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10 Ways To Increase Your savings

Are you looking for other ways to increase your savings? Read on to discover some effective ways to increase your savings.

There are lots of different ways to increase savings.

Have a percentage of your wage automatically deposited into an investment account. Most mutual funds have a $25 minimum investment amount. You won’t even miss it from your pay cheque because you don’t see it and your investment grows.
Understand your taxes. There are so many easy tax breaks you can utilize if you understand how they work. Ask your tax preparer or read on your own.
Make a life plan and work towards it. If you plan to have a million dollars by the time your 40 then let that drive you.
Budget. Don’t buy all that stuff you don’t really need. Pack a lunch instead of eating out all the time.
Put a dollar or two away EVERY DAY into a piggy bank in your house and invest it once a year.
Have 2 bank accounts. One for your everyday expenses, which you keep a lower balance in and one for the extra money you can access in a hurry should you have an emergency or unexpected expense.
Take a close look at your insurance. Question your coverage and insure for only what you need. Increase your deductibles. If you keep all your insurance with the same company they sometimes give you a discount. Shop around.
Shop smart. Impulse shopping accounts for a lot of wasted money. Ask yourself, do you really need to but the designer clothes or have 15 pairs of shoes. Clip coupons and shop in discount stores or look for the sales.
Quit that bad habit, (smoking, drinking, gambling, etc.) Deposit the money you saved by not supporting the habit into a savings account.
Take an interest in your money. Learn about investing. Learn what drives the markets and what a falling dollar or rising oil prices mean to your investments and be active in managing them.

These are only a few ways to increase your savings. The key though, is to WANT to increase your savings. If you truly want to save then you will make the effort to look for all the ways to increase those savings and make the money work hard for you.

10 Ways That Food is Ruining Your Budget

Food is a huge drain on your finances. Here are a few ways that your food bill can torpedo your wallet.

Next to rent, food is the largest bill that most households face. If you wonder why hundreds of dollars seem to disappear from your bottom line every month, read about these cash drains.

Convenience store snacks – Stopping at the local convenience store for a drink and a snack can easily become a habit. It seems like an innocent treat, a little pick-me-up on the way to work or a reward for another day finished. But what does this habit cost? For example, imagine that you purchase a 20-ounce soda and a small bag of chips every workday. The average soda price is around $1.25 and the chips are another $1. In a five-day workweek, this habit totals $11.25, or $45 per month. The fix? Consider purchasing a large bag of chips from the grocery store (around $2) and keep this bag in the car, making it last all week. This one adjustment will save you $12 per month.
Buying name brands when generic will do – Yes, sometimes the name brand version of a product will be of a better quality than the generic. However, many products are virtually identical, regardless of brand. Experiment with generic products to see which are better deals without losing taste and freshness. Every generic product that replaces a name brand on your shelf can shave 5-10% off of your grocery bill for that item.
Not using coupons and sales – Men are especially guilty of this one. Clipping and using coupons takes a little time but can substantially reduce your food bill, especially on items that do not have an acceptable generic equivalent. It only takes a minute to scan the grocery store weekly flyer to find the bargains in the store. Sometimes you can pair an in-store sale with a coupon for extreme savings. One word of caution: Do not let coupons convince you to buy premium brands that will cost you more in the long term than the coupon is worth. Manufacturers use coupons to entice consumers to try, and hopefully get hooked on, their product.
Huge portions in restaurants – A few years ago the restaurant industry hit on a new way to sell more food. They simply increased the size of the plate portions and raised the price accordingly. Few folks complain about the inflated price because the portions are so generous. When dining as a couple, do not be embarrassed to split an oversized plate between the two of you. Every time you use this technique you are halving your restaurant bill.
Wasting leftovers – This is worst in single occupancy households. You cook a large portion of food, eat until full and put away the leftovers. The next day you do not feel like eating the same meal twice, so you make something else. Most of the leftover food ends up in the garbage or being fed to a pet. If you are single and find yourself throwing out food every week, try working out a dining schedule with your other single friends. Take turns cooking for one another so that all of the food is used on the night it is made. If you don’t want nightly dinner guests, try taking the leftovers to work and doing a lunchtime food swap with your co-workers.
Not disputing overcharges in the grocery store – Food items are frequently marked down and discounted. Sometimes the reduced price does not find its way into the automated checkout system. Pay attention to the food items as they are being scanned and point out any discounts, buy-one-get-one bargains or reductions that are not calculated into the bill. Before you leave the store, glance at the register receipt to double check that you are paying the correct price.
Shopping on an empty stomach – Snack items and junk food looks wonderful when you are already hungry. Try to put off grocery shopping until just after you’ve had a meal.
Buying into menu extras – This is another restaurant sales tactic. From loaded baked potatoes to shrimp toppings on salad to that delicious appetizer, it is easy to say yes, yes, yes! These add-ons add up to big bucks for the restaurant. Just say no.
Not taking home the ‘doggie bag’ – This is the equivalent of wasting leftovers, restaurant style. The big difference here is that you are leaving behind food that you have paid a premium for. Take home the leftovers, even if they do not appeal to you right now. Eating the remainder for lunch the next day could save you $5 to $10.
Allowing kids to make impulse purchases – It happens so often that it’s nearly a cliché. The kids convince you to purchase the new Hannah Montana cereal. You pay $4 for a box of cereal that ends up in a landfill or as bird food. Children are even more susceptible to advertising than the adults, and they have the added luxury of not worrying about the financial impact of their food purchases. When possible, grocery shop without them or hone your ‘saying no’ skills.

10 Reasons Why Everyone Should Buy Insurance

Even though the insurance industries have grown so much today, there are still many people who are not aware of the importance of insurance. Too often, these people discover the necessity of it a wee bit too late – when they seriously need the money.

What is insurance?

Speaking from the Asian market viewpoint, insurance is still something most people would stir clear of. Everyone can somehow come up with at least one reason why they shouldn’t take up a policy but in the first place, do they really understand what insurance is about? If they don’t, I really hope they’d give an insurance agent a chance to explain to them – why insurance has become a necessity today (and not just tomorrow) – when he/she approaches them.

Have a look at the list below. I’m sure at least some, if not all, are on your own concern list.

1. Emergency fund

It’s not uncommon nowadays to hear about down-sized o solvent organisation. One minute you’re right on top of the chart, and the next you’re given four month’s compensation (or none at all) to leave the company because they can’t afford to pay you anymore. It’s really terrifying especially for those who have huge commitment to their families and tonnes of debts to pay.

Saving some of your salary from the beginning of your career could save at least some of your trouble should retrenchment happen to you.

In insurance, there is such thing as a policy loan and this is immediate and less painful compared to getting loans from a bank or a money lender.

If the going gets tougher, surrendering the policy for the cash value would be an alternative to policy loan.

2. Retirement fund

How much do you need to support your standard of living every month? When you retire, how many more years do you think you have before you hit the road and not come back to earth? Most people live for a good thirty years after retirement. So what are you going to survive on if your income has stopped? Most people find that their provident fund or some savings in the bank wear out just five years after their retirement. After that, some go back to work, some depend on their children (which is a struggle and uncertain) and some… well, live miserably for as long as they can.

Putting aside some money for an endowment plan is a good way to build up a retirement fund. The moment you retire, the money is just right there, begging to come out and give you an easy life after you’ve worked for so many years. That’s the time to pamper yourself. Make sure you have lots to spend by then!

3. Education fund

This is for people who plan to have children. Before your child is born, look around for good education fund. Nowadays, college fees are killers. Some people sell their properties just so they can send their children to college. Others struggle to work 25 hours a day so their children get to learn some kind of skills in small institutions.

Instead of just putting money in the bank where you save before you create, purchase an education plan where you can create the fund for your child as you save. Most of these plans come with premium waiver in case a parent is unable to continue paying due to death or disability.

4. Hospitalisation and surgical

You can determine a lot of things in your life but some of the huge issues in life that you can’t foresee are accidents and illnesses. You could be hospitalised for any reason at all. You know you didn’t plan for all these but they come and steal your savings like a thief in broad-daylight. So if you have a medical card, your hospital and surgical bills can are paid by the insurance company, as long as you remember to renew it annually. Just think: you may not have paid much for your premium but whenever you need money for a medical emergency, it’s right there for you.

5. Critical illnesses

Upon diagnosis of a critical illnesses such as a stroke, the insurance company pays a lump sum of money to the insured. This is useful for covering expenses are than your hospital bills since the bills are already paid for by your hospitalization and surgical policy.

6. Personal accident

There are three types of people in the world where personal accident policies are concerned. The first group does not think that getting into an accident is possible if you’re always very careful. But please remember that accidents DO happen anywhere, anytime and to anyone. You don’t have a crystal ball to tell you when or whether or not you’re going to have an accident. You can be the most cautious person in the world but the person next to you may not.

The second group consists of ‘PA extremists’. They buy all the personal accident policies they can find or are offered but are not sure whether all the policies are necessary and/or claimable.

The third group is buys moderately. Whichever group you belong to, know that you need a personal accident policy to go with your life and medical plans. For more information, please read my 11 Things to Consider When Purchasing a Personal Accident Coverage. Somehow, people tend to realise they need this only when it’s too late.

7. Death or total permanent disability

This is a basic life policy where a lump sum is paid to the policyholder if he/she is disabled or to the beneficiary upon the death of the policyholder.

When a person is disabled and are unable to perform the tasks that his job requires of him, he will not be able to earn any income. The money claimed from this policy can be a lot of help with regards to continuing his financial support of the family, additional medical expenses or even hiring a nurse for home care.

Upon death, the money claimed could help loved ones in funeral expenses or settlement of outstanding liabilities.

8. Income protection

In the event of a misfortune, the income of a person is always one of the first thing to be affected. Whether or not you have a family, a financial commitment is something you can’t avoid. If you’re single, you have your car and/or credit cards to pay for. If you have a family, your expenses are three to ten times more, depending on the size of your family. When your income stops, your commitment suffers.

Buying an insurance policy helps you to continuously support your own or your family’s needs should an unfortunate event happen. Remember, whatever your marital status is, your responsibilities do not disappear along with your inability to bring in income. Somebody still has to pay your bills…

9. Business continuation

If you are a proprietor of a business and you have a few partners, it would be good to buy policy which allows you to divide the shares of your business equally should something unfortunate happen to any one of your partners. Upon death or disability of a partner, the insurance company could provide the finances for the other partners buy his/her share so that the business can continue to function.

10. Senior citizen’s fund

Who says insurance is not for those over the age of 55? A senior citizen can still buy a policy which pays the sum assured upon the death of the insured. This would be helpful for their loved ones to settle funeral expenses or leftover medical bills. None of us, regardless of what age we are should have to leave this world, worrying about how our loved ones would have to cope financially when the emotions involved is bad enough.

Having said that, it’s all about how a person prioritise his/her expenses. Saving money in the bank is essential too but we can’t keep all the eggs in just one basket. Insurance is also a form of savings. It is a necessity now because it provides protection besides handling your other financial worries. Everyone is encouraged to have a comprehensive coverage – life policy, critical illnesses policy, hospitalization and surgical policy and personal accident policy – in order to optimize the benefits of insurance.

Get one today before it’s too late. No one needs to look back and say, “Should’ve”, “Could’ve” or “Would’ve” on their hospital bed.

11 Things to Consider When Purchasing a Personal Accident Coverage

Many people like to buy personal accident coverage for themselves from just about any company. But do they really know what they are actually paying for?

Nowadays, almost everything you buy or any company you register with would offer you a Personal Accident coverage with high sum assured and discounted premium. These offers can be really attractive. Anyone would feel inclined to buy. After all, a coverage is a necessity. It’s cheap! And you only have to pay 50% of the usual premium now and every time you renew your policy!

Some people own over 20 personal accident policies without knowing the benefits. When it’s time to make claims, probably only one or two of those would pay. What about the others? They tell you, “Oh, this plan does not cover what you just went through…” So you paid – discounted as it may have been – for absolutely nothing. You’d have to make sure you die of an accident in order to reap the benefits of all the policies you’ve bought. Well, it’s not you, but your beneficiary who will get that lump sum you’ve been hoping for.

Here are some of the things you need to take into account when purchasing a personal accident coverage:

1. Accidental Living Benefit

If you survive an accident, you will receive a lump sum for the above benefit as stated in your policy. The living benefit is usually twice the sum assured, which is the death benefit.

2. Accidental Death Benefit

If you do not survive an accident, you beneficiary will receive the sum assured.

3. Accidental Dismemberment Benefit

If you survive an accident with loss of any part of your body, you will receive a percentage of the total amount of cover, depending on the severity of your injuries. The percentages vary from insurer to insurer.

If you survive an accident with permanent and total disability, you will receive the sum assured.

4. Medical Reimbursement

Let’s side-track for a paragraph. A hospitalisation and surgical coverage allows you to claim if you are hospitalised. However, if you are admitted to the emergency ward for some stitches following an accident, you will not be able to claim from your hospitalization and surgical policy.

Medical reimbursement under the personal accident policy lets you claim your medical and surgical expenses, whether it is an out-patient or in-patient treatment for any injuries caused by an accident. There is a maximum amount of claim, depending on the plan offered and the amount of sum assured.

5. Treatment Benefit

If you are hospitalised within a certain period of time because of your accident, you will be reimbursed for your medical expenses, up to a maximum amount according to your policy.

6. Physician Benefit

You will be reimbursed up to a certain amount of cover if you seek alternative treatment for injuries caused by your accident. These treatment could be acupuncture, bone-setting, chiropractic therapy, osteopathy, or physiotherapy.

7. Weekly Indemnity

If you sustain temporary total disability due to an accident and are unable to perform your normal routine, you will receive an amount every week up to a certain period of time as stated in your policy.

8. Accident Hospital Income

If you are hospitalised because of an accident, you will receive a daily income up to a certain period after the accident as stated in your policy.

9. Home Care

If you are hospitalised as a result of an accident, you will receive an amount in one cash payment for each accident.

10. Public Conveyance Benefit

If your policy provides this benefit, you will receive a certain amount of cover if an injury or death occurs as a result of an accident while you are travelling in any public transportation.

11. Broken Bones and Burns

If you suffer broken bones or burns as a result of an accident, you will receive a percentage of the amount of cover, depending on the severity of the injury.

Of course, there is not one policy that has all the benefits. You can always consult your insurance agent on the benefits that you wish to receive for the policy that you purchase. For some people, they may not see it necessary to purchase one with the benefits of broken bones and burns cover. Others, may prefer accident hospital income to weekly indemnity. However, if your agent is creative in nature, he/she would be able to package a few policies in such a way that they cover as comprehensive as possible and provide most, if not all the benefits.

Having said that, your needs (and budget) should be the main concern of your agent. He/she should be able to whip up a concoction that best caters your needs.

10 Great Guidelines to Becoming a Millionaire

How to make very good use of your salary to make a better result in the after that.

Every once in a while someone becomes an instant millionaire by getting lucky. They might inherit a lot of dough, build a product straight away wins popularity contests, or strike the lotto. For most of us however, becoming a millionaire is hard work. It takes time, discipline and some patience.

But for those who are indomitable to retire young and retire rich, it can be done. And becoming a millionaire does not require a high income. While that helps, building wealth is ultimately the ability to manage your money properly.

Here are some tips to get you started today:

Reduce consumption and increase investments.
Create and stick to a budget.
Increase your financial IQ.
Make contributions into investment vehicles on a consistent basis.
Start a part-time business to increase income and take advantage of tax write-offs.
Surround yourself with like-minded people who believe and support your goals.
Find great CPA (cost per action) and other trusted advisers.
Set short-term and long-term goals.
Make a commitment to become a millionaire.
Start now. Time is your friend when it comes to investing.

Making your first million dollars is the hardest, but it will never come if you don’t take action. Continue to increase your fiscal literacy by subscribing and visiting fiscal websites, but don’t get caught in “analysis paralysis” mode. While the information on these websites, magazines and new related TV programs can be very valuable, making money is actually very simple. It’s just a matter of knowing the rudiment and how to apply to them.

4-ways to Make Our Money Earn More

Books have no alternatives as yet with regard to learning and earning knowledge.

Money, especially our own, needs careful planning and constant nurturing. To help secure our finances and maximize earnings of our investments, Books by Mail has selected the following titles on personal investments and finance to fill our need for professional counseling in securing our financial future. Take advantage of years of accumulated wisdom on how to handle our own money thruo0gh these latest books on investments and finance.

Personal finance:

1. Money Shock By James Jorgensen. 224 pages

Finally here’s a book, written for the average consumer that not only explains the enormous changes in our financial services but more importantly guides us on how to take advantage of these innovations to our advantage.

2. Dollars and Sense: Financial Wisdom in 101 doses By Gerald W. Perritt. 412 pages

A Comprehensive primer on money management handily dispensed in quick, to the point chapters. Covers many areas of personal finance from credit cards, to bank accounts, to taxes, to retirement planning and much more.

3. Common Cents: the complete money management workbook By Judy Lawrence. 84 pages

Helps to put sensible financial planning in black & white. Conveniently offers ready-made, easy to follow worksheets to help us organize our finances and take full control of our money.

4. The Manager’s lifelong money book By David M. Brownstone and Jacques Sartisky 250 pages

Here’s a comprehensive source-book for all business people on how to attain financial security. It is a fundamental guide to money, investing, insurance, and real estate investments.

Health Insurance, Top-Up and Super Top-Up

Recently, I met a couple in their mid 30 s. They posed an interesting question to me?What should they do to increase their medical cover without paying much of a premium over and above their already running medical floater plan?

A reason for them being so worried was quite obvious……their parents recently had to undergo a huge medical bill due to their prolonged illness and they were managing it somehow for themselves through their savings!!!

Now, what about these couples as they were employed in Private sector jobs with a very low coverage of 2.5 Lakhs!! The second problem was they were not earning a handsome salary package – despite all odds they had still managed to taken a 3 lakh floater plan for their family.

Now that’s where a where a Top Up or a Super Top Cover comes into picture. Today I shall discuss the same in detail.

Health top-up plan, it might be a new term for most of you but then knowing it well will really help you in multiple ways. Basically, a health top-up plan is a type of additional coverage for those people who already have a health insurance policy. It enhances sum insured amount at a very reasonable premium. It improves your existing health insurance policy by providing additional health coverage. A Top-up cover gets triggered once the deductible in the existing policy is worn-out. It is not compulsory to have a health insurance plan to buy top-up plan, but it is advisable to take a health insurance plan before choosing any top-up plan.

Let us take an example to understand this in a better way.
Suppose you have a health cover of Rs 3 lakh and you now realized that it’s not enough to meet the needs of a medical emergency. Buying an extra cover of let’s say 5 Lakhs means you have to pay a big amount as a premium. This is where a health top-up plan makes sense. With a health top up policy, you can get additional cover at a low premium and it can save you a lot of money.

Consider the example of Mr. Akbar who has a health insurance policy of Rs 3 lakh. He is paying an annual premium of Rs 8000/-. Unfortunately for Mr. A, he is hospitalized due to a heart attack, the treatment for which goes up to Rs 7 lakh. Now under normal circumstances, his policy would pay only upto Rs 3 lakh and he would have to pay the additional amount from his own savings or investments. Now, if Mr. A had opted for a Top-up policy of Rs 10 lakh with a deductible limit of Rs 3 lakh, this additional amount of 4 lakhs would be paid by his new policy, ensuring that he stays financially protected.

In simple words, a Top-up health insurance policy provides protection after the basic threshold limit under a normal policy is breached or I should say it gets exhausted.

A Top-up insurance policy has certain drawbacks when it comes to its implementation, which can be resolved by opting for a Super Top-Up policy. Unlike a Top-up plan which pays only if the threshold limit on a regular policy is exceeded on a single hospitalization, a Super Top-up provides cover over the threshold limit in multiple cases.

Let us take the example of Mr. Akbar again. Post treatment for his disease he suffers another one after 6 months, with the bill coming up to Rs 7 lakh, which comes outside the ambit of his top-up plan since only one claim can be entertained under its provisions. Now, if Mr. Akbar had opted for a Super Top-up plan with a cover of Rs 10 lakh and a threshold of Rs 3 lakh, this plan would pay the additional sum of 4 lakh.
In simple terms, a Super Top-up Health Insurance policy has provisions for multiple claims, which are not offered by a regular top-up plan.

So next time when you think of increasing your health cover why not think about such plans. Till then Happy Investing

How do you react in a falling market?

First Lesson – Don’t panic…….. please don’t panic. That’s the winning mantra to sail through such testing times. Remember the crash of 2008 and if one tries to correlate to the falling market of 2008 the severity and magnitude of market fall was very great. But scenarios have changes drastically this time around. The participation of the common investors has increased significantly and so does the market overall economic indicators and global market scenarios. The factors are many however I won’t deal them here in detail or else it will dilute the very point of discussion.

Few things one must realize – in a bullish market (as we have seen in the last 4 years) ultimately your cost price followed an upward trend you kept buying at high prices. Here comes the “Onion Theory” in fact that how I have coined it over the years. Let’s say the intrinsic price of onions in the market is 25 per kg and then comes a market scenario wherein you start buying them at the rate of 40 per kg or even 60 rupees per kg because of demand and supply gap and other variable factors. What do you do when you buy onions at the rate of 60 you are basically paying more per kg Right!!! In fact this is what really happens in a rising market. People are really happy over excited in such a rising market and they get overconfident. But don’t forget markets by their very nature are cyclical in nature and it fluctuates!!

So what if the investors saw a more than 30 percent annualized returns or even 50 percent in the mid and small cap fund segment in the last 1 to 2 years. Don’t forget the onion theory the market are cyclical in nature and it will fall (why not buy cheap and sell later at high price) and so will your overall portfolio valuation. In fact those new entrants in the last 3 to 4 years (who got overconfident) may not have even witnessed a falling market and are now experiencing the same and seems to be a worried lot. When market collapses every fund will replicate it except for fixed income funds though. In fact the fall will be huge for mid and small cap. So now what do you do as an investor?

Point Number 1: – For those of you who have been a regular investor with the market and have chosen funds appropriately do nothing and feel happy that you will get to buy the funds at a cheaper value. Secondly, it also considers the fact that you don’t need the money for let’s say – for the next 5 to 7 years and you have a long term vision with your goals sorted out and aligned properly. Don’t look at the market valuations every day. Psychology and temperament plays a major role in ones investment . Stick to your game plan because that is the most important thing for you. If you exit at this time you will miss the opportunity. Dealing with such market adversity is important. Ability to withstand to such a market scenario will go a long way to your final success of achieving your goals.

Point Number 2: – New Entrant in the last 1 year in the market who accidentally entered the market to reap the market rewards would see their portfolio gains withering away in a very dramatic manner. What do you do then? Should I sell? Well it is high time you plan out your goals. Once a market starts falling freely all the windfall gains will be gone in a matter of days ! This very experience will scare you so much that you may never invest in to equities ever again. Make sure you have chosen the right mix of funds. For example if you invested 100 rupees at least 25 to 30 percent of it should be put into fixed income funds this way it will protect your capital to an extent. For those who have made money though riding high on the mid and small cap funds move towards a balanced fund so as to minimize your returns and catch hold of the falling losses. Remember even though you get a far more lower returns still this way you will be able to minimize the risk to an extent. After all it’s your money right and you would also want to protect it from a far greater fall. For those of you who are in to the market for let’s say 2 to 4 years try to move to multi cap funds.

So now Let’s sum it up : –

Be in a diversified fund at all times. Don’t buy too many funds.
Invest regularly (as you brush your teeth regularly). Investment is a healthy habit.
Keep a long term approach and invest your money which is quite aligned with your goals. This way no matter what you will be able to sail through the testing times ….

Till then…. Happy investing

By Keeping Things Simple and Easy You Can Make Money.

Simple and easy is it? No ways that would be your first reaction. In fact, many investors make the mistake of doing too much to their investment portfolio. Why can’t we do it the more simple way –you will probably ask me how? Well, you can do it provided you stick to some basic principles of personal finance management lessons.

Invest in the minimum possible number of financial instruments. It also means taking the fewest possible actions.

In the last decades or so, the investment culture and methodology has undergone a sea change. People have somehow gradually shifted towards being a worshiper of complexity. As I had mentioned earlier in my previous article “simple seems quite complicated” for most of the people holds quite true in today’s times also. More and more investors assume that any investment methodology that doesn’t involve any sort of mysterious formulae,complicated complex products and elaborate charts can’t possibly deliver them the goods. The truth, perhaps, is quite the opposite. Today I will talk about the same through simple time box. Why time box because each of your investments should be centered around investment time period only.

Time Box Number 1: – Keep all the money that you might possibly need for at least the next 1 to 5 years in safe fixed-income investments .Like investing in to a liquid fund to ultra short bond funds and other debt products. The idea is simple safety is the key while taking minimal risks with your money.

Time Box Number 2: – Long-term investments which exceeds a time period ranging from 5 to 7 years should be allocated to a balanced or conservatively run equity funds with a good track record.

Time Box Number 3:- Very Long term goals (like retirement planning goals) exceeding say 7 years to 20 years should be allocated to a mix of multi cap/a mix of small and mid cap too. This will diversify your portfolio and help you compound your returns with times.

Always note investments in equity should be gradual—moving lump sum money received through annual bonuses into equity-backed investments in one shot when the market is on a high can lead to disaster! Instead learn to park your money gradually form a liquid fund to an equity based mutual fund stretching over a period of 18 to 24 months. This way you will minimize the volatility risk.

Apart from these 3 time boxes there’s insurance to think of however insurance is not an investment at all. It’s an instrument that buys you peace of mind. In the Indian context though we end up buying this product as an investment tool often missold to millions !!! Make a liberal estimate of how much money your family will need if you fail to wake up tomorrow morning and buy the cheapest term insurance you can find. Buy an appropriate life cover based on your liabilities.

In a nutshell keeping things simple can help you go a long way – it can help you pick the right investments provided you choose your appropriate time box and helps you understand your requirements before putting your money in to the “BEST” of the products. Simplicity is needed not just in the types of investments that you choose but in your investment portfolio as a whole. Today every 9 out of 10 people should have basic emergency fund/a huge term plan and not more then 3 to 4 mutual funds that’s all. Everything should be centered on reaching your life goals after all that’s what you want in the life right…….. Till then happy Investing

Making Money, Staying Calm and Carrying On

Few days back I attended a wealth management session on “Making Money”. Though the idea was quite lucrative and the attendance was good, it just turned out to be just another dead rubber for many since by the mid-session many left and realized it was just another marketing gimmick endorsing a financial product. The obvious reason why most of them were disappointed – they were looking for a ready-made solution or a product that could offer them RETURNS. If this task of making huge/decent returns on ones investment was so easy everyone would have been a millionaire by now, right?

Let’s talk further – so what happened when the recent annual budget introduced taxes on long term capital gains on Equity investment – the retail investor pushed the panic button for sell. Was it really required at that time? The obvious answer is No. But since the basic fundamentals of investment is not known to most of us – we never realize the power of “STAYING CALM and CARRYING ON” .

This ad was as an instant hit (Keep Calm and Carry On – I have just simply changed few words here to make more sense) among most of the office goers in the Delhi NCR region few years back. They could relate to it quite well when they were stuck in traffic jams for long hours and they would often get into heated arguments with fellow passengers to reach office in time. Was avoiding the traffic jams under their control? No.

Why can’t we simply apply the same methodology to our investments? Why can’t we as investors understand the way the market cycle functions? Why can’t this mad rush for achieving greater returns be toned down? And we start looking for ways by STAYING CALM. It is possible quite possible provided you have a vision in sight and believe on setting your goals (with a definite number in mind) and then aligning your investments with a definite time frame.

That’s the way your investment needs to be. You need to stay calm and carry on with your investments. Since, the 2008 financial crisis when the prospect of the equity markets looked bleak. The common investor either stopped investing or pushed the sell button. Looking back over the last decade or so that would be the worst thing to do to stop your investments/SIPs in such times.

Remember in the end you have a goal in life for which you are working relentlessly. No matter what these market cycles will keep happening and you just cannot escape it just like your traffic jam situation.

The simple fact is that there no better time to create the foundations of a solid portfolio than when everyone is running and looking to sell. Eventually over a long term horizon it’s that kind of dips that will actually produce profits for you. Remember the onion price theory I talked about in my previous write up. Keep buying low and when the market tide changes directions you are there to reap rich dividends of staying invested.

Persisting through such times is what sets the tone for much higher returns over a complete market cycle. If you end up trying to time the market you will go nowhere. So it does pay to STAY CALM and STILL STAYING INVESTED when you have a goal in sight. Till then happy investing.