Retirement Planning for Beginners | Retirement Planning Guide & Tips

All other life goals can be adjusted with or delayed but Retirement is one thing, which will happen!


Yes the age may differ from person to person. Each one must plan for retirement first. It is actually easy, if we follow some discipline towards achieving this goal.



how retirement ready are you - retirement planning guide tips for beginners


According to the Aegon’s Retirement Readiness Index, India ranks first with a score of 7.3 out of 10, ahead of the BRIC-Brazil and China counterparts. However, if you analyze the data further, you will realize that Indians use Bank Fixed Deposits and Life Insurance as their primary retirement planning tools.


This is contrary to the products primarily used by the rest of the world, i.e. mutual funds, annuity, offshore funds, etc. 83% of Indians believe that retirement readiness should be a shared responsibility between the individual, employer and the Government.

Thus, a stronger drive and thrust towards retirement planning is of utmost importance.

Beginner’s Guide To Saving For Retirement

Things you should do to reap the benefits of all the hard work you have done and enjoy a relaxed retired life have been highlighted below:

1. Start Early


it is never too early to plan for your retirement - start early retirement planning

As they say, ‘It is never too early to plan for your retirement’. The earlier you start saving, the easier it would be for you to achieve your goals.

Start with small amounts at an early age. It helps to build up a higher corpus due to the ’ of investment.

the compounding effect of investments - retirement calculator

We can clearly see the difference in corpus when Raj and Seema started saving Rs 5000 each but Seema started 10 years later and thus had less than 1/3rd the corpus that Raj could make with the same investment.

Some things that you can keep in mind while doing so are:

  • Retirement is not a destination. It is a journey. Hence the retirement corpus needs to grow even when you start withdrawing from the same, in order to combat inflation.
  • Do not withdraw the amounts that are kept aside for retirement, not even to buy a house. For e.g. Employee Provident Fund (EPF) is a part of corpus to be built for retirement and should not be withdrawn when you change a job.


2. Consider Value of Money and Inflation


value of money and inflation control - retirement planning for beginners

When planning for retirement one needs to consider the fall in value of money due to inflation. In simple words, a dozen of bananas that costs Rs. 20/- ten years ago, now cost Rs. 60/-.Thus, the value of Rs. 20/- has reduced over the time, due to inflation.

Thus, while computing the amount of money that you require at the time of retirement, you need to consider inflation and then back calculate the amount that you need to invest today.

Also, with increased life expectancy, any miscalculation of inflation would discomfort your retired life.

Let’s take an example of a 30-year-old who expects to retire at 60. His life expectancy is approximately 80 years and his monthly expenses now is Rs 40,000. With no rise in lifestyle, which is an unnatural expectation, and an inflation of 6% p.a. for a period of 30 years:

calculation of monthly expenditure - value of money and inflation

This means, your monthly expenses would become Rs 7.36 lakhs per month by the time you are 80 years old. And all of this assuming the lifestyle remains constant! This is BIG MONEY! Have you thought about it?

3. Proper Asset Allocation


proper asset allocation - retirement planning for beginners tips

A basket of investment options are available in the market and you need to choose the right one at the right time. Thus, if you start investing at an early age, you can choose investing in equity linked mutual funds, which would provide higher returns than bank FDs and definitely are more tax efficient.

Ideally, retirement planning basket should be a mix of EPF, PPF and Mutual Funds. You need to consider your overall asset allocation and maintain your equity allocation over all the years, in order to beat inflation.

One thing that is to be considered while choosing any asset class is that the real return on the investment has to be positive.

That is, if the interest earned on a fixed deposit is 8%, while the inflation stands at 10%, the real return on investment is negative as inflation eats up the interest income earned on deposit.

Each person has his perfect Asset-allocation mix which depends on his age and risk appetite. Thus, if you know your ideal Asset Allocation Mix, you should try to achieve that at all points of time.

Typically, a 30 year old would have a higher risk appetite than a 60 year old because of age being on his side. However, it also depends on your current liabilities, family wealth, dependents, etc.

Maintaining the minimum requirement percentage in equity is one of the easiest ways to build a sound retirement corpus!

4. Provide for Medical Insurance


major expense post retirement is towards medical expenses - retirement planning for beginners

Typically, household expenses are expected to reduce post retirement with no more EMIs to pay or no more expense towards children’s education. However, the major expense post retirement is towards medical expenses.

A major illness may toss away your entire financial planning. It is therefore to have a health insurance policy.

Most of the times people depend on the health coverage provided by the employer only. Many insurers provide for continuation of the same health plan provided by the employer. But insurers of the employer may change and also their clauses.

It is, therefore, advisable to have an individual policy in place which is operational post retirement.

Since health plans are lifetime renewable, you must continue the same till the last day.

5. Think of Alternate Source of Income & Develop a Skill Set


alternate source of income & develop a skill set - retirement planning for beginners

In today’s world ‘change’ is permanent and inevitable. Any change in technology, policy or a global turmoil may result in losing a job or closing down of business.

Also, with increased stress levels, people want to retire early. It therefore becomes important to develop a skill, which can generate income in case you need to give up your job early.

6. Make a Will


make a will, save for our loved ones - retirement planning for beginners

If you have yet not made a will, make it now. While we save for our loved ones, it’s important that they don’t face any difficulties in our absence.

It is not only important to abridge our spouse or children about our investments, it is also important to make a ‘will’, which would legalize their rights.

retirement planning for beginners - assured a comfortable life - post retirement

At the end of all the retirement planning, you would be assured of a comfortable life post retirement. Post retirement life should be stress free and the only way to make it happen is to build a healthy corpus and stay fit!

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Investwell July 16, 2019 0 Comments

How Can Financial Advisors Improve Client Engagement

The financial advisory business has undergone a sea-change in the last few years. Financial advisors today find themselves dealing with more sophisticated and informed investors.


Professional knowledge and positive returns, though critical, aren’t the only deciding factors when clients have to make a choice of one advisor for their financial planning.


Personal connect, trustworthiness and reliability often influence the choice of an investor along with technical know how.


Financial advisory, like any relationship-based business


It is based on interacting with like-minded people. In order to build long and healthy client relationship, financial advisors must understand this and hone their soft skills to build a strong bond with their clients.


As the competition is getting tougher, more and more advisors today realise that client engagement is extremely important. You can have a look at the Best Marketing Strategies for Financial Advisor that will help you to be at top in the competition.


As they are consistently looking at improving here are a few simple ways which may help independent financial advisors can improve their client engagement :



7 Ways Through Which Financial Advisor Improve Client Engagement

7 ways through which financial advisor can improve client engagement


1. Use of Social Media Platforms


use of social media as to improve client engagement by financial advisor


Social media is another medium which can help you reach out your clients. Platforms such as LinkedIn and Twitter can be used to share insights and showcase your expertise.


It can also provide you information on interests and opinions of your clients which can be helpful in your future interactions.


2. Host An Event For Your Clients


host events for clients a way to improve client engagement by financial advisor


Hosting an event for your client is another way to help you in client engagement. Events should be done keeping in mind their interests and hobbies, so as to make the client feel special.


This will not only help in bringing the client to the event but also ensure that he stays at the event and let him know that you appreciate them.


3. Use Technology To Your Advantage


use of technology is a way to improve client engagement by financial advisor


Technology has changed the way we do business. It all boils down to have effectively and successfully one has embraced this in their business.


Financial advisors should use technology to their advantage to increase their productivity and improve customer relations.


4. Get To Know Your Client


past track record plays important role while improving clients engagement


Though as a financial advisor your connection with a client is a professional one, but it is important that you get to know your client at a personal level.


As an advisor you are meant to keep a track of financial records of your clients but keeping a track of personal records of the client like birthdays, anniversaries, children, and other such information can help you build your relationship.


5. Leverage On CRM To Improve Client Relationship


leverage on crm to improve client Relationship by financial advisor


CRM is an excellent tool which can help advisors to improve their productivity. If used well it can help you in many ways effortlessly to keep you at the top of your client’s mind all the time.


Simple things like recording each and every personal and professional detail of your client, details of your meeting and scheduling next appointment help you engender client’s trust which will ultimate help build deeper relationships.


6. Do Entire Financial Planning For Your Client


do entire financial planning for your client to get engaged by financial advisor


Instead of focusing on making a one-time connect with your client by offering them a product, advisors should focus on the big picture and do financial planning based on his individual needs and goals and then suggest products for investment.


It may look like a time consuming exercise initially but in the long run it can be extremely fruitful.


7. Focus On Events Which Are Life Changing


focus on events which are life changing for client by financial advisor


Regularly interacting with your clients not only helps you stay connected with them but also provides you the opportunity to be around them in events which require them to re-look their financial situation.


Birth of a child, higher education, marriage, discovery of an ailment are some of the events when they need the right advice from you and if they receive it from you they are likely to value the relationship more.



Client Engagement For Financial Advisors!


client engagement for financial advisors


At the end, client engagement for financial advisors could result in creating business and build on profitability. Existing satisfied clients create value not just by giving business but can also help you widen your client base by way of referrals.


If clients are happy with you and your services they are likely to refer you to their friends and family. Thus, financial advisors at all times must focus on building a base of loyal and engaged clients.

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Investwell July 9, 2019 0 Comments

How To Select Best Health Insurance Plan In India

In modern times a health insurance plan has become a necessity if you consider the rising medical costs against the increasing incidence of diseases. As such, more and more individuals are opting for a health insurance plan to protect their finances against medical contingencies.


Even insurers are competing against each other to offer the best health plan to customers. The market is flooded with various types of health plans and each plan offers something unique. Then, how do you select the best health plan for yourself?


Best Health Insurance Plan in India

How To Choose ?



The choice of a health insurance plan depends on a number of factors and your requirements. The factors which you should consider when buying a health insurance plan are as follows:


1. Understand Your Healthcare Needs


understand your healthcare needs - factor while choosing health insurance paln


The first and foremost step is assessing your requirements regarding the selection of healthcare plan in India. You should understand the members who require coverage, their age and any existing diseases if any.


If you are covering your dependent parents you should understand if they have any pre-existing illnesses and then buy a plan accordingly. If you are single, an individual health plan would be sufficient. But, if you are married, you should buy a family floater plan covering your spouse and children, if any.


If you are into adventure sports or perilous activities like trekking, scuba-diving, mountaineering, etc., you should remember that injuries faced due to these activities are usually excluded from coverage of a health plan.


If you need coverage for such risky activities, you should check with the insurance company about the availability of add-on covers for the same.


2. Assess The Sum Insured You Require


assess sum insured you require - factor while choosing health insurance plan


Having a health plan with an optimal sum insured is essential to meet the exorbitant medical costs incurred in case of medical emergencies. For choosing the right coverage, you must assess your lifestyle expenses.


  • If you are likely to seek hospitalization in an expensive hospital or in an international one, you should ensure that you have a high sum insured coverage.
  • If you are employed and have a company sponsored health plan you can buy a top-up or super top-up plan to enhance the coverage at minimal premiums.
  • If you have a family history of ailments, a high coverage is necessary.
  • If you travel frequently, your healthcare needs are affected. You should look for plans which cover international treatments and also opt for a higher sum insured as such treatments are expensive.


So, consider all these factors, your income and expenses and select the optimal level of coverage required.


3. What Type of Health Insurance Plan Do You Need?


type of health insurance plan do you need - factor while selecting plan in india



There are various types of health insurance plan available in India. You can buy;


  • Comprehensive health plan
  • Top-up or super top-up plan to supplement your coverage
  • Disease-specific plan
  • Critical illness plan
  • Personal accident policy


A comprehensive health plan is of the utmost importance. If you have a comprehensive plan but want to enhance the coverage, a top-up or super top-up plan should be your choice.


A disease-specific plan should be your choice if you are suffering from diabetes or any heart-related illnesses. A critical illness policy should be added to your health plan as critical illnesses are increasing.


Also, you can buy a personal accident plan for covering the financial implication of accidental disability and loss of income. So, understand your healthcare needs and choose a plan.


4. Understand The Health Insurance Plan Benefits


health insurance plan benefit - factor while choosing health insurance policy in india


After you have assessed your needs, the optimal level of sum insured and the type of plan, it’s time to study the benefits offered by health plans.


You should see if there are sub-limits in the plan, if the plan offers sum insured restoration feature, see if there are free medical check-ups and if there are, when should these be done.


The plan should have a low waiting period so that your critical illnesses are covered. Look for premium discounts and no claim bonus feature. All these features would ensure that your plan gives you a comprehensive scope of coverage at reasonable rates of premium.


5. Find Out The Network Hospitals


find out the network hospitals - factor while choosing health insurance plan in india


Every health insurance plan has tie-ups with different hospitals throughout the country where you can avail cashless treatments. Since cashless treatments prevent any financial strain they are always preferred.


If you want a cashless claim facility you should check the list of network hospitals and ensure that your preferred hospital is in the tie-up list. Moreover, you should also check if the network hospitals are in your vicinity for emergent cases.


6. Compare The Health Insurance Plans Before Buying


compare health insurance plans before selecting the best in india


To get the best plan features and buy a plan at the best rates, there is only one way — compare the available plans before buying. You can compare the different coverage features of health plans, their premium rates, the plan reviews from existing customers and then make an informed choice.


Comparison of health plans can easily be done online. Online web aggregators and brokers facilitate online comparison which is easy and convenient.


So, to buy the best healthcare plan in India you should remember the above-mentioned points. These points serve as parameters which help you in choosing a plan most suitable to your requirements. Therefore, follow these points and get yourself the best health plan.


If you enjoyed this article, feel free to share to help others find it and buy the best health insurance plan for themselves!

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Investwell July 3, 2019 0 Comments

Financial Advisor/Self Advisor – Whom You Pick To Manage Your Investments

All of us have some dreams and objectives in our lives that include plans for our kids, owning a house, investing in a business or going on vacations. The goals and dreams change over time.


However, in order to fulfill these wishes without any hitches, you need to plan and manage your finances diligently with the help of a proper financial plan.


Financial Planning is a process of planning one’s own financial future.


Although a financial plan can be done on your own, but it is best to hire the services of a professional. It is similar to visiting a doctor or a lawyer for advice. You can surely opt for self-medication if you have a headache. But would you be doing the same for a more serious ailment ? Will you opt for self-medication or visit a specialist ?


So, it depends on how serious the situation is or how serious you are with your financial future.


financial advisor is perfect answer to your financial needs


Financial Planning is a plan for your sound financial future. If the same is not executed properly — penned down and followed up diligently, the purpose is completely lost! This is where an expert is needed.


A financial planner or an independent financial advisor, IFA can be the perfect answer to your financial needs. However, if still the following questions pop-up in your mind;


  • Do I really need a financial advisor
  • Is it worth paying a financial advisor
  • Can I be my own financial advisor
  • How to decide which one is best choice for me
  • Should I use a financial advisor or do it by myself


It is normal to have such kind of questions in your mind because it’s all about your hard earned money which you hand over to someone to make the effective use of it and gives you a better result.



5 Factors To Decide Which One Is Best

Financial Advisor or Self Advisor



1. Knowledge and Expertise


knowledge expertise as factor financial advisor & self advisor


Financial Planning is a 6-step process which needs to be written down and then followed to the tee.


A financial advisor studies for about 2 years, acquires in-depth knowledge and gets certified, using which he can actively help to plan our finances so that we don’t have to face any troubles at the time of financial needs.


So, why waste your time on something that is not your forte and risk your hard earned savings?


If your advisor is able to make even a 3% difference to your portfolio in one year, it makes a huge difference to your portfolio in the long run when compounded annually! That is where the knowledge, wisdom and expertise of your financial advisor can play a pivotal role.


2. Changing Market Conditions


market condition changing as factor - financial & self advisor


You can read a lot of the market news on financial websites and newspapers but what you can understand and relate to your daily investment needs is a big question.


If you are fully conversant with the market scenarios, the changing trends, the conditions and can correlate the same with your investment patterns, then you might as well do the same on your own.


But more often than not, a layman would hardly be able to understand where you should invest your surplus for the maximum yield as per your risk tolerance. Thus, a financial advisor is the best person to update you with the continually changing market conditions and advise you accordingly.


He keeps himself abreast with the ongoing changes in market and possesses the required proficiency that can help you make decisions on your investment portfolio.


3. Wider Choice of Financial Products


financial products choices as factor - financial & self advisor


Since a financial advisor is aware of the entire bouquet of financial products, he would be the best person to advise you with the perfect solution to your needs. A financial product needs to be solution driven and not product oriented.


Hence a financial advisor will weigh the pros and cons of the product and then advise you according to your needs, goals, tenure, risk appetite and requirement. All the factors need to be considered before a solution is provided and a solution can be a mix or a combination of one or two products as well instead of a single product.


This is where the role of a financial advisor comes into play with a huge variety of financial products at his disposal!


4. Benefit of Advised Over Non-Advised Investment


advised over non advised investment benefit by financial advisor


Like I mentioned, if you have a headache, you might as well buy an over-the-counter paracetamol or aspirin and have it but if you have a serious ailment or a prolonged headache, you have to visit a doctor.


A doctor will never advise medicines without finding out the real reason for the headache. It could be because of multiple reasons and the same can be treated in numerous ways. Similarly,


a financial advisor will check the financial health of your existing portfolio, diagnose your real investment needs and goals and then customize your solutions accordingly.


A doctor has a huge responsibility of saving a person’s life and can also be sued for wrong treatment. Similarly, a financial advisor carries the responsibility of saving a person’s portfolio and making him financially sound. You can take him to task for mis-selling if the product was not well explained and does not meet your financial needs.


Though, it should be noted here that taking the advice of a financial advisor can’t protect you against making losses arising from movements in the market.


5. Cost Factor


cost factor a difference between financial advisor or self advisor


Do you hesitate even once before paying your doctor his fees for every visit? No, right? Then why hesitate to pay your financial advisor who vows to take care of your financial health for the rest of your life and release you of a huge amount of stress and time for other engagements?


You need to realize that a professional will behave professionally only if you pay him his fees. There is no free lunch. If he is not changing you anything upfront, there is a hidden cost in the product or somewhere which will fund his advice. Otherwise, why will he spend his time to advise you?


Mutual funds have an inbuilt fee of approximately 1% of the entire Asset Under Management or AUM which is paid out to your advisor. The remaining amount is invested in your portfolio. So, with mutual funds, you get all the above mentioned benefits and advises of the IFA just at the cost of 1% fee.


As Jim Rogers, a well-known financial commentator and author had said,


jim rogers, a well-known financial commentator and author


Acknowledge the complexity of the world and resist the impression that you easily understand it. People are too quick to accept conventional wisdom, because it sounds basically true and it tends to be reinforced by both their peers and opinion leaders, many of whom have never looked at whether the facts support the received wisdom. It’s a basic fact of life that many things ‘everybody knows’ turn out to be wrong.


Thus, it always makes much more sense to opt for the services of a financial advisor instead of regretting it later. For that you as well as other investors need to change the way you perceive financial planning and take it more seriously instead of taking it for granted.


Then why postpone your long awaited holiday plans or your dream house? Happy investing!

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Investwell June 28, 2019 0 Comments

Top 5 Marketing Strategies For Financial Advisors & Financial Planner

With the passage of time people are becoming more aware and well informed about the investments they have to make of their hard earned money. There are numerous sources from where they gather all this information.


Furthermore there are numerous advisors out in the market giving financial advisory services to the public. This has made it of greater importance for an advisor to stand out from the others.


think outside the box - marketing strategy for financial advisor


Advisors need to think out of the box and promote themselves by going a step ahead from others. Professional know-how and positive returns are two common things offered by all financial advisors.


In today’s era of neck to neck competition, it is also necessary to develop a personal relationship based on trust with the investors so that they can rely on us for their finances.


Independent financial advisors should work on improving their soft skills as well in order to have a strong and long lasting relationship with their clients. Below are a few strategies, which if followed, would result in a perked up client engagement:


Marketing Strategies For Financial Advisors


1. Knowing Your Client


know your client marketing strategies for financial advisor


Breaking the barrier of professional relationship with the client and getting to know them personally would do no harm. It would rather help your business.


Sending them greetings on their birthdays, anniversaries or on festivals would help in developing a better relationship with your clients. Thus, knowing only the finances of your client is not enough; you should also keep a track of some of their personal life events.


2. Complete Financial Planning


complete financial planning - marketing strategies for financial advisor


Don’t just offer a product to your client and relieve yourself from the job, since, this would result into a one time connection with your client. Rather, it is advisable to do the entire financial planning for your client. Though it is a tedious job initially, but would yield great results later.


3. Regular Interaction


build trust with regular interaction with client - marketing strategy of financial advisor


In addition to making the personal relationship with your client healthier, regular interaction with them would also help you to keep yourselves updated of the events that are milestones of their life.


Getting married, birth of a child, marriage of the child; are few such events. At such points they seek financial advice, and getting it from you would make these clients appreciate the efforts made by you and value their relationship with you.


4. Say Hello To The Virtual World


connect clients over virtually platforms - marketing strategies for financial advisor


Social media is one of the easiest and cheapest ways to reach out to the public at large. Knowledge sharing through social medium like LinkedIn or Twitter can help you to show off the expert knowledge you possess.


In fact, it can also help you gather information about the interests of your clients and their opinions. Using this information, you can serve your clients better.


5. Get Hi-Tech


use of hi tech technology - marketing strategy for financial planner


Technology has evolved a lot over the years. And keeping oneself updated and well equipped with the new technologies and financial advisor’s software that has become need of the hour. You can also make use of some technology that helps you to increase your productivity & improved relations with your clients.


These are just a few ways that can help a financial advisor to strengthen their relationship with the clients.


A satisfied client is your best marketing agent !

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Investwell June 25, 2019 0 Comments

How To Select A Mutual Fund Scheme | Key Points To Remember

While investing in Mutual Fund, selecting the right mutual fund scheme is a key. There are a basket of Mutual Fund schemes available in the market be it Equity, Debt or Money Market schemes. Within equity also is a wide range of options like Large Cap Funds, Mid Cap Funds or Sectoral or Thematic Mutual Funds schemes.

However, one needs to select the mutual fund scheme that best suits one’s requirements.


Key Points to Consider while Selecting Mutual Fund Schemes


key points to consider while selecting mutual fund schemes


1. Performance Of The Mutual Fund Scheme


While selecting any mutual fund scheme it is important to review the performance of the fund. The key things that would determine the performance of the fund would be:


performance of mutual fund scheme while selecting mutual funds schemes


o Returns /Yields

The fund houses publish the performance of each fund scheme managed by them. Net Asset Value (NAV) is a key factor in Mutual Fund parlance. The movement in NAV is a fair indicator of performance of the scheme.

For long term investment, the investor needs to evaluate 3 to 5 year return generated by the scheme. It is also important to note that the return generated under the scheme needs to be compared with the performance of similar schemes managed by other fund houses as well as performance of the benchmark during the said period.


o Fund Manager

The Fund Manager is the ‘decision maker’ of all transactions done by the fund. The investor should therefore check the past performance of the fund manager and also the performance other schemes managed by him.


o Expense Ratio

All fund houses have to incur salary expenses for their fund manager, employees and also distribution expenses for their mutual funds. These expenses are ultimately charged to the investor’s whose funds are managed.


Typically, larger the Assets Under Management (AUM), lower is the expense ratio. The investor should also check the Exit load (charges levied on redemption of mutual fund units) under the scheme they want to invest.


2. Risk Appetite Of The Investor


risk appetite of the investor while selecting mutual fund schemes


There are mutual fund schemes available for all kinds of investors in the market. Mutual Fund investments are subjected to risk with no assured returns. The risk appetite of the investor goes a long way in deciding the Mutual fund scheme that the investor should choose. Depending on the risk appetite the investor can select the schemes as follows:


o High Risk Investor

A young investor or a Middle aged salaried professional would typically have a high risk appetite and can opt for investment in purely Equity linked Mutual Fund Schemes. These schemes are generally high risk -high return schemes suitable for these kind of investors.


o Low Risk Investors

Retired people should opt for schemes which have a moderate return but a lower risk. Debt mutual funds or Balanced/ Hybrid mutual funds (equity and debt mix) best meet their requirements.


3. Time Horizon Of Investment


time horizon of investment while selecting mutual funds scheme


The other key factor in deciding the scheme would be the time horizon.


o Shorter Time Duration

If you intend to park your funds for a short period of time say six months to a year, debt mutual funds or money market schemes are a good option.


o Longer Time Horizon

The longer the time horizon the better. If the investment is to meet long term goals open ended equity mutual fund schemes should be opted for.


4. Purpose Of Investment


purpose of the investment while selecting mutual fund schemes


Goal setting is an important step in financial planning. The purpose of investment needs to be understood before selecting the scheme:


o Long term goals like higher education, marriage of kids

In case the goal is to save for your child’s higher education or marriage you should opt for aggressive equity linked schemes which would generally give desired returns in a long time period.


o Tax Savings

Mutual Fund investment is an effective way of tax saving. There are various Equity linked savings schemes (ELSS), investment in which is allowed as a deduction under section 80C of the Income Tax Act. Thus, it serves a dual purpose of tax saving and return generation.


o Regular Income

Retired investors need a regular flow of monthly income. Mutual Fund schemes offer two options under any fund scheme- Growth and Dividend. Under the ‘Growth’ scheme there are no payments made to the investor inspite of increase in NAV.

However, under the ‘Dividend’ scheme dividend is declared under the scheme on a regular basis and paid to investors. The people desiring a regular flow of income should opt for the ‘Dividend’ scheme.


there are various mutual fund schemes available by the mutual fund industry for investment


Thus, there are various mutual fund schemes made available by the Mutual Fund industry and the investor has to choose the one best suited for him. Do consult a Financial Advisor before investing. He/She may be able to understand you and your needs and give you a proper solution.

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Investwell June 19, 2019 0 Comments

Factors Influencing Investment Psychology To Be A Genius Investor?

It is indeed difficult to invest successfully. Yet, it does not take a genius to be a prosperous investor. Even Warren Buffet, arguably one of the smartest investors of all times, is of the opinion that a high-level IQ is not integral for proper investing. In fact, he was of the opinion that once you pass the age of 25 years and have ordinary intelligence,


IQ does not factor much with investment.


In actuality, it is your control over actions that usually cause investment trouble that will determine your success. A sound investment psychology will ensure you do not fall in a financial pit. A true investor successfully overcomes his/ her own psychological weaknesses and limitations. Let us look at a few factors influencing investment psychology.


Factors Influencing Investment Psychology To Be A Genius Investor?


  • Overconfidence Influence Investment Psychology


overconfidence influence investment psychology


This is the primary factor that gives an investor an illusion of control. It makes you invest in a rapid manner. Investing in a rapid manner is a costly affair and does not always give rich rewards. In stocks, rapid trading costs can reduce the return on your investments. Be confident but do not let it get to your head as exercising caution makes for a sound investor. Although If you want to become rich then here are some lessons from billionaires to become rich.


However, keeping a control on your actions and doing what is right, consistently, over the long run reaps better results and is a proven fact.


  • Dive in Boom/ Dive out when Bust – Don’t Let You Be A Genius Investor


dive in boom dive out when bust - don't let you be genius investor


We are wired to review past events and identify patterns in order to make decisions moving forward. Stock markets make you delirious as when the market is booming everyone feels like investing. When the opposite happens and the market loses steam, investors tend to back out and sell their equity holdings.


This is wrong pattern identification and this is what the herd does. Fight your inherent tendency to fight or flight when facing a challenging financial situation.


Warren Buffet says, Buy low, Sell High and most of us end up doing just the contrary. We tend to buy when everyone else is buying in a boom market and sell after the market slips!


How Investment Psychology Works


understand how investment psychology works and become genius investor


A decent investor must be defiant by virtue, be able to take educated risks and find the value that is veiled. Do not be swayed by how the market is performing.


You should be confident in your abilities as an investor even when the market says otherwise. Remember your financial goals and do not give up your stocks when the market is not performing well.


Your educated risk will pay off if you stick to your gut. If you do not you may face the risk of not reaching you financial goals. Do not give in to pessimism and follow the market blindly. Do not give in to Mr. Market and rely on your personal research and investment acumen.


intrinsic stock value is a factor influencing your buy or sell decision


The intrinsic stock value should be the only factor influencing your decisions to buy or sell at all times.


Additionally, your research will ensure that you find the hidden value of a fund or company that may not be apparent on the face of it. It may take a while to find this out but it will be worth the investment decision. You will stand to make a ton of money if you have an eye for success.


Hidden value can be determined by studying the intellectual property worth of brands. Other ways to determine are understanding estate holdings that can be developed and the worth of subsidiaries.


sound investment psychology to be a genius investor


Let sound investment philosophy shape your judgments in the stock market for longevity and guaranteed returns on investment. Being invested through all times is the simplest and the easiest form of a healthy portfolio.


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Investwell June 17, 2019 0 Comments

Top 5 Ways To Legally Save Tax In India

You could be a professional with years of experience or even a fresh at work — a substantial chunk of your salary is deducted every month in the form of taxes. With rising costs and responsibilities, it only makes sense to make use of means to save tax in India in a legal manner. Relax and sit back, as you will know learn all about legal tax saving through the course of this article.


Best 5 Ways to Save Tax in India

what are the best ways to save tax in india 2019



1. Make Use of Section 80 C & 80 D (Income Tax Act)


income tax under section 80C & 80D to legally save tax in india


Section 80 C of the Income Tax Act allows you to claim tax deduction of up to a maximum of Rs 1.5 lakhs. Some of the options that are available to you include Employees Provident Fund, Public Provident Fund, Equity Linked Savings Scheme, Senior Citizen Savings Scheme, Home Loan Principal Repayment, Life Insurance Premium, National Savings Certificate, Post-office Tax Saving Deposit, Kid’s Tuition Fees and Sukanya Samriddhi Scheme.


Under Section 80 D, you can save Rs 25000 in health insurance premiums. For older pensioners the amount is Rs 30000.


2. House Rent Paid Helps In Saving Tax In India


house rent paid also helps in save tax in india 2019


House Rent Allowance is a common part of the salary structure for most employees. It is not completely taxable. Some part of the HRA is exempt from tax under Section 10(13A) of the Income Tax Act. Nevertheless, do remember that HRA received is fully taxable if you are living in your own house.


HRA exemption equals the minimum of these 3 items :

  • Amounts to actual HRA received.
  • 50% of the Basic total salary in metros and 40% in non-metro cities.
  • The excess amount of rent that paid every year over 10% of the Basic annual salary component.


If HRA is not part of your salary, the maximum amount of deduction is Rs 5000 every month or Rs 60000 annually.


3. National Pension Scheme Makes You Save Tax In India


National Pension Scheme Makes You Save Tax In India


Additionally, you can make use of the National Pension Scheme to claim an additional amount of Rs 50000 under Section 80CCD (1b). Other tax saving expenses as well as investments such as PPF, kid’s tuition fee and life insurance premium can be claimed under Section 80 C and the requisite National Pension Scheme contribution will be claimed under Section 80CCD (1b) — this way you can achieve a total tax deduction of Rs 2 lakh.


It is very useful for investors who have finished their 1.5 lakh investment limit as per Section 80C. This is a great option for people who do not mind investing their money until the time they retire.


4. Home Loan Is A Way To Save Your Tax In India


home loan - way to save tax in india 2019


Under Section 80E, if you have availed home loan for the first time then you will be eligible for a tax deduction of Rs 50,000 on the interest paid on the home loan. This is provided that you are the you are one of the co-owners of the house.


In addition, property buyer should have no other properties under his/ her name. Tax benefits under this can only be claimed post the building of your new home and not during its construction period.


5. Education Loan Helps To Save Tax In India


education loan - a way to save tax in india


Under Section 80E again, expenses incurred on higher education allow you to claim tax deductions. Interest paid on education loans can aid in reducing your taxes.


The deduction amount is equal to the interest paid on the education loan. There is no upper limit for the same. You cannot avail tax benefits on the Principal Amount.


In addition, the tax deduction should not exceed your taxable income. The maximum period for you to claim deduction is a maximum of 8 years. This begins in the year you begin repaying interest on the educational loan or until the period the interest is paid in full — whichever is on the lesser side.


You will be on the road to greater tax savings if you follow the above-mentioned legal ways to save tax. All taxpayers should make use of all available tax reducing legal provisions.

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Investwell June 11, 2019 0 Comments

Lessons To Be Learnt From Billionaires – Inspire To Become Rich

Billionaires have made money in many different ways over the years. Though investors have their unique and singular journeys through life, some of their investment choices are better than the others.


Arguably though, real wealth is accumulated by means of prudent equity investments and not by means of simpler techniques such as accumulating money in savings account or amassing cash.

Indian Equity Market – Lesson From Billionaires


indian equity market status - learn lesson from indian billionaires


Indian stock markets are doing very well presently. The Indian equity market has created enviable returns, especially when you compare these returns to the ones made by other asset classes. Even many foreign investors are buying stocks listed in the NSE and BSE.


The rich in this country have always preferred long-term investing in equity in the form of mutual funds and stocks. This is so as investing in equity for a period of more than three years guarantees a decent return on investment. In addition to this, equity investments with a tenure of more than one year ensure benefits on long term capital gains, with your returns being free of any tax.


As long as you stay invested in equity for a period more than three years, the returns are great despite the risk along with tax cuts. The sad part is that only about 2% of the people in this country indulge in equity investments. Investing in mutual funds at an early age is advisable as your money grows as you grow.



Billionaires are not born overnight and it takes decades for people to reach that high fiscal point. Starting early is the way to achieve your objective of amassing riches.


The right kind of research can fetch you a fine selection of mutual funds and stocks. Do not underestimate the power of compounding when it comes to equity investments in this country.

Lesson To Be Learnt From Billionaire – Warren Buffet


lessons from warren buffet the billionaire inspiring to become rich


“Think Long-Term” –  the best piece of advice from the CEO of Berkshire Hathaway. You only sit in the shade today if you planted a tree a long time back. His advice is to go for long-term yet stable investments and avoid short-term risky investments.

Lesson To Be Learnt From Billionaire – Michael Lee-Chin


lessons from michael lee chin billionaire inspiring to become rich


According to this Jamaican-born entrepreneur, you should only purchase shares in a handful of high quality businesses. You should understand everything about them and ensure that these businesses are part of industries with long-term growth.


These businesses should be prudent with the use of debt and you should stick to these businesses for a long time.

Lesson To Be Learnt From Billionaire – Sam Walton


lessons from sam walton billionaire inspiring to become rich


The successful founder of Walmart is of the opinion that if a large horde of people are investing in something, it does not mean that it is the most valuable investment. Trust your own research!

Lesson To Be Learnt From Billionaire – Chandrakant Sampat


lessons from chandrakant sampat the billionaire inspiring to become rich


A good example to emulate is Chandrakant Sampat, also known as India’s very own Warren Buffet. Sampat invested in mutual funds for a period of more than four decades with stocks from reputed companies such as Nestle and HUL. There was even a time when out of all his investments, equities held 70%.


He was of the opinion that true education is derived from markets and mistakes — the perfect piece of advice for a young investor who wants to be a billionaire in the future. Sampat carefully scrutinized every stock held by him and encouraged constant portfolio examination. One of his favorite quotes was that;

No one is poor in resources, just poor with their imagination. Courage is necessary to dream.

Conclusion – Inspiration To Be Billionaire !


lessons to be learnt from billionaires - inspiration to become rich


Spend some time trying to understand equity investments. There are certain mutual funds that are risky and promise high returns such as high-yield stocks and bond funds. The investor with a moderate risk-appetite should choose balanced funds.


There is a plethora of options to choose from to create a diversified portfolio with the correct type of asset allocation. Learn from the people who have made money by means of calculated, well-researched and long-term equity investments.


All you need to do is dream!

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Investwell June 5, 2019 1 Comment

All You Need To Know About The National Pension Scheme (NPS)

Having a sufficient corpus after retirement is what everyone wants so that they can lead a comfortable retired life. While there are various avenues which help build up a retirement corpus, having an earmarked avenue which is meant only for retirement funding is better.


With this sentiment in mind, the National Pension Scheme was launched on 1st January, 2000. In the initial years the scheme was open only for the employees of the Central Government except the armed forces.


Later on, in the year 2009, the scheme was opened to the general public. Currently, any individual can invest in the NPS scheme to create a retirement corpus.

What is NPS?


NPS is an investment scheme where individuals can contribute regularly when they are earning an income. Thereafter, after retirement, the invested corpus can be partially withdrawn in lump sum and partially used for availing annuities.


who can and how can i invest in nps


Who can Invest in NPS?


Every Indian citizen in the age bracket of 18 years to 60 years can invest in NPS. Even NRIs can invest in NPS if they want. However, if the citizenship of the NRI changes the scheme would be closed for them.


How to Invest in NPS?


You can invest in NPS scheme through financial institutions which are called Point of Presence (POP). Almost every Indian bank and other financial institutions act as POPs which allow you to invest in the NPS scheme with them. Their authorized branches act as collection points where you can deposit your money. These collection points are called Point of Presence Service Providers or POP-SPs.


You can get the list of POPs on the website of Pension Fund Regulatory and Development Authority (PFRDA) ( ) which is also the governing body of the NPS scheme.

What are the Documents Required When Opening a NPS Account?


what are the documents required when opening a nps account


After you have located the POP, you can invest in the NPS scheme by submitting the investment amount and your relevant documents. The documents which are required to open the NPS account include the following –


  • Registration form
  • Identity proof
  • Age proof
  • Address proof

Different Types of NPS Accounts


When you choose to invest in NPS, you would have the choice of three types of NPS accounts. These types are as follows –

  • Tier I Account is the account into which contribution is compulsory. Withdrawals are restricted till the investor attains 60 years of age. Even at that time, withdrawal from the account is restricted and subject to conditions. The minimum investment required in this account is INR 6000 yearly.


  • Tier II Account is a voluntary account chosen by the investor. It can be chosen only if the investor has an active Tier I account. The contributions made into this account can be withdrawn anytime as per the discretion of the investor. The minimum investment is INR 1000 to open the account and at the end of a year the minimum balance in the account should be at least INR 2000.


  • Swavlamban Scheme is meant for the economically weaker sections of the society. Under this scheme, the Government contributes INR 1000 every year for 4 years to the NPS scheme. The scheme is available for individuals who are economically weak and have opened a NPS account in the year 2010-11


Multiple NPS accounts are not available. Investors can invest only in the above-mentioned types of accounts. Moreover, if the minimum investment criterion is not fulfilled, the NPS account is frozen. To activate the account the investor would have to visit the POP and pay the minimum required amount with a penalty of INR 100.

The Basics of Investing in the NPS Scheme


basics of investing in the nps scheme


When investing in the NPS scheme, you would have two choices of investments –


  • Active choice – this choice is when you manage your investments on your own. There are three types of funds available for investment under this choice which are –


  1. Asset class E which invests at least 50% of its portfolio in stocks
  2. Asset class C which invests in instruments having fixed interest rates except Government securities
  3. Asset class G which invests only in Government securities.


Under the Active choice of investment, the investor can choose to invest the money either entirely in C and G asset classes or in a combination of E, C and G classes with a maximum limit of 50% when investing in asset class E.


  • Auto choice – under this choice the investor doesn’t have to manage his investments. The investments are managed automatically based on his age. Investment is done in a predetermined manner as directed by the PFRDA. If the investor is aged 18 years to 36 years, 50% of the money would be invested in Asset class E, 30% in C and 20% in G. This ratio would remain constant till the investor attains 36 years of age. Once the investor attains 36 years of age, the percentage of investment in classes E and C would decrease annually increasing the investment in Asset class G. This reduction in E and C and increment in G would continue every year till the asset allocation becomes 10% in E, 10% in C and the remaining 80% in G when the investor is 55 years of age. Thereafter, the allocation would again remain constant.


The money which is invested in the NPS account is then managed by pension fund managers who are registered with PFRDA. Presently, PFRDA has registered eight fund managers which are as follows –

  1. LIC Pension Fund
  2. ICICI Prudential Pension Fund
  3. Reliance Capital Pension Fund
  4. Kotak Mahindra Pension Fund
  5. UTI Retirement Solutions Pension Fund
  6. SBI Pension Fund
  7. DSP Blackrock Pension Fund Managers
  8. HDFC Pension Management Company

Investors can choose to invest in any type fund and as per any investment strategy to build their retirement corpus. They can also choose their fund managers for managing their money. Moreover, once the investment strategy and asset class is selected, it can also be changed once in a financial year in both Tier I and II accounts.

Permanent Retirement Account Number (PRAN)


permanent retirement account number (pran)


When you invest in the NPS scheme you are allotted a PRAN card which is like a PAN card for retirement benefits. The card contains a unique PRAN number, your name, your father’s name, signature or thumb impression and your photograph. You can apply for the PRAN card online or offline. The method is as follows –


  • Online application – you would have to visit the website of NSDL, download the PRAN card application form, fill the form and submit it online. Once the form is submitted, the PRAN number is generated


  • Offline application – you would have to visit the website of NSDL and download the PRAN card application form. Then you would have to fill the form, attach your KYC documents and mail the form and documents to NSDL’s office. Once the form is verified, the PRAN would be generated.


Maturity or Withdrawal from the NPS Account


maturity or withdrawal from the nps account - all you need about nps


While withdrawals from Tier II accounts are allowed freely, Tier I accounts have restricting conditions. These conditions are as follows –


  • If the investor wants to withdraw the money and exit from the scheme before attaining 60 years of age, 20% of the corpus is allowed to be withdrawn in lump sum. The remaining 80% of the corpus should be used to purchase annuities.


  • Partial withdrawals are also allowed from the scheme before the investor attains 60 years of age and the scheme matures. Partial withdrawals are allowed for up to 25% of the corpus from the third year after opening the NPS account. These withdrawals are allowed for specific purposes like medical contingencies, children’s education, marriage costs, etc. such withdrawals can be made for a maximum of 3 times during the tenure of investment and each withdrawal should have a minimum gap of 5 years.


  • If the investor has attained 60 years of age and wants to quit the scheme, 60% of the corpus can be withdrawn in lump sum. The remaining 40% of the corpus should then be used to avail annuities.


  • If the total corpus at the time of maturity of the scheme is below INR 2 lakhs, the entire amount can be taken in lump sum


  • If the investor dies before attaining 60 years of age, the nominee can withdraw the entire corpus in one lump sum.


So, withdrawal from the NPS Tier I account can be summarized in the following way –

Moreover, the investor can also defer withdrawing from the NPS scheme after attaining 60 years of age. Deferment is allowed for 10 more years till the investor attains 70 years of age.

Process of Withdrawing from the NPS Scheme


process of withdrawing from the nps scheme - all information about nps scheme


To withdraw from the NPS scheme, you would have to follow a process which is as follows –


Fill up a withdrawal form and submit it to the POP with your documents. The documents include the following

  • Your original PRAN card
  • A cancelled cheque
  • Attested photocopies of your proof of identity and address

Once the documents are submitted along with withdrawal application, they would be verified by POP
After verification the documents are forwarded to the Central Recordkeeping Agency (CRA) and NSDL
The withdrawal claim would be registered by the CRA which would send you the application form and the list of documents required to be submitted
After you complete the formalities, the withdrawal application is processed by the CRA and you get the settlement of your NPS account.

Tax Treatment of NPS Contributions and Withdrawals


  • Tax implications on NPS investments


tax implications on nps investments - all you need to know about national pension scheme


NPS investments are tax-free in the hands of the investor for the contributions done to Tier I account. This means that you can claim a deduction on your taxable income for the investment done in the NPS scheme.


However, contributions done to Tier II account do not enjoy tax reliefs. They are taxable in the hands of the investor.


The tax benefits on NPS investments are available under three different sections. These are as follows –


Applicable sections Who can claim the deduction Limit of deduction available
80 CCD (1) Both salaried employees and self-employed individuals For salaried employees – up to 10% of the basic salary + DA

For self-employed employees – upto 10% of annual income

However, in both cases, the maximum limit of deduction available is limited to INR 1.5 lakhs which also includes deductions available under Section 80C

80 CCD (2) Salaried employees whose employer’s contribute towards NPS scheme Up to 10% of the basic salary + DA
80 CCD (1B) Salaried employees, self-employed individuals and ordinary individuals having an income Up to INR 50,000. This  is in addition to the limit of Section 80C and 80 CCD (1)


Thus, individuals can claim a maximum deduction of INR 2 lakhs by investing in NPS through Sections 80C, 80CCD (1) and 80 CCD (1B). Moreover, the employer’s contribution is allowed additionally as a deduction under Section 80 CCD (2).


  • Tax treatment of withdrawals from the scheme


tax treatment of withdrawals from nps scheme - all you need to know about nps scheme


In case of withdrawals, tax treatment depends on when the amount is withdrawn. Let’s understand –


Time when withdrawal is done Amount of withdrawal Tax treatment
When NPS matures and the investor attains 60 years of age 60% of the corpus No tax is levied on the lump sum withdrawal
40% of the corpus in the form of annuity Annuity payouts are considered to be an income. They are, therefore, added to the taxable income and taxed at the investor’s tax slab
When the investor dies Full corpus Completely tax free
Before the maturity of NPS, i.e. before attaining 60 years of age 25% of the corpus for specific needs Completely tax-free
20% of the corpus for other needs Completely tax free
80% of the corpus received in annuity Annuity payouts are considered to be an income. They are, therefore, added to the taxable income and taxed at the investor’s tax slab


Given these tax implications, NPS is considered to be an EET (Exempt, Exempt, Taxed) investment scheme where the investment is tax exempt, returns are tax exempt but annuity payouts are taxable.

Annuity Payouts Under the NPS Scheme


annuity payouts under the nps scheme - get all information about national pension scheme


Annuity means a series of payments which are done at regular periodic intervals at predefined rates and for a predefined period. Annuities, therefore, provide a source of regular incomes. Under NPS schemes, 40% or 80% of the corpus is payable in the form of annuity depending on when you exit from the scheme.


Annuity payouts ensure that you get a series of regular incomes after you retire to meet your lifestyle expenses. This way, NPS creates a retirement income and proves useful. Moreover, there are different options of annuity payouts which you can choose to receive depending on your financial requirements.


These options include the following –


  • Annuity payable for the lifetime of the investor at a uniform rate
  • Annuity payable for a guaranteed period (5,10 or 20 years) and thereafter payable for the lifetime of the investor at a uniform rate
  • Annuity payable for the lifetime of the investor at a uniform rate. On death of the investor, the purchase price is returned
  • Annuity payable for the lifetime of the investor where the annuity amount increases @ 3% on a simple interest  basis
  • Annuity payable for the lifetime of the investor at a uniform rate. In case of death of the investor, 50% of the annuity is payable to the spouse for his/her lifetime
  • Annuity payable for the lifetime of the investor at a uniform rate. In case of death of the investor, 100% of the annuity is payable to the spouse for his/her lifetime
  • Annuity payable for the lifetime of the investor at a uniform rate. In case of death of the investor, 100% of the annuity is payable to the spouse for his/her lifetime. After the death of the spouse, the purchase price is returned to the nominee.


Who Pays Annuities Under the NPS Scheme?


who pays annuities under the nps scheme - all information about national pension scheme


You can choose to receive annuity payouts from any of the insurance companies which are empanelled with PFRDA to pay annuities under the NPS scheme. Presently, the insurance companies empanelled with PFRDA to pay annuities include the following –


  • SBI Life Insurance Company Limited
  • Star Union Dai-ichi Life Insurance Company Limited
  • Life Insurance Corporation of India
  • Bajaj Allianz Life Insurance Company Limited
  • HDFC Standard Life Insurance Company Limited
  • ICICI Prudential Life Insurance Company Limited
  • Reliance Life Insurance Company Limited


So, understand the complete details about the National Pension Scheme before you choose to invest in it so that you can know exactly what the scheme promises and how it helps in tax planning.

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Investwell May 2, 2019 1 Comment

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