Financial Planning

Couldn't sleep last night. Got the bad news of the salary cut by 20,000 And then the boss kept an early morning meeting of 9 am. Less salary, more work. Was literally confused how to cope up with the loss of 20,000 After the meeting, the first thing I did was stopped my SIP of 20,000. I don't need that money tomorrow anyway. Savings can always wait. Neel is only 6 years old now, and I will be needing money for his foreign education only after 12 years, what's the hurry! But, I don't know how? Within an hour of SIP stopping, I got a call from my adviser he had only advised me to restart the SIP I told him clearly, there is no scope to continue the SIP. Already there is a lot of stress in life, you please don't give me your “gyaan” (knowledge) Though I was shouting, my adviser as usual, was very calm. He just asked me to make my monthly budget again and check what expenses have gone down and he will c all back again tomorrow Haven't got the time thro...

Oil markets witnessed a historic moment on Monday when WTI crude for May delivery fell more than 100 percent, settling at around -$37/bbl indicating that producers would have to pay traders to take oil off them. Difference between Brent and WTI Crude WTI or Western Texas Intermediate is extracted from oil fields in the United States. It is primarily extracted in Texas, Louisiana and North Dakota and is then transported via pipeline to Cushing, Oklahoma for delivery. Cushing was a major spot for oil for decades, and has been the delivery spot for contracts and price settlements for WTI for more than 30 years. It contains 0.24% of sulfur. WTI futures contracts are traded on the New York Mercantile Exchange (NYMEX) Brent crude is extracted from oil fields in the North Sea. ‘Brent Crude’ refers to a blend of four crude oils - Brent, Forties, Osberg, and Ekofisk which together are known as BFOE. It contains 0.37% of sulfur. Brent futures contracts are traded on the Interco...

Very often I have seen ‘EXPERTS’ suggesting to run the SIP for the entire period till the beginning of the goal period in print and electronic media. Every time I picked up the topic to write against this idea some time procrastination and sometimes data was not there to substantiate my thoughts. Not that I was praying for this crash to happen so that I could write a note on this  However, on a serious note, let’s look at few data points and WHY it makes sense to lock the gain 18-24 months prior to start of the goal and park the amount in risk free asset class to avoid any crash like the recent one. Say if the GOAL was to create a corpus of 30 lakhs for education in April 2020 and if the advisor suggested SIP of Rs. 10,000 p.m. for 12 years, i.e., 144 instalments with assumption of 12% CAGR, the future value would be Rs. 31.9 lakhs, which is very comforting for both investor and advisor as it is almost 2 lakhs more that the required amount but a crash like recent on...

The spread of Covid-19 has mauled the market. Finding yourself in the grips of a bear market will upend any haughty notions you may have about your risk appetite. This story tells you how to contain the damage caused to your investment portfolio. For the first time in a decade, Indian investors are witnessing a full-blown bear market. The frontline BSE Sensex index has tanked 30% from its January peak. The earlier crash had seen the index lose 60% of its value. Investors are worried how big the cut will be this time and how they can protect their finances. While the reasons for stock market crashes vary every time, the basic tenets of surviving these events remain the same. If you follow the principles outlined below, you should be able to safely manoeuvre your finances through this challenging phase. What to do Create a financial cushion Since severe bear markets are usually accompanied by crippling economic downturns; they can wreak havoc on your finances. Retrenchments, sal...

Animals in the Stock Market are commonly used terminology to define specific characteristics of the type of traders or investors or market scenario. Have you heard/watched the movie ‘The Wolf of Wall Street” starring Leonardo DiCaprio as  Jordan Belfort? If yes, then have you wondered why he has been referred to a wolf in the movie? What’s an animal doing in the stock market-based movie? We are going to discuss most commonly used animals in the stock market. 1. Bulls The bulls represent the investors or traders who are optimistic about the future prospects of the share market. They believe that the market will continue its upward trend. Bulls are the ones who drive the share price of a company higher. 2. Bears Bears are the investors or traders who are totally opposite of the bulls. They are convinced that the market is headed for a fall. Bears are pessimistic about the future aspects of the share market and believe that the market is going to be in RED. T...

No one can predict what the future holds, but everyone can prepare to meet future uncertainties. Valentine's Day as a concept evokes a mixed reaction from all quarters. While some deem it as a commercial event popularised by corporates to give another reason for people to indulge, others regard this day as a celebration of love and affection. Irrespective of your bent of mind, it cannot be denied that, at the core, Valentine’s Day is an occasion for all couples to make special efforts for appreciating their significant other and renewing their promise for a happy life together. While buying gifts, going out for movies or dining at fine restaurants are the most common ways of celebration, a more meaningful way to mark this day would be to lay a strong foundation for a secure future together. No one can accurately predict what the future holds, but everyone can prepare to meet future uncertainties by effective financial planning. Financial planning for couples has come...

It would be better to link them to long-term goals such as retirement Tax-Saving ELSS funds are fairly popular. Along with the obvious benefit of tax saving, they also provide potentially higher returns because of their investments predominantly being in equity. But I regularly see people investing in ELSS funds randomly and just to save taxes and get some good returns. Nothing wrong in this approach. After all, what can be wrong about saving taxes and earning good returns? Unfortunately (and unknown to most), this approach doesn’t take them anywhere. It’s true that Section 80C savings provide tax benefits. But 80C investments shouldn’t be made just for savings taxes. Rather, they should be linked to financial goals. It would be better to link them to long-term goals such as retirement. Saving for goals Because these ELSS funds are nothing but equity funds. And when it comes to equity, it is advisable to hold it for the long term (generally 5-7 years or more), to get th...