The Big Fat Indian Wedding

In India,spending on a wedding is equivalent to celebrating a festival. It involves lots of preparations, invitees and above all, it is important to ensure that none of the events are less attractive than the previous ones. So, as a financial planner whenever we receive wedding plan as a listed goal, we ask our clients to mainly ponder on following points to decide the cost estimate. 

Main expenses related to the wedding are as follows: 

a) Venue of Marriage – It is the one of the one of largest expense involved the ceremony. The cost of venue depends on following factors:

·Number of members to be invited in the program.

·City of main ceremony like metro cities, tier I cities or a destination wedding.

·If marriage takes place in a community hall or place of worship like church or gurudwara then the cost is limited and more or less like a donation/ charity.

·Beyond the main event any major program involved can be held back at home, building terrace or a small party plot or banquet depending on the members involved. Usually the invitees are less in these programmes than the main wedding day.

b)Entertainment – In case, if you intend to keep some musical programmes ahead of your wedding ceremony, define the requirement very clearly like

·You need to hire a professional dancer to choreograph the event.

·Call in a troupe of dancers for the programme.

·Do a small self designed skit.

·The musical sound systems required or if you want to have a bachelors/hen party, consider the DJ costs too.

c)Catering – Food is the most discussed cost of any marriage ceremony. It is necessary to allocate budget to this expense as it has maximum amount of wastage at end of all. So, numerically plan well the numbers. A well known caterer or a leading five star chef entourage could cost more than comparatively less known local food supplier. Also, include the after ceremony sweets in the cost. 

d)Clothing & jewellery – The expense on clothing, jewellery is largely contributable to the wedding trousseau, which has both high emotional value and also a huge monetary price tag attached to it. The cost is primarily more on the bride’s side or even could be evenly distributed between both the partners. The costs can be anything from regular tailor stitching expense or a huge label designer wear. 

Beyond, these major expenses, there are other expenses like the photography expenses, the honeymoon expenses, home renovation expenses or even grooming expenses to be taken care for. 

How do we plan for it?

Planning for an actual wedding usually starts six months before the event. However, what it required to be started years ago is the savings to spend on this event. Although even a personal loan can be taken to fulfil the goal but it is recommended that EMI should not extend beyond a certain percentage (around 5% of your personal monthly income).

Long Term Planning

·Planning a goal of wedding expenditure should be initiated only after planning for your primary goals of retirement and children’s education.

·If there is any jewellery expenditure anticipated to the wedding it is best to earmark your physical gold for the goal and make timely additions in it.

·Out of your stock portfolio, identify four –five scripts with a decent growth for your goal. It could help to match the speculative nature of the expense.

·Also, starting an NPS/PPF in name of child could serve as good booster in case to balance the risky assets.

Short Term Planning

·Fix the venue at earliest to avoid last moment price war.

·Usually the venue caterers are fixed making the cost of marriage more viable and sometimes, zero deposit on banquets. Always book with caterers a number less than the real number of guests.

·Make the travel booking for honeymoon in priority to benefit from fare discounts.

·If you prefer trendy clothing, its’ recommended to buy only the wedding day clothes and not shop for entire trousseau. The same can be gifted bought during the coming time frame.

·Make major gold investment in raw/tradeable gold that can be used going forward by the couple.

·Home renovations if not necessary, should be planned for a later stage of wedding. It helps as the couple can actually make changes as per their needs.

So, whenever you now plan for your or for your dependent’s wedding, please ensure that the expenses are well calculated. Lastly we would like to say, that it is a discretionary expense and sky is the limit for the dream wedding. But this dream for a day should not become a sore pain for your life. 


Regards
Saarthi Financial Planners
www.saarthifp.com


#FinancialPlanning #FP #CFP #SaarthiFinancialPlanners  #SaarthiFP #SaarathiFinancialPlanners #SaarathiFP #SarathiFinancialPlanners #SarathiFP   

Plan for your vacations

The new song “hafte mein chaar shanivar hone chahiye” from the just released Hindi Bollywood movie “All is Well” truly reflects the state of mind of all working population. Working around the clock for 365 days has made us a ticking time bomb waiting to explode until we plan to give ourselves a break from the regular grind. The break can be any distraction like hiking, trekking or an enrolment at spa wellness resort or even a weekend detour to a local hill station can be refreshing to recharge our tired minds.  To take a break from our hectic schedules is very necessary as it helps in various aspects including improving personal health, family bonding and even improves our performance at work. Out of the major goals listed by our clients, one of the goals is to save for a vacation. Although, one tends to take regular small break but to go on an exotic vacation, one needs to plan it well on monetary terms. What are the aspects one should consider in this plan?

a) Fix the time of travel/ season – Usually a family plans a vacation taking into account the maximum number of common holidays available at work for them and at school for children. So, it is necessary to design your itinerary well in advance as it is most possible to be a busy season at all tourist places. Do a basic short listing on your desired places. From the shortlisted destinations you can work out the probable costs. It is observed that usually in an impromptu weekend plans we tend to spend more. Also, a group tour is less expensive than a customized one.

b)  Budget allocation – In every cash flow we analyse, we always suggest to earmark holidays spends under the discretionary expenses on anticipated or actual basis during the last year. This includes all annual visits to your native village, your social visits outstation or even your small hiking trips. Budget acts as a double check to plan your trip as well as limits your spending on your travel. 

 c) Supplementary expenses – The calculation of expenses on a trip should not be limited to the actual journey expenses or stay cost. It should also include expenses related to food, shopping, tips and visas, in case of foreign travel. Additionally for a foreign travel, it is advised that you take necessary travel insurance for your entire family. 

d) Deal or no deal – Today we come across various online website luring us to new hotels and places with attractive discounts to try them out. They give you deals like free meals, additional one day’s free stay and discounts on their spa services or make your stay at their group hotel free in next six months. Don’t get tempted by the word free. It is best to check the property on your own or follow some acquaintance’s experience before making a final decision. At least, check the reviews of past travellers on aggregator sites (websites like tripadvisor.com) to get an unbiased review. 

e) Consider the inflation – if you plan to make a huge trip in terms of monetary value, it is best to plan at least two years before the actual travel date.  So, it will help your financial planner to help you get sufficient time to allocate the minimal possible amounts every month for your planned trip. It is necessary to consider the currency impact on your trip. Like an increasing pound value would increase your travel expenses on food, entry fees at tourist spots or even shopping cost.

So, how do you plan for a holiday goal?

  Lets’ calculate the cost for one person travelling from Mumbai to Switzerland on 6 night tour package would approximately cost as follows: 

Break Up of Expenses	Approx Expenses	Nature Of expense
Travel Cost ( To & Fro)	Rs 44,000 per person (at least 6 months prior to travel and with lowest duration)	Major & subject to deals
Hotel Stay	Rs. 10,000 – 12,000 per day (double occupancy basis)	Major & subject to season of visit / deals
Food Spends during trip	Rs. 3000 -5,000 per day ( by trams)	Discretionary and variable on family size
Inter city Travel – in case of personal travel		Discretionary and can be avoided
Shopping ( pre & during journey)	Maximum 30% of travel cost –depending on choice for luxury goods and souvenirs	Discretionary
Any Travel Insurance	Rs 2000 – Rs 3000 per person (varies with age)	Necessary and recommended
Visa Cost - Schengen visa	Rs 5,000 per person	Necessary and fixed
Others	Not more than Rs 50,000	Discretionary

Source: www.plannedtraveller.com – helps you plan your travel in an informed manner

So, plan your holiday and most importantly, plan to save for it.    


Regards
Saarthi Financial Planners
www.saarthifp.com


#FinancialPlanning #FP #CFP #SaarthiFinancialPlanners  #SaarthiFP #SaarathiFinancialPlanners #SaarathiFP #SarathiFinancialPlanners #SarathiFP 

Design your own post retirement income

The next feasible step after planning your retirement corpus is to plan to earn the desired regular income post retirement. It is possible that the expected amount collected on your last working day may not match with the required sum but the bigger issue is to leave that sum unplanned for later years. So, the work of calculation does not stop at retirement but begins on retiring.

a)    Calculate the tax liability on your collected corpus

The amount to be received on your retirement is never on one particular date, it is received over a time frame of year or so. Like your EPF proceeds are credited in month’ time of your retirement or your PPF gets credited on 1^st week of April. The Bank FDs and other bank products have their own unique maturity dates. So, the best possible manner to understand your tax liability is to break out the receivable maturity funds as per financial year and taxability.

Asset	Tax Liability
Public Provident Fund	Not taxable
Employee Provident Fund	Not Taxable (beyond five years of withdrawal)
Bank FDs	Taxable
Shares Dividend	Not taxable
Equity Mutual Funds	Not taxable
Tax free Bonds	Not taxable
Gold ETF	Taxable

b)        Study your asset list

Around the retirement period, it is best to identify your assets as income earning assets or assets held as only for investment value. It may be possible that you hold many Bank FDs but till now it were only a easy way to invest or a PPF seen as a tax saving haven. But now post retirement it is necessary to make a call on whether the asset should be held for any longer. If not, the same can be used to generate regular income going forward. Like holding a huge portfolio in shares is not helpful for retired individual as the dividend yield is very low in them. Similarly, holding a real estate property if you are not the end user of it is not a good idea if yields no rental income. Also, many people have huge amount of physical gold or ETFs in their portfolio so unless it is earmarked for some end use, it will yield no value to you except adding to your balance sheet totals.   

c)         Study Your Various Investment Options

There are various regular income options to support the financial requirements of every individual, some of the popular investment route are:

	Monthly Income Plans – Mutual Funds/ Post Office	Senior Citizen savings scheme	Bank/Corporate FDs	Pension Funds – Via annuity
Lock In	No such Lock in	Five years lock in	Tenure based lock in. Bank FDs can be broken at a premature date	Lifetime
Taxability	Taxable	Taxable	Taxable	Taxable
Minimum & Maximum Fund Requirement	No Limit	Maximum – 15 lakhs each individual	No Limit	No limit
Expected rate of return ( average based on current returns)	7%	9.2%	9% -9.5%	6% -7 %

• Beyond this a contingency fund providing for any huge medical emergency should be created and kept ready, via investing in liquid mutual funds.

• Also, if you have a empty property it can give good rental yield (although the average rental yield is around 3-4%) if you don’t intend to sell the same due to emotional value attached to it or want to leave it for your nominee.

d)    Transfer of assets to divide the income receipts

At the early stage of your working life make sure that required investment is divided between you and your spouse so the tax liability also gets distributed among both of you on retirement. This ensures that you fall under low tax liability or may enjoy a nil amount of tax due to higher tax slabs for senior citizens (above 60 years).  


Regards
Saarthi Financial Planners
www.saarthifp.com\


#FinancialPlanning #FP #CFP #SaarthiFinancialPlanners  #SaarthiFP #SaarathiFinancialPlanners #SaarathiFP #SarathiFinancialPlanners #SarathiFP