation increasing our lifestyle expenses, a regular salary is the only way to survive. But what happens when you are handed the pink slip?

A sudden job loss is both emotionally and financially damaging. While you might deal with the emotional loss, do you know how to handle the financial one? Dilip was in such a dilemma when his company laid him off as a part of its cost-cutting measure. Though he was dejected at losing his job, the bigger problem he faced was getting the ends to meet. He didn’t know how we would pay off his home loan EMI and meet his household expenses. Do you know how?

You might not. Here are some tips to deal with your finances in case of a sudden job loss –

  • Don’t default on the loan. Get it renegotiated

Lenders allow renegotiation of the loans extended by them wherein you can get your repayment tenure extended to lower the EMIs or an EMI holiday. Instead of defaulting on your loan repayments, get your loans renegotiated. Talk with the lender and try to increase the repayment tenure. It would bring down your EMIs and make them affordable. Defaulting on the loan is not a good idea because of two disadvantages. One, you get charged a penalty for the default. Two, your credit score suffers due to the default. So, avoid defaulting on the loan and get it renegotiated.

  • Re-allocate your monthly budget

Now that you do not have a steady source of earnings, it is time to redo your expense budget. Cut down on unnecessary expenses and spend on things which are absolutely necessary.

  • Assess your investments

If you have investments which require regular investments, you should rethink about them. In case of SIPs, you can stop your investments without any penalties. If you have a life insurance policy where premiums are payable regularly, change the premium paying frequency. Try and pay monthly premiums to avoid sudden outflow of money. Once you get back a job or start earning again, you can continue your SIPs and annual premium payment, etc.

  • Take loans against assets or sell them

If you have assets, pledge them to get secured loans. These loans would have a lower interest rate and you can avail funds easily for your daily lifestyle expenses. If possible, redeem your investments rather than taking a loan to avoid repayments or sell your assets for generating funds.

  • Dip into your emergency corpus

It is advised to hold at least 6 months’ salary in a contingency fund. If you have done so and created a contingency fund, dip into the fund for money because your job loss is an emergency. However, if you have not created any emergency corpus, you have no option but to sell off your assets or redeem your investments.

  • Try using your credit card for transactions

Your credit card requires payment at the end of a 30-day cycle for all transactions carried during that period. They also give you a pay-by period of 15-20 days after the completion of the 30-day cycle. Thus, for any transaction conducted using the card, you can defer payment till the pay-by date. This gives you ample time to arrange for funds or land a new job. So, try using your credit card for transactions when you cannot pay for them immediately.

  • Use your severance pay to invest in a Systematic Withdrawal Plan (SWP)or in the dividend option of Balanced Funds

You must have received a severance package when you lost your job. Invest it wisely. Buy a SWP with the lump sum. The SWP plan would pay you an income every month, quarter, half-year or year as per your choice. This would yield a regular stream of income for you. Another option is to invest in dividend-oriented Balanced Mutual Funds. These funds pay a good dividend quarterly thereby providing another source of income.

  • Seek out help from family and friends

If there is someone who can help you in an emergency, it is your family and your friends. If you are in dire situations where the above-mentioned tips don’t apply, don’t fret. Borrow from your family and friends. They would lend you a helping hand financially and you can meet your expenses from the money extended by them. However, ensure that you always pay them back!

However, please remember that once you start earning again:

  1. Replenish your contingency fund to at least 6 months
  2. Clear all debts, especially bad ones like personal loan, credit card outstanding, etc.
  3. Rebuild assets and start your investments again
  4. Build a Plan B for yourself and your family. This can be done by creating an investment corpus and opting for systematic withdrawals or dividend payouts in an emergency.

A job loss, though bad, is not under your control. However, dealing with the finances post job loss is. Follow the above-mentioned tips and deal with your finances effectively even after losing your job.

Double income, no kids? Here’s how to secure your financial future

According to the great playwright Shakespeare, life is a stage where each one of us plays seven roles depending on our age. This philosophy of Shakespeare finds its application even in our financial planning process. Experts believe that our finances should be planned depending on our life stage. Though there are various investment avenues available in the market, their suitability depends on your requirements which in turn depend on your life stage. When you are unmarried you have almost no responsibilities. After marriage, when you start your own family, your responsibilities multiply. Even without children you have responsibilities. If your spouse is not earning, you have to shoulder all the financial responsibilities. But what if your spouse is earning?

Double Income No Kids (DINK) depicts the situation when both spouses are earning and they have no kids. Here are two of the most important features of couples in the DINK category –

  • They have a high disposable income

Disposable income is actually the in hand salary received. Since there are two sources of income, DINK couples have a high disposable income. They, thus, have a high investment potential and can invest in a variety of avenues.

  • They have low responsibility

Since a child is not in the picture, these couples do not have to plan for their children’s financial safety. As such, their responsibilities and liabilities are low.

Do you too fall in the DINK category? If yes, do you know how to plan your investments?

With a high disposable income and a variety of investment choices, making a financial plan seems confusing. Does it not? Worry not! Here is a guide for you to chalk out a good investment plan:

  • Create a contingency fund

This should actually be the first item in your financial portfolio. A contingency fund is required for those rainy days when you need finance. For instance, either one of you can face unemployment. In that case you would require funds to maintain your lifestyle, wouldn’t you? Or you might face a financial crisis and need funds to come out of it. Whatever be the contingency, the bottom line is that you should have a sufficient contingency fund. Ideally, a life insurance policy and a fund equal to six months’ wages should be set aside for contingency.

  • Buy health insurance

Another important requirement is a health insurance plan. The rising incidence of diseases and the inflating medical costs necessitate a health insurance policy. Otherwise, despite the high disposable income, your finances suffer a threat in case of a medical contingency.

  • Get equity exposure

Equity investment, though fraught with risks, yields attractive returns. Since you have no kids at present, you can easily afford to take risks. Ensure that at least 60% of your investment portfolio has equity exposure. Invest in equity shares directly or go for mutual fund schemes. Whatever you do, get equity exposure and grow your savings.

  • Start retirement planning

Surprised, are you? You must be thinking why retirement planning when you are so young. Well, if you want to build a substantial retirement corpus, the trick is to start young. By putting aside a little amount from a younger age, you let the power of compounding work wonders to your investments and create a considerable corpus. When you have kids, your financial priorities would change. You would have to provide for the child’s financial safety. At that time, investing in a retirement fund would be the last thing on your mind. If you, however, start now, with small amounts, you can continue your investments till you retire and get a good corpus. If you don’t believe me, look at the numbers. Rs.5000 invested monthly towards retirement for 35 years (considering you are presently aged 30 years) at a very conservative interest rate of 8% would yield a corpus of Rs.1.15 crores (approximately). Doesn’t planning young have its benefits?

  • Create assets

Buy a car and a home. Due to double earnings, paying off the home loan would be easier. While you would afford your home loan repayments, you would also create an asset for yourself.

The DINK stage is a very beneficial stage as you have little or no responsibilities and the income earned is also high. Plan your finances properly and you would never face problems later when you have children, start your family and shoulder greater responsibilities.

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