Welcome 2011 : Have a relook on your Financial Planning

New year resolutions on personal financial planning has been always a ritual for many. But this time around it is nagging several people on account of rising inflation. December end 2010 it recorded over 14% in food category and over 11% in fuel category. Irrespective of category, it eats into persoanl income and savings.


The sensex was at 3975 at the beginning of the decade and ended at 20509.09;


Gold has seen hike in prices too in the same decade. The demand for jewelery, investment and industrial and decorative needs were quite impressive.



Unprecedented debt worries make nations to resort to print money or take fresh debt to pay an old one. We hear stories of PIIGS today and fear competitive devaluation of currencies in the year unfolding.

So, how do you stay floating?


Buy a pension, if you do not have.
Even if you have a PF account, it is fine. If you do not join NPS; or get an index fund for your golden years.

Have an emergency plan.. to take you through an immediate casuality of income loss , may be equal to 3 months. you can find another job in the meantime.

and follow horses for courses. one investment for one purpose. your life goals are distinctively different in term, amount and the value you attach to it. so your investments also sholud be distinctively different in terms of suitable instrument, term, maturity and risk involved.

happy new year, happy investing.

Mutual Funds in Your Portfolio?

Why should you invest into Mutual Funds?

People seems to forget the basics once the markets started going up & up.

Irrespective of market movements, Mutual Funds help you remain in same risk class. This is important in your journey through Balyam, Kaumaram, Youvanam, Vardhakyam and Vanaprastahm. can you identify a product that will help you continuously invest for more than 15 years in the same account? With same risk level? At your leisure?

Imagine a 35 year old invested into Mastershare-1986 in the year 1986. By September 2010, he has made compounded annual rate of return appx 18%. Now having completed 24 years in the scheme and approaching his retirement now, he needs to review his holdings.

He needs to take stock of his income and expenses. He needs to look at his assets and liabilities. And take a decision whether he should remain further in the Mastershare -86, an equity scheme. If his profile permit, he can. Otherwise he needs to re-structure his portfolio to include MIPs from PO, Bank Fd, Company FD, MIPs from Mutual Funds etc.. Remember all these long 24 years, the Mastershare allowed him to remain in same risk level....that is the beauty added by such long term products; that is why you should look at your savings routes.

Simultaneously he should look at tax reduction, liquidity and health needs so that Vardhakyam is happily spent.

Setting up charity for furthering his wishes could be thought of at this stage. One should also have Estate planning, if not done.

Happy investing..

When the Bulls are in charge...

As the markets started going up riding on FII cash flows, what is in for the Financial Planning?

Comparatively more rate of return in a longer period is given by Equity. It accompanies High Risk also. Risk reduction is important to ensure the achievement of goals in life, be it Setting up a business, Getting married and establishing family, Children's Education, Their marriage, Protection against Loss of Life and Assets, Creating Income Earning assets for for Retired Life, Asset Distribution( Charity & Estate Planning) etc.

So tame equity to your benefit. Directly investing may prove costly for those who do not have the expertise, money and time to constantly evaluate the equity markets. Mutual Funds are the best to harness here. Equity comes with different risk level. Mutual Funds make portfolios that could be of your taste. Go for SIP than lumpsum investments. Get the power of compounding do the job for you. And as a final caution: MFs remain at same risk-return level all through out their life. Not your life. So when you reach milestones in your life, you have to offload your MF schemes and move to your preferred asset classes for rest of your life. For example a 40 year old bought UTI Mastershare-86 during its launch. In 2010, he is 64 years meaning retired. He has to take a call whether he has to further remain in that scheme or move to MIPs either from MFs or PO or Banks depending upon his life needs.


Real estate gives a certain amount of inertia to your wealth - the much needed anchoring could be in the form of your residence to begin with and later a farm house or additional number of dwelling units that give income as agricultural income or rental income as the case may be.


And if you are a NRI, you can look at many alternatives

For a domestic investor, lot many opportunities are available. Get out of 'avanavan kadampa' - self imposed restrictions or myths of investment. One can build wealth legitimately, systematically and improve from status co.

happy investing India

After USA, it is the turn of Europe: How well did you prepare

The international events are having a toll on your savings and investments through three routes:

• The inflation
• The interest rates and
• The exchange rates

The foreign entities affect your investments in the capital markets as they buy and sell securities irrespective of the asset class : equity, debt, gold, oil or other commodities or any kind of derivatives. The domestic government can shield you on one front while the other forces may combine to ruin your asset values. That means you are chasing a moving target and needs keep pace with times.

First of all, do not have the feel that it is a life time happening, it will not happen again.

Second identify the assets, liabilities you want to fulfill in your lifetime and possible time span when you would accomplish your finnacial goals. Look at whether any point in life time your assets will pay for your needs. Many a Gap can be fixed with proper planning... and then re-look at your Financial plan.

When to look or re-look at your Financial plan?

as a student

on a first job

a job shift

first marriage

first child

first house

first vehicle

any life event...

or a shift in govt policy at home.......

or even an international event like the sub prime crisis of USA or the economic turmoils of Europe should trigger a review of your Financial plan

Companies reduce the size of IPOs, re-work their pricing anticipating a fall in capital markets key indices...

How did the Indian Equity markets welcome the news on Greece, Portugal, Spain and Germany ?

Recall the USA's subprime crisis and its after effects when the waves reached the Indian shore. In spite of JNREGP, JNRUM, wage rises to Govt employees, UGC packages to Teachers we experienced rise in prices, a freez on campus recruitments.....

the Reliance Power Ltd IPO price fixed at Rs.450.00. The markets turned sore and the prices tumbled at the bourses. and finally, a re-pricing by passing 3 for 5 bonus to look good and feel good.

It is not only equity, it affects debt too.

The interest rates goes up in the market. You hear about rising infaltion and gold prices sky rocketing. Comes with an appreciating rupee ...What about inflation? The measures taken from Budget 2009 till date and the Central Bank efforts did it tame inflation? Irrespective of the classification(Food/Non-Food/Fuel/Manufactured Products), it takes away your savings or investments unknowingly. And the Central banks across world continue trying their best to keep the three horses pulling in opposite direction in control.

Look at the way the RBI took it through. A similar situation is again on the anwil, triggered this time from Europe?

So you have to take charge of your life. Do not leave things to Government to tell you to save through the SEC 80 C under Income Tax Act 1961 or similar routes. You can surely make use of these avenues to reduce tax impacts and enhance value of your savings and investments through all legitimate purposes. Gone are the days of save, invest and forget. You have to look after your investments just like you look after your paddy field or children...

Reserve a day for looking at your investments just like you take a weekly off..

All the best.