Archive for the ‘ Regular Saving ’ Category

A Late Start to Retirement Planning – Strategies to catch up

Wednesday, May 20th, 2015

“A year from now you may wish you had started today.”  – Karen Lamb

Are you 40 plus.. and haven’t started your retirement savings yet.. don’t panic. You can still make solid progress toward your financial goals if you make the effort now

From a Retirement Planning perspective this decade (40 to 50 years) is of utmost importance. Your Career is probably blooming and the 50’s are always the best earning years in one’s career.

Retirement Planning

Getting Started Right now :

Forget the past and start by estimating the amount you would require for a comfortable retirement. Take a pen & paper and note down the assets or savings you have which you can allocate to retirement savings. Get a rough estimate of your monthly expenses you would require after your retirement.

Also estimate how much you can save every month which can be allocated to the long term savings.

Finding the money to save

Eliminate all unnecessary expenses. Spending is sometimes just a habit which you need to modify or divert yourself in habits which are more satisfying and enriching.Take a look at expenses you would like to give up today to make an investment for your future. You will find many of them especially the subscriptions which you end up paying which are of no real use, for e.g a magazine subscription you never find time to read, or a Gym membership where you rarely go. Negotiate for  better rates with telecom companies for telephone as well as internet usage.

Automate your savings

As soon as your pay-checque reaches your bank account, arrange for an auto-mated SIP/switch to Investment account. You will not miss – what you never had. The feeling of your retirement corpus being funded will offset the feeling of spending less.

Invest all extra funds to retirement account

Expenses tend to rise with rising income, but try to avoid it. Whatever increments you get, bonuses, incentives you get divert at least half of those funds to your retirement account.

If you get unexpected money such as by inheritance, stock options etc invest the same to the retirement corpus rather than buying a new car or going for a vacation.

This strategy would be the key to your retirement planning success.

Spend on yourself

The Decade of ages 40-50 are crucial in one’s career. Invest in upgrading and educating yourself to tap the opportunities to the fullest. Keep learning in 40’s, attending classes and training programs which would give up benefits in your 50’s while you reach the peak of your career.

Also spend on good health and food. Being a healthy person you will automatically save the high medical costs of the future.

Invest more Aggressively

Don’t be conservative with your retirement savings because at 40 you still are two decades away your retirement.  Invest in well researched equity shares and Mutual funds. It may expose your portfolio to some volatility but if you invest all your savings to fixed income you may not be able to keep up with Inflation.

Review your Portfolio and Re-balance

Asset allocation is the key to success of any investment. Review your portfolio at-least once in a year and make necessary adjustments keeping in mind the best you can do with the time you have.


Sandwich Generation & their Finances

Thursday, May 7th, 2015

Sandwich Generation is the term used for people who care for their aging parents while supporting their own children.

India is known for it’s family values since ages, when an Indian speaks of family he does not limit it’s meaning to spouses and children. The Circle of Care in Indian families embraces all generations.

With Increase in Life expectancy and a generation of young adults struggling for financial independence the burden and responsibilities shift to the Middle Aged who still have to build their own retirement nest.

The phenomenon is not new, but the dynamics have changed considerably, families are smaller than they once were, so there might be fewer siblings to share the burden and with more women in the workforce having the extra responsibility of yet another person to care for squeezes their time which also leads to extra burden on the couple.

How should you Plan ?

As you have two sets of dependents leaning on your financial house, be sure it’s strong and sturdy.

  • Maintain a Decent Contingency/ Emergency Cash Reserve
  • Take appropriate Insurance covers for yourself – Protecting your family from the risk of your disability or death is more important than ever.
  • Take sufficient cover for long term health for yourself and your family – Proper Insurance coverage will reduce your burden financially in case of any eventuality
  • Do not belittle the importance of your own Retirement Planning, continue with your savings – If at all possible, don’t use your retirement savings—whether through loans or early withdrawals—to support your kids or parents. Withdrawing from your retirement funds could leave you inadequately prepared for retirement and force your children to support you financially. You should break the cycle.
  • For Eduction Cost of your child opt for Education Loan

How to deal with both sides ?

Your Children : Your children are watching and learning from you. Have an open dialogue with them on importance of financial planning. Children raised with money management skills will be better prepared for their own financial success.Prepare a Financial plan and save accordingly for children education and marriage.

Your Parents : Know your parents’ total financial picture, help them in managing their funds. Help them in their Estate Planning. Take special care that they are safe, make necessary changes in the house required for the elderly. Devote some quality time.

Above all, be realistic about what you can do. Don’t expect too much of yourself, either emotionally, physically or financially.

Recommended Mutual Funds – Large Cap

Tuesday, February 18th, 2014

Equity is a powerful asset class that offers potential for long term wealth generation. However this potential is only realized for those investors that are able to maintain a diligent and disciplined approach towards it. The Investors should also select the schemes wisely wherein the fund managers are aligned in their long term approach to risk management and wealth creation.

Large Cap Equity Mutual Funds make a base for your equity portfolio and should weigh atleast 35-40% of your equity portfolio.

BIA Capital Recommends  following Large Cap Funds for your Mutual Fund Portfolio.

  Return as on 11-02-2014 (Returns above one year are CAGR) Ratios based on 3 years performance
Name of the Funds AUM (in crs.) as on 31-12-2013  YTD  1 month  3 month  1 year  3 year  5 years  10 year  Beta  Alpha  Sharpe Ratio
ICICI Prudential Focused Bluechip Equity Fund 4,705 -2.22% -0.75% 1.85% 7.48% 8.94% 22.36% 0.85 0.34 0.451
Birla Sl Frontline Equity Fund 3,586 -3.32% -1.59% 1.86% 5.41% 8.25% 20.59% 17.90% 0.90 0.36 0.38
Axis Equity Fund 603 -4.38% -2.67% 0.23% 7.64% 8.85% 0.83 0.35 0.47
Franklin India Bluechip Fund 4,958 -3.35% -1.41% 1.07% 0.28% 5.45% 19.17% 15.97% 0.87 0.08 0.273
Edelweiss Diversified Growth Equity Top 100 Fund 22 -4.10% -2.29% 0.83% 7.62% 9.39% 0.82 0.35 0.464

A brief note on the recommended funds :


It’s not that hard to be a millionaire..take the first step to wealth

Thursday, January 30th, 2014

Today’s article reminds of the following quote :

The First step is always the hardest, but it’s the only way to reach the second step. – Susan Gale

Being a Millionaire, a multi-millionaire or in the Indian Context being a Crorepati is always desirable. It is achievable too if you have disciplined savings approach.

Let’s analyse how one can achieve this wealth accumulation goal. As we know The First Step is always hardest – Accumulating the First Crore is hardest but later on the your savings have a multiplying effect.