Financial Planning

Friday,16 Feb 2024
Source/Contribution by : NJ Publications

Born into a world of constant connectivity and boundless information, Gen Z is navigating adulthood with habits and preferences that set them apart. As per UN World Population Prospects 2022, more than 50% of India's population is below the age of 25, and over 65% is below the age of 35. The future of our nation depends on the youth, i.e. Gen Z (born between 1997 and 2012). These young adults are likely just starting to enter the workforce or at the early stages of their careers.

According to the 2022 Investopedia Financial Literacy Survey, Gen Z is more financially sophisticated than the previous generations; however, this generation is known to want instant gratification and, hence, indulge in risky investing habits such as speculative investing. Such speculative trading instruments can prove to be catastrophic to your wealth-building journey. According to a report by SEBI, the share of participation of individual traders belonging to the age group 20-30 saw a significant rise from 11% in FY19 to 36% in FY22. The report went on to state that 89% of individual traders in equity futures and options incurred losses.

When it comes to your hard-earned money, one needs to cultivate patience, consistency, and discipline. Moreover, it is important to seek guidance from a financial advisor time to time and trust in delayed gratification. Here are a few tips for new investors to safely park their surplus, manage their finances, and create wealth:

Set goals - To succeed in any endeavour, it is important to set goals. Whether it is a game of football or investing, goals shape the game plan and provide direction to your efforts. Before investing, it is important to set financial goals and quantify them. Financial goals should be SMART - specific, measurable, attainable, realistic, and time-bound. Setting such goals not only help you build a plan but also streamline your investment journey.

Choose the right product - When it comes to investing, a plethora of options are available, but trusting your hard-earned money with these products is the real challenge. Investment instruments ranging from highly safe fixed deposits (FDs) to extremely risky speculative instruments such as options are available for investing at your disposal. However, one needs to draw a perfect balance between risk and return so that one can build sizeable wealth with peace of mind. The choice of the right product should be based on your risk profile and your financial needs.

Avoid debt trap - A debt trap refers to a vicious cycle of borrowing, struggling to meet debt obligations, and consequently accumulating more debt to cover existing payments. The term debt trap is associated with the inability to exit this perpetual cycle, leading to financial hardship. Generally, young adults are at a higher risk of falling into a debt trap since they are just at the start of their careers, and the expenses can mount up, nudging them to opt for loans.

Moreover, in a bid to live flamboyant lifestyles, young adults are also turning to credit cards. If you want to use credit cards for your expenses, you should use them rationally, maintain a credit utilisation ratio, and make timely payments. These mistakes can negatively impact your credit score, making it difficult to borrow in the future. Hence, it is important to avoid such credit mistakes and budget carefully to avoid a debt trap.

Budgeting - Gen Z lives in a highly connected, virtual world. With the advent of technology, everyone is now closer than ever digitally. Hence, Gen Z can often become the victim of greed and desire by comparing their lifestyle with others. Moreover, Gen Z often tends to follow the newest trends and practices. A new trend, 'soft saving', is getting quite popular amongst Gen Z. This phrase refers to living a luxurious lifestyle now and saving minimally for the future. This approach can prove to be detrimental to your future, leading to a paycheck-to-paycheck lifestyle with little left for your future financial goals. It's essential to strike a balance between your desired lifestyle and allocating funds towards your financial goals.

Start early - To build wealth, it is imperative that you start investing early. As soon as you get that first paycheck, setting an amount aside for investing is the wise thing to do. When investments are started early and done for the long term, the power of compounding can turn small investments into huge funds. For instance, if you had invested Rs 1,00,000 in Sensex TRI 25 years ago, then its value today would be Rs 34,89,772, an XIRR of 15.26%. However, if you had invested Rs 1,00,000 in Sensex TRI 15 years ago, then its value today would be just Rs 9,17,060. Hence, it is essential to start your investment journey as early as possible.

(Source Ace MF. The investment periods taken into consideration are - 25 years - 31 Dec 1998 to 31 Dec 2023 and 15 years - 31 Dec 2008 to 31 Dec 2023.)

Invest through SIPs - SIPs or systematic investment plans in mutual funds offer a flexible, systematic, consistent, and disciplined approach to investing. SIPs are highly accessible and affordable, allowing investors to start with an amount as small as Rs 100. With SIPs in mutual funds, one can start saving small amounts from their earnings and invest them in the long term to not only achieve financial goals but also build wealth. For instance, if you had started an SIP in mutual funds of Rs 10,000, 25 years ago, then its value today would be Rs 27,759,841, an XIRR of 15.06%. (Source Ace MF. Returns of Sensex TRI. The 25-year period taken into consideration is from 10 Jan 1999 to 31 Dec 2023. The SIP interval is assumed to be the 10th of each month.) 

Emotional biases - Young investors are often motivated to invest due to herd mentality and the fear of missing out (FOMO). Investing on the basis of such biases, fear, and greed can not only lead to losses but can also lead to missed opportunities. Hence, while investing, it is important to stick to the fundamentals and have an understanding of the investment avenue, the objective of investing, and the associated risk.

Emergency fund & insurance planning - The most inevitable thing in life is uncertainty, making it the most important thing to prepare for. You may never know when a rainy day arises in your life; hence, it is essential to prepare for these perils in life by insuring yourself. Moreover, one can also build an emergency fund, which can further prepare you for uncertainties in life. Preparing an emergency fund and securing adequate insurance not only safeguards your wealth-building journey but also eliminates the need to resort to loans during unexpected challenges.

Tax planning - For young individuals just entering the workforce, tax planning is a crucial concept of financial management. While the complexity of tax laws may seem intimidating, one can learn basic tax laws and consult a chartered accountant or a financial advisor who can further guide in financial management and efficient tax planning.

To conclude,

As the new generation sets foot in the professional world, embracing sound financial planning practices becomes paramount for a secure and prosperous future. By incorporating the aforementioned principles, Gen Z can navigate the complexities of financial management with ease. Moreover, opting for the guidance of a financial advisor can set the stage for a financially stable future.

Friday,19 Jan 2024
Source/Contribution by : NJ Publications

A new year is a fresh beginning - a time when we can reflect on the past and look forward to the future with a fresh perspective and a desire for a positive change, which motivates us to make New Year's resolutions. While resolutions allow us to envision the best version of ourselves, most of them are abandoned in just a few weeks.

In managing personal finances, too, this scenario is all too familiar. So, as we stand at the onset of 2024, perhaps it is time to revamp our approach to financial well-being. Instead of relying on financial resolutions, make small changes in your lifestyle and embrace the power of atomic habits. Let’s look at some habits we can adopt for our financial future.

  • Goal-based investing - To begin with, it is important to set financial goals. Everyone has the desire to be wealthy and financially independent. However, setting such vague goals brings ambiguity and uncertainty. In order to achieve a financial goal, one must set goals that abide by the SMART acronym - specific, measurable, achievable, realistic, and time-bound. Setting SMART goals can help build a practical plan through which you can set deadlines and derive an optimal investment amount to achieve your goals.
  • Budgeting - Creating a monthly budget is a systematic method to ensure the timely settlement of payment obligations and maintain a consistent trajectory towards financial goals. Just setting a budget, however, is not enough. One must track spending to ensure whether the budget is being followed. Moreover, regular tracking of expenditures provides invaluable insights into financial habits, allowing for informed adjustments to the budget as needed. This would not only reinforce discipline but would also allow strategic decision-making, ensuring the achievement of financial goals. 
  • Emergency fund & insurance planning - The only thing certain in life is uncertainty. Hence, one must always have a plan in hand to cater to these uncertainties of life. In the absence of an emergency fund, one might have to opt for loans or, worse, break the funds created for specific needs, bringing a hurdle to your wealth creation journey. 

While an emergency fund is necessary for immediate liquidity for unexpected expenses, insurance is also essential to mitigate the long-term financial impact of significant perils of life, such as accidents, illnesses, or the unfortunate loss of the breadwinner. Both insurance and an emergency fund serve as a pillar to fortify your financial health and safeguard against unforeseen events that can potentially derail your financial stability.

  • Expenses to investments - “Do not save what is left after spending, rather spend what is left after saving.” One must track all their expenses and ask oneself a question - ‘Is this out of necessity, or is this something that can be avoided?’. Upon doing this, one can cut down on unnecessary expenses and make changes to lifestyle. For instance, if you spend a total of Rs 10,000 monthly on leisure activities, then just cutting down by 10% and investing that Rs 1,000 can make a huge difference. To give you a perspective, an SIP of Rs. 1,000 in equity mutual funds started 15 years ago would have helped you build a fund of Rs 5,64,120, a gain of 14.01%. (Source: Sensex TRI)
  • Timely servicing of debt - Unsecured loans and unpaid credit card dues can be detrimental to wealth creation and are often categorised as ‘bad debts’. It is crucial to clear these bad debts or any other overdue payment obligations in full as and when they arise. This not only impacts your overall financial health but also plays a pivotal role in establishing and maintaining a good credit score. Untimely payments and delinquencies can be toxic for your credit score, making it difficult to bag good interest rates or, worse, get a loan in the future.
  • Automated investment - Setting up automated investments like a SIP in mutual funds can empower you with financial discipline and consistency. With an SIP in mutual funds, you can invest small amounts towards your financial needs and build a fund methodically over time. Moreover, SIPs relieve investors from the need to remember to invest each month consciously. The convenience of automation allows you to stay on track with your financial needs without having to intervene in the procedure. The inherent benefits of SIPs, such as rupee-cost averaging, power of compounding, accessibility, and affordability, furthermore make it an attractive investment option. 
  • Retirement planning - As per a survey conducted in 2020 by Nielsen, 51% of Indians do not have a retirement plan ready, and barely one in five takes inflation into account while planning for retirement*. This sheds light on the unpreparedness of Indians for retirement. Moreover, many still rely on their children for retirement. With the shifting mindset and growing trend of nuclear families, it is very important for every individual to plan for their retirement. Retirement planning is a cornerstone of financial freedom, which is of utmost importance to make you self-reliant and ensure a dignified and stress-free lifestyle during the golden years of retirement.

* Source: Business Today 

  • Seek financial guidance - Making the right investment decisions might seem like a daunting task. To get guidance in this journey, one can consult a financial advisor. A financial advisor can understand your financial needs and risk profile and support you in your wealth-building journey. When opting for the mutual fund route, one can leverage the knowledge of a mutual fund distributor. 

Cultivating positive habits for your financial health can prove to be pivotal for your financial success. Even subtle adjustments in lifestyle and savings practices can make a huge difference, for one good habit can create a ripple effect. Bringing discipline and consistency to your investment pattern and following fundamental financial health practices such as goal-based investing, budgeting, timely payment of debt, and insurance planning can lead you to a financially prosperous future. 

Friday, Sept 22 2023
Source/Contribution by : NJ Publications

In this fast-paced world, where time is precious and financial responsibilities grow with each passing day, finding an investment approach that aligns with your life's trajectory is paramount. A game-changing approach, SIP with Top-Up ensures that your investments keep up with your changing lifestyle and protects your wealth from inflation's eroding effects.

Gone are the days of monitoring market movements and constantly adjusting your investment plans. With SIP and its automated Top-Up feature, you set out on a hands-free journey to steadily and gradually amass wealth. As your income grows, so do your investments, and with the power of compounding, your wealth multiplies effortlessly.

SIP Top-up gives anease of increasing your investments, the wisdom of regular contributions, and the extra potential of compounding growth. You can unlock the secret of building sustainable wealth and make financial independence achievable without your active participation. Let's explore further this simple yet revolutionary idea and understand certain aspects of building wealth with SIP Top-up.

1. Automation helps bring in Discipline: 

SIP Top-up is a user-friendly strategy that promotes consistent and methodical investing through automation. It assists people in developing the habit of growing investments without having to worry about market timing or frequent manual modifications. However, it's essential to have a reasonable selection of suitable mutual fund schemes based on risk tolerance, investment horizon, and financial objectives. 

Being automated also brings in the discipline of increasing your investments steadily with time. Often people start SIPs and then forget about it for years together thus effectively end up saving less and less every year, both due to inflation in absolute terms and as a percentage of your income. Even from the perspective of saving consistently in ‘real-value’ terms, the increase in SIPs yearly must at least match the inflation figures and one can add more to adjust for change in income levels and living standards.

2. Enables you to build wealth faster: 

Increasing your SIPs with Top-Up facility can greatly improve growth of wealth and hasten the wealth creation journey for you along with accomplishment of financial objectives. This powerful strategy takes advantage of systematic investing, compounding, and automatic increments in savings to propel your wealth growth manifold. Let us understand the power of SIP Top-Up by comparing it with a normal SIP assuming market returns of 12%. 

Wealth Created In 10 Years In 20 Years In 30 Years
Normal /Fixed SIP of Rs.10,000 ~Rs.22.40 Lakhs ~Rs.91.99 Lakhs ~Rs.3.09 Crores
With SIP Top-Up of Rs.1,000 ~Rs.30.43 Lakhs ~Rs.1.47 Crores ~Rs.5.33 Crores
With SIP Top-Up of Rs.2,000 ~Rs.38.47 Lakhs ~Rs.2.03 Crores ~Rs.7.58 Crores

We can clearly observe that the wealth created increases by a substantial margin if we opt for a SIP Top-Up option across all horizons and more when the periods are longer with the power of compounding. 

3. Helps Achieving Financial Goals: SIP Top-Up is a useful tool for attaining your financial objectives faster once it is linked with your financial goals as compared to simple SIPs. Having a purpose-driven or goal oriented investment strategy that keeps you motivated and focused when you match and map your SIP investments with these objectives. With the benefit of compounding, even the goals that may seem to be unachievable can surprisingly look achievable if proper planning and SIP Top-Up needs are identified. Even when a simple SIP is sufficient, the Top-Up SIPs would add that extra layer of comfort and margin should anyway go wrong when the goal maturity is near. In addition, it will also take care of your increase in aspirations and living standards with time such that your goals need not be fixed.

Let us see this with an example where we have a higher education goal target amount of Rs.2 Crore, maturing after 15 years. Now assuming market returns 12%, we can see that the normal /fixed SIP amount required would be around Rs. 42,000 per month. However, if one decides to increase the SIP by Rs.5,000 every year, then the first year SIP amount required falls down drastically to around Rs. 17,000. Thus, a goal becomes more achievable with Top-up SIPs. 

Now, what would happen if the person is capable of saving say Rs.42,000 and still do a top-up of Rs.5,000 every year? In such a scenario, the wealth created after 15 years would be Rs. 3.18+ crores, giving you an extra cushion to upgrade to the best college or have a margin of safety, just in case. The original target of Rs.2 crore would have been achieved around 3 years prior to the target date.

Bottom Line 

To make the most of SIP with Top-Up, it is essential to start early, stay consistent, and invest for the long term. As a simple rule, we can think that every SIP has to be a SIP with Top-up SIP. As we have seen, the Top-Up SIPs can significantly transform the course of your financial journey by providing a simple yet efficient way of comfortably achieving your financial objectives along with discipline. 

Friday, July 21 2023
Source/Contribution by : NJ Publications

A month has already passed since the start of the new financial year (FY). When it comes to any matter involving finances, accounts, and taxation, the FY is crucial. Since a lot of activity takes place during this phase, it is an important period for many businesses and employees. Regardless of any action though, the financial year presents an opportunity for everyone to revisit their finances and their plans for the new year. There are a few things that ought to be done. Here’s a brief checklist of the things you should do at the start of every FY. 

1. Revisiting your Financial Plans

A long-term financial plan is a very important element of any person’s financial journey in life. The idea is to identify, and plan for our financial goals and align our portfolio with savings to fulfill them. Thus, it becomes crucial that we should regularly review our goals and plans. The start of the financial year presents an opportunity to revisit your goals. Typically the need for any change may arise due to any change in your current life including family composition, financial situation or your own requirements and aspirations. 

2. Portfolio Review

Your portfolio consists of different asset classes and different underlying products /investments. The portfolio review is where we are making decisions on the portfolio composition and reviewing the underlying holdings. If you already have a financial plan in place, your portfolio should be tuned to these predefined objectives. In the absence of the same, there should be some portfolio-level asset allocation strategy followed as per your risk profile. Reviewing your portfolio may lead to rebalancing the asset allocation to start with. At the granular level, you would also want to make sure that you have ‘suitable’ holdings while removing any non-required, long-term non-performing holdings.

3. Managing Incentive & Salary Increment 

This is the time for many to receive the yearly performance incentive /bonus. The joy of earning the annual bonus, which is something we all look forward to, is followed by many plans about how to spend it. Further, this is also the time when you look forward to your salary increments. With both, a sizable amount and an increased cash flow every month, it is also the time to plan for the same. Surely, rewarding yourself with a well-deserving holiday break or a new gadget is well justified. However, going overboard and spending more than required is something you would wish to avoid. So again, it is that time of the year when you put some part of that bonus and increment to good use by investing & saving it towards your goals. Note that regularly increasing your monthly savings or SIP and investing lumpsum amounts significantly contributes to your wealth creation journey.

4. Assessment of Insurance Coverage 

Your responsibilities notably grow after key life events like marriage, parenthood, buying a house, etc. Make sure your insurance has enough coverage to handle all of these newly added commitments. Return back to the calculations you would have used to determine the appropriate level of coverage for yourself and your family members, add the amount required to cover the additional responsibilities and purchase any extra coverage that you require. However, each of those measures must be completed while taking into account your needs and possible risks. Keep in mind that you should reassess your insurance coverage each year to make sure it is sufficient to cover both your standard of living and the growing cost of medical care.

5.Tax Planning 

The beginning of the financial year is a good time to do your tax planning rather than the year-end. That’s because you have enough time to calculate your expected tax liability and make decisions for savings and spending for tax-saving purposes. Moreover, this is the right time to do so since there is no rush or pressure of deciding something quickly and thus you are less likely to make any mistakes. You now have ample time to estimate tax saving needs and evaluate all options available and make those investing & spending decisions for the entire year.

6. Revisiting your Financial Behaviour & Past Decision  

Your financial and investment behaviour is perhaps the most important determinant of your financial success /well-being over the long term. Every investment decision taken, not taken or delayed carries risk, return and opportunity cost elements. Decisions influenced by emotions, biases, unrealistic expectations and so on can have a huge impact on your wealth creation journey. The start of the year is an opportunity to learn from your financial and investment decisions taken over the last year which can be improved now. It is also an opportunity for you to set some benchmarks for yourself and frame a proper process /checklist for any financial decisions that you can make in future.


We celebrate and welcome the start of the new calendar year with a lot of excitement and zest. Most of us also set new resolutions and targets for the new year. The start of the new financial year should be seen as equally important in the financial sense. Why not set some new financial resolutions? This is a time for self-assessment in monetary terms and resetting yourself close to your financial objectives and well-being. One should resolve to be a better and wiser investor and ensure that your financial path in the coming year is clear and well-planned. It is time for you to also pick up the phone and schedule a meeting with your mutual fund distributor/ advisor and set the ball rolling.

Friday, June 09 2023
Source/Contribution by : NJ Publications

Investing is a risk-versus-reward game. Where some have made millions, many more have lost. What are the characteristics that differentiate a successful investor? Successful and exceptional investors, such as Warren Buffet, Benjamin Graham, and Rakesh Jhunjhunwala, exhibit critical character traits that set them apart from the crowd. Have you ever thought about what all great and successful investors share in common? What distinguishing characteristics do these investors possess that you do not?

Successful investors aren't necessarily the brightest people on the planet. Being successful in your investments may have little to do with intellectual prowess and almost everything to with your investing mindset. Let's take a look at the key personality traits you'll need to be a successful investor.

1. Patience 

Patience is an essential trait of successful investors. When they decide to invest, they do so by keeping the long-term picture in mind rather than making quick gains. Some of the investments may not perform at all for quite some time but if one is confident in the fundamentals, sooner or later, results will follow. In the long term, the prices will eventually follow and catch up with the profits. Even the corollary is true. We get tempted for a very high-performing stock where the fundamentals may not be that strong. There is a test here too. However, many of us fail the test of patience. All we need is some patience and the ability to remain calm in the face of turbulence.

2. Passion and Determination

The road to success in investments is paved and simple, yet difficult to follow. One of the key differentiating trait is consistency in what you are doing. All successful investors have their own science which they have practised over and over again and perfected over the years so that it now looks more like an art. One has to be committed and stay focused to practice your approach towards investments. Keep learning and improving your investment approach. If you are investing in say mutual funds, you may have saved a lot of time and effort in analysing stocks. However, still there is a need for you to be passionate about and focused on wealth creation and to follow your investment objectives /asset allocation regularly, with discipline.

3. Keep Emotions in Check

Sentiments are always present in the stock market. The stronger they are, the sharper is the market movement moves. Sentiments can cause a financial storm in the investment world. . That is why the risk of getting sucked into the market ‘mood’ is as dangerous as it is real. Beware of the two most powerful emotions in the market - Fear and Greed. Successful investors though can identify and differentiate the real from the hype and see beyond these emotions. They tend to get very active at such times since the market throws up many opportunities during this time and they act decisively during such irrational times and make the most of their investments. To be a successful investor, you must be emotionally neutral when it comes to winning and losing what. Winning and losing are just part of the game.

4. Understand and accept volatility

There are two way of dealing with volatility. One, the trader’s mindset which drives people to react to the volatility. Second, is the investor’s mindset where you avoid the volatility altogether. Many investors become concerned during volatile times and begin to question their long-term investment strategies. This is especially true for new investors. Experienced investors know that market volatility is unavoidable and designed to move up and down in the short term. More importantly, it is extremely difficult to time the market. Riding the volatility waves while staying afloat without getting wet is what would differentiate the successful investors from the novice ones.

5. Avoid Speculation

A speculation is a guess or a hope of something happening which is not well researched. Such speculations can be in form of tips from friends and from so called social media experts which we find floating around almost everyday. This should be taken with extra bit of caution as it can possibly be to lure unknowing investors. The opposite of speculation would be well-researched, future projections based on sound fundamentals and good assumptions. One can’t really replace speculation with such a well-researched projections. Successful investors do not engage in speculation and see it more like a gamble with a known outcome with time. Some novice investors may get excitement and fun in speculating but, it is a sure way of losing both peace of mind and money.

6. Ask Questions

Good investors understand that it’s better to ask a few additional questions than to regret or be locked into a bad investment. They are inquisitive and ensure that they understand all of the “fine print” of any investment product or asset. Any financial /investment product has its’ own positive and negative factors. Should it meet your expectations, needs, risk appetite, liquidity needs and costs, is something you must question. Before making any decision, successful investors ask questions and consult with unbiased sources. To put it another way, they educate themselves and invest only in products which they are very familiar with.

7. Listen to what is important!

Good investors keep themselves updated just enough on the major economic, geopolitical undercurrents that may impact the markets on the long run. There is no need to track daily movements of markets and listen to every little noise happening on a daily basis in the market. With experience, successful investors learn to pick up only the meaning information and avoid the rest as just noise. With information so easily available and in such a huge quantum, this is an essential skill we should master.

Bottom Line

Becoming a successful investor takes time, patience, efforts and learning. There is no shortcut to success but knowing the mindset and the characteristics of successful investors can surely help us in our journey. Surely, even we can and be as successful as our investment gurus, at least by our own standards.

We offer our services through personal counsel with each of our clients after understanding their wealth distribution needs. Our approach is to enable our client's to understand their investments, have knowledge of investment products and that they make proper progress toward achieving their financial goals in life.

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