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Portfolio Re-balancing- Way to manage your asset allocation and investments smartly.

Portfolio Re balancing! Do you know? by exercising portfolio re-balancing, you can save your earnings and maximize your profits. Most of investment advisors advise for portfolio re-balancing so that investor can benefit from market movements and also maintain investments as per risk profile. Re-balancing your portfolio is nothing but reviewing your asset allocation and maintain it as per your risk profile. It is important task during journey of financial planning. Download our app for Mutual fund investments For e.g. You have invested amount say one lakh. Out of which 30 % invested in debt assets and 70 % in equity. Now after some period that is after one year there will be change in your asset percent due to variable performance of debt as well as equity portfolio. Suppose your equity investment decreased due to negative returns and debt investment increased due to positive returns. This will result in increase in debt percent and it will be more than 30 % and equity investment will be less than 70 %. Invest in NJ Mars! an automated portfolio re-balancing product. So while re-balancing you have to adjust percentage of assets back to original percentage. i.e. make debt investment 30 % and equity investment 70 %. How to perform Portfolio Re balancing? With reference to above example, An investor invested one lakh rupees. As risk profile of investor is moderate, He invested 50 % in Debt and 50 % in equity. Read the full article

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Best ways to use credit card. Benefits and drawbacks of credit cards

Best ways to use credit cards Hi, Today we will discuss about best ways to use credit cards. Now a days, Lot of people using credit cards and it has become common. Also credit cards are offered by banks very easily. But do you know that if you are not able to use credit card effectively. It can spoil your financial status in bad way. It can also impact on your financial plan as well. So that while using credit cards, you should keep close track of outstanding amount and timely payments of due amount. Get digital credit app Always pay bills on time before due date. Always remember! All bills should be paid on or before due date. Other wise you will be paying high interest on out standing amount. Interest charges for credit cards outstanding are up to 48 % yearly. For ensuring timely payment you can opt for auto debit facility provided by banks. Avoid Paying minimum due When credit cards bills are sent to customer they mention minimum amount due. Which is around 10 % of total due amount. Never opt for this facility. This can become trap for you. When you pay only minimum amount, interest charges are applicable on remaining outstanding amount as well as new purchases made there on. Never share credit card details Don't share credit card details to anyone.Like  card number, PIN, CVV etc, This can lead to misuse of your credit card. Banks and companies never ask for these details. These details are asked for financial fraud purpose only. Read the full article

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ICICI prudential freedom SIP. Features of freedom SIP.

What is ICICI freedom SIP? ICICI prudential has launched freedom SIP recently. Which is providing fixed income after certain period of investment. The logic behind this SIP is to provide regular income to investor after investing for certain period. This will be beneficial for investors looking for regular income after retirement or after some times. But since returns in mutual funds are not guaranteed, How it is possible to provide guaranteed returns? This will be achieved by investing your money in equity mutual funds when you start investing. When your investment will be matured it will be invested in debt fund and Systematic withdrawal plan will be started and said amount will be credited to investor. How much amount will be paid to investor in ICICI freedom SIP? Monthly withdrawal amount is depending on monthly investment amount. as well as tenure of SIP. for example If you investing Rs. 10000/- per month for eight years. You will be paid 10000/- monthly after eight years. Withdrawal amount will be increased with increasing tenure of SIP. It will be 15000/- for ten years, 20000/- after twelve years and 30000/- after fifteen years. Please refer below image for reference. How long monthly amount will be paid? Monthly withdrawal amount will be paid till your accumulated corpus is available as well as returns on investment will be added to corpus. Read the full article

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SIP with insurance, Should you invest in mutual funds offering insurance cover?

Some mutual fund houses are offering SIP with insurance products. In this products if investor starts SIP in particular mutual fund scheme. He is offered free insurance cover. But there are some conditions applicable for it. And these conditions should be checked before buying such products. Should you Invest in SIP with insurance cover? Before buying SIP wit insurance please check below points. There are different mutual fund houses providing this product with different names. Such as ICICI MF's SIP plus, Aditya birla MF's century SIP and Reliance's SIP insure facility. All fund houses has almost same conditions. please check specific product conditions while buying such products. Here are some common points in these products. Aditya birla MF's csip is also covering COVID-19 now. How much insurance cover is provided in SIP with insurance? Insurance cover provided in SIP with insurance depends on tenure of SIP completed. It provides ten times insurance cover in first year. Fifty times of monthly SIP amount in second year and hundred times of SIP amount from third year on wards. But there is capping of insurance cover to maximum 50 lakhs per investor across all schemes and folios. Insurance cover provided is group insurance. Who's life is covered under SIP with insurance? It should be understand that only first unit holder's life is covered under this facility. Life cover will not be provided to second or third joint holders. Read the full article

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Retirement planning-Most important part of financial planning

Why Retirement planning is important?

“In general, many people spend more time planning a graduation day or wedding day than planning their retirement. And that’s only one day. People should spend time planning for their retirement”. - Dave Reed Today we will talk about retirement planning. Retirement planning is most important part of financial planning. But people are not aware about this while they are earning. Retirement planning is important because period after retirement is almost same to period of earning (Considering life expectancy 85 years). But in retirement period your earning is stopped . And your expenses are not stopped. Though your income has been stopped, your expenses may increase due to increased inflation as well as health issues. Retirement period is called as golden period by us but it may become very difficult if we does plan our retirement. When we are young and start our career, We spend lot of money on our comfort and luxurious lifestyle. But we are not thinking about our golden years that is retirement. We should start retirement planning as early as possible. There are different things to consider while  deciding investment amount and required corpus for retirement planning

1. Age of retirement

We should decide when we are going to retire. Though there is standard age of retirement is around 58 to 60 years. We can plan early retirement with proper planning. But it very important to plan retirement at early age, Because it will help you for better planning. Suppose you decided to retire at age of 60 years. Current age plays major role in planning and amount to be saved for retirement. Let's check below table for checking how early planning affects retirement saving

Retirement planning As per above table if start saving for retirement at age of 20. And you decided to save Rs. 5000/- per month you will accumulate 5.88 Crs at 12 %. And if you started saving same amount at age of 40. You will accumulate only 49 lakhs. This shows why early planning is important. Also when you start planning at young age you can take risk for better returns. Second point to consider while retirement planning is

2. Life expectancy

No one knows how long he will live, yet it is important to plan for retirement by considering base age and life expectancy. You should decide amount to save considering present age required corpus for retirement. As age increases saving amount will increase as you have less time to achieve goal. Current life expectancy of India is 69 years as per Wikipedia. So that even if you retire at age of 60 you have to take care of expenses at least nine years. You may take help of below table for assuming life expectancy

3. Medical needs and expenses

Age and health issues goes hand in hand. In current situation around we may see that we are facing health issues at age of 40's. Medical expenses will be increased very high at higher age. So make sure to take right health insurance to take care medical expenses. Also take sufficient life insurance. While taking medical insurance consider inflation in medical expenses. Suppose your current medical expenses are one lakh. By considering 10 % inflation your expenses after 25 years would be 10.83 lakhs. So that it is very important to review your insurance cover periodically.

4. Monthly basic expenditures

Consider your monthly basic expenditures to calculate your retirement corpus. Try to minimize your expenses by avoiding non essential buying. Most of people has habit to buy unnecessary things just due to advertisements. This results in loss of money as well as time. Before buying anything check it's need, use and effectiveness in your life.

5. Future value of current expenses

Due to rise in inflation you will need more money to maintain current lifestyle. Even if we consider inflation rate of 8 % Your current expenses of one lakh will become around 6.85 lakhs after 25 years. This shows that value of current one lakh will be fourteen thousand after 25 years.

6. Lifestyle after retirement

While deciding retirement corpus. you should consider your lifestyle after retirement. And adjust your retirement corpus accordingly. If you live in rural area your expenses would be less compare to urban area. If you consider to take one vacation per year after retirement. You should consider future value of expenses for vacations. If you have any queries you can mention in comments or feel free to contact. Also don't forget to follow for future posts   Read the full article

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What is term insurance? Guide for buying term insurance.

 Firstly we will talk about what is term insurance?. Term insurance is type of life insurance which is purely covers your life and does not offer any other benefits. When we purchase conventional life insurance, they offer benefits like money back during premium paying term, or after maturity benefits. But term insurance does not offer such benefits.

Why term insurance?

People think that there are no benefits of term insurance then why we should take term insurance. Though there are no other benefits of term insurance except life cover. In financial planning, advisors strictly advise to take term insurance over other conventional products. Since people buy conventional life insurance thinking that they are getting extra benefits from it. But if you compare these benefits with term insurance. Then you will find that you are getting very little insurance cover against your premium. For example I bought life insurance of sum assured 3 lac at monthly premium of 1500/- approx at age of 22. But if i had bought term insurance at that time. I would have been got cover more than one crore. Even at current age i am getting 50 lac cover with premium 500/- monthly. This is difference between term insurance and conventional life insurance. Now lets compare other benefits i got from this insurance. I got 45000/- money back at fourth and eighth year an i will get maximum 1.50 lac after maturity i. e. after 12 years. SO that i will got total around 2.40 lac after maturity. And if we consider returns on money received after fourth and eighth year, It would have become 1.62 lac at returns of 10 %. SO that total i will get around 3.12 lac after 12 years with life cover of three lac. And there is extra cover of 1.50 lac for six years after maturity. Now we will calculate if I have been taken term insurance instead of this conventional insurance. If i have been purchase life cover of 25 lac. I would have to pay premium of around Rs. 300/- per month. This premium is as per current price. It would have been less before ten years. Please refer below premium comparison.

Policybazaar.com And if I would have been invested remaining Rs. 1200/- per month. I will get Rs. 3.24 lac after 12 years. This shows that by purchasing term insurance i will get extra cover of 22 lac and also returns more than conventional policy. This clearly suggest that you will get more benefits by purchasing term insurance against conventional life insurance. Buy insurance and get extra discount!

Guide for buying term insurance.

Now while purchasing life insurance you should consider below points. Claim settlement ratio: Before purchasing term insurance, it is important to check claim settlement ratio of insurer. Claim settlement ratio is percentage of total claims settled by company against total claims raised. This ratio should be high. Higher ratio indicates that insurance company working better. Life cover term: Insurance companies are offering term insurance cover up to age of 90 years. But while purchasing term, please ensure that you could pay premium up to cover you have taken. Because after retirement it may become difficult to pay premium of insurance. So that it would be better to take cover up to the age of retirement. It may also affect your premium amount. Premium payment term: Insurance companies are offering different premium payment terms for insurance. Like advance premium payment, Premium payment up pt certain period etc. Before choosing premium payment term compare with each other and take decision accordingly. Some companies also offering return of premium at maturity. But availing this facility is not recommended. Choosing different riders. Insurance policies provide different riders as below Choose riders carefully Accidental Death rider: This rider provide extra benefit if death of insured is due to accident. This is additional benefits after basic sum assured of policy Accidental Permanent disability: If insured gets permanently disable due to accident, This rider provides financial support to insured and also some companies provide regular income option in this rider. Critical illness rider: This rider provides extra sum assure, If insured diagnosed with critical illness which is covered under policy terms. Extra sum assured is paid to insured for treatment of critical illness.Some companies also provide premium payment waiver during critical illness rider. Every company has different definitions of critical illness, so that it is important to check illness covered under this rider. Premium waiver benefit rider: If insured becomes permanently disabled or diagnosed with critical illness, You will not require to pay policy premium. But your cover will be continued and you will be eligible to claim sum assured after death of insured. Income benefit rider: Under this rider nominee will get predefined monthly amount after death of insured. This is extra amount over basic cover taken for insured. So all these points should be considered before buying life insurance. Hope this will help you. Thank you for reading. For any queries you may ask in comments or feel free to contact me.   Read the full article

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Retirement planning

Importance of retirement planning explained 

https://www.mymoneymatters.in/retirement-planning-most-important-part-of-financial-planning/

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It is personal finance blog for helping people make good investment decisions