19 September, 2017

Park your money in liquid funds to get higher returns than on savings account.

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Here are some of the queries in "Ask mint money" :



I have read in many articles that liquid funds are better than bank fixed deposits if you want to invest for a short term. I wish to start making some investments in mutual funds and begin with something that is less risky. Kindly advise on how I should choose a liquid fund.
—Marion Saldanha
A liquid fund is one where the underlying investments are real short-term papers (up to 91 days) like T-bills, government securities, overnight debt securities, and others.
The credit rating of these papers is generally high and due to the short tenure nature of the underlying funds, the risk is low. These funds, on an average, are offering about 6.5%, which is significantly higher than what savings accounts are generally offering, which is 3.5%. Hence, liquid funds score on the return front. Liquidity is high and assured as mutual funds are the counter party. Choosing a liquid fund should not be a difficult exercise at all. Since all liquid funds are low-risk, the only real differentiator would be the expense charged, which would reflect in the scheme performance. Lower the expense ratio, the better it would be for you.

I am 30 years old and want to start planning for retirement. My retirement is 30 years away as I will retire at the age of 60 years. What factors should I keep in mind?
—Arun Jaipal
Thirty years is a fairly long period in which you can plan for your retirement. The first thing to keep in mind is to resolve never to touch the money kept aside for retirement, for any other purpose. This is usually the problem as retirement is a long way off and a holiday seems too exciting to pass up for something that is going to come 30 years hence.
At 30, you could take a fairly aggressive call on your allocation to equity as your risk capacity would be good now. But risk tolerance, even for a 30-year-old, can be anywhere between low to high on the slider scale. Hence, you need to assess that before allocating resources among asset classes.
Consistent and disciplined investments throughout the period would ensure accumulation of a good corpus. There should be a certain sum going towards retirement every month and over time, this figure should go up. As the salary increases, one should also augment allocations towards retirement, as necessary. Similarly, any bonus, ex-gratia, or incentives, which one may receive, should also be used to augment the retirement corpus as may be necessary.

Also read other articles on Retirement:

I took an education loan for my higher studies . I wish to finish paying off my loan in the next 5 years. I have to pay back a little less that Rs5 lakh in all, including principal and interest. I earn Rs80,000 a month post-tax and want to save in order to be able to pay off the loan in 3 years. Where should I invest?
—Nitika Bahl
Education loan is not a high-cost loan if one takes into account the tax breaks given on such loans. You would be aware that the entire amount you pay as interest would be available as a deduction. Suppose your education loan interest is 12.5% and you are in the 20% tax slab, your effective tax would be about 10%, which is not very high.
Hence, you could even look at allowing the education loan to continue and invest your money in avenues that have the potential to earn more than this. However, if you have set your mind on paying back the loan in 3 years, you may probably have to invest in debt funds only to accumulate a corpus for that purpose. I am not suggesting equity funds as the 3-year period is a short time frame for equity.

Author  -   Suresh Sadagopan  | Founder | www.ladder7.co.in

#SureshSadgopan #FinancialPlanner #FinancialAdvisor #Fiduciary #LifePlanning #FeeOnly #HolisticAdvice #Ladder7





12 September, 2017

Enjoying the journey called life!

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Oh God. It’s Monday and I need to get ready for work, thought Ravikiran. He dragged himself out of bed and got ready for office, 45 minutes later. After a couple of cups of coffee, he was feeling a lot better now. Driving to the office, he was thinking about his life…
He had joined a good Indian multinational as a trainee in the Sales function. He has risen to the position of Sr.Vice President - Sales in the same company, in a matter of 16 years. He was the blue eyed boy of the then MD and was fast-tracked in his career. RaviKiran was no slouch - his performance was fantastic and he was always an outlier.
He had all the trappings of success… he had his own home in a tony neighbourhood, his wife & kids were well provided for & he is virtually rolling in money. Ravi was well regarded in his office for his professional competence and his affable manner. All in all, he was in the pink and should have been delighted at his wonderful placement in life. Instead he keeps feeling a vacuum & has this sinking feeling. He keeps thinking as to what he is doing with his life… where it is all heading... he feels drained these days & derives no satisfaction, even when his department is setting water on fire!
His lack of vigour & unhappiness was a mystery even to himself. He was wondering as to why he was feeling that way. When he discussed this in the passing with his wife she suggested him to meet her friend’s brother - Seshadri. Seshadri was a Life Planner and Geeta, Ravi’s wife, had heard good things about him. She understood that Seshadri may be able to help Ravi.
Ravi fixed up a time with Seshadri. In the initial meeting, Seshadri explained to him the concept of life planning. “Life Planning seeks to unlock the deepest yearnings/ longings & seeks to deliver the dream of freedom - a life that one has always dreamt & felt was impossible to attain. The idea here is to live a life imbued with meaning, values and rich potential. Inshort, living a life that you can’t have enough of and which you eagerly look forward to every single day”.
That seemed too good to be true. But, Ravi felt it was worth trying, considering the dreamlike payoff.
Ravi had to answer certain questionnaires, which gave him some insight & clarity. Seshadri understood where Ravi was and explored more about his motivations, his deepest desires and what would be an ideal life for him.
Ravi’s ideal life was one where he wanted to slow down a bit and have time for his passions. He has multiple passions - he is an environment evangelist, a person concerned & interested in indigenous arts & crafts and has a passion for music.
Seshadri had understood what would make Ravi tick and probed further. Ravi had an interest in indigenous handicrafts & he told excitedly about how wonderful it would be if he could start a firm in areas that interest him. Seshadri asked Ravi to elaborate this vision a bit further. Ravi got very excited. Ravi said," If I can identify a place on the seacoast with a beautiful mountain backdrop, that would be an ideal place to live and work from. Ravi was an avid trekker & he felt such a place would help him indulge in his passion and be healthy. Being environmentally conscious, he also expressed his keenness to rejuvenate denuded mountain slopes by planting shrubs & trees. Ravi was mighty excited at the life he was now able to clearly visualise.
Seshadri told him that there are many beautiful places like what he described all across India & he could virtually pick & choose the place of his interest. Ravi wanted to be near where some indigenous artisans lived & created their handicrafts. Ravi had visited Orissa & felt that there are good places in Orissa where he can locate his firm near where the artisans worked. While talking of all these, he came up with the idea of setting up kiosks in malls & operating independent shops in tourist places to sell the wares. Ravi also wanted to sell these handicrafts online, which will give reach and scale.
After this discussion with Seshadri, Ravi was visibly happy. He was grinning and a strange light gleamed on his face. It showed excited anticipation of living a life with a true purpose. He was walking on air, literally.
The next time they met, Ravi brought up a few problems like what will his son do, if he lives in a remote area. Seshadri suggested that since his son Hari, being in 8th standard can be admitted to a boarding school. Ravi was not sure if Geeta would agree. The other problem that Seshadri raised was about cashflows. Ravi had good investments and assets. He said that he has no problems in selling some assets to fund his business. Ravi was optimistic that cashflows from the business would start from year 2. Ravi had an idea for corporate & festival gifting, which if successful, would bring in good money. Seshadri revised the cashflows with the numbers shared by Ravi & showed it would work. Ravi was happy to have surmounted most obstacles. But, he still had to find his ideal location. He wanted to take off for 15 days and find a base.
Ravi was fired up. Seshadri showed him the plan in the next meeting which confirmed that the plan would work in the new avatar. Ravi confirmed that Geeta was game to put their son Hari in a boarding school. The only thing was to identify the location where they would drop anchor. And another… his MD was aghast when he heard that Ravi might be leaving. Ravi softened the blow saying that he would spend time - 8 days a month, for upto a year in which time they can find a replacement. His MD had reluctantly agreed.
Ravi’s days have started getting exciting. He had gone to travel sites, arts and handicraft portals and pored over for suitable locations. He was able to identify half a dozen locations he needed to check out. He was so excited that he went on a road trip almost immediately with Geeta, to look at these places. They hit the bulls eye in the second place itself. They found their ideal destination in Orissa. The destination was Puri. There were no mountains there - but that did not matter. Geeta instantly okayed it as her Lord Jagannath was there. It worked wonderfully for Ravi too, as Raghurajpur was not too far, which is a hub for Pattachitra paintings and other handicrafts. Ravi went on a recce to Raghurajpur and came back suitably impressed, with a couple of paintings as souvenirs. Geeta could see how excited he was - he did not stop talking about the painters, the beautiful & intricate pattachitra paintings, how he went to their home, had food with the artists etc. Geeta was happy to see this Ravi.
Seshadri learnt from Ravi that the location was to be Puri. Seshadri did a few last minute touches to the plan and expressed his satisfaction. Ravi will be able to live this second innings & love it.
All this is part of the EVOKE process of life planning ( as propounded by George Kinder ) in which the planner and client find out what is exciting for the client & see how the client can pursue his heart's core yearning. Life becomes exciting when it has a purpose. It’s a wonderful thing to behold when the client gets back their mojo and the planner is able to guide the client in the process & help the client live the life they truly always wanted & will now be able to live and cherish.
From here on, the client will live a life they truly dreamed of and wake up to one exciting day after another. That’s infact the true reward a life planner would look forward in an engagement - a client whose torch has been lit & is enjoying every moment of this journey called life!

Article first appeared on Linkedin:
Enjoying the journey called life!

Author  -   Suresh Sadagopan  | Founder | www.ladder7.co.in



#SureshSadgopan #FinancialPlanner #FinancialAdvisor #Fiduciary #LifePlanning #FeeOnly #HolisticAdvice #Ladder7