Personal Financial planning tips & Awareness

Personal Financial management tips:

1. save first spend later. incase of self-employed pay yourself first then others ex: tax, operating expenses
   save at least 20% of your income
2. Track your Net worth (Assets and liabilities) daily /weekly /monthly/annual cash flow.
3. Keep on eye on the cash flow it flowing negatively to debt or positive to the asset column
4. budget 30% for lifestyle spending
   movies, restaurants, and happy hours—basically, anything that doesn’t cover basic necessities
5. Maintain an emotional bank account
6. buy productive assets that create positive cash flow buying stocks or house generates monthly income.
7. Know the difference between good debt and bad debt  good debt ex: house loan
   bad debt EMI based vehicle
8. Compare FD VS EMI Interest rates if your investment giving low returns and paying high-interest rates personal loan, Credit card loan you can close FD and pay the debt.
   another example:
   Paying insurance by lending money. insurance better of risk coverage.
   bit if you are paying for endowment plan savings+returns
   then your returns will be at 4%*. not even beats inflation.better to buy term plan and rest of amount in mutual funds or other investment strategies.
9. Give Money to Get Money
   the more satisfaction you get when giving somebody that makes them happy. your returns depend according to the law of attraction
10. Compare credit card benefits vs charges

 

Financial Needs

Foundation:

Insurance (Term & Health)

Emergency Fund 6-12 Months salary (self-employed 1 year )

Goals

Retirement Planning

Child Education

Gold & Real Estate

Passive Income

Maslow’s Hierarchy of Financial Needs:

Income >>Insurance>>Credit>>Savings>>Investments (Stocks,Bonds,Real estate).

 

Power of Regular Savings aka SIP

1. start Early
2. Invest Regularly
3. Power of Compounding Invest

 

Particulars	Mr. A	Mr. B
Age	25 (35 years)	45 (15 years)
Monthly SIP /investment	5000	15000
Total Amount Invested	21,00,000	27,00,000
at 60 Years age @15%* CAGR	5.71 cr  or 571M	92 lakhs or 9.2M

Financial Life Cycle

1. Wealth Basic Protection
2. Accumulation
3. Distribution

 

 

Tax planning

• Section 80C up to 1.5 lakhs (Home Loan, Saving schemes, ELSS, PPF, Life Insurance, etc)
• 80 D Health Insurance up to 25k to 75K (for parents & family)
• 80 G Donations 50% to 100%
• 80CD NPS  (extra 50K)
• Carry forward & set of losses 
• Capital gain tax LTCG & STCG

Investments

Fixed returns   (fixed deposits & other savings schemes)

 

1. Saving accounts ar 4%
2. Fixed deposit
3. Recurring deposit
4. Saving schemes PPF and NSC, Sukanya Samriddhi Yojana and Senior citizen saving Scheme

volatile returns (debt mutual funds and other etc)

High-risk high returns

1. Equity Mutual Fund  (invests in only shares /equity high volatility)
2. Debt Mutual Fund (buy bonds from government & corporate companies)
3. Balanced mutual funds (invest in both equity and debt schemes)
4. investing in Gold (trading gold now very easy with a Demat and trading account)
5. commodity trading (gold, silver, petrol, etc)
6. Forex trading.

Note: if you are an investor don’t trade frequently, generally traders do it on a daily basis.

Difference between trading and investing?

the simple answer is, investors, wait for a long time. but Trader sells quickly basis on some loss or profit.

investing in Real Estate

Taxation

There are 2 types of taxes are there direct and indirect tax.

Indirect taxes added to the products and services directly ex: GST and the direct popular one is  Income tax.

Direct tax

Income Tax (this most popular parts every person who crosses the current FY slab limits can file the return)
Corporation Tax (companies take care of this)
Capital Gains Tax (earning from selling a property)
Securities Transaction Tax (while buying shares)
Professional Tax (by state governments)
Education Cess (3% of the overall tax at returns)
Wealth Tax (no more to avoid foreign accounts)

Indirect Tax

GST (all services & products at 18%)
Customs duty (while importing)
Stamp duty (registering a property)

Insurance

General insurance (Home, motor. term insurance, health insurance, Personal Accident policy).

it’s valid only for 1 year if no claim you will lose all of your money, unlike life insurance policies.

Life insurance: These plans again different types based on the needs of the customer. But most of the plans related to

saving cum protection, family, child, pension plans, money-back policies, ULIP, etc.