Before turning 30, you should make certain financial decisions as early as possible for a stress-free future where financial contingencies are a far cry.
So what are those decisions? Here’s a list of 4 basic decisions that are almost universally applicable, so let’s take a look.
1. Ensure Yourself – There is no specific age for taking out an insurance policy and the earlier you start the better.
By the age of 30, you are probably one of the contributors to the family income if you are in the joint family system or the main breadwinner in your nuclear family.
Even though your spouse earns, there will be financial loss in case of any unfortunate event. Insuring is always the best answer for income protection and buying a term plan with considerable coverage is also affordable.
2. Plan for Retirement – Retirement is the last thing you think of when you just hit the 30-year age mark. The whole life ahead seems too short to accomplish all you desire and the thought of retirement leaves a sour taste in the mouth.
But planning early is the key to a comfortable retired life. Post 40 when the majority of people plan for their retirement, the accumulated corpus falls short because of other liabilities.
So open a PPF Account and start saving a little amount every month. Let compounding do its magic and you won’t have to worry about your retirement corpus.
3. Health is Wealth – Moving on from life insurance, can health insurance be left far behind? In the year 2012, the insurance sector reported a surge in insurance claims to 47% as compared to 15.8% in 2004 and that too in the age group of 26-35 years.
Yes, though you are turning 30, the modern lifestyle has given rise to newer diseases that do not consider age while attacking the individual. So don’t be foolish and invest in a health plan probably a family floater one to cover the entire family.
If affordability is a factor, you can start low and then add a top-up plan with your base plan for complete protection.
4) Buy a SIP (Systematic Investment Plan) – Mutual funds have become attractive with the diversification they provide and with a positive trend observed in the stock market, investing in a SIP of any good performing mutual fund house is the next best decision you should make.
Starting early gives the benefit of compounding returns where the money grows exponentially over the years.
So when you need funds for your child’s future or for buying a house or for that much-awaited Europe trip, you won’t have to look anywhere else.
Investing in multiple SIPs is ideal taking into account the quantum of savings.
An average investor uses his money and invests the rest; a good investor invests his money and uses the rest. Investing is a risk vs. returns game.
While some have made millions, many have lost as well. Learn the key characteristics of a good investor to become one.
Goal setting
A good investor will always have a clear goal. It is very important to have a plan to achieve the goals. Variations most likely tend to divert an investor from the agenda.
Having a plan of action within a defined period for a particular return on investment is a sign of a good investor.
They are prepared for the uncertainty of the market while the plans are usually made considering both the sides
Patience
Over some time a good investor creates wealth due to his patience. It is probably the finest quality to have. A good investor has faith in his plans.
They usually do not feel bad about the 10% downtick; they would rather sit tight to celebrate the 100% uptick.
They are persistent about sticking to the plans. They usually do not get into the buy and sell trends.
Knowledge
Besides utilizing time to the best, a good investor possesses knowledge of the market. He/she understands the position of funds and has researched the company’s investment strategy and philosophy.
You need to know where your money is being utilized. A good investor analyses the growth pattern of the company over the years from genuine sources.
On the accounts of the anticipations and knowledge, a good investor will have a defined plan for exit point as well.
An active learner who is open to making the right choice based on the genuinity of knowledge is a good investor.
Right Decision A good investor knows the time. They keep an eye on the current scenario in the market. They update their knowledge about market activities and growth.
Having a sound understanding of trends enables the investors to overlook their plans and decide the term of the investment.
Having an understanding of current trends and company market position makes one a good investor. They own their mistakes and learn not to make them again.
The good investor doesn’t need to jump into the trends; he/she just does what is right.
A Financial Advisor is also your wealth guardian. A financial advisor takes care of his clients as a Family Doctor.
He looks holistically at your financial portfolio & also advises the clients even when he isn’t handling them directly.
1. Do you Google the medicine when you are ill?
Magic is not in medicine. The right dose of Medicine at the Right Time with the Right Combination & Right Precaution will give you a magical recovery.
Only a skilled & experienced advisor will be able to do the magic to your financial health.
You must know the work experience & certifications of the financial advisor before hiring.
2. Would you go to a doctor whose clinic is always empty?
Finding out the size of an advisor’s client base can tell you a lot about what kind of service you can expect to receive.
Don’t forget to ask for the advisor’s client base and top clients.
3. Do you visit a Multispecialty Hospital or a local doctor for a health check-up?
You need to know the infrastructure setup of the advisor. It is also advisable to visit the advisor’s office before hiring him
4. A Part-time nurse or a Practicing Doctor?
Feel free to ask whether the financial advisor is a part-time practitioner or a full-time Financial Planner.
It can be dangerous working with part-timers as they work only for their own benefit.
5. How about a medical emergency and your Doctor is on holiday abroad?
It’s very important to know the team members and ways to reach the advisor.
It can be quite difficult for you if your advisor is unavailable while he is traveling or ill.
6. Technologically updated Doctor or old-style Practitioner?
It is equally important for you to know if your advisor is technologically updated or not. Bundles of documents and several signatures: not a good idea.
Ask for the website address, link to Mobile Application, and paperless transaction facility.
7.Would you enjoy Health check-up, Medicines & Doctor consultations at different places?
Ask for the product basket offered by the advisor. Your life will be at ease if your advisor can sort all your financial needs.
Before you hire a financial advisor, it’s crucial to understand how they work.
Will they put your best interests first, or will they serve themselves? And will they create a tailored list of recommendations, or throw a generic list of brochures at you during your first meeting?
In life, we need to take action. Today, I need everyone to start saving immediately if you haven’t yet.
How many of us have always thought about saving but think that we can always do it tomorrow? We always think that we can wait, but you will be waiting forever to be financially free too.
1. We can’t wait to go on a vacation but we can always wait to pay our mortgages.
2. We can’t wait to get rich quickly but we can always wait to learn how to get rich through time.
3. If you give yourself excuses, stop.
4. We can’t wait for early retirement but we will have to wait.
5. If it, is you, change?
6.If you want to feel financially secure, save.
7.We can’t wait to leave work but we can always wait to learn how to increase our wealth.
Trim down your spending and start saving. Otherwise, I guarantee you will regret it.
Here are some of the reasons that make NPS a go-to solution to retire rich while at the same time avail tax benefits.
Accumulate Wealth for Retirement
With NPS, you can create a corpus for retirement and secure a pension for yourself after retirement.
You can withdraw up to 60% of the accumulated corpus at the age of retirement and utilize the remaining corpus to buy an annuity to receive a pension regularly.
Get Extra Tax Deduction of Rs 50,000
Your investments in NPS make you eligible to claim an additional tax deduction of up to Rs.50,000 under section 80 CCD(1B) over and above the tax benefits of Rs. 1.5 Lakh available under section 80C.
Earn Market-linked Returns
NPS provides you an opportunity to earn market-linked returns that beat inflation and help you to accumulate a relatively larger corpus for retirement.
Enjoy the Option to Rebalance the Portfolio
Your NPS portfolio gets rebalanced once every year wherein your allocations in equity shares are shifted to debt as your age increases.
A month before your car insurance policy comes to an end, you usually get a reminder to renew your policy from your agent.
As you know, renewing third-party insurance is mandatory, according to the Motor Vehicle Act of 1988, but most of you would also look at add-on covers or own damage to vehicle policy to protect your car in case of an untoward incident.
1. Look at the type of policy you want for your car
You can opt for your damage to your vehicle that helps you stay covered against damage caused to your vehicle due to accidents like fire, theft, etc.
In case of an accident, your damage cover compensates you for the expense to repair or replace parts of your damaged vehicle.
You can also look at add-on covers which include depreciation cover, passenger assist, consumable cover, engine safe cover, GAP value cover, key loss cover, and roadside assistance cover.
2. Read policy wordings
Policy wordings are different for different car insurance policies. So, the cover you have for the damage to your vehicle will be different from an add-on insurance cover.
Choose the type of policy you want for your vehicle and read the policy wordings carefully before you buy it.
3. Renew your policy on time
Many policyholders tend to not renew their existing policy and they lapse. According to the new IRDAI rules, if premiums aren’t paid on time, policyholders stand chance to lose no claim bonus (NCB) that they accumulated when the policy was in force.
To sum it up, while third-party car insurance is mandatorily needed to be renewed annually, you also need to constantly check on the policies you have purchased for your vehicle to ensure you don’t struggle in case of damage.
4. Use our customer support
We are here to help you and if you have any queries about your policy, so just contact us.
Our objective is to make the motor claims and renewal process as efficient and hassle-free as possible for the policyholder.
Disclaimer: For more details on risk factors, terms & conditions please read the sales brochure carefully before concluding a sale. The discount amount will vary subject to vehicle specification and place of registration.
Got a term plan for your family? Or maybe you’re planning to take the term plan in a few days.
If you are, good for you! One of the biggest questions, every person considering term insurance has, is – “Should I take the cover for the maximum period?”.
We provides coverage up to 85 years of age. or 20 25 30 35 40 years. I am confused about which policy term is better to get maximum benefits?
Just like him, hundreds of investors have asked me this question over and over again, and I tell them, “Just take it only until you reach 60 years of age.”
And they happily ignore my suggestion; as if I am crazy, suggesting this to them. The “Insurance only till 60 years” looks kooky to them – kind of a “wrong deal” and they want to get “maximum benefit” out of the term plan.
“The chances of my family receiving the claim amount is higher when I am covered for long” is the common thought process of every person who is in the mad rush of buying the highest possible tenure.
Trust me, that’s flawed thinking and I will explain why today. More than a sermon, think of this article as a discussion, where I put some points in front of you and you reflect and ask yourself – “Does it make sense? or not?” and then make your own decision. So here are those 5 reasons– why you should not take Insurance till the age of 85 years or more
1. You don’t need it beyond your working life
You need to ask yourself the question – “Why am I taking Life Insurance?” and the answer is – “Because right now, I don’t have enough net worth, which will help my family if I am gone” or in other words – “Because my family is financially dependent on me.”
For a person who is not earning and does not bring money home, his death will cause family only emotional loss; not financial loss. Hence, logically you need to cover yourself through a life insurance product, only for the time you are working and others are financially dependent on you.
2. You will have “probably” have enough wealth by the time you retire anyway
Stretching the 1st point, if you are taking life insurance cover until you are 75-85 years, will you need it at that time? Do you feel that you will have any reason to have a cover of 1 crore that time (after 30-40 years)? I am sure (more confident than you), that you would have completed all your financial goals by that time, you will have your own home by that time and you will have done everything in your life by that time.
Your focus area at that old age will be very different than what you focus on right now.
To understand this point, you have to stop for a moment and go into 2040-50; when you are retired and close to heaven’s door.
Are your children financially dependent on your income – which does not exist? Is your spouse depend on your income? You must have already accumulated enough wealth by that time and you must be getting some income out of that.
Your death has nothing to do with family cash flows at the time.
3. The premium factors in your tenure already
Most of the people who feel that they are smart enough to take a term plan till 85 years, forget that on the other side is a professional business running for decades now.
They have hired people who are 10 times smarter, who design products (they are called Actuaries) that generate large profits for companies and not investors. Life Insurance is a “for-profit” business. They design things so that they earn profit.
If a company allows you to make a plan that lasts until you turn 85, why have they done that? Why did they allow that to happen? The premiums they charge already factor in everything. You pay premiums to get that term plan, it does not come free!
4. The value of your sum assured is peanuts later
I hear it most of the time – “I am taking the term plan till 85 years so that even if I die, my family will get the money. So, the higher the tenure, the higher the chances of making money.”
But they forget that by doing so, they are helping the insurance guys make a profit, but let’s say you die at 70 years. Celebrations! Your family will get that 1 crore, which at this moment sounds good, but will not be worth a lot that time.
Let me show you the mirror that lets you look into the future
Let’s say you are a 30-year-old guy, and your monthly expenses are 40k per month. You say to yourself, “Let me take that term plan worth 1 crore so that in case, I die my family can get 1 crore which will provide them some good monthly income.”
It would be a very good number if you die early in your life! With each passing year that 1 crore will be worthless. If you die the next year of taking the term plan, the worth of that 1 crore is pretty much the same, 1 crore.
But if you die after 10 yrs, that 1 crore will be worth 50 lacs in today’s world. So, getting 1 crore after 10 yrs is the same as getting 50 lacs right now. Are you getting my point? The money you get in the term plan is a constant number, not linked to inflation!
So, imagine you have taken the term plan till 85 years and you die at 70 (after 40 yrs of taking the term plan),
what is the worth of that same 1 crore at that time? Hold your breath! It’ll not more than 6-7 lacs assuming an inflation of 7% and even if inflation for the next 40 yrs is a small 5%, it would not be worth 15 lacs today! So, when your family gets that 1 crore after 40 yrs, it’s kind of worthless.
No one would be depending on that money anyway; it’s just a bonus on your children’s inheritance money!
Act like a real informed and smart investor
I have been seeing this madness for many months now and was constantly wondering why people are focusing so much on this small thing called “long tenure” in the term plan.
I see investors abandoning one insurance company for another just because the other company is offering a term plan for 75 years.
You are allowing yourself to fall into a trap if you do this. If you have already taken the term plan for 85 years, do not worry … do not cancel it, just let it run its course.
Stop paying premiums when you feel that your family can be taken care of, by the wealth you have generated.
If you are planning to take a term plan right now, take it for as long as it takes you to retire, probably till 55 to 60 years, but not beyond that.
Would be happy to hear your thoughts and your views on this topic! You have taken the term plan for very high tenure.
The recent selloff in the most popular cryptocurrency -the Bitcoin, is a wake-up call for those investors smitten by astronomical returns provided by this unofficial unit.
The thrashing received so far highlights the importance of sovereign currencies and the need to understand the risk associated with cryptocurrency.
Although, it is desirable to expect volatility in a speculative risk asset, taking an informed decision based on the degree of uncertainty overrides the benefits on offer.
Uncertainty over its value shortly amid such high volatility limits the need for bitcoins and other cryptocurrencies as a medium of exchange.
Bitcoin, the largest cryptocurrency by market value, on Wednesday had plunged 30 percent to hit the $30,000 level, weighed down by China’s regulations on crypto trades and Tesla’s decision to suspend vehicle purchases using Bitcoins.
In the last 24 hours, Bitcoin touched an intraday high of nearly $40,000 and a low of $30,000. Bitcoin is still over 200 percent up from September 2020 and 27 percent so far this year.
This shows the huge amount of volatility that persists in the crypto market as against the traditional currency market.
“A nearly 40 percent dip in bitcoin price from its all-time high looks dramatic but is normal in many volatile markets, including crypto, especially after such a large rally,” said Avinash Shekhar, co-CEO of ZebPay.
Such corrections are mainly due to short-term traders taking profits, while long-term value investors might call these lower prices a buying opportunity.
“Technical analysts would call this a test of the support level around $40,000. Neither type of investor would say that tweets are the underlying cause. Investors should invest in education first.
Research the underlying value of Bitcoin, Ethereum, and other crypto-assets as you might look at a company’s information before buying stocks.
Use strategies like rupee cost averaging and SIPs to more confidently maneuver through volatility and take a long-term view,” Shekhar added.
Nithin Kamath, founder, and CEO at Zerodha said he has no exposure to cryptocurrencies, “But the rules for investing are the same: Reduce percentage exposure if the risk is high, and do not average down.”
According to Sumit Gupta, founder and CEO—CoinDCX, investments in cryptocurrencies too should be driven by financial situation and goals.
For those looking to diversify and grow their portfolio, Gupta believes that a long-term approach is warranted to benefit from the potential rewards of blockchain technology and its positive impact on cryptocurrency prices.
On the other hand, for immediate goals, he thinks that adopting a short-term approach with a clear risk-reward ratio is beneficial with quicker potential returns.
“Wisdom would point towards thorough research, entry near support levels for the said cryptocurrency and ensure to periodically review holdings while maintaining a strict stop loss based on risk appetite,” Gupta added.
In India, gold has traditionally been used as an instrument of saving along with its use in jewelry for marriages and festive occasions.
Over the last few decades, gold coins and bricks are being used as a saving medium. In general most of the gold that is imported into the country was rarely put to use regularly.
To take advantage of this habit, the government came out with a novel scheme that would incentivize gold saving as well as prevent the import of gold.
The government decided to launch a Sovereign Gold Bond scheme where instead of purchasing gold in physical form one can do so in electronic form, just like shares.
Date of Issue
The date of issuances shall be as per the details given in the calendar below:
Tranche Date of Subscription Date of Issuance
2021-22 Series VII October 25 – 29, 2021 November 02, 2021
2021-22 Series VIII November 29- December 03, 2021 December 07, 2021
2021-22 Series IX January 10-14, 2022 January 18, 2022
2021-22 Series X February 28- March 04, 2022 March 08, 2022
What is the Gold Bond Scheme?
Sovereign Gold Bonds, hereafter referred to as SGB, are government securities denominated in grams of gold. The Bond is issued by the Reserve Bank of India on behalf of the Government of India.
Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. These bonds act as a proxy for holding physical gold.
Why are SGB called Bonds?
SGB’s are just like any other bonds as the bearer of the the instrument is entitled to interest payment.
The Bonds bear interest at the rate of 2.50 percent per annum on the amount of initial investment.
This interest will be credited semi-annually to the investor’s bank account and the last final interest will be payable on maturity along with the principal. The tenure of each SGB is for eight years.
At what price are the SGBs sold?
The nominal value of SGB will be fixed based on a simple average of the closing price of gold of 999 purity, published by the India Bullion and Jewelers Association Ltd, for the last 3 business days of the week preceding the subscription period.
The price of gold for the relevant tranche will be published on the RBI website two days before the issue opens.
What are the advantages of SGB over physical gold?
The risks and costs of storage are eliminated.
The SGB offers a superior alternative to holding gold in physical form.
The bonds are held in the RBI or Demat form books, eliminating the risk of loss of scrip, etc.
SGB is free from issues like making charges and purity in the case of gold in jewelry form.
These bonds carry a sovereign guarantee since they are issued by the government.
The SGB can be used as collateral.
The buyer gets paid interest on the money invested, which is not possible when holding physical gold.
Who all are eligible to invest in SGB?
A resident Indian as defined under the Foreign Exchange Management Act (FEMA), 1999 is eligible to invest in SGB.
The set of eligible investors include individuals, HUFs, Trusts, Universities, and charitable institutions.
Joint holding and minors are also eligible to invest in SGB. If an individual investor changes his residential status from resident Indian to non-resident he may continue to hold SGB till early redemption/maturity.
What are the tax implications of investing in SGBs on both – interest and capital gains?
Interest on the Bonds will be taxable as per the provisions of the Income-tax Act, 1961.
The capital gains tax arising on redemption of SGB to an individual has been exempted.
The indexation benefits will be provided to long terms capital gains arising to any person on transfer of SGB.
Is there a minimum and maximum limit of investment for SGB?
Yes, the SGB is issued in denominations of one gram of gold and multiples thereof.
The minimum investment in the Bond shall be one gram with a maximum limit of subscription of 4 kg for individuals, 4 kg for Hindu Undivided Family (HUF), and 20 kg for trusts and similar entities notified by the government.
Each member of the family can buy 4 kg of SGB in her or her name. In the case of joint holding, the limit applies to the first applicant.
Is premature redemption allowed?
While the tenor of the bond is 8 years, early redemption or encashment is allowed after the fifth year from the date of issue on coupon payment dates.
The proceeds will be credited to the customer’s bank account provided at the time of applying for the SGB. The SGB investor also has the option of selling the bonds prematurely anytime on stock exchanges.
Such sales would attract capital gains tax at the same rate as for physical gold.
Everyone wants their money to grow to accomplish their financial goals but the risk of losing the hard-earned money has confined people in a “let it be” zone. Money won’t grow sitting idle in your account.
Don’t worry, there is a way to invest your money with low risk and high returns. Confused? It is none other than a Systematic Investment Plan (SIP) in mutual funds.
As a beginner, you need to invest your money in a scheme with low risk and high returns. And SIP in Mutual Funds is the one that can provide you with such comfort.
What is a Systematic Investment Plan (SIP)?
It is a method of investing in mutual funds. A particular amount of money (minimum Rs. 500) is invested every month to mutual funds for the period you want to invest. It involves very low risk and due to this reason, in little time, it has become the top preference of newbie investors.
Reasons to invest through SIP:
Diversified Investments- Investing through SIP in mutual funds offers you an advantage to invest in different assets. It reduces the risk and gives you higher returns. As a newbie, you don’t want to lose money in the first go.
Therefore, Investing in SIP does not only give you risk-free returns but also provides a diversified portfolio.
Compounding Effect:
SIP in mutual funds is much more profitable due to the compounding effect. Compounding effect means the returns on reinvestment. The returns you get from your investment, those returns are reinvested and this way, you get returns more than you estimated.
Rupee Cost Averaging:
This factor plays a big role in fetching maximum returns. Due to fixed regular investment, it averages the amount of one unit.
When the market goes up, you buy less; when the market goes down, you buy more. It is also one of the things intelligent investors do and Guess what? You don’t even have to engage with daily market updates. It all happens itself.
Conclusion:
Risk follows investment; they said. Lower risk can give you higher returns; they never said.
Investing in SIP is easy. You don’t need to take daily market updates to invest. Start your SIP once and enjoy stress-free high returns.
