Financial Tips for 2019

1. Start savings regularly and the sooner the better (preferably as soon as you get your first job). Try to save at least 20% of whatever you earn.

2. Avoid buying property on a mortgage as it takes a lot of your income unless you have a planned strategy to clear off the loan. Cash Flow is very Important. Though, the house will be your asset on the balance sheet, your liabilities and commitments would also increase.

3. Unexpected situations can hurt all your plans; ensure you are in a position to handle these risks by doing regular financial reviews.

4. Car Purchase can be avoided unless its for daily use.

5. Ensure you are saving money into a ANNUITY which provides you with Income as soon as you retire; Income in retirement is an Asset; Assets in retirement can become a Liability.

6. Deduct your savings from your income before you spend any of it. Do not take on loans and liabilities unless that is your only way out of a situation. Unnecessary loans dent your cash flow and affect your peace of mind in ways you cannot even imagine sometimes.

7. Marriages are made in Heaven; but the cost of the ride can dent your pocket. Weddings can be more beautiful on your pocket and warmer if kept simple; consider when you spend this money. It can dent your pocket very deep.

8. Inflation is real; if money is kept Idle; you are losing money everyday; beware of how much money you keep in a current or checking account. If it is excessive; you are losing more and more to inflation: a HIDDEN RISK to many families and individuals.

9. If you invest in the stock market, watch it with caution and be ready to take action.

10. Do not have a belief that showing off with a huge property and expensive car make you (look) rich. It's what you save and invest, that is more important in the long run.

11. Where there is a will; there are relatives; therefore ensure you have a clear "letter of wishes" to protect the people you truly care about and avoid them the hardship which follows your demise.

12. Never invest in LIFE insurance looking from the perspective of getting market returns. LIFE Insurance is not an investment; it is a risk management tool to protect future income.

13. Your knowledge and your skill set should be your first investment; after that you can invest into other physical assets.

14. Your future plan should be very clear especially in the areas of your career, your life goals, your expenses and your investment strategy.

15. Build an emergency fund which covers approximately 6 months of your expenses.

16. Health is Wealth; Ensure you keep a close eye on both these words; loss of either one can be very dangerous. Do regular check ups on both these words; HEALTH & WEALTH.

17. Death and Illness cannot be predicted!!.... therefore buy adequate income protection insurance due to illness and death.

18. Old age is REAL; do not overestimate your working capacity; you will need some form of "Guaranteed Income" when you are in retirement. AGE HAS A FUNNY WAY OF TAKING TOLL ON YOUR ABILITY TO WORK!!

How to Manage Money

In today's times, Most of the times financial crisis occurs in our life not because of lack of enough income but, not following proper financial Planning.

It doesn't matter if your monthly income is 5000 PM or 100000 PM, You must have some plan to manage your money.

Priority 1:

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Before going for any investment/Savings, You must fulfill these goals, May be most of these are one time spendings/expenses and most of the people tend to avoid these goals. But remember this is your first priority in your financial Planning.

 i. Health Insurance: 

     Whatever the age, You must take the health insurance for yourself and for your dependents.

ii. Life Insurance:

     Remember, Life insurance means pure term Plan. Don't take any traditional insurance plans who offer returns after policy ends.

Don't Mix Insurance with investment.

If you have any concerns while taking term plan, You can comment here or you can whatsapp me at 8801 64 8801.

Here's my Blog post on the Same Term insurance Comparison 2019

iii. Emergency Fund:

     You don't know when you lose your job, or sometimes we will need money for emergency needs. For that purpose we must maintain Emergency funds. It must be atleast 3 months of your income or 6 months of your spendings.

Park your emergency fund in Liquid Funds.

If you don't know about liquid funds, i will post another blog post about liquid funds soon. Till now, if you want to know more about Liquid funds drop me a whatsapp message.

Priority 2:

Follow 50/30/20 Rule

Rule	Purpose	Where to Invest
Rule 20	Once you Receive your Paycheck, You need to put/allocate at least 20% of your income into savings/investment accounts. Remember that this amount have to be utilize for long term goals.	If you want your money works for you, you must give equity exposure to your investments.
Rule 50	You can allocate max 50% of your income for your house needs and common spending Ex: House rent, EMI payments, groceries,insurance premiums etc.	Maintain separate account for your spendings. Its best practise to maintain joint acount incase both husband and wife are working
Rule 30	You can allocate max 30% of your income for your entertainment needs, Dining out,children toys or short term goals like foreign trip etc.	Save this amount to short term debt funds, So that you will get better returns than saving accout.

Note: I've developed few tools to calculate above mentioned terms. Drop me a whatsapp message i will provide you the link.

Best Term Insurance 2019

We can't conclude the best term policy in terms of any single parameter. We need to check multiple parameters which suitable for us as individual.

As per standards, Below 4 are the best selling policies in term insurance category. So i'm comparing these 4 insurance policies with multliple parameters.

This comparison is for HNI Clients i.e whose annual income is more than 5 Lakhs, I assume policy holder age is 30yrs and non smoking category.

For smoking category, the premium price will increase.

Note: If you are viewing the post from Mobile, Please change it to desktop site mode for better view.

Insurance Company	LIC	MaxLife	ICICI Prudential	HDFC Life
Sum Assured	1Cr	1Cr	1Cr	1Cr
Age	30Yrs –Non Smoking category	30Yrs –Non Smoking category	30Yrs –Non Smoking category	30Yrs –Non Smoking category
Premium/Year	18,672	13,216	14,697	19,146
Policy Term	Need to pay premium till 65Yrs (Person Age), Policy also applicable till 65Yrs. After he enters 66Yrs, Policy will not applicable.	Need to pay premium till 60Yrs, Policy applicable till 80Yrs. No need to pay any premium between 61Yrs -80Yrs	Need to pay premium till 80Yrs, Policy also applicable till 80Yrs.	Need to pay premium till 60Yrs, Policy applicable till 80Yrs. No need to pay any premium between 61Yrs -80Yrs
Critical Illness Option	Not Available	Available	Available	Available
Claim Settlement Ratio	98%	98.7%	98.6%	98%
Premium Return After policy ends	No, We don’t get any amount after policy ends.	We will get all the premium we pay at the end of the policy term.	We will get all the premium we pay at the end of the policy term.	No, We don’t get any amount after policy ends.

Some Common Misconceptions:

1. Is it safe to take the Insurance from Other players than LIC.

Ans: Let me clear this first, This is the top most common question most people have.

All insurance companies must follow IRDAI guidelines including LIC. They must deposit 60% of our premium in IRDAI accounts, and follow other IRDAI guidelines.

If any insurance company will delay your payment on time, They have to pay you with interest.

If you check the Claim settlement ratio from above table, All other players have more settlement ratio than LIC.

To correctly articulate this, Let suppose SBI offering 6% interset rate for FD and ICICI is offering 8.5 for the same.

which one you opt for?

Did you go with SBI, just because it is old and public sector? Its upto you.

2. How to take the term policy?

Ans: First decide yourself, Then call the corresponding agents. Because most agents are allowed to sell only one insurance company policies, they try to manipulate you to take their company policy.

Even they will try to sell unnecessary addons which are not really required for you, just because of their targets and commission.

Be clear on what you want and then call agent.

You want trusted agents, Just drop me a whatsapp message(8801 64 8801). I will forward you contacts.

3. How to Redeem your policy in case something happen to you?

Ans: Once your insurance policy Approved, You will get one booklet which includes your policy number.

Your nominee need to submit policy number with death certificate, all by themself or with the help of agent.

Its as easy as withdraw amount from bank, No worries, anyone can do this.

Any Help Needed?

Not able to choose suitable policy for yourself, or want my second opinion, Feel free to comment here or you can drop a message on my whatsapp (Expect some delay for replies).


If you have any queries on term insurance or MutualFund investments or looking for gaining knowledge. Feel free to get in touch with me on my whatsapp number 8801 64 8801.

Budget 2019: How to be tax free even if your income is 10L PA

Finance Minister Piyush Goyal Announced in the Budget 2019 that individual taxpayers will get a full tax rebate for income earned upto 5Lakhs.

But if you utilize all the existing income tax deductions, You can be tax free even if your salary/income is 10Lakhs PA.

Check the data in below table for better understanding

Income Tax Deduction	Max cap
Standard Dedction	50,000
Section 80c	1,50,000
Contribution to NPS	50,000
Health Insurance Premium Payment	50,000
Interest on Home Loan	2,00,000
Total	5,00,000

After all the income tax deduction calculation, Your income reduce to Rs 5 Lakhs which comes under no tax rule according to new budget session.

Standard Deduction: 

An individual need not disclose any investment proofs or expense bills for this purpose. The Standard deduction is allowed at a standard rate.

Section 80 C: 

You can claim upto Rs 1,50,000 under section 80C investments.

Mutual Funds - 3 Yr lock in Period
Bank Fixed Deposit - 5Yr Lock in period
LIC, PPF etc..

But the best investment under section 80 C is undoubtedly Mutual Funds, Which will help your money works for you if you invest for long term.

You need to remember that not all mutual funds come under tax deduction section, Only ELSS category mutual funds are eligible to claim the tax.

Don't Worry just subscribe to sipway website at the end of this post and whatsapp to 8801 64 8801, Our SEBI Certified Financial Advisor will help you to invest in best mutual funds which comes under Section 80c at free of cost.

NPS:

You can claim upto 50,000 by investing in NPS(National pension System) or  Atal Penion Yojna.

You can open an accont from online also. For more details visit NPS official website
https://enps.nsdl.com/eNPS/NationalPensionSystem.html

Health Insurance Premium Payment: 

If you made any health insurance payment for yourself or your parents you can claim upto 50,000.

Home Loan: 

 If you are paying interst on your home loan you can claim upto Rs 2 Lakhs.


If you have any queries please mention in comments, You can feel free to contact us at our whatsapp number 8801 64 8801 (Expect some delay in response :) )

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Financial Resolutions for 2019 to Become rich

When a new year is coming we all ready with our new goals, Weather we fulfill our past goals or not. We always have a new list for upcoming year.


If you look at the gym in the months of January or February, The chances that most of the gyms occupied with more crowd than usual. But from march onward it will become normal. Its common man attitude that we can commit easily, and its difficult to fulfill.

Unlike other resolutions, The Financial resolution goals are difficult to start. Once you start you will definitely achieve your goals or targets.

In this post we are describing the top financial resolutions that will help you to become you rich after reviewing Financial literacy blogs, books and experts interviews.

You don't need more money/income to become rich, Even you can become rich with small income if you know the art of money management.

Plan Your Budget
You must know how much you are spending each month, You should track your expenses and bill payments regularly.

If you are earning good amount of salary/income but still facing financial problems at the end of the month. The first reason being you don't know your monthly expenses.

Stop Using Credit Cards

If you are using credit cards most of the times you tempt to do unnecessary shopping.

Its very difficult to track your expenses if you are using credit cards.

You should remember the advise from warren buffet that "Youngsters must away from the credit cards"

Automate your debt payments/Savings and Investments:

The popular financial author David Bach quoted from his bestselling book The Automatic Millionaire that the simple rule to become rich is you have to follow the automate way while distribute your money among your debt payments/savings/investments.

As we discussed in our last post Two Qualities that Makes You Become Rich, By following this habit you will learn discipline.

With the ease of technology it become easier to automate our payments.

Set Goals:

You must always have  Financial Goals. It could be Buying House, children education, Foreign trip or Retirement Plan.

Let Money Work For You:

While setting your financial goals, You can divide them into two types based on the duration of your goal reach.

Short Term Goals:  If your goal period is less than 5Yrs 

Two Qualities that Makes you Become Rich

This post is mainly targeted for young adults who started earning in their mid 20's and 30's.

This could be the only generation who is earning considerable amount of income thanks to the globalization.

Unfortunately, This is also the only generation where job security is very low, and as experience increases the chances that the company fires them are high (Talking about IT industry).

According to the recent survey of Economic Times illustrated that the people who are in their 40's are facing a lot of financial crisis because of their lack of awareness on money spending .

As we discussed in the post "First step to get Financial Independence", We should start thinking about our retirement on the joining day of our job.

You may wonder why should i care about my retirement such an early stage?

Because, If you follow that strategy you are going to unveiling the biggest secret of Money.

Earning money is not a magic.

But, Its an art, and Its a kind of science. It has its own set of rules. If you follow those rules you will become rich.

Here are the top 2 qualities which warren buffet believes are

Discipline and Patience.

Sounds simple right? But, These 2 qualities are lacking in 90% of the young adults according to times money magazine survey.

Discipline:

Let's assume that you got a bonus of 40k from your employer, what will you do?

we will come to you later

You know 60% of young adults were spending another 50% on buying gadgets, luxury items, vehicles which are not really necessary if they get the bonus or hike from the employer and ending up with paying EMI for the extra amount.

That means if they got the 40k bonus, they are spending 60k on things which are really not necessary.

That's why i always urge you to have some retirement plan. If you have your retirement plan on your mind you could have easily put half of the amount in that and you can spend half of the amount which really matters to you and for your happiness.

When i say retirement don't think that you will wait till 60 Yrs. You can retire at your 40's and start doing what you love to do without much worrying about your financial needs.

Here are the few points that makes you financially discipline

1.You must have life insurance for you, And take health insurance for both you and your family

      Your Life insurance cover must be 10 times higher than your package.

      Let's say if you are earning 7Lakhs p.a. Your insurance cover must be 70+ lakhs

2. You must maintain emergency fund. This amount should be in liquid, that means you can easily convert to cash when needed.

    Your emergency fund must be 3 months of your salary.

    You can invest this emergency fund in any debt funds for better return and secure.

3. Start investing in Equities early. If you don't have any knowledge on equities you can consider equity mutual funds. 

    Equity funds beat inflation and gives you good return if you invest in long periods (atleast 5Yrs).

Check your wealth checkup at free of cost: Wealth Checkup

Patience:

We usually start our career to work for money. But, If you have a rich mindset you should start thinking that how money works for you.

If you want to reach that state you need only one quality in you i.e Patience.

If you are in your mid 20's or 30's, and if you start investing early the age is in your favor and you can fully utilize the power of compound interest.

Difference between Saving and Investment:

Some people save the money in bank accounts and thinks that they are investing for future. This is one of the biggest mistake.

Investment means it should beat the inflation in a long period.

Inflation: Lets say your house rent today is 10,000. Do you think it will be the same even after 10years. No, it will increase. The same way all prices will increase because of inflation.

If you are investing in bank fixed deposits and LIC's, If you minus the inflation from your profits. You almost earn nothing. i.e your money sits ideal. It doesn't work for you.

If you want your money work for you, if you want to beat the inflation. Then start investing in equity mutual funds through SIP's.

SIP(Systematic Investment Plan)  is a methodology where you can invest in mutual funds with constant amount every month over a period of time.

Most of the young adults knows that investing in mutual funds is a good investment option but, they will postpone or avoid it because they think they lack the knowledge on it.

If you fell ill and you don't know how to cure yourself what will you do?

you will consult a doctor. The same way you can consult a financial adviser, most advisers will serve you with mere fee of below 500Rs.

Ignorance should not be an excuse when it comes to investment.

Equity mutual funds are high in risk, i.e if you are investing in equity mutual funds for 1 or 2 years. then that's a bad investment idea.

If you want to invest for more than 5 years then the equity mutual funds are the best option.

If you start investing in early and you have a patience, here's how compound interest will work for you.

Power of Compound Interest:

Assume that you required money at your 45th year.

In both the case you are investing 12 Lakhs, but see the difference in wealth gain.

Case 1: Start early with less amount  (25Yrs-45Yrs)

SIP amount:  5000
Investment Period: 20Yrs
Interest Rate : 15% CAGR (Equity mutual funds average return if we invest for long periods)

Returns:

Invested amount: 12 Lakhs
Wealth Gain: 64 Lakhs
Total Expected amount: 76Lakhs


Case 2: Started a bit late, but invested double the amount than case1 (35Yrs - 45Yrs)

SIP Amount: 10,000
Investment Period: 10Yrs
Interset Rate: 15%


Returns:
Invested amount: 12 Lakhs
Wealth Gain: 16 Lakhs
Total Expected amount: 28Lakhs

Check Yourself how compound interest will work for you:  www.sipcalculator.in

No more words, Only numbers can speak more than words.

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Lesson 1: First step to get Financial Independence

This blog is intended to make people aware of financial knowledge, We don't use complex terminology from accounting terms, Our goal is even common person without any financial background should know how to make his money work for him.

Let's start with the basic question What is Financial Independence?

To answer it in simple words let's assume that you stopped working today, and you are in a position to pay all of your bills and expenses, then you are in a state called financial independent state.

To live better life we all should be become financial independent at some point in our life. Some become at 40, some become at 60 and some not at all. Its all depends on our financial habits.


In this post, we are illustrating the ways to achieve financial freedom at earliest

Step 1: First and foremost, you need a Motivation

 The famous author Stephen Covey quoted in his bestselling book "The Seven Habits of highly effective people" that "Begin with the end in Mind".

If you fix your goals, The chances to achieve are higher.

The common myth is that we can plan for our retirement later, But no, you have to plan for your retirement today, right now.

Why we need to get financial independence (can i call retirement?) at earlier?

It varies from person to person

Some people want to travel the globe
Some  want to start their dream startup
Some want to work with NGO's
Some want to pursue their dream career which has not constant earnings like writer,blogger,artist,musician etc..
Others just want to enjoy stress less life with family members.

So, What's your goal? no goals, then think about it. You should always have one.

Step 2: Plan your Budget

If you want to become rich, you don't need to be a financial analyst or trading expert, you just follow below 2 steps.

1. Once you receive your salary/Income, Transfer the amount to your savings/investment accounts (It shouldn't be your primary bank account). 

2. Maintain the balance in your primary bank account which is sufficient for your monthly needs.

3. Stop using credit cards.

Credit cards makes us tempt to do unnecessary shopping most of the times.

Some people will argue that, we use credit cards only at emergencies. Then, why you are not maintaining your emergency fund at first place?

If you are using credit cards then you will end up with improper planning.

Once wall street reporter asked warren buffet "What's the advise you want to give to youngsters?"

Buffet Replied that "I urge the youngsters to Stay away from Credit Cards"

It looks simple right? but, you know simple things are hard to follow, I believe the same steps you might heard from many people on many times. Are you following it?

If i ask you, Whats your average expenses per month, Do you have an exact answer? 

If Yes, Thats Great.

If no, Start noting down your expenses from today on wards for the next 1 or 2 months.

If you pledge yourself to follow the above steps, Then nothing will stop you from achieving your financial heights.

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