The Indian youth has never had it so good. On the Youth and Investing -----------------------------------------------------------3
Money consumption side, the choice of goods and services The importance of investing wisely cannot be overstated.
available is unprecedented. And as far as income is
Simplified concerned, given the booming economy and its ever Investment avenues for youth-------------------------------------------8
Financial Planning improving prospects, opportunities have never been Young investors have a wide range of options to choose from.
for Youth better! So, the youth is earning a lot and spending a
lot! It's definitely a happy situation to be in!
Copyright: Importance of life insurance ------------------------------------------- 12
It is important to get life insurance at an early age.
In times like these, when everything seems to be going
right for so many, there is a tendency to ignore that one
great habit - saving money. The rationale is simple - The importance of tax-planning --------------------------------------- 18
since the future looks great from here, why set aside Tax-planning can be a synonym for wealth creation.
money for future needs and contingencies. But, in our
Services Pvt. Ltd.
view, this is an ideal time to save money as surplus How much real estate must you own? ------------------------------ 21
monies are high. Rather than spending this money on a Your real estate investments must not be governed by price.
product or service you do not really need, you would
do well to invest the same to provide for some future Use your credit card smartly ------------------------------------------ 25
critical need. A lot of the negatives about credit cards are related to expenses.
In this issue of Money Simplified we discuss this and a How to spend wisely ----------------------------------------------------- 28
lot more, including the investment avenues available Spending wisely is the key to financial well-being.
Services Pvt. Ltd.,
to the youth. And yes, we also discuss the concept of
404, Damji Shamji,
spending wisely and the very popular tool to fund
purchases - credit cards!
Mumbai - 86, India
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022 - 6799 1234 This booklet a) is for Private Circulation only and not for sale. b) is only for information purposes and Quantum Information Services Private Limited
(Personalfn) is not providing professional/investment advice through it and Personalfn disclaims warranty of any kind, whether express or implied,
as to any matter/content contained in this booklet, including without limitation the implied warranties of merchantability and fitness for a particular
Team Personalfn purpose. Personalfn will not be responsible for any loss or liability incurred by the user as a consequence of his taking any investment decisions based
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31st October, 2007
022 - 2202 8550 investment objective and financial position and using such independent advisors as he believes necessary. Information contained in this Report is
believed to be reliable but Personalfn does not warrant its completeness or accuracy.
This guide is for informative purposes only and under no circumstances it is to be used or considered as an investment advice. It does not have regard
Content: to specific investment objectives, investment strategies, financial situation and the particular needs of any specific person who may receive this
document. Investors should seek financial advice from their Financial Consultants regarding the appropriateness of investing in any plans/products
Abhijit Shirke that may have been discussed or recommended in this guide. HDFC Standard Life Insurance Company Limited (HDFC SL) does not guarantee
that any forecasts or opinion in this material will be realized. And the views expressed herein are not necessarily that of HDFC SL. Further, HDFC
Dharmesh Chauhan SL disclaims all the liability of content provided in this guide, and shall not be held liable for the accuracy, correctness, completeness, timelines or reliability
Himanshu Srivastava of any such information. The recipient shall accept all risks and responsibilities for losses, damages, costs and other consequences resulting directly
or indirectly from using any information or material available in this guide. The distribution of this document in certain jurisdictions may be restricted or
Irfan Husain Rupani totally prohibited and accordingly, persons who come into possession of this document are required to inform themselves about, and to observe,
any such restrictions. Unit Linked Plans are different from traditional insurance plans & are subject to different risk factors. In Unit Linked Plans, the
Vicky Mehta investment risk in your chosen investment portfolio is borne by you. Please acquaint yourself with the associated risks and the applicable charges from
Rahul Goel your Financial Consultant/product brochure/policy document before buying a Unit Linked Plan. Insurance is the subject matter of the solicitation.
Copyright: Quantum Information Services Private Limited.
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Financial Planning Financial Planning
Youth and Investing Two, invest the surplus in Maturity value of Rs 1 m, 10-Yrs hence
instruments which are best suited Return Maturity Value (Rs)
Ideally, just how spending comes You probably already got the point. to your needs and profile. While 8% 2,158,925
naturally to you, the youth, so must Maintaining one's standard of living is in present times this appears to 15% 4,045,558
saving and investing. Think about it. not a very challenging feat; all one needs be the easy part, in reality, this is
to do is be employed and do well. The where a significant amount of time needs When investing monies for long-term
You are able to finance your spends in annual increments will compensate for to be invested. This is to ensure that the needs like children's education or
present times. But to ensure that you inflation and more. But what is critical monies you have saved and invested retirement or even a simple goal like
are able to at least maintain the same here is how you deal with this "more", in by making short-term sacrifices actually becoming a crorepati say 15-Yrs from
spends in the future, you need to earn, other words the surplus, as this will delivers the anticipated return over the now, it is necessary that you not only
understand which assets suit
save and invest today! The "spends" decide whether your standard of living To achieve Rs 1 m, 10-Yrs from now your risk profile the best; but also
here is the money you have to spend to changes over time or not. Time to goal (Yrs) Amount to be invested (Rs those assets which are suited
5 497,177 best for such tenures. Later in
maintain your standard of living.
Let's step back a bit here. A rise in the 10 247,185 this guide we will discuss each
Why you must invest standard of living does not necessarily
Assumed Return - 15% pa asset class in some detail so that
When it comes to the standard of living mean wasteful expenditure. It could mean you are able to understand them
there are some points to note. among other things an annual foreign better.
holiday instead of a domestic one; period of holding. Here is another
One, if the basket of goods you consume sending your children to the best illustration to give you a sense of the
impact returns have over time. Suppose Now, let's take the goal of becoming a
today costs Rs 100 per day, the same colleges; or even a farmhouse for a crorepati 15-Yrs from now. Suppose
will cost you Rs 134 five years from now. luxurious retirement! The aim is to you invest Rs 1 m today for a period of
10-Yrs, in assets which yield either 8% you are an investor who has never taken
This is basically the impact of inflation accumulate wealth that will help you on much risk; the preferred investment
(assumed at 6% per annum here), a accomplish most of what you wished for! of 15%. The difference in the maturity
values is palpable! avenues for you have been the small
scenario in which there is too much savings schemes (also called post office
money chasing too few goods; this When it comes to the surplus, you need Therefore, if you want to have a wealthy
future, you need to save as much as you schemes) like Public Provident Fund
results in an erosion in the value of to focus on two things at this early stage (PPF) and others like RBI Bonds and
money. So, to maintain the same standard in your life. can as early as possible and then, invest
the same wisely. The latter ofcourse is fixed deposits. All these avenues are
of living, you need to spend more money very safe, and therefore, the return they
in the future. One, maximise the surplus by cutting easier said than done.
offer tends to be on the lower side. In
wasteful expenditure. Remember every present times such a portfolio would
Two, the standard of living itself is a Rupee invested today is more valuable Setting objectives
Before you begin to invest money, you generate a return of about 8% per annum
moving target. You will aspire to improve than a Rupee invested tomorrow. The (pa) pre-tax, and assuming you are in
your standard of living (for instance, more money you put aside at the start of need to have clear objectives. The lack
of clarity on this front can often lead the highest income tax bracket, about
mode of transport over time will change your investing cycle, the more 6% post-tax (the return on PPF is tax-
from a bus, to a cab to even your own disproportionate the benefit on maturity. you to take decisions that are ultimately
not in your benefit. Spend as much time free and hence the higher than expected
car). And over time as you have Here's a simple illustration. Suppose you post-tax rate).
dependents, their spends too need to need Rs 1 million (i.e. Rs 10 lakhs) 10-Yrs as is necessary to think about the
be taken care of. So you will need to from now to fund some expenditure. This objectives you have and then prioritise
them. This will help you achieve your To achieve the goal, you will need to set
spend a disproportionate amount of is how different the scenario will look if aside Rs 34,854 every month for 15-Yrs;
money to improve your family's standard you had to invest for that need today, or objectives. Well thought out objectives
go a long way in contributing to the or you could set aside Rs 429,628
of living. five years down the line. annually.
success of the plan itself!
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Financial Planning Financial Planning
How to become a crorepati appetite! investing. Of course the risk that you
Case 1 Case 2 Case 3 take on should be well understood and
Aggressive Moderate Small Saving And the benefit of being invested in even in the worst-case scenario should
equities is palpable. Our long-term not jeopardise the financial security of
Amount you wish to accumulate (Rs) 10,000,000 10,000,000 10,000,000 expectation of return from this asset class your family.
Time to meet your target (Yrs) 15 15 15 is 15% pa. So in the unlikely event that
Solution you invest all your monies in the stock To conclude, here are some must-dos
market in your quest to become a for you:
Assumed Return (Pre-tax) (%) 15.0 12.0 8.0 crorepati, the comparable amount you
Assumed Return (Post-tax)(%) 15.0 11.5 6.0 will need to invest is only Rs 16,414 per One, be clear about your objectives;
Tenure (Yrs) 15 15 15 month for 15-Yrs; or you could set aside think about what you want to achieve
Rs 210,171 annually! Broadly, your in life and then prioritise. Once you are
Annual Saving Reqd (Rs) 210,171 279,244 429,628
contribution to the plan, as compared to clear on this the financial planning
Or simply, Monthly investment of (Rs) 16,414 22,127 34,854 the very low-risk option discussed activity will be a lot simpler.
earlier, would halve! That's the power of
Now, since the return is assured, the is often said, and rightfully, that they equities. Two, employ the services of an honest
chance of this plan not achieving its are the best tools to beat inflation and financial planner to handhold you as
objective is very low. For a risk-averse generate wealth over time. The solution is not always a 100% low- you go about planning for the future.
investor this appears to be the best plan. risk portfolio or a 100% high-risk You are likely to be busy with work and
Of course, people have lost money by portfolio. In fact for most of you a will not be able to devote the necessary
However, when one is investing for time investing in equities. But that almost blended asset allocation will work best. time to this activity. An honest financial
frames as long as 15-Yrs, the ideal asset always can be traced to their having But even then, equities will and should planner will help you fill in this gap and
classes to invest in are equities, real either succumbed to a mania or a tip, account for the largest chunk of this ensure that you are on target to achieve
estate and maybe even precious metals. surrounding either the entire market or a portfolio. In the table, the moderate plan, your goal.
Of these equities should probably sector or a particular stock that promised which is basically a mix of high-risk and
account for the largest chunk of the stupendous returns in the shortest low-risk assets, is something that will Three, as early as possible in your
asset allocation. period of time. Later in this guide we appeal to a lot of you. working career, take life insurance (the
discuss more on equities and mutual pure risk variety - term insurance) for a
Selecting from various investment funds. Now you know that for your own future tenure of about 30-Yrs. Pure risk
avenues interest you need to start saving and insurance is very affordable and will
Equities are assets which carry high risk. If you are a disciplined investor, and are investing wisely. And also that if you protect your family's needs in case you
There is a possibility that not only you not prone to succumbing to greed and want a wealthy future you need to start are not around.
may not earn a return, but, you may fear depending on short-term movements taking on some risk when it comes to
actually lose your capital! Well, all this in the stock market, then you must
is undoubtedly true. The why should educate yourself to take on this
you, someone with a moderate to low additional risk of investing in the stock
risk appetite invest in equities? markets. Of course, if you do not have
the skill to pick the best stock or fund,
The fact is that over long-tenures you can always employ the services of
equities have consistently out- an honest financial planner; but what
performed other asset classes. In fact it you cannot outsource is your risk
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Financial Planning In estment Av
ITC ves tment Avenues
Investment avenues for youth
IN A NUTSHELL A basic principle of investing is that the and sold by investors at the prevailing
Investing is important as it can help provide for one's future needs. investment avenue must match the market price. Over shorter time frames
The need to invest stems from two major factors i.e. inflation and investor's risk profile. For example, a high (say less than 3 years), equities can be
lifestyle. risk investment avenue would suit a risk- volatile (read high risk) investments.
Typically, a wide range of investment avenues is available to investors. taking investor. Also the investment Factors like market sentiment come into
The investor's risk appetite should determine which investment avenue should aid the investor in achieving his play and contribute towards distorting
is chosen. financial goals and objectives. For the price of shares. However, over
Equities have the potential to deliver better than other avenues example, if the investor wishes to save longer time frames, the company's
over longer time frames. money to buy a car in a stipulated period valuation (its true worth) determines the
Young investors have time on their side and should consider investing of time, then his investments should help market price of shares. Hence it is
a significant portion of their portfolio in equities. him achieve that predetermined goal. important that investments in equities
be made with a long-term perspective.
Young investors have an edge over Sadly, in most instances, you are likely
others on account of their age. In other to hear about people trying to make a
words, a young investor has more time quick buck by investing in equities. Rest
on hand as compared to a middle-aged assured, this is the wrong approach to
investor or one who is closing on equity investing.
retirement. This in turns affords young
investors greater flexibility while making A common problem associated with
investment decisions. equity investing is the method of
selection. Often, investors rely on 'tips'
In this article, we discuss various to decide which company to buy into.
investment avenues available to young They are essentially relying on hearsay
investors and the various facets of each and in a way, gambling and hoping to
avenue. get lucky. Equity investing in the true
sense requires research and in-depth
1. Equities study. The investor must understand the
You must have heard your friends and prospects of the company, the factors
relatives mention investing in the 'share that affect the same; he must have an
bazaar' or 'stock markets'. Actually they understanding of the economy, interest
are referring to equity investing. Simply rates, political and legal environment,
put, equities represent a share in the and a host of other factors. Clearly
capital of a company i.e. ownership in equity investing is like a full-time job
the company. Hence an investor who that is best left to experts.
invests in a company is also referred to
as a shareholder. Despite equities not offering assured
returns or safety of capital, they have
When a company is listed on the stock the potential to add value to the
exchange, its shares can be freely bought portfolio. Over longer time frames
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In ves tment Avenues
Investment Av In ves tment Avenues
equities have historically delivered However, the stability in fixed income equipped to make more informed expenses and therefore combine long
higher returns as compared to other instruments comes at a price. Since the investment decisions vis-à-vis retail term savings and insurance. These
avenues like fixed income instruments, returns are locked-in, you will not be investors. plans assure a corpus to the family either
gold and real estate. As a young able to gain from any subsequent hike through the maturity benefit or in the
investor, given that you have age on in interest rates. Also inflation (a Of course, the opportunity to invest in a case an unfortunate case of
your side, equity is a must-have in your general rise in price levels) hits fixed mutual fund and gain from the fund policyholder’s demise. Hence you
portfolio. However, instead of directly income instruments the worst. The real manager's expertise comes at a cost. should not let tax saving or just returns
investing in equities, it is recommended return on investments (i.e. rate of return Investors in mutual funds have to bear influence your decision of buying an
that you invest in the same via the mutual on investment less rate of inflation) that costs in the form of loads and expenses. insurance plan.
funds route or even, very selectively, represents the actual earnings made by Often mutual funds are wrongly equated
the unit linked insurance plan route an investor, takes a hit when inflation with chit funds. The two are about as Having said that, unit linked insurance
(more on that later in the article). rises. similar as chalk and cheese. Mutual plans (ULIPs) is one offering from the
funds are professionally managed and insurance segment that combines
2. Fixed income instruments Ideally, fixed income instruments are regulated by entities like SEBI (Securities investment with insurance. In fact, it
As the name suggests, fixed income best suited for investors with a low to and Exchange Board of India) and AMFI would be fair to state that ULIPs are
instruments offer assured returns. Hence moderate risk appetite. If an investor (Association of Mutual Funds in India). more inclined towards investments
you, the investor are aware as to how affords higher priority to stability of rather than insurance. ULIPs invest in
much return your investment will income and capital protection, fixed Apart from letting experts handle the both the equity and debt markets. Hence
generate and over what time frame. Fixed income instruments are his calling. As investments, the mutual funds route their performance is market-linked. A
deposits, small savings schemes (Public a young investor, a smaller portion of offers another advantage - a wide range well-defined sum assured (i.e. the sum
Provident Fund - PPF and National your portfolio should be invested in of options to choose from. Equity funds that your dependants will receive in the
Savings Certificate - NSC, among others) fixed income instruments to impart a (invest in equities), debt funds (invest sad event of you meeting with an
and bonds are examples of fixed income degree of stability to the portfolio. in fixed income instruments), balanced eventuality) takes care of the insurance
instruments. funds (invest predominantly in equities aspect. ULIPs have been dealt with in
3. Mutual funds and a smaller portion in debt), monthly greater detail in a separate article.
A differentiating factor between equities While investing in equities and fixed income plans (invest predominantly in
and fixed income instruments is the income instruments, you (i.e. the debt and a smaller portion in equities), The importance of a sound investment
safety of capital. In an equity investor) directly invest in the sector funds (invest in equities from a advisor
investment, the capital invested (i.e. the aforementioned avenues. Mutual funds single sector), index funds (invest in Conventionally, the neighbourhood
money invested by you) is at risk. When put a layer between you and the actual stocks from a benchmark index) and fixed agent was the individual that most relied
equity markets crash, forget earning a investment. Mutual funds collect maturity plans (mutual fund equivalent on for making investments. This
return, you may even lose a part of the monies from a large number of investors of fixed deposits) are just some of the gentleman armed with application forms
capital. Conversely, investments in fixed and this common pool is then invested offerings that investors can choose from. and an agency from the local post office
income instruments from credible in line with the fund's investment was like a one-stop shop for
institutions and companies offer safety objective. Each fund has a Clearly, mutual funds have a lot to offer investments. However, the present
of capital. For example, assume that you predetermined investment objective to you as an investor. And the same investment scenario is a lot more
were to invest Rs 10,000 in a fixed deposit that determines where and how the should be the preferred vehicle for complex and requires a different set of
that offers 10% return for a 1-Yr period. monies will be invested. Also the making investments. expertise on the investment advisor's
On maturity (a year hence), you will investments are made by an expert i.e. part. Peddling forms and collecting/
receive Rs 1,000 as interest income and the fund manager. The fund manager 4. Unit linked insurance plans delivering cheques are of secondary
the original investment i.e. Rs 10,000. with his expertise and experience is Insurance products like endowment importance. Now, an investment
plans are tools for taking care of future advisor's primary role is to offer
9 visit us at www.personalfn.com visit us at www.personalfn.com 10
In ves tment Avenues
Investment Av Interview
unbiased and expert advice. More On your part, you should ensure that Importance of life insurance
importantly, the advice has to be right you are associated with the right
for the investor in question i.e. the investment advisor at all times. He could
A lot of people go through their entire providing for the future in a way that
advice should be based on the latter's well be the individual who plugs the gap
lives before understanding what life your absence does not hurt your family
needs. In other words, a 'one-size-fits- between you achieving or not achieving
insurance is all about. There are several members financially. For this you must
all' approach won't work. your financial goals and objectives.
reasons for this - the most common is first, as accurately as possible, estimate
that no one really informed them about the value of your life. This is called the
it. Another equally common reason is 'Human Life Value'. One of the methods
that those who did inform them (read of calculating your human life value is
insurance agents) gave them inadequate to sum up all expenses along with your
IN A NUTSHELL information so that they could sell them future liabilities that your family
With time on their hand, young investors have a lot of flexibility what they wanted rather than what was members will have to pay off in the
while investing. best for clients. unfortunate event of your death. Once
Equities can be risky over shorter time frames, but over longer time you have done that you must take a life
frames they have the potential to reward investors. Anyone who has been reading the insurance policy to give you an
Fixed income instruments are best suited for investors who afford Money Simplified regularly (we are in insurance cover equaling your human
greater importance to stability of income and safety of capital. the fifth year now and there are plenty life value.
Mutual funds offer the opportunity to indirectly invest in equities of regular readers) has no excuse. Life
and fixed income instruments.
insurance is one of the only tools where Let's understand how the Human Life
Investors in mutual funds can gain from the fund manager's expertise.
you create an asset at the start (life Value (HLV) is calculated with the help
The mutual funds segment has a number of offerings, each suited to
cover) as compared to other options of an illustration. Vivek is a 32-Yr old
a varied need.
where your savings build up over a software professional. He is married; at
ULIPs combined investing and insurance in the same avenue.
period of time.For the benefit of the first- present he does not have any children.
The complex investment scenario necessitates the presence of a
timers; life insurance is all about He has some liabilities mainly in the form
competent investment advisor.
Vivek’s Human Life Value
Vivek's age Yrs 32
His wife's age Yrs 28
Life expectancy of Vivek's wife Yrs 70
Number of children -
Household expenditure Rs 40,000
Of the above, how much is spent on Vivek Rs 15,000
Expected inflation in household expenditure % 5
Outstanding loans Rs 3,000,000
Other liabilitiesRs -
Medical expenditure Rs 500,000
Rate of return on low-risk securities/deposits % 8
Human Life Value Rs 10,999,917
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Life Insurance Life Insurance
of loans as also regular household To draw a parallel between term plans Endowment plans differ from term plans give you the sum assured with
expenses. This is how his HLV is and other forms of life insurance, in one very critical aspect i.e. maturity accumulated profits under both
calculated: consider the premiums paid out on benefit. Term plans do not pay out the scenarios - death and maturity. And they
medical insurance or a vehicle. The sum assured if you survive the term; you are a good avenue of investment for
It is important to note that calculating premiums are paid out regularly with the receive the sum assured only if you meet those with a low or medium risk appetite
the HLV is not a one-time process. It explicit intention of being compensated with an eventuality over the tenure. and seeking a combination of insurance
must be reviewed regularly. For instance, in the event of any loss (to health or Endowment plans, on the other hand, and savings.
in Vivek's case, if things were to change vehicle). If there is no loss to health/ pay out the sum assured under both
over the years - for instance, more loans, vehicle in a particular year, then there is scenarios - death and survival, so long Unit-linked Insurance Plans (ULIPs)
higher expenses, children, then he would no compensation. However, you must as you have paid the premiums regularly. The ULIP, a variant of the endowment
have to revisit his HLV calculation. keep on paying the annual premium plan, is another insurance product that
because you don't know when your Instinctively endowment plans appear is much misunderstood. Unlike term
As we explained before, life insurance is health/vehicle will deteriorate. more worthwhile because they pay out plans and traditional endowment plans,
all about providing for your HLV so that the sum assured regardless of whether ULIPs invest in stock/debt markets (you
your family members are not left to fend If you have understood how medical you survive the term. You get a sense have the option to choose the
for themselves in your absence. Life insurance or vehicle insurance works, that paying those premiums worked out allocation). Since equity/debt markets
insurance allows individuals to opt for a you will appreciate how term plans for you. fluctuate on a daily basis, the
life cover broadly through two plans, work. When you opt for a term plan you performance of your ULIP gets linked
viz. term plans and endowment plans. are required to pay an annual premium Before endowment plans get your to the markets. The value is captured by
over a pre-determined tenure, till you thumbs up, it's important to consider a the NAV (net asset value) of the ULIP. If
A point to note is that the way life encounter an eventuality (put bluntly, few points. Endowment plans do pay out you find that ULIPs are similar to mutual
insurance premiums are structured, till you pass away). On death, your the sum assured (along with profits) but funds, then you are right, at least to the
opting for life insurance policy at an survivors will receive the sum assured this comes at a cost to you. Since extent that both are market-linked.
earlier stage of your life works out that has been promised to them. On endowment plans have to pay out the
cheaper. survival, you will receive nothing. sum assured regardless of whether you ULIPs unfortunately, have been sold as
survive the tenure or not, the insurance pure investment when they are actually
Term Plans However, term plans differ from medical/ company builds this into the cost of your a combination of long-term savings and
Term plans simply provide a life cover, vehicle insurance in one important insurance plan i.e. the premiums you pay. insurance in that order. This is because
nothing more, nothing less. To aspect. While medical/vehicle So a part of your endowment plan if getting a life cover is really critical then
understand this better, consider the two insurance are annual contracts and must premium is apportioned towards savings subjecting your insurance monies to the
likely scenarios while opting for a life be renewed every year, a typical term while the other part is towards a life fluctuations of stock markets is not a
insurance plan; the individual either plan tenure is usually much longer (the cover. What the insurance company very prudent thing. For instance,
survives the tenure or does not survive number of years varies across life provides you (either on death or on imagine how Vivek's family will be placed
it. Term plans and endowment plans insurance companies). However, once maturity of the tenure) is not just the sum if the value of his ULIP falls sharply to
(explained later in the article) differ in you have taken a term plan, the premium assured, rather it also provides you a coincide with his death. Hence, if your
the way they tackle both these scenarios. stays the same till the end of the term. return/profit on the sum assured. It does objective for taking insurance is life
this by investing the premiums in assets cover only then a term plan would suit
Term plans are relatively straightforward; Endowment Plans (stock and debt) and paying out the best as compared to an ULIP.
they pay-out the sum assured only if If you have understood how term plans return to you on death/maturity. Another reason for the mis-selling is
the individual does not survive the term. work, you have already got a fairly good
rooted in the fact that many a times,
If he survives the term, he gets nothing. idea of how endowment plans work. Like we mentioned, endowment plans do either on account of insufficient due
13 visit us at www.personalfn.com visit us at www.personalfn.com 14
diligence on part of the individual or lack your frontline life cover policy. Rather, Money Simplified: Get your own copy!
of communication by the insurance that is a role most suited for a term plan.
agent, the expense structure of the ULIP We are delighted to have you benefit from the Money
is not understood by the individual. We have compared term plans to
Simplified, which is arguably India's most popular financial
Having said that, the expense structure endowment plans and ULIPs. Term plans
of certain ULIPs could make their work out the cheapest and it is
expenses comparable to mutual funds something that all individuals must
over the long-term. consider taking, especially at a younger Over 160,000 users have registered for the Money Simplified
age. A ULIP can play the role of so far. And here's the best part, each one of them likes it so
While ULIPs can add value to the enhancing your investment portfolio much that on an average, they share their copy with atleast
individual's portfolio, in our view it and bridging the shortfall, if any, in your four of their friends. Given the scale of this distribution
would be a mistake to opt for ULIPs as life cover. undertaken by our subscribers (!), there is a fair chance that
you have received this copy from a friend.
Did you know that Money Simplified is published
Yes, it is a monthly guide. And, it is absolutely free!
Here's how you can get your own copy?
We will be delighted to inform you of the release of
IN A NUTSHELL
future issues of the Money Simplified. All you need to do is
Before opting for a life insurance plan, calculate your Human Life
Value. click on the link below and provide us with your email ID.
The Human Life Value can be calculated by adding up your liabilities We do not require any further information as of now.
along with all expenses that need to be paid off.
Life insurance is all about providing for the future in a way that your Click here:
absence does not hurt your family members financially. http://www.personalfn.com/investment/ms/eml.asp
Opting for life insurance at a younger age is cheaper.
Term plans are the cheapest form of life insurance. They do not pay
out the sum assured on maturity.
Endowment plans and ULIPs pay out the sum assured on maturity.
We respect your privacy and will take all measures to protect
While generally ULIPs have higher expenses, the expenses on certain the same. Your email will never be shared with any third
ULIPs are competitive vis-à-vis mutual funds. party.
Term plans are a must-have for all individuals looking at taking life
insurance. A ULIP can be considered from an investment perspective. Welcome to the world of smart investing!
Money Simplified - The smart way to plan your finances
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Personalised Services from Personalfn
The importance of tax-planning
Who are we? We are For most individuals tax is a four-letter 80C for a variety of investments - for
www.personalfn.com is one of India's leading finan- word. How many individuals willingly example investments in tax-saving
cial planning initiatives. part with their hard-earned money for funds (ELSS), Public Provident Fund
We are a part of Quantum Information Services Pvt. taxes? Not many! Mention paying taxes (PPF), National Savings Certificate
Ltd., which is one of India's most experienced and all those age-old arguments about - (NSC), infrastructure bonds and tax-
research houses (set up in 1990). Quantum also offers "what do we get that we should pay saving fixed deposits. Similarly,
equity research via its online initiative, taxes?" surface. While that is a topic contributions towards provident fund,
www.equitymaster.com. which can be debated for eons, few would life insurance premium, repayment of
dispute the utility that tax-planning can the principal amount on a home loan,
Our offerings offer. payment of tuition fees are also eligible
• Personalfn helps individuals plan their investments for Section 80C deductions.
so that they can meet their financial commitments What is tax-planning?
(like retirement, marriage and child's education) Tax-planning amounts to making How tax-planning can lead to wealth
investments or contributions in line with creation
• Research on mutual funds and debt instruments prescribed guidelines that lead to The Section 80C limit has been set at
• Tools like the Asset Allocator and MyPlanner which reduction in tax liability. Simply put, the Rs 100,000 in a financial year. This
empower individuals to plan and track their fi- tax liability is computed as a percentage means you can invest upto Rs 100,000
nances of the income. As per prevailing tax laws, every year in the stipulated investment
certain investments and contributions avenues or utilise the sum for paying
Our publication have been earmarked for claiming tax life insurance premium, repaying a
• Personalfn also publishes the Money Simplified, a benefits. When these investments and/ home loan and claim tax benefits. Now
free-to-download monthly guide to help you plan or contributions are made, the same are the same has a two-pronged effect.
your finances better. reduced from the income while First, you save tax at present, and
computing the tax liability. As a result, second, by investing the monies, you
Contact information the tax liability is reduced. No marks for are creating an asset/income for the
To benefit from Personalfn's services, please call us at guessing that lower taxes are a welcome future. For example, investments in tax-
break. saving funds, PPF and NSC will yield
Ahmedabad - 6450 5215 / 5216 Bangalore - 6535 9899 / 9900
returns in the future. Life insurance
Chandigarh - 653 5304 / 5305 Chennai - 6526 2621 / 2622 Section 80C premium repayment will mean that your
Now that we have discussed what tax- dependents will be provided for in your
Hyderabad - 6591 8423 / 8435 Jaipur - 650 1396 / 650 1397 planning is, the next step is to discuss absence. Finally, home loan repayment
Mumbai - 6799 1234 / 7536 New Delhi - 6450 5302/5303 how the same should be conducted. will lead to creation of an asset (a
Before that, an introduction to Section housing property).
Pune - 6602 9448 / 9732 80C is necessary. While there are a
Alternatively, write to us at email@example.com or visit number of sections in the Income Tax Act Let's not forget that we are talking
www.personalfn.com that offer opportunities for tax-planning, about investing Rs 100,000 (which is a
the most popular and pervasive one is significant sum) every year. Simple
Section 80C. maths tell us that Rs 100,000 invested
You can claim deductions under Section every year at 8.0% per annum (pa) over
17 visit us at www.personalfn .com visit us at www.personalfn .com 18
a 15-Yr period will amount to a Yr period. The scheme requires recurring insulated from any subsequent rate tax-saving fixed deposits is chargeable
substantial Rs 2,715,200. investments i.e. annual investments are change. to tax and subject to TDS (tax deduction
necessary to keep the PPF account at source).
How to create wealth active. The minimum and maximum You can make investments in NSC for a
Now that we have discussed tax- investment amounts are Rs 500 and Rs 6-Yr period to gainfully invest one-time Tax-saving fixed deposits can be utilised
planning, its benefits and how it can help 70,000 respectively pa. Investments in surpluses and to provide for needs that like NSC, to meet future needs that will
create wealth, let's come to the PPF are eligible for Section 80C will arise over a corresponding time arise over a predictable period.
interesting part - how to create wealth. deductions. Also the interest income frame.
We discuss some of the major investment from PPF is tax-free. 5. Unit linked insurance plans
avenues that offer Section 80C benefits 4. Tax-saving fixed deposits Unit linked insurance plans (ULIPs) are
and should form a part of your tax- At present investments in PPF offer a You must be aware of fixed deposits the most "happening" offerings from the
planning portfolio. return of 8.0% pa, compounded offered by banks. Tax-saving fixed life insurance segment. Simply put,
annually. However, this rate is subject deposits aren't very different. These are ULIPs are market-linked avenues that
1. Tax-saving mutual funds to revision; hence, investments in PPF fixed deposits, wherein investments combine insurance and investment.
Tax-saving mutual funds (also called may yield a higher or lower return going upto Rs 100,000 are eligible for deduction Premiums paid on ULIPs are eligible for
equity linked savings schemes - ELSS) forward, depending on how rates are under Section 80C. Generally, Rs 100 is deduction under Section 80C. ULIPs
are equity funds that offer tax benefits revised. the minimum investment amount. Tax- have been dealt with in detail in another
under Section 80C. Essentially, like saving fixed deposits have a 5-Yr article in this guide.
equity funds, these funds also invest You can make smaller contributions to investment tenure and no premature
their corpus in equities. However, the the PPF account. The same will help you withdrawals are permitted. In conclusion, remember that tax-
differentiating factor is the 3-Yr lock-in build a risk-free corpus for the future. planning is not just another dreary chore
and the tax benefits. While in a regular At present, most banks offer a rate of that has to be conducted annually. On
equity fund, the investor is free to sell 3. National Savings Certificate return in the range of 8.0%-8.5% pa. A the contrary, it's an opportunity for
his investment whenever he wishes to, National Savings Certificate (NSC) is higher rate of return (additional 0.5%) is wealth creation. Give the tax-planning
in a tax-saving fund, the investor must another assured return scheme. offered on investments made by senior exercise its fair attention and time.
stay invested at least for a 3-Yr period. However unlike PPF, it isn't recurring in citizens. Also the interest income from
Also, investments in a regular equity nature. Hence, an investor is required
fund aren't eligible for any tax benefits, to make a lumpsum investment that
but investments in tax-saving funds are matures after 6 years. The minimum IN A NUTSHELL
eligible for Section 80C tax benefits. investment amount is Rs 100, while there n Tax-planning helps in rationalising the tax liability.
is no upper limit for investing in NSC. n More importantly, if properly conducted, it can help in wealth
For a young investor like you who has Interest income from NSC is paid on creation.
time on his side, tax-saving funds should maturity; the same is also taxable. n Investments and contributions of upto Rs 100,000 under Section 80C
be the preferred tax-planning Interest accrued on NSC is considered are eligible for tax benefits.
destination. They will aptly match your to be reinvested; hence, it is eligible for n Tax-saving funds are market-linked avenues that can make an apt fit
risk appetite. reinvestment under Section 80C. in young investors' portfolios.
n PPF offers the opportunity to build a corpus over a 15-Yr period in a
2. Public Provident Fund Investments in NSC offer a return of
8.0% pa, compounded half-yearly. This n NSC runs over a 6-Yr period and can be used to invest short-term
Public Provident Fund (PPF) is an
assured return scheme (i.e. it offers rate is locked-in at the time of making
n Tax-saving fixed deposits from banks are also eligible for tax-benefits.
guaranteed returns) that runs over a 15- the investment. Hence investment is
n ULIPs combine insurance and investment in a single avenue.
19 visit us at www.personalfn .com visit us at www.personalfn .com 20
Real Estate Real Estate
How much real estate must you own? the change is adverse, it will lead to a based on the asset cycles; this rarely
downturn. Since there are several works and in any case is too time
For a lot of investors, at least in the clear why owning real estate is important factors at play at the same time, various consuming (you also need very accurate
Indian context, physical assets like real but owning it alongside other assets is assets are under different stages in their research to tell you beforehand which
estate and gold have traditionally held even more so. cycles. asset will see a downturn and which one
much significance. And the sharp run will witness an upturn). It is more
up in their prices has further ignited Every asset, like equity/debt, is governed This explains why at times equities are preferable to be invested in several
interest in these avenues. While having by different factors, which have an on a high, but gold isn't or why being assets in a pre-determined allocation so
real estate and gold (among other assets) impact on its price performance over the invested in debt is more profitable than that no matter which asset is in which
in your investment portfolio is critical, long-term. To understand this better being invested in equities or why real stage of its cycle, as an investor you are
this must not be dictated only by the consider debt (like corporate bonds, estate prices are on upswing but equity well-placed to clock a return in line with
prospects of making a gain. Rather, how government securities, debt funds), markets are depressed. While in theory your risk profile and in tune with your
much real estate you must own (which which is closely linked to interest rates, at least, it is possible that all asset long-term investment objectives. This
is the subject of this note) must be inflation and the economic health of the classes are witnessing the same cycle is like placing your eggs in various
governed by factors that are unrelated country among other factors. Then at the same time, in practice this is a rare baskets or as it is referred to in investing
to its price. consider equities, which are governed phenomenon (surprisingly, that rare parlance - diversification
by, apart from the abovementioned phenomenon is what we have been
So why and when should you buy real factors, performance of corporates/ witnessing over the last few years!). As an investor if you have a preference
estate? Before we answer these very companies. for real estate then its time to 'change'
critical questions let's first understand Why asset allocation helps your bias in light of this note. Rather,
some very basic points about investing. Notice that although there is an overlap Now consider an investor who does not you should remove all biases for any
to some extent between the factors that understand how asset cycles work, asset. On the contrary invest in various
Asset allocation govern the performances of debt and which is why he is invested heavily in assets according to a pre-determined
Any discussion on investing must begin equities, there are also factors that are real estate with only limited investments plan/allocation.
with what is known as a portfolio. An exclusive to each asset. On the same in other assets. At a time when real
investment portfolio (since it's related lines, real estate has factors that are estate prices are on an upturn and other At Personalfn, we maintain that you
to your investments) is a list of assets exclusive to its performance. Over the assets are on a downturn, the investor must have enough real estate/property
that you own in a certain proportion long-term, the exclusive factors set apart will benefit. But when the trend reverses for:
(referred to as allocation). So all assets the performance of one asset from (i.e. real estate prices decline and prices 1) your own residence and business, if
put together in a particular allocation are another. of some of the other assets rise), he will any, and,
referred to as asset allocation. not only part with the gains he made on 2) to give away as inheritance (which
What is an asset cycle and how it works his real estate investments but will also for someone of your age is quite some
A typical portfolio must include equities, The domestic and global economies are forfeit the opportunity to earn returns time away)
debt, real estate, gold and cash in a dynamic and are constantly witnessing on other assets. Typically, for most individuals property
particular proportion. Notice that real changes. These changes trigger a factor, must account for roughly 50% of assets.
estate does form part of the asset which in turn impacts the price That is why it pays to be invested across Owning anything significantly higher
allocation, but it features alongside other performance of a particular asset. If this various assets in a defined allocation to than that can prove self-defeating, as it
assets like equities, debt, gold and cash. impact is sustained, it will give rise to a benefit from the various asset cycles. will expose you to the uncertainties of
There are reasons why there are several cycle in that asset. If the change is Since you do not know beforehand real estate without adequate backup (in
assets in your portfolio. Once you positive it will lead to an upturn in the which asset is going to be in which the form of other assets like equities,
appreciate these reasons, it will become price of the asset; on the other hand if stage of its cycle, it is futile trying to debt and gold).
time your entry from one asset to another
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Real Estate Real Estate
Real estate: A case study It is however important to note that in in a reputed company are just two of can help you with the details particularly
To give you an idea, let us consider present times when one buys a property, them. Various banks have various while filing returns when your home loan
Kumar, a 26-Yr male, unmarried, who is it is very likely that it will account for a parameters with varying importance breakup (in interest and principal) must
in his first job. According to the lot more than 50% of the total value of accorded to each parameter. It's best to be defined.
Personalfn's Asset Allocation Review, one's assets. In such instances it does check with the banks while applying for
this is how his asset allocation should not mean that you do not buy your first the loan. So while it is pertinent to invest in real
appear: residential property because you will estate, individuals must curb their
exceed the 50% mark; what the Allocator Individuals who are looking at buying enthusiasm for it to ensure that their
Kumar's Asset Allocation tells you is the ideal allocation for you is property on a home loan have another investments in real estate are always
this and that over time you must reach reason to be pleased. Home loans are aligned to a well-defined and well-
Cash it. So, when you buy a property in eligible for tax benefits: balanced asset allocation plan.
FD/Bond 5% Mumbai, probably property will account,
10% for let's say, 80% of your assets. In such a) Interest on home loans is deductible Of course, drawing up an asset allocation
instances the incremental monies you from income upto Rs 150,000 under plan is not that simple. This is where an
invest should be in other assets (equity, Section 24 (b). honest and competent financial planner
debt, gold) so that over time their share b) Principal amount of upto Rs 100,000 comes into the picture. At Personalfn,
30% 50% increases and you reach your ideal is eligible for deduction under Section we always urge investors to hire the
allocation. 80C. services of a professional financial
Kumar is unmarried now, but in time planner who can help them devise a well-
plans to get married, he must therefore Buying property on a home loan If all this sounds very confusing, balanced asset allocation plan with a
consider buying a property on priority. Since it's likely that you are in an early consider taking advice from your defined allocation for real estate across
Personalfn's Asset Allocation Review stage of your career, your salary is chartered accountant or tax advisor. He various life stages.
recommends that Kumar must aim at probably not enough (add to this the
having 50% of his money in real estate. prohibitive property prices) for you to
He should invest in stocks/equity funds purchase a property outright.
(30% of assets) as equities can add Fortunately you do not have to rule out
IN A NUTSHELL
considerable value to a portfolio over buying a property for this reason. For
n Do not opt for property because prices are higher and it is easy to
the long-term. He must invest in fixed salaried individuals in particular there is
make gains on property.
deposits/bonds (10%) for stability; in help in the form of home loans.
n Owning any asset including property in unduly high proportions can
gold (5%) mainly for diversification (and be self-defeating especially when prices fall.
not for generating above-average Many banks offer home loans and n Investment in property and other assets must be in line with a pre-
returns as many investors are tempted salaried individuals stand a good chance determined plan referred to as asset allocation.
to do now when gold is at a high). He of qualifying for one. This is because n All assets have a cycle and trying to enter and exit an asset based on
must maintain 5% in a savings bank most banks prefer the steady income of its cycle is time-consuming and often volatile.
account for emergencies. a salaried individual to the irregular cash n Property must be held primarily for your own residence and to give
flow of a businessman, for instance. And away as inheritance.
While this is our estimate for Kumar, it is if you are working in a reputed company n Those who can't buy property outright, can consider taking a
not too different for other individuals. (as defined by the bank) then your home loan.
For instance an individual (in the 45-55 chances of getting the loan are n The principal and interest amounts on the home loan are eligible for
year old age group) who is married with enhanced. Of course, there are various tax benefits
children must also aim to have no more parameters on which home loans are
than 50% of his assets in property. approved, being salaried and working
23 visit us at www.personalfn .com visit us at www.personalfn .com 24
Credit Cards Credit Cards
Use your credit card smartly to find out is to check with the bank in interest on the unpaid amount along
the second year. It is possible that the with taxes. In the final analysis this turns
Traditionally, Indians have been quite about credit cards are related to bank may waive off the fees based on out to be very expensive.
averse to buying on credit. Don't look expenses, hidden or otherwise, that the your track record of making timely
too far; just ask your dad if he purchased user did not know (or was not informed) payments. If the bank does not waive 5. Payment by EMI
as much on credit, as you probably are at the time of opting for the card. To off the fees in the second year, you can On the same lines, whenever you make
now, thanks to your credit card. Your avoid distress at a later date, we have cancel the card. However, if you wish to a large purchase (usually over Rs 10,000,
dad probably never owned a credit card listed down some points that you must cancel the card in the second year ensure although the amount varies across
and if he did, he probably preferred to note while using the card: you do so before using it, because using banks) you may get an offer from the
use it only in emergencies. But that was the card indicates that you have agreed bank to opt for the EMI (equated
in the past; among the many customs 1. Term and conditions to pay the fees/charges for the second monthly installment) facility to make the
and trends that have undergone a How many times have you read this year's subscription. payment. This facility does not come
change over the last few years in the before - read the terms and conditions cheap and the interest on the EMI is
country, credit card usage probably carefully before signing up for anything. 3. Lifetime free cards prohibitive. Again to the extent possible,
ranks very high. For every product you purchase or Offering 'lifetime free credit cards' is a we recommend that you make the
service you opt for, always read the relatively new trend in the credit card payment before the due date in one go
Technically speaking, a credit card is an terms and conditions and that includes industry. While there was a time when and give the EMI facility a miss.
unsecured loan. This means that unlike credit cards. If you find anything in the most banks charged annual fees on their
a secured loan, which is advanced by a terms and conditions of the credit card credit cards, the industry is graduating 6. Borrowing cash is expensive
bank/financial institution against a that was not conveyed to you or is to a level where annual fees are being Credit cards can be used for making
security like property for instance, a contrary to what was conveyed to you, phased out. In effect, clients are being purchases on credit as also for
credit card is offered without any then seek a clarification from the bank. given lifetime free cards i.e. no annual borrowing cash. While making
security. In a secured loan, if the If you are not satisfied with the fees are charged. However, its best to purchases on your credit card (so long
borrower fails to make good on his clarification, dump the card. double-check with the bank what the as you pay on time) is okay, borrowing
principal/interest commitment, the bank/ executive has promised you about all cash on your credit card is a very
institution can seize the security as It's important that you read up on the annual fees being waived off. expensive affair. Avoid borrowing cash
compensation. In an unsecured loan like terms and conditions before you use the on your card; use the card to the extent
a credit card that is not possible. Hence card and not after. Once you use the card, 4. Minimum payment possible for making purchases.
banks take necessary steps to ensure it is assumed that you have read the One detail you will find relatively well
that only those meeting certain terms and conditions and have accepted highlighted in your monthly account 7. Insurance benefit
parameters are qualified to use their credit the same. statement is the Minimum Payment Due. Many credit cards are known to offer an
card. This is the minimum amount that you insurance cover. We recommend that
2. Annual fees must pay for the purchases done in that you ignore this benefit and go for the
Without getting into how you can It is common for banks to waive off the month so as to not attract a penalty for core offering - credit card. If the card
qualify for the credit card, let's annual fees/membership fees in the first default on payment of card dues. We has features that suit you, then you can
understand how you must use your card year (cards are usually issued for at least would recommend that you pay the entire opt for it even if there is no insurance
once you have qualified for one. Credit two years). The second year fees are sum to the extent possible. Buying on a cover. On the other hand, if the card
cards have their pros and cons, which usually charged. It is possible that you credit card is okay till the time you pay features are not to your liking then reject
explains the good and bad that get are promised that the second year's fees your bills religiously. The moment you it regardless of the insurance cover. In
reported about them. Not surprisingly, will be waived off as well. The only way carry forward your payment to the next any case, on most occasions the
many of the negatives that get written monthly cycle, you will have to pay insurance cover is usually linked with
25 visit us at www.personalfn .com visit us at www.personalfn .com 26
Credit Cards Spending
so many terms and conditions that it is insurance cover is unlikely to be
very difficult to claim the same. It is sufficient for you.
How to spend wisely
altogether another thing that the
In a guide targeted at the youth, to ignore idea of abiding by a budget for spending
spending would be akin to committing a may seem "uncool", it is nonetheless,
cardinal sin. Today's youth have higher the right thing to do.
IN A NUTSHELL
disposable incomes as compared to their
n Credit cards have their pros and cons. A major negative with credit
cards is related to the expenses. counterparts in earlier generations. The 2. Track expenses
n To have a better idea of the card expenses, read the terms and same has resulted in a significant change Again, tracking where you have spent
conditions carefully before accepting the card. in lifestyles. Objects that were your money may not qualify as an
n Check with the bank everything that is promised to you by the considered luxury goods say a decade interesting way to spend time, but it is
executive who sells you the card. If you are not satisfied, dump the ago have become necessities for the important nonetheless. It will provide
card. present generation. In fact, the young you an unambiguous picture of your
n To the extent possible use the card only to make purchases; avoid population has been a major contributor cash flows; this will put you in better
withdrawing cash and other facilities like the EMI option because it to the India growth story. It is widely control of your finances. More
is very expensive. believed that spending habits of the importantly, it will provide you an
n Make your entire card payment before the due date. youth will play a major role in vitalising insight into your spending habits. This
the economic cycle, going forward. in turn can help you understand the
areas that account for a significant
However, there is a need to understand portion of your expenses and give you
that spending in an unrestrained and the opportunity to do a reality check on
haphazard manner could spell disaster their utility.
for your finances. Spending should be
done with a degree of discipline and 3. Don't succumb to impulse spending
planning. We present four tips which It is now considered trendy to hangout
will help you master the art of spending. at malls, coffee shops and lounges. And
window displays and latest
1. Spend in line with a budget blockbusters are known to test the
Remember the longstanding method of resolve of even the strongest. A young
making a budget and then spending in individual with access to disposable
line with the same. That is still the right funds can be rather vulnerable in such
way to go about spending. Having a a situation. Resist the temptations and
clearly laid-out budget will help you don't succumb to impulse spending.
prioritise your spending. For example, This is especially pertinent if the
the highest priority must be accorded to spending will come at the cost of your
investments that have to be made in line monthly investment towards your
with investment plans and commitments retirement/home building corpus.
like life insurance premiums. Only when Always try to spend in line with your
the high priority needs have been taken budget.
care of, should the balance funds be
used for other expenses. Although the For example, while it’s good to take your
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friends to the movies or for a dinner once 4. Beware of credit cards
in a while, we recommend that it not be Easy availability of credit cards has
overdone. Movies/dinners can be very provided a major boost to spending. A
expensive propositions these days, credit card gives you access to high
which means that you stand to gain spending limits; also it liberates you of
significantly if you cut down these the worry about handling cash. But
outings even by say 20%. credit cards have their downsides as
well. For example, making the "minimum
For example, even if Rs 1,000 were to be payment due" could get you entangled
saved on these outings and invested in in a debt trap and force you to make
a diversified equity fund over 20 years interest payments at obscenely high
as a one-time investment, it would rates. In fact, credit cards are so
mature into Rs 16,366 (assuming 15% pervasive in the present day context that
compounded growth). we have chosen to dedicate an article to
the same in this guide.
IN A NUTSHELL
Today's youth have higher disposable incomes as compared to their
counterparts in earlier generations.
Spending in an unrestrained and haphazard manner could spell disaster
for one's finances.
Always spend in line with a clearly laid-out budget.
It helps to track expenses regularly.
Resist various temptations and don't succumb to impulse spending.
Use the credit card sparingly and for the right purpose.
29 visit us at www.personalfn.com visit us at www.personalfn.com 30