JagoInvestor Book By Manish Chauhan - Review

I am really happy to announce that, Manish Chauhan of JagoInvestor Blog has given me the opportunity to publish a review about his newly launched hard cover book JagoInvestor - Change your relationship with money.

What's the book is all about?

Jagoinvestor is as the name suggests, its the book about changing your relationship with your money. In layman's language, this book is all about basics of personal finance and financial planning related advises. This book is not about earning money but its all about how to manage your hard earned money. Its all about how to handle your money wisely.

If you are searching for some professional level of stock market or commodity market trading or investing book than this book is not for you. This book is for the people who want to increase their basic financial literacy by several folds as the book is written in very simple language that even a school going kid can understand its lessons and advises and change their financial life.

Believe me, if you are in your twenties and early thirties and this book is in your hand than probably it has changed the financial future of your entire family tree.


Good News

Now, the good news is that - the book is written in very simple and lucid language and you will gain lots of financial knowledge from its each and every page.
Another great news is that the book is full of diagrams, charts, tables and animations. This helps us to understand the subject very well.

As there is an old saying that - a picture is worth of 1000 words. And this old saying exactly applies to this book. Lots of diagrammatic illustrations and flow charts make this book really easy to understand.

Another good thing about the book is that, at the end of every chapter the book has action plans and question papers. The book has taken care that after reading each of its chapter you just don't become a couch potato but actually use your mind and take the action.


What's Inside the book?


As I have already told in the starting of the article that, the book is all about basics of personal finance and financial planning related lessons.

The book starts with extremely important financial advise - Start (investing) early. From the first chapter only, the book has emphasized the power of compound interest and benefits of starting early.

The book is divided into 7 chapters.
And each chapter contains lots of basic personal finance advises. You will amazed after reading these advises that how simple personal finance is.

In the Chapter 5: Change your relationship with money, there are almost a dozen of basic personal finance lessons. The most touched one lesson is - Time is the new Money.

Manish says that,

The so called 'busy' people have no time for their personal finance but they somehow find time to be on various blogs, chats and social media sites. Here you are wasting your time in small installments and you are not even aware of it. Always remember that NO capital is getting generated from these activities. No wealth is getting generated. There is NO increase in your bank balance due to it.

The above is the most touchy thought. In the internet world, the modern Web 2.0 applications actually consume your time. The same time could be utilized to gain immense financial knowledge or immense success.

The book has also chapters on goal planning, setting your financial goals, considering inflation while calculating your financial goals and many more things with diagrams and figures.


Is JagoInvestor-Change your relationship with money worth reading?


Yes. If you are a financial newbie and don't know anything about basics of personal finance. Financial literacy is not given to us in any part of entire India and that's why when we leave our schools and colleges, we have hard time to manage our money. This is because much little has been taught to us about the most important element of our life - Money.
This book is for every Indian (or NRI) who want to do successful financial planning for their various long and short term financial goals like your retirement, child future planning, child education, marriage and many others.

No. If you already have some basic level of financial education and you have already done a successful financial planning for your financial future (And if you think that you have done it correctly...!!!).


How to Buy this Book?


The best way to buy this book is - Online according to me. Just visit Flipkart.com and buy this book and the book will be delivered at your home.
If you don't want to buy it online, visit your nearest Crossword book store or some other reputed book store. If your nearest book store does not have this book, request them to keep this book in their store and they will arrange for this book for you.
So getting this book in your hand is not a big deal.

Price of the Book

The Hard cover printed price of the book is Rs.499 per hard cover copy which is I think a very reasonable price. (You won't believe it but I have literally spend thousands of rupees per hard cover copy for some foreign personal finance authors like Manish.) The binding of this book is very good. So this book will remain with you a long time.
You can also think of giving this book as a present to your family and friends.



Update:

One request to Manish.

Manish kindly send the FREE books to the readers with your signature, date and time on the first page of the book. This is a good practice.
When I received your hard cover book for FREE, I was expecting your signature on the first page of the book.
My request to you is kindly send the book with your signature to the people who participate in the following offer by Moneysights.com

http://www.jagoinvestor.com/2012/02/free-jagoinvestor-book-by-moneysights.html

Spend Your Annual Bonus Wisely

Spend your annual bonus wisely

Annual Bonus is a very important component for any working professional. Normally, every individual has his own plans on how to spend it before it hits your salary account. But there are a few people who don’t know what to do with this extra money and where they should

· Spend

· Invest

· Save

Normally professional in the mid 20’s spend it on luxuries and later on repent on it “I should have invested it somewhere” This is how you can spend your annual bonus wisely and stay ahead of others in financial planning

1. Invest in Mutual Funds to create wealth

Investing in mutual funds especially equity mutual funds helps in creating long term wealth by diversifying in 3-4 schemes. You must consult your financial planner (not sales agents) before you plan out for your future. Mutual funds have historically given a return of 15-18% which can make your money 27 times in 20 years considering 18% rate of return. This means if you have received a annual bonus of 1 Lakh, it can become 27.85 Lakhs considering 18% rate of return and 20 years of time period, the money which will need at your retirement or for your child’s marriage. SIP in Mutual fund is an another way to create a huge corpus for your future needs.

2. Prepay your Expensive Loans

In case you are holding any personal loans or credit card debit account, you must pay them first. Never delay expensive loans as it can disturb your whole financial plan. Credit cards sometimes act as a debt trap as nearly 35 monthly interest can hit your badly

3. Tax Planning

You can look to save tax through various deductions under various sections. You may invest your bonus amount in Equity linked savings scheme (ELSS) or in PPF or some other assest class which may help you to save tax upto 1 Lakh under Sec 80c. By this you can save your tax and take the benefit of power of compounding in your investments.

Now its upto you whether you want to save, invest or spend your annual bonus

This article is written by Mr. Mayank Gupta who blogs at www.wealthbazaar.in which is into portfolio advisory services and financial planning

The 80-20 Rule of Investing

The 80-20 Rule of Investing

I think the readers must have heard of the Pareto Principle,which is also known as the 80/20 Rule. This principle states that 80 percent of your results will come from 20 percent of your efforts. And this applies to investment in stocks also.

Whenever I ask any investor about how he started off investing. He would normally reply. I have invested 5 Lakhs in Fixed Deposits. Another one says, he has invested 5 lakhs in Mutual funds. In recent times, because the markets were not volatile, people tend to forget about assest allocation of funds.

Assest Allocation of funds means percentage of your assests in Equity, Debt & other assest classes like Gold, Fixed Deposits. If we talk about the risk & return matrix, Mutual funds which invest in equities had given 18% returns in the past whereas Fixed Deposits give 8-9% return. Equity markets are volatile & risk, and there is no guaranteed returns. In Debt funds, you may get guaranteed 8-9% returns. So what should be the assest allocation for any investor. I would say as a rule of investor. Invest in Mutual funds 100 minus your age. It means if your age is 35, you should invest 100 minus 35, 65% of your total investment in mutual funds & remaining in debt funds.

Similarly for a investor above 50, he should invest 50% of his investments in equities, remaining in debt.

The conclusion should be , one must be active while investing & must use assest allocation tool to plan his/her investments or hire a wealth manager. This would help him in getting returns in line with his expectations. SIP in Mutual Funds is the best route for retail investors to put their money in stocks indirectly & leave the decision of which stocks to buy in the hands of fund manager

This article is written by Mr. Mayank Gupta, financial planner, who is into Portfolio Advisory & wealth management

Get Richer by Avoiding this Money Mistake

Get Richer by avoiding this Money Mistake

Mental Accounting is one such money mistake even smart people are committing. Understanding this mistake and avoiding this could make us richer.

Behavioral Finance experts say that mental accounting works this way: Let us say you have bought a Rs.200 ticket to a movie. When you show up at the entrance of the theatre and realize you have lost your ticket, do you buy another ticket?

If you are like most people, you would probably think twice. You may still drop down the money, but you will now feel that you paid Rs.400 for a Rs.200 movie.

But let's construct the scenario differently. Let’s say you hadn’t bought the ticket yet, and you show up at the entrance to buy your ticket. Unfortunately, you realized you’ve lost Rs200 in cash since you walked from the parking place. But fortunately, you still have enough in your wallet to cover the cost of the ticket. Do you buy the ticket? Again, if you are like most people, you may feel upset about the lost money, but it probably won't affect your decision to buy the ticket. Why?

Behavioural Finance experts conducted similar experiments. They found that 46% of those who lost the ticket were willing to buy a replacement ticket. On the other side 88% of those who lost an equivalent amount of cash were willing to buy a ticket.

Both scenarios are a loss of Rs.200. However, in the second scenario you separate the loss of the Rs. 200 from the purchasing of the ticket. In the first you consider the cost of the movie as a total of Rs.400 and suffer at the high cost.

It is because of the psychological phenomenon known as mental accounting. One of the fundamental concepts in Economics says that wealth in general and money in particular, should be fungible. Fungibility, in a nutshell, means that Rs.100 in lottery winning, Rs.100 in salary and Rs.100 tax refund should have the same significance and value to you since each Rs.100 has the same purchasing power at the market. But do you treat them in a similar way?

Mental accounting has enormous consequences in your daily life. It affects how you spend money and how you save. It influences how you deal with losses and windfall gains.

How Does Mental Accounting Affect You?

1) The source of the money affects how it is spent.

v You tend to dine lavishly with the “gift meal vouchers” given by your company. But you will be dining consciously if you are paying out of your salary.

v You are most likely to spend more with credit cards than with cash.

v You may consider Tax refund as“free money”. In actual terms it is your own money. You will not spend tax refunds, birthday gift money or lottery winnings on essential things like utility bills, school fees, paying off your credit card debt. But you will be more than happy to spend the same money on discretionary items such as vacations or a trendy mobile phone.

2) Don’t be a victim of ‘Relative cost’.

Assume you are going to a super market to buy a laptop. The price is Rs.40000. But you get to know that there is another branch of the supermarket, a ten minutes walk away, in which the same laptop is sold for Rs.39950. Will you walk down to the other branch?

Let us say instead of buying a laptop you have planned to buy a memory card. The price at the supermarket is Rs.100 and at the other branch is Rs.50. Where will you buy the card?

Most of us will make a trip to the other branch for the memory card but not for the laptop. Because we think that the Rs.50 saved on a Rs.100 item is better than the same amount saved on a Rs.40000 item.

But both the situation is same. You save Rs.50 by making 10 minutes walk to the other branch.

Remember that money is money. Rs.50 saved on Rs.40000 laptop is not less money than Rs. 50 saved on Rs.100 memory card.

How to face Mental Accounting and spend consciously?

• You can use mental accounting to your advantage by spending money out of your salary. Immediately invest the “free money” like Tax refunds, gifted money or any other windfall gains.
• Imagine that all income is earned income.
• Use the free meal vouchers and other gift vouchers to buy essential items.
• Pretend you don’t have a credit card. I am not telling you not to use credit cards. I am saying you should stop and think: would I buy this if I was using cash?

A Successful Practical Strategy:

You can have two bank accounts. One for the purpose of savings and the other one for spending.

Every month you need to set aside some amount for expenses as per your budget or previous experience. That amount you need to transfer to your spending account. Balance amount you need to keep it in savings account.

You need to meet all your expenses including your credit card payment from the spending account. You should not spend from your savings account.

In between, if you receive any cash gifts or windfall gains, deposit them in your savings account. If you receive gift vouchers, then transfer the money equivalent of that voucher from your spending account to your saving account. That is your spending limit will not go up by just receiving the gift voucher. So that you will not use it lavishly and use it only on pre-planned things.

When it comes to money your mind unconsciously plays this trick of mental accounting. You have understood that today. So hereafter, you can avoid this mistake and you become richer day by day.

The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in.

Eight Simple Ways to Plan your Taxes

Eight Simple Ways to Plan your Taxes.

You have got only a few more months to complete this financial year. Very soon you will get a call from your company to submit the proofs for tax saving investments. So why don’t you spend some time on organising your tax plan?

1) Proper Allocation of Annual compensation

Restructuring your salary with some additional components can reduce your tax liability. This restructuring doesn’t require any additional cash outflow. The following components can be efficiently used to reduce your income tax liability.

v Transport allowance to the extend of Rs.800 is exempt

v Medical expenses which are reimbursed by the employer are exempt to the tune of Rs.15000

v Food coupons like sodexo or ticket restaurant are exempt from tax up to Rs.60000

v Individuals who are all living in a rented accommodation can include House Rent Allowance ( HRA ) as a part of their salary

v Leave Travel Allowance (LTA) can be part of your salary as this can be claimed twice in a block of 4 years.

2) Effective Utilization of Tax Exemption

As far as possible utilize the maximum exemptions available under section 80 C, 80 CCF and 80 D. The maximum exemption available under section 80 C is Rs. 100000.

Under this section Rs.100000 investment or contribution can be made in PPF, NSC, Life insurance premium, 5 year FD with banks and Post offices, Mutual Fund ELSS, Principal Repayment of housing loan, and the tuition fees paid for children’s education.

Under Section 80 CCF, you can invest up to Rs.20000 in infrastructure bonds.

Under Sec 80 D, the premium paid towards the mediclaim policies are exempt. The maximum limit of exemption is Rs.15000 and for senior citizens the limit is Rs.20000 and for covering senior citizen parents there is an additional exemption to the extend of Rs.15000.

3) Properly Structure your Housing Loan

The Principal repayment of a housing loan is eligible for a deduction up to Rs.100000. The interest paid on a housing loan is eligible for a deduction up to Rs.150000. If the housing loan is for a sizeable amount, then it is possible that the principal repayment and interest may exceed the specified tax exemption limit. To utilise the maximum tax benefit, an individual can consider going for a joint home loan with his/her spouse or parent or sibling. This will make sure that both the co-owners can claim tax deductions in the proportion of their holding in the loan.

4) Tax Plan in Sync with Overall Financial Plan

You should not do your tax plan in isolation. You need to do it in sync with your overall financial plan. So a tax plan is not only to just save taxes and also it should assist you in achieving your other financial goals like children’s higher education, buying a home or retirement.

5) Avoid Last Minute Rush

In fact the right time to do the tax plan is the beginning of the financial year. If you postpone your tax planning even now and do it in the last minute, then you will not be able to choose the right investment. In the last minute rush, you will be forced to choose a scheme which gives the proof immediately. Is the investment sound and profitable? Is there any other better options? You will not be able to choose the best scheme and you may settle with a mediocre one.

6) Invest Some Quality Time

Before investing your money, you need to invest your time. You need to take some quality time to understand the various tax saving options and compare their benefits and limitations.

7) Check for Future Commitments

Some tax saving options like NSC or ELSS need only onetime investment. Some other tax saving options like PPF, Ulips need periodical investments year after year. You need to be careful in choosing a tax saving scheme where you need to commit for periodical future payments. You need to check on a few things like; do you need such a future commitment? Will you be able to meet the future commitments at ease? The law may change and you may not get any tax exemption for your future payments. Would you consider the scheme irrespective of tax benefit for the future payments?

8) Changed Your Job; Redo your Tax Plan

Did you switch your job in the middle of the financial year? Then you need to redo your tax plan with consolidating the income from both the companies. It is advisable to inform the new company about the income during the particular financial year from the old company. So that your new company will deduct the right amount of TDS. Otherwise you may need to pay extra tax at the end of the financial year.

Whenever you change your job, you need to have a sitting with your financial planner or tax advisor. So that the required changes in your tax plan can be done proactively.

With proper tax planning you can reduce your tax liability; save more; invest better and become wealthier.

The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in.

A Step by Step Guide to First Financial Plan

A step by step guide to first financial plan

Prabu was a college student till yesterday. Today he has got a job. He has changed his costume from T-shirt and jeans to a formal wear with a tie. When he got his first pay cheque, his father advised him to save, his girl friend asked him to take her out on a date, and his friends wanted a party. Prabu was totally confused what to do with his first salary. What are all his actual priorities? Let us help him by laying out a step by step initial financial plan for him.

Get a PAN Card:

PAN Card is an ID card issued by income tax department. This card is useful in filing your Income Tax returns. Apart from this, the PAN card is very much useful in opening a bank a\c, demat a\c, investing in mutual funds and the like. The required documents for getting a PAN card is a passport size photo, address proof and an identification proof. You need to apply with either UTI or NSDL. They are the two approved agencies by income tax department for issuing PAN card.

Personal Accident and Disability Insurance:

Almost every day you can find a news column about road accident. It may be your colleague, your distant relative, your neighbor, your friend, your classmate. The stories of such incidents give us a reminder that the accidents can happen to anyone. The impact of these accidents on ones working life could be huge. Some accidents could reduce our employability temporarily or permanently. Personal accident and disability insurance policies will cover the financial losses arising out of accident and disability.

You need to decide the coverage amount of this policy based on the estimated loss you may suffer because of accident. That is how much loss you may incur from employment temporarily or permanently because of the accident. This will cost you approximately Rs.1500 p.a for a coverage of Rs.10 lakhs.

Health Insurance:

Most people don’t think about health insurance very often. But it comes to mind first when a loved one is sick. Under health insurance, the insurance company pays the medical bills if the insured person becomes sick and hospitalized. Health insurance can protect a family from financial damage in case of severe and serious illness.

If you have a health insurance from your employer, that may not be sufficient. Employer may cover the employee and not his family members. And moreover these policies are not portable and cannot be individualized if you leave the job. Employer provided policies cannot be transferred to another employer in case you switch your job. Also employer provided policies will give you coverage as long as you are employed. Once you retire you may not be having coverage. It is really unfortunate that only after your retirement you need health insurance at the most. If you plan to take a fresh policy after retirement, insurance company will not cover the pre-existing diseases at that point in time. Though your employer provides a health insurance policy it is better for you to take a separate health insurance policy at least with a small amount of coverage.

The coverage amount of the health insurance policy need to be decided based on your health consciousness, your family health history, and the class of hospital you choose for treatments.

Term Insurance:

Generally as a beginner, there will not be any requirement for any life insurance. But if your parents are financially depending on you, then you need to cover yourself with life insurance. As a breadwinner, today you are there for your family to provide a lifestyle. In case of any mishappening to you, your family members should not compromise on their lifestyle. That is why it is advisable to cover yourself with life insurance if you have dependents.

But don’t fall prey for ulips. Go for a pure term insurance policy. These policies give you a high coverage with low premium. The premium for a sum assured of Rs.10 lakhs will cost a 25 year old only Rs.2500 p.a. approximately.

Emergency Reserve:

Once you have completed the above obligations, you need to build an emergency reserve or contingency fund. One aspect of financial planning involves planning for situations where there could be a temporary break in one’s professional income. This could happen, amongst other reasons, due to ill health or could even be self opted. Such planning requires creation of contingency fund. The size of a contingency fund is linked to one’s estimate of what could be the maximum duration of such a break. For instance some people plan for the possibility of a 3 months break, others for 6 months.

This emergency fund gives a psychological security to you. In case you need to quit you r present job and need to search a new one, you can do that comfortably and confidently as you have an emergency fund for the intermediate period. You need not panic. If you have created a contingency fund, in the event of any emergency you need not pre-close your other investments and hence you avoid paying penalty or booking losses.

Tax Planning:

You can save under section 80 C up to Rs.120000. Out of this Rs.20000 need to be invested in the infrastructure bonds and the balance Rs.100000 can be invested in NSC, PPF, insurance premium, and ELSS mutual funds., You can give maximum allocation to ELSS mutual funds, as you are so young and in the beginning of your career.

Other goals:

You may have other goals like buying a laptop, higher studies, and vacation. You need to plan for all these goals. You need to keep in mind two things before deciding an investment. They are your risk tolerance and time horizon. How much risk you are afford to take and psychologically comfortable in taking? When do you need this money back? Based on the answers to these questions you need to choose the right kind of investment plan.

Plan out your work and work out your plan. Normally we don’t plan to fail, but we fail to plan.If you work on your financial plan, when your friends are partying and taking their girlfriends out, you will be definitely going to be retired richer than your friends.

The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in.

Does Your busin Professional Schedule offer you time to Monitor your PF?

Is lack of time making you go crazy in your attempt to plan your finance?

Does your busy professional schedule offer you time to monitor your personal finance?

Balaji is working for an MNC. Today he has got a deadline for a particular assignment. His day is fully packed. First thing in the morning, he receives a mail from his HR Dept stating that today is the last date for producing proofs for tax saving investments; otherwise a huge amount will be deducted from his salary as tax. He wanted to do some tax saving investments urgently and submit the proof on or before end of the day.

Mahesh is an NRI, working for a software company in US. He has got a couple of crores in his overseas fixed deposits giving a return of 1.50% p.a. Returns are taxable. At times, he thinks that the return what he getting is very low. He wanted to check up with a professional financial planner in India. He thinks he will contact as soon as his present project gets completed. Like this he has not contacted any financial consultant for the last 3years because of some reason or the other.

Most of the investment decisions are either taken because of some compulsion or urgency or postponed because of compulsion or urgency in some other area of life. This is because we want to complete the urgent thing first not the most important thing. Many important things that contribute to our overall financial objectives and give richness don’t tend to give any pressure on us. Though they may not be urgent, they are the things that we must give importance and carry out immediately.

We act upon things like pressing problems, deadline-driven projects, and official meetings. We don’t give importance to

· prepare for a meeting with a financial planner; appraising a financial planner before making investments

· planning activities like budgeting, children’s future planning, retirement planning;

· protective activities like taking a term insurance, house holder policy, health insurance;

· empowering ourselves by upgrading our knowledge with reference to investments

Why we are not able spend time on important things and spend most of our time on urgent things? Because, we are following a way that focuses on how fast or efficiently we are getting things done. We are not following a way that focuses on why we are doing things.

Take the case of Mr.Balaji. Why didn’t he do his tax planning during the beginning of the financial year itself? Why is he chasing at the last minute? Balaji is much worried about his deadline for assignment than tax planning. As he is making investment urgently, it is difficult for him to choose the right financial advisor and also difficult to judge which one would be the best tax saving option for him. He will be investing with an advisor who can get the investment proof on the same day. Is this the basis on which we select an investment advisor? Will the relationship of Mahesh and this advisor be a long term one? Will this investment is going to be of any help to Balaji in meeting the higher education expenses of his son after 15 years?

Coming to the case of Mr. Mahesh, he had couple of crores at 1.5% pre-tax return. He could have tripled his returns by investing in an Indian liquid fund which is very safe. There are far better investment options available for him to choose. But he has settled for 1.5%. If he could have spent a day or two in carefully choosing the right financial advisor and investment product he could have earned more. The earning opportunity which he missed with his investments might equal to his 6 months or 1 year salary.

He could have generated that passive income equivalent to 6 month or 1 year salary without any pressure from the top management; without meeting any deadlines by just spending a day or two.

We are all working hard for money. Is our hard earned money is working for us or lying in our SB a/c or really growing?

We find a ladder and see there are so many people trying to reach the top of the ladder faster. Then we also follow the group, deadlines to be met in each and every step; focusing more on reaching the top and finally reached the top. Only after reaching the top, we realize that we have come to a very wrong place or a place which is not worth missing so many things and opportunities in life. This is how the today’s world is.

Nothing wrong in working harder or focusing more on completing the assignment or spending more time on finishing the project on deadline. These are all good thing to do. But always remember, there are better and best things to do. We keep too many good things ahead of a few best things.

Setting up financial goals; working out a plan for achieving those goals; and implementing those plans are all best things to do in life. You know in advance where you want to reach exactly, by doing this exercise. As we progress, we enjoy the journey. As we reach the place, we really feel happy and we have not missed any important thing on the way.

Procrastination and not giving priority to financial goals and investment plans are costliest mistake one can take. So let us stop procrastinating and give priority to our financial goal setting and investment planning. Then life will be really so beautiful.

The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in.

Portfolio Management Scheme: A Unique Investment Opportunity

Portfolio Management Scheme: A unique investment opportunity

What is Portfolio Management Scheme?

Portfolio management scheme popularly known as PMS are specialized investment vehicle for lump sum investments. The portfolio manager invests the money in shares and other securities and manages the portfolio on behalf of the client.

One can invest fresh money in Portfolio Management Scheme and the portfolio manager will construct a portfolio by deploying that money. Also one can transfer his existing share portfolio to the Portfolio Management Scheme provider. In that case, the portfolio manager will revamp the portfolio in sync with his investment philosophy and strategy.

Once the Portfolio Management Scheme account is opened, the client will be given with a web access to his portfolio. The client can look at where the portfolio manager is investing client’s money. Also one will be able to generate reports like Investment Summary, Portfolio Transaction List, Performance Analysis, Portfolio Statement and Quarterly capital gain report.

As a result, Portfolio Management Scheme relieves investors from all the administrative hassles of investments.

Portfolio Management Scheme Vs Direct Stock Market investment:

One can directly invest in stock market. Then what is the advantage of investing in the stock market through a Portfolio Management Scheme. Investing in share market demands knowledge, right mindset, time, and continuous monitoring. It is difficult for an individual investor to meet all these demands. But a Portfolio Management Scheme meets these demands easily. The Portfolio Management Scheme will be managed by an experienced professional. It saves the time and effort of the individual investors. Hence it is advisable to outsource the stock market investment to a sound Portfolio Management Scheme operator instead of managing it on our own.

Portfolio Management Scheme VS Mutual Funds:

Mutual fund is also a good investment vehicle. It should also form part of your total equity investment. But mutual funds are mass products. So they will be conservative by nature. As per SEBI regulation, mutual funds have some investment restrictions. There is a maximum limit on the percentage of amount invested in an individual stock. Also there is some maximum cap on the exposure in a particular sector.

Once the fund manager reaches the maximum limit prescribed by SEBI, he is forced to invest in some other stock or some other sector. That is why we see a large number of stocks in a mutual fund portfolio. Where as a Portfolio Management Scheme will invest in 15 to 20 stocks. This concentration makes it more attractive and aggressive. Managing a 25 lakhs Portfolio Management Scheme portfolio will be more flexible when compared to managing a 2000 crores mutual fund portfolio.

Portfolio Management Schemes relatively have more flexibility to move in and out of cash as and when required depending on the stock market outlook.

Basically the conservative portion of your equity investment can go into mutual funds. The aggressive portion can go into Portfolio Management Scheme.

How to choose a best Portfolio Management Scheme?

There are so many Portfolio Management Schemes in the industry. So it is really very difficult to choose a good Portfolio Management Scheme provider. Here are some factors to be considered before choosing a Portfolio Management Scheme.

1) Yardstick for Performance:

One should not just go by the past performance alone. Making an analysis on various Portfolio Management Schemes in the industry with their past performance along with the risk adjusted return and the consistency of performance will be useful in selecting the best Portfolio Management Scheme.

2) Minimum Investment Criteria:

Investors need to avoid Portfolio Management Schemes where the minimum investment is less than 25 lacs. Even there are Portfolio Management Scheme operators who keep minimum investment for their schemes as low as 5 lacs. But these kinds of Portfolio Management Scheme operators will have more number of PMS accounts. When the quantity (the number of PMS A\cs) goes up the quality (the performance) may relatively come down.

Therefore it is better to choose a Portfolio Management Scheme where the minimum investment is 25 lacs or more. So that our PMS A\c will be directly handled and managed by the top level portfolio manager and not managed by the juniors and analysts. If you are planning to invest less than 25 lacs, then the ideal investment product for you would be mutual funds.

3) Conflict of interest:

Portfolio Management Schemes have been run by some stock broking companies as well as investment management companies. There is a conflict of interest in Portfolio Management Schemes run by share broking companies. The main business of a share broking company is to earn commission income by facilitating the share market transactions.

Portfolio Management Scheme is an additional business for them. It is not their core business. Hence there may not be enough focus on the Portfolio Management Scheme business. Also they may indulge in doing undue and unnecessary churning of the clients’ portfolio to earn more commission income. This will cause additional expenses and short term capital gain tax to the client.

The core business of investment management companies is managing the investments of their clients to earn management fees. So, with the Portfolio Management Schemes run by investment management companies, there is no conflict of interest or vested interest. Therefore it is always advisable to choose a Portfolio Management Scheme offered by investment management companies.

4) Role of Professional Financial Planners:

A professional financial advisor or financial planner will study and analyse the Portfolio Management Schemes run by various stock broking companies as well as investment management companies. If we approach them, they will guide us in choosing the right Portfolio Management Scheme depending upon our requirements and other factors.

Also a professional financial advisor will continuously monitor the performance of various Portfolio Management Schemes and advice the client on a regular basis on the performance of the Portfolio Management Scheme where the client has invested vis a vis the other PMS schemes in the industry. After a certain period, if necessary he may advice you to move from one Portfolio Management Scheme operator to the other.

ESOPs and Portfolio Management Scheme:

ESOPs are provided by the companies to its employees based on their service. Most of the employees are of the opinion of keeping the ESOPs as it is forever because it is their company shares. But logically it is too riskier to invest in a company to whom you work for. Because, your employment income as well as investment income will depend on the performance of a single company.

So it is not advisable to keep your investments in a company where you actually work. So it is at all times advisable to transfer your ESOPs to a Portfolio Management Scheme. They will revamp it to construct a well diversified portfolio.

Portfolio Management Scheme is an aggressive investment product and really suitable for those investors

• Who have a share portfolio and find it difficult to manage.
• Who have enough exposure in Mutual funds and looking for a different and good investment option
• Who have sizable ESOPs.

The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in.

How to Create w Workable Budget that gives you money and life?

How to create a workable budget that gives you money and life?

"Modern man drives a mortgaged car over a bond-financed highway on credit-card petrol."

Taking control of your cash inflow and outflow is the base for financial planning. Budgeting is important to gain control over your financial life, be prepared and avoid surprises, save for a major purchase, get out of debt and stay out of debt, expand your lifestyle, and to retire early.

Thiruvalluvar, a much celebrated Tamil poet emphasizes budgeting through his following lines:

Incomings may be scant; but yet, no failure there,
If in expenditure you rightly learn to spare. (Kural: 478)

Who prosperous lives and of enjoyment knows no bound,
His seeming wealth, departing, nowhere shall be found. (Kural: 479)

Most of us hesitate to make a budget because we think it is about cutting all the fun in life. Budgeting is not about cutting all the fun; it is about conscious allocation of funds. Once we start spending consciously, our mind will find out a whole new way of having fun within the budget.

Making Budget: A step by step guide

There is a saying, “God is in the details”. Detail every bit of your financials while creating a budget.

1) Check your financial statements:

It could be your utility bills, d’mat account statement, other investment receipts, ITR, Form 16A, Form 16, bank statement, credit card statement etc. The idea is to make out the monthly average of income and expenses. Therefore the more details you can get the more relevant and accurate will the budget be.

2) Listing out income from all sources:

It is very easy for us to list down the income from employment or self employment. Normally we will lose track of income from investments, rental income and other miscellaneous income. Also check is there any annual income. Don’t forget to record the incomes received by way of cash equivalents like meal voucher and credit card reward points.

3) Finding out your total expenses:

We can easily list down the major expenses. But listing out the miscellaneous and petty expenses would be difficult. This is where the collected financial statements would help. Don’t forget the annual expenses like car insurance and property tax. Once you have recorded all the expenses then split them into fixed expenses and variable expenses. This classification will provide much more clarity.

Most people are surprised to learn that it may go for things that we do not need at all. Writing your expenditures down provides us with the unique opportunity to visualize and find out if any money goes for things that we do not need or want.

4) Are you saving or over spending?

Now you have your total income as well as total expenses. Deduct the total expenses from the total income. You will know whether you are saving some money or doing over spending. If you are saving some money channelize that money into the priority areas such as clearing your credit card outstanding or any other loan to become debt free or retirement savings or children’s future plan. If you are on over spending, then you need to make some adjustments to expenses.

5) Review your spending pattern:

On your expenses list, pay close attention to the variable expenses. This is where you can cut short a few expenses.

Every month we need to keep aside appropriate amount for the proportionate annual expenses.

You can find out the reasons for over spending. Most of the cases it would be emotional buying or unplanned shopping. Once you have pointed out the reasons for overspending, then find out the steps or precautions to be taken to rectify the same.

6) Are you on the track? Check monthly:

Every month set aside an hour to compare the actual expenses with the budgeted expenses. If there is a negative deviation, find out the measures to control them.

Why your earlier budgeting attempts failed?

Budgeting is not a onetime activity. It is a continuous process. Normally we start budgeting with a genuine motive. But after a few months it may get off-tracked like our attempts on dieting or exercising. Therefore one needs to understand the behavioural aspects of budgeting.

1) Positive Approach:

Never focus on the negative aspects. Focus on the benefits of successful budgeting. What will you accomplish by creating a budget? It could be becoming debt free, some money for vacation, planning for retirement or children’s future.

2) Keep your enthusiasm alive:

Budgeting may over a period of time become routine and hence boring. Set a few short term goals like trying to repay the personal loan in 18 months instead of 36 months. If you achieve it reward yourself. Recognition could be a good motivating factor. Inform all your family members, friends and well wishers about your progress on budgeting. You can also join in some of the forums related to money management.

3) Have a realistic expectation:

One needs to keep realistic expectation on the outcome of the budget. Over expectation may demotivate you. Budgeting is not a magic. It is an art like singing and dancing. You will be able to progress it only over a period of time with constant practice.

If you have not done budgeting for yourself and family so far, then now is the right time to take action. The fact that you are reading this article shows you have decided to stop procrastinating, and have answered the ancient question, “If not now, when?” with “NOW!”.

The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in.

AEGON Religare Rising Star Child ULIP Plan Review

AEGON Religare Rising Star Child ULIP Plan Review

Let us today review AEGON Religare Rising Star Child ULIP Plan.

Download Brochure

This is one more ULIP plan which claims that it will secure the future of your child. However, I personally don’t think so. This is because Insurance cum investment products (especially child future plans and other types of ULIPs) are the wealth suckers. They slowly erode your long term wealth by charging lots of charges of various kinds for you.

According to the plan, the minimum annual premium is Rs.20,000 per annum. The minimum age of entry for the parent is 18 years (1 day for the child beneficiary), with 60 years (15 years for the child) being the upper limit . The minimum cover, depending on the parent’s age at entry, is 7-10 times the annual premium, while the maximum is 30 times the amount.

The plan offers you 4 types of options.

01) Secure Fund

02) Stable Fund

03) Debt Fund

04) Accelerator Fund

What I personally don’t like about child future plans is their high level of opacity and lots of charges. Let me explain you this in detail.

Well, say for example, Accelerator fund invest 80-100% of your money in equity. But well, they have not mentioned anywhere that in which stocks they will invest? – Large cap, midcap or small cap or mixed and in how much proportion?

While in case of Equity Diversified mutual funds everything is clear. Not only this but if the fund manager leaves the scheme than also you can know and suppose if the fund manager changes his investment strategy than also you can know because everything is very transparent.

But well, this is not the case of ULIPs and child future plans. In case of mutual funds, suppose if the fund doesn’t perform well than you can any time exit from that fund and invest in some other fund. But in case of child future plans suppose if the fund performs bad, you can’t exit and if you exit, you will have to pay lots of charges.

Let us discuss various charges associated with this plan.

01) Premium allocation charge – 4.40% for the first year, 3% for 2-5 years, 2% for 6-10 years and 1% from 11 years onwards.

Thus, during the entire tenure of the policy, you will have to pay this charge while mutual funds don’t have any entry load or any other recurring charges other than fund management charges (That is maximum 1.5% per annum).

But well, here the story doesn’t end. Even after paying premium allocation charges, you will still have to pay fund management charges (FMC) in this plan.

02) Fund management charges – 1-1.30% depending on the type of fund you select.

Thus, there is no sense of paying two separate charges here. Another drawback of Child plan like this is that, it gives you just 10 times insurance cover than the regular premium so it means that for 20,000 of annual premium, you will get insurance cover of just Rs.1 lakh. This is really a low life cover.

Pure term life insurance plans offer much better cover than this.

My Opinion -

No need to go for this plan. If you really want to plan your child’s financial future than buy a term insurance plan and invest rest of money in 2-3 equity diversified mutual funds carefully selected from Valueresearchonline.com via SIP.

Term Insurance + Equity Diversified Mutual Funds (3-4) is the best combination to build some long term serious wealth for your child.

Flat Rate Vs Reducing Rate – Which is Better?

 

Flat Rate Vs Reducing Rate – Which is Better?

When you will go to the bank for personal loan, your bank/lender will ask you for two types of rate – Flat rate or reducing rate. In fac, your lender will advise you to go for flat rate and also tell you the advantages of flat rate interest loans.

But well, this is not the truth. You should not go for flat rate. This is because reducing rate is much better than the flat rate. Let me explain you how. But before that you will have to understand the difference between flat rate and reducing rate.

What is Flat interest rate & What is Reducing rate interest rate?

In a flat rate loan, the rate is calculated on the principal amount of a loan, while in a reducing balance loan, interest rate is charged only on the outstanding amount of a loan on a periodic basis.

Let me explain you by giving you an example.

In case of flat rate, suppose if you take a loan on Rs.5 lakhs and pay Rs.20,000 as a first EMI than from second EMI also the interest rate will be calculated on entire 5 lakh.

While in case of reducing rate, if you take a loan on Rs.5 lakh and pay Rs.2,000 as a first EMI than from the second EMI the interest rate will be calculated and charged only on Rs.4.80 lakhs and so on. So when you are about to finish the loan say just Rs.50,000 are remaining, you will have to pay interest on just Rs.50,000.

While in case of flat rate even if just 50k is remaining, you will still pay interest on 5 lakh…!!!

So get financially educated and always choose reducing rate option when you borrow money.

FMP Vs FD – Which is Better?

FMP Vs FD – Which is Better?

In India, the Bank Fixed deposits are very much popular because of one reason and that is - “SAFETY”. Fixed Maturity Plans (FMPs) however offer much higher returns than FDs but still they are not as popular as FDs.

But well, in my opinion FMPs are better and superior than FDs. This is because of the tax treatments for both of these financial instruments is different.

In case of Bank FDs, your interest income will be considered as income from other sources and will be taxed as 30% if you fall in the highest tax bracket. However, this is not the case of FMPs. The income from FMPs is considered as Capital Gain income because of its holding period of more than 1 year (typically 370 days).

One can earn higher returns from 370 days FMP than 500 days fixed deposit.

On the top of this the interest rates offered by FMPs is higher than FDs. In case of 500 days bank FD the interest rate is 8-8.5% per annum while in case of just 1 year FMPs the interest rate is 8.5-8.9% per annum.

Not only this but in the near future the interest rates are going to go up much higher than this. Don’t surprise if in the near future the FMP interest rates goes up to 10% per annum.

And that’s why in my opinion an investor should invest in FMPs rather than in Bank FDs. Tell me what do you think about it?

Should You Borrow Against Your Insurance Policy?

Should You Borrow Against Your Insurance Policy?

Many people ask me this question via e-mail. When we are in acute money emergency, we think of borrowing money against our life cover.

In India, the banks give you a loan against your life insurance policy of 90% of its surrender value at the rate of 9% per annum. So Is it a wise decision to take a loan against your insurance ?

The Simple answer of this question is – NO.

It is not at all advisable to borrow money against your insurance policy. Well, see the insurance policy is not for the purpose of raising money in emergency but it is for the purpose of protecting your life.

So What to do?

Well, you should build an Emergency fund for such kind of purposes. An Emergency fund is 6-12 months of your monthly expenses. So in case of real financial emergencies, you can use this emergency fund and protect your long term investments from liquidating and protect yourself from borrowing money against your insurance policy.

Financial Planning for a Child Tips

Financial Planning for a Child Tips

Are you planning a child? Than do you know that you will have to do a financial planning for your child’s future? Well, yes. The economy will advance after 20 years from now and everything will be costly starting from education to marriages, businesses and lifestyle.

And that’s why the day your child born, you should start a financial planning for your child. Here are the few great tips for the financial planning of your child.

1. Start Investing early -

This is the 95% advise that anyone needs to do a successful financial planning for their child’s future. Well, its a simple logic. The earlier you will start, the compound interest will work more in favour of you and you will make a huge wealth for your child. Only a 5 years of difference can make a huge difference in the wealth later on.

Just search this blog for “Articles on Compound interest” or simply search the Google and see that how powerful it is and you will realize the importance of starting early. Ideally you should open a joint account in the name of your child since his/her birth and start investing regularly in it.

2. Invest 100% in Equity for long term -

When we plan to build wealth in the future after a long time horizon say 15-20 years from now, we should go for the asset class which can give us highest returns in the long run. And that asset class is the Equity. So invest 100% of your money in Equity to build a huge wealth for your child.

The simple and easy way to invest in equity is – Equity Diversified Mutual Funds. Simply start investing in 3-4 equity mutual funds having a past record of proven performance via SIP and simply forget it.

3. No Child Future/Education Plans please -

One of the commonest mistake people do is, they invest lots of money in the financial products offered by insurance companies. This is probably because of their lucrative names. Well, don’t invest in any investment schemes offered by the insurance companies. This is because they are very costly and they won’t build much wealth in the long run. Only buy pure term life insurance for your child from insurance company and invest rest of the money in equity only.

4. Consider Inflation -

Most of the people don’t consider the inflation while doing the financial planning. If you need today’s 1 crore after 20 years than at the rate of 7% inflation, it will be 5 crores or above. So consider the inflation first and than start investing.

Thus, keep in mind the above basic things and start EARLY…!!!!

Financial Planning for NRIs India

Financial Planning for NRIs in India

Are you Non-Resident Indian (NRI)? Than do you know that you should do financial planning for your various goals of your life? Well, yes. This is true. Many of my NRI friends argue with me that they are still in their twenties and thirties than what is the emergency of doing a financial planning as there are 2-3 decades still remaining for the retirement.

Well, This is a Myth. The truth is that, you should start financial planning from the first day of your active earning life. Here are the few things that you should keep in mind before doing financial planning if you are an NRI.

01) India or Abroad after Retirement?

First of all decide that weather you want to live in India or abroad after your retirement? If you are planning to live in India after your retirement than open NRI account in India and start investing in India very early. Open an NRI account with Best Bank of India.

02) Emergency Fund -

Build an emergency fund. An Emergency fund is 4-6 months of your monthly expenses. Emergency fund is necessary because it stops liquidating your long term investments during the time of emergency.

03) Get out of Debt as early as possible -

You can not retire in true sense and come back to India until you get out of debt. This is because a debt is a trap. So get out of debt as early as possible.

04) Start investing as early as possible -

You should start investing as early as possible to make compound  interest work in favour of you. Equity is the best asset class to beat the inflation and tax in the long run and build a wealth for your retirement.

Thus, keep in mind the above key points and start doing financial planning for your retirement.

How to Transfer EPF Account?

 

How to Transfer EPF Account?

EPF (Employee’s Provident Fund) deductions every month from your salary can be painful initially but well, in the long run these small deductions can build a huge amount of wealth because of the compound interest.

Whenever, you change your job, don’t forget to transfer your EPF account and its balance with the new employer. This is because many people do a common mistake and that is, when they change their employer, they simply open a new EPF account.

Up to now, there was not any problem in doing this because the older account keep accumulating interest income over the period of time. However according to the new rules, After 2011, after 3 years of inactivity, your EPF account will stop earning any interest income.

And that’s why it is better to transfer your EPF account with the new employer whenever you change a job.

You need to fill Form 13 to transfer your EPF account with the new employer.

Download Form 13 Now

You will have to fill the Form 13 and submit it with EPF India and after that it will take 1 month to transfer your account and all of its balance to the new employer.

So know the Form 13 well and use it to transfer your EPF account whenever you change a job.

How to Open Demat Account for Minor?

 

How to Open Demat Account for Minor?

Many of you may don’t know one secret of Rich people in India especially Gujarat. Well, in Gujarat all the Rich families (And I am sure that in other states of India also this is the tradition) open the demat accounts for their children in their very young age sometimes just after birth.

This is because Rich people understand the importance of early investing. They start building equity portfolio for their children since their childhood and that’s why when they become adult, they have a huge portfolio income (passive income) and they can fulfill all of their dreams from this wealth. Here are some rules to open a Demat account in the name of Minors in India.

1.Demat accounts can be opened in the name of a minor child by the natural guardian (parents) or court-appointed guardians only.
2. The guardian needs to fulfil all requirements for documents and KYC norms to open the account in the name of the minor.
3. A minor cannot be a joint holder in a demat account. The demat account can be held only in the name of the minor.
4. Date of birth of the minor is mandatorily required, with proof. The account becomes inoperative when the minor turns major.
5. On attaining major status, a new demat account needs to be opened after completing all documentation. The erstwhile
holdings can then be transferred to the new account.
6. If shares are held jointly with a minor in paper form, they need to first be transferred to the minor and then to the demat account in the minor's name.

Balance Your Portfolio for Better Financial Future

Balance Your Portfolio for Better Financial Future

A Portfolio can not be made up of just one asset class. But the portfolio is the collection of more than 1 asset class such as Equity, Debt, Gold, Real Estate, Art, Businesses, Online Properties…etc..

And collecting every type of asset available in the market is also not enough to become financially free. You will have to re-balance your portfolio by doing proper asset allocation time to time.

Here are the various factors that determines your asset allocation.

- It varies from person to person

- your age

- risk appetite

- number of years remaining for the retirement

- income level

- number of dependents

- your future financial goals…etc..

By taking into consideration all of the above criteria, you should do your portfolio asset allocation. Say for Example, if you are in your twenties and without having any dependents than you can increase the equity allocation of your portfolio to as high as 90-99%. This is because you still have lots of years remaining for the retirement and you don’t have any dependents on you so you can take more risk.

Thus, consider all of the above criteria while balancing your portfolio for the better financial future.

Gold Loan Vs Personal Loan

Gold Loan Vs Personal Loan: Which is Better?

Many readers ask me that which loan is better – A Gold loan or a personal loan? Well, it really depends. Most of the personal finance advisors say that gold loan is better than personal loans. Well, I do agree with them but for particular circumstances only.

Let me explain you How?

Most of the finance gurus say that gold loan is better than personal loans for two reasons.

 

01) Gold loans don’t require any Income proof or huge salary. Anyone who has gold can apply for the gold loan. While for taking a personal loan, you will need to submit lots of income proof and other required documents.

02) The second advantage of gold loan is – Low Interest rates. Gold Loan Interest rates are just 12-14% per annum. While personal loan interest rates can be higher than this.

Thus, because of the above two reasons, gurus advise to take a gold loan rather than personal loan.

But well, my opinion is little bit different. What my opinion is that, if you are going to finance the assets (Education, Business, Real Estate or any other Investment) out of your borrowed money than and only go for the gold loan, otherwise go for the personal loans if you are going to finance the liabilities (Tours & Travels, Car, Status items..etc..).

This is because in case of personal loans, if you will default than you will only damage your credit value with the lenders. But if you will default on gold loan than you will lose the control over this precious asset class.

So only go for gold loan if you are going to finance the assets. But if you are going to finance liabilities than go for the personal loans.

Remember, the smart people are those who use debt to finance the assets while the dumb people are those who use debt to finance the liabilities.

How to Protect Your Wealth from Inflation?

 

How to Protect Your Wealth from Inflation?

Inflation is the major wealth killer. It silently erodes the purchasing power of your wealth over the period of time. Thus, the so called “SAFE” Financial instruments (PPF, Bonds, Bank FDs, Post-office savings scheme, Debt funds…etc…) are not really safe because they don’t maintain or grow the purchasing power of your wealth if the inflation is higher than the returns offered by these products.

Say for Example – PPF & GOI Bonds. Both of these are the most popular financial instruments of India and offer 8.5% while the inflation in India is 10%. So actually these so called :SAFE” Financial products are earning –1.5% return on your investments every year.

Thus, every year the purchasing power of your money invested in PPF & Bank FDs is going down by 1.5% even though it gains 8.5% in numbers.

Thus, smart investors are those who protect their money from the bad effect of the inflation. So How to do that?

Well, I personally give following suggestions to my readers of this blog to protect their wealth from the inflation.

01) Gold -

First is Gold. The gold is the traditional asset class which is inflation proof. If you want to maintain the purchasing power of your hard earned money than simply invest in gold. It will maintain the purchasing power of your hard earned money.

02) Equity -

Equity is the second asset class which can protect and even grow your wealth by beating the inflation. However, for that you will have to invest for the long time horizon say 5 years or even 10 years and more.

03) Start your own Business -

What you can do is, You can start your own Business out of scratch and invest your hard earned money in your own Business. The business is the asset class which can beat the inflation very well. And not only this but what I like about owning a private business is that, it can give you a steady cashflow.

Take the Example of this Blog. This blog is my internet business which I started in March 2008 without any investment. My only investment was the investment of my time. I used to spend daily 8-10 hours behind this blog to write informative posts on personal finance. And today this blog business is giving me a steady monthly cashflow on which I can live very well.

Thus, be the smart investor and protect your wealth from the inflation.