financial planning

Investment Challenges Of Wealthy Investors

Investors with high net worth face investment challenges. But wealthy investors need to be mindful of issues that arise majorly from wealth. A few of them might be – Being too traditional – There can be tendency towards being traditional when an individual has more assets than they think they’ll ever spend. This results in lower long term returns. Collectibles – The wealthy have a tendency to invest in their passions and also they have performed well over years. But a common mistake by them is that they do not keep up to date appraisals on record and this may bring consequence with regard to estate liquidity and taxes. Concentrated Equity – A few of the senior executives accommodate large stock positions in a company that employees them. This creates risk but also can be managed in s...

Ever Heard Of This Investment Risk?

Investors are aware that investing in capital markets may present any number of risks such as Interest rate risks, company risk, market risk etc. Risk is not a separable companion for long-term growth. Some of the risks can be mitigated by the method of diversification. Also you may face another less known risk as an investor for which neither the market compensate you nor can it easily be reduced by diversification.  Yet it might be the biggest challenge to the sustainability of your retirement income. This risk is called the SEQUENCE OF RETURNS RISK. The uncertainty of the order of returns which an investor shall receive over a period of time refers to sequence of returns risk. “Never try to walk across a river just because it has an average depth of four feet”. For an example- say a mar...

How to Double Your Investment?

There’s something that intrigues most investors by the idea of doubling one’s money. Doubling your money is a realistic goal that investors must always be moving towards, as well as something that can lure people into impulsive mistakes regarding investing. Here we shall look at the right and the wrong ways to invest for huge returns. THE SUPERIOR WAY- EARN IT SLOWLY To double your money, the most tested way over a reasonable time is to invest your money in a solid, non-speculative portfolio that diversifies between investment grade bonds and blue chip stocks. The portfolio won’t get doubled in a year, but will surely do eventually. The old rule of 72 helps you calculate the time it would take for your investment to get doubled if its growth compound itself. According to rule 72 you got to...

How can Diversification Help you?

Diversification is an important mean to manage risk. But, it does not guarantee against a loss. The key is to identify investments that perform different under various market conditions. It will be diversified between bonds, stocks and cash alternatives. How diversification works For an instance, say a stock portfolio included a mechanics company, a car manufacturer and a diesel service firm. Here, even though the portfolio has spread risks it may not be considered as a good diversified portfolio as all of them are connected to one Mechanical industry. So, switch to different portfolios such as a mechanics company, a computer company and a drug manufacturer. The concept of diversification is one reason as to why mutual funds are so popular among the investors. Ways to diversify your invest...

Retirement Income & the Conventional Portfolio

Experiencing negative returns early in retirement could deplete your portfolio quickly. For this, you might want a couple of strategies to help mitigate this concern. LIQUID ASSETS It is required to have a pool of very liquid assets to fund two-to-three years of retirement spending which could help you from selling long term assets at an inopportune time. Through time, and depending on market conditions, you might have the opportunity to replenish this cash reserve using gains from your retirement portfolio ANNUITIES Another complementary strategy is to integrate annuities. This could help you to shift the risk of market volatility off your shoulders. The guarantees of an annuity contract depend on the issuing company’s claims-paying ability. Annuities have contract limitations, charges &a...

Plan well for your Child’s Education

In earlier 90’s the fee for children’s education was in thousands and today it’s not the same. The fee structure for children’s education is so high that it could make you worry for your child’s educational future. Planning now for your child’s education can reduce the anxiety you will face when time comes to dish out the money. It would be your little ones dream to get educated in institutions of their choice & also pursue higher level degrees, but making sure they can afford the education is your job. Your planning shall be all according to the following things below-  Today, the fees is near to 2 lakhs for a B.com degree, above 10 lakhs for engineering etc. 10-15 years from now the educational fee will be much more higher. Let’s have a look on some approximate costs of a few of repu...

Your Emergency Fund- Is It enough?

Have you ever experienced one of those days wherein the water heater stops heating, dishwasher stops washing & your family ends up on a first-name basis with the nurse at urgent care. Then, as you are driving to work you see smoke seeping out from under your hood. Bad things happen to the best of us, & instead of spacing themselves out, they almost always come in waves. It is important to have a financial life preserver, in form of an emergency cash fund. Many people know that an emergency fund is an important resource but at the same time they area nit sure about how much to save or where to keep the money. Others wonder how they can find any extra cash to sock away. HOW MUCH MONEY? How much is enough to set a target amount for starting an emergency fund?  Unfortunately, there is ...

Mistakes You Should Avoid To Help Your Money Grow Through S I P

A Systematic Investment Plan allows investments (small amounts) at regular intervals to yield high returns over a long period of time. SIPs help you build your wealth gradually without hurting your financial commitments rather than just investing a lump sum amount. It has the power of averaging and compounding which makes it a smart investment option- There are some common mistakes investors make:-   Deciding huge amount for investing Investors make a mistake on not calculating their present and future financial capabilities before committing high investment amount. + What to do? Set a realistic amount for monthly SIP investments by evaluating your financial condition such as present and future salaries, expenses and contingencies. Investing for one year It is an extremely small durat...

How Do You Choose The Right Mutual Fund?

  Saving and Investment for future security is at most important for each and every individual. For several people, busy lifestyle and lack of proper information might create a problem in selecting the right investment product. Mutual funds help you to get out of this hindrance. Mutual funds provide skilled investment management for people at a reasonable value. Here are a few tips for selecting mutual funds: Fund house: You need to choose a fund house on which you’ve got enough faith to invest your money and not adjust in a scheme of your choice. Identify fund houses that have a powerful presence within the financial world and provide funds that have consistent record.   Achieve goals of investment: Investments are made in such a way that it makes sure your savings enhance your ...

Reasons Why Investing in Mutual Funds In Nothing Like Gambling

  Very often, we come across peers and friends who believe that investing in mutual funds is likely to be gambling. Let’s have a look on the differences between investing and gambling. TIME SENSITIVE: Gambling like betting over a sports match or a casino lasts only as long as the event does. You cannot recover your money you lost during the respected event. On other hand, investing is a long term process where you have chances of making profits over the years over your initial investment. DIVERSIFICATION: While in gambling, there is no such risk-mitigation strategies applied. Whereas, mutual funds’ investments help you diversify your money. RECOVERY: If at gambling you lose money with an unlucky hand, you lose all of it at once which has no recovery option. Whereas when mutual funds a...

Start Small and Grow Big

Dream Big, Start Small, Stay Focused and Keep Going Forward Ever thought of saving from your salary? Ever managed to do it? If not, here is a plan for you to develop the habit of saving and investment – SAVE INSURE INVEST !! Let’s start small – Rs.500 It is an amount you can save easily and get started with investing. Rs.500 is the minimum amount to start an SIP(systematic investment plan). Start investing Start investing in an SIP with a debt mutual fund as it let’s you withdraw the amount at a day’s notice and also provides better returns if the money is left dol in your savings account. Stay invested regularly Set a fixed date for an SIP every month so that you don’t end up spending money. Keep the process on for about 6 months to 1 year and later sta...

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