Share the load

A very famous FMCG company tried to woo many of its female potential customers toward their product coming up with the tag line of “Share the load”. India has a family oriented culture with the oldest leading the way and the men raising the battle. Decisions are hardly taken through the route of discussions and mutual consent. We have always followed the dictum “Experience overcomes knowledge”. Not any longer though. It is time to speak up and share the load. Toiling all alone will not take you to any great heights especially in your money matters. It will only worsen your case further to de-motivate to stop trying something new. It is time to ask for help and make life simpler for ourselves. It is not necessary to bring the gender or age in between in these cases.

1. The Parents & Children Saga- if you are a retiring/single parent living on your savings then there is no harm to ask your working / studying children to contribute to your home expenses. It is easy to work out areas where expenses can be distributed and the clear path of authority is maintained. Accordingly, if required then encourage children to sponsor their own higher education and lifestyle expenses. Try to inculcate the basic need of health and life insurance requirements to them at early stages. There can be chances where children should take the onus of exposing the parents to new ways of investing money and teaching them the tricks of better savings. Like encourage them for equity investments or explain the ill benefits of market linked insurance products. Try to keep the money matter always as transparent as possible. In case if you don’t intend to take any help from your children, you can design your assets in such a manner that you can get maximum benefit out of it. Something like reverse mortgage.
2. The spouse story – Every individual should treat their spouse on same footing as self with regards to money matters. If not then the trifle arguments over spending and expenses could lead to huge fights. Speak about your way of saving and spending. Take your spouse’s decision in consideration for every small detail including – asset purchase, jewellery mortgage or even real estate investment. This clarity ensures that your spouse is not cheated by anyone in case of any fatality occurs to you. The best relation to share the load is of a man and his wife. They share emotions, relations then why not even economics. The harder way is to lie to them the whole life rather adopt for simple truth at the very beginning. If you are the DINK couple then it is must that both partners are active decisions makers in all matters.
3. The Friends truth- it is difficult to have lifelong friends especially if you are not exactly a social media buff. If you are the one, who is happy with his/her handpicked friends then it would be easy for you to be obligated by any small request made by your friend. It is not necessary for it to be emotional support or talk- it could be monetary. So, if you have any such week Achilles heel then quickly resolve this year to stay away from any such act doing. Even if you are involved in such transactions please ensure that you make a written affirmation of the same. It would be helpful for times when friendship is not so great.

Same could also go between siblings, where one could find themselves being made the scapegoat for all needs. It is necessary to voice your opinion and clarify your role. Any monetary matters are different from personal talks. There is a need to record them in a right manner.  

As your financial guide, Saarthi would also advise you to keep safe distance from weak emotions on finances and be opinionated in your thinking. 

Thanks and Regards

Team

Saarthi Financial Planners

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Email: saarthifp@gmail.com

A simple DIY for independent investors

Many times following the policy of “Jack of all, Master in none” we undertake multiple new tasks under our belt to reduce the daily interactions with numerous people. We want to try the DIY options and let go the hassle of talking to experts in different fields. We want to try new avenues of self learning and make the most of newest technology. To share with you one such incident, I spoke to one of my client asking them to invest in the list of given mutual funds in line with his goals. He asked me the reason for this allocation, I explained him the entire allocation thinking that he wanted to understand the given advice. However, later when he sent me the list of his investment around 50% of the allocation was made in the similarly mutual fund of my advice but not in the given proportion. He had taken the liberty of distributing too much dependency in one particular fund leaving the other one to petty amounts. Of course, when I asked my client the reason for it, he simply mentioned to me that I have personalized mutual fund software that devises the portfolio allocation for me based on my monthly income and fixed goals. I was shocked for a moment not realizing that I was not able to make my client realize the value of human input over software output. 

Over years, we have come across many prospects, which were willing to subscribe to various software packages and applications to help them their personal finances but not the same with their Personal Financial Advisor. They trust more of machines over human. It is fine to advocate the error free usage of software over human interface but there are certain limitations which should not be ignored. Today we would like to discuss some of the simple things any DIY investor should check in his personalized advisor tool.

Some check points 

·         Source of data- the software is dependent on human to add information for the latest investments/ SIPs or even information regarding the mode for payouts. It could be possible that we may miss out any on particular entry and not be able to get an accurate output of the investment valuation. So, it is best to set a fixed time – like particular day, time or date on which the information is added to the software. This helps to avoid any lapse in entry to particular investment.

·         Return rates – the future valuation is dependent on the software fed return rates. If these rates are not to the mark or updated, the results could be fictitious and unrealistic. So, it is essential to understand how is the rates is fixed.

·         Investment valuation - most of the software are cloud based and get automated directly but there are times when a user needs to update the data. So, please ensure that the software follows the required methodology.

·         Security parameters- there are usually two levels of security parameters ensuring that the client data is encrypted. If you are linking your savings account to the software please take care that your personal data is not compromised.

·         Reports generated – it is always better to have a bird’s view of your investment valuation and beyond that give you a recommendation on your goal achievement.

·         Recommendations and advice- An advice should be customized in line with your goal and age requirement. It should not be that the particular investment is adjudged on its individual capacity. Make sure that the entire investment goes well with your risk appetite and requirements.

·         Timely upgradation – it is better to avoid trial versions of your preferred software and go in full fledged application for your use. It will ensure you get all the required features and service.

A word of caution
 

Software may be good to run algorithms and give results in quick time. However, what it may not understand is your emotional mental status. It would not be possible to give you a sound ear on your personal move. It is best to talk to a human over machines. However, if you are person on go with ease of handling multiple agendas then it good to crack the DIY code well become plunging into them.

Thanks and Regards
Team
Saarthi Financial Planner
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Email: saarthifp@gmail.com

How much change have you lost?

“ Itna sa hi toh hai” a so common line for anything we loose. The bai spills some milk or your child drops some food on the floor, the leaking tap or even the cooking gas wasted when we cook our food in open vessels. The increasing shortage of small changes is becoming prominent in our small riksha rides where we let go the loose change. Also at times we are so relieved if someone gives us discount that we are ready to forget the quality of the product. It is our increasing mentality to adopt the route of mental peace and ease of doing things. The same principle we even adopt for our investment purpose. Go for something that is simple to execute and fast to accomplish. It may even that for that you have to loose some good percentage of profit but that is fine with you as long as you can gain some mental gratification.

The long run story in short ..

We need to change the style of investment. We need to understand that over long run- the only thing that gives us better returns is constant investment and compounding benefit. If we don’t take advantage of either of them then we shall not be able to earn as much as profit we can from our investments as we could if we diversified our investments well.

Lets us at a common example,

Suppose four different people make annual investments of Rs 150000/- in one of these investments each, then let us look at the amounts collected by them at end of the tenure.  

Instrument	Fixed Deposit	Direct Equity	Equity Mutual Funds	PPF
Returns % pa	7%	13%	12%	8%
Time	10	10	10	10
Returns	Rs. 2,95,073	Rs. 5,09,185	Rs. 4,65,877	Rs. 3,23,839
Tax	taxable +TDS	No tax after one year	No tax after one year	Nontaxable and locked in for 15 years

So, what seems like a small simple decision can prove to be a big hole in your pocket in the long run. So shun all your laziness today and make a diversified portfolio today. Plan your goals and give your portfolio a better design.

Thanks and Regards

Team

Saarthi Financial Planner

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Email: saarthifp@gmail.com

Life in a Metro...?

Every time I visit my uncle at my native place, I feel so disconnected in everything I see around . The families sitting across the porch enjoying their morning chai, the children playing with their friends in puddles, the women gossiping with each other across grocery shopping or sitting outside the local temple. I always ask my uncle to visit us once in a while to enjoy the comforts of the city life and he always laughs me off. He raises only one query “What comfort are you talking about?”. Even before I mention to him any thing about multiple cuisines restaurants, malls, big skyscrapers, he clearly shrugs off saying “I feel suffocated in your air conditioned furnished flat. You can't see any one passing by from your tall building windows and everyone is locked in their homes. There is no one to talk once you leave for work. Only TV and a small garden in your compound are left for me to enjoy. I have TV here also and for garden I have the entire village full of greenery and fresh air. So, why should I come there and stop living rather you come here and enjoy life to the fullest”. I am shocked at his simple denial to come to see me at my home but it is the truth. We take our city comforts so granted that we believe that it is the only way to lead a happy life. Meeting friends once in a week, having dinner together and discussing politics, markets over coffee is too cool and is the only happiness left in life. It does sound like a good plan especially in our odd working hours where we all are in race to earn more. But what when we are back there resting in our home couch. Wouldn't the silence in your AC homes make you a little uncomfortable? Think about it?

Why suffer for life?

 It is understood fact that we live in cities in our working life to earn more money. But living like this after retirement is a foolish thought. What are we giving up for this? Our health, our family life and even after this we are still adjusting our needs. We cannot enjoy open space, fresh air or comfortable meeting with our extended families.

Plan Your Life, Plan it now

Life Planning is more important than goal planning. If you don't intend to live in this hustle bustle over retirement then why are you making non movable assets out here? Why do we sacrifice all our hard earned money in paying the EMIs. It might look cool in your net worth to own multiple real estate assets but over retirement you would only like to enjoy the rental income from it and not leave your current surroundings to shift to a more noisy environment. What are we seeking then from this attachment? Why is the fact of living in a metro or big city making us so arrogant? We live in this place not by choice but by need. We have multiple needs and the best place recommended to fulfill them is the metro. That's is the end of it. There is no other advantage of it. The real treasure is our health and family which is a lost in our current lives. Be prepared to disown it.

So as your financial guide, Saarthi always recommends you to build assets but more importantly earmark them to your goals. So, when the right time comes, you can sell it off to meet your goals. So, the first thing to do right now is to plan your move right now. See if you want to still spend your sunset days in this big busy city or you would prefer the calm of a small town. Make your choice now. It is your this choice which will eventually help you calculate your retirement corpus.

Thanks and Regards
Team
Saarthi Financial Planner
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Email: saarthifp@gmail.com