Personal Finance
The global economy is in shambles, so is the state of our national finances. The Centre has ‘monetised’ Rs. 66,946 crores this year due to the rising gap between revenue and expenditure. In simple terms, the UPA Government is facing falling tax revenues and huge election expenditure this year. Hence, it is printing currency notes like crazy – Rs. 66,946 crores to bridge the gap between revenue and expenditure.
During my attempt to understand the current situation, what I could retrieve is that with so much money sloshing about in the economy, the net result is often higher inflation after a lag. So, the dramatic drop in inflation from nearly 13% in August to over 5% now will not be a reason to celebrate. The inflation dragon has presumably gone into hibernation and will return with an enormous thud.
At this juncture, the investment avenues for a salaried person have drastically reduced. The real estate companies have posted their worst quarterly results in December, 2008, with an aggregate 71% fall in net profit. The sector has declared that the old projects are not selling, new ones will bring cash only next year. This provides with us with limited returns in the infrastructure sector.
It is necessary to understand that money has a time value. The notion that a rupee today is preferable to the same rupee in future is intuitive enough for many to grasp. This brings in the concept of “prudence”. The simplest tools in finance are often the most powerful. It is imperative for an individual to feel financially secure at any stage in his life. A simple question like, how perfect is your financial planning will raise eyebrows of many. Majority of the working youth don’t have investments, savings or planning on their priority list. The banking and finance sector, though suffering a sub-prime crisis offers a plethora of investment vehicles: Mutual Funds, Stocks and online Trade, Debt instruments, Fixed Deposits and Personal Insurance.
The basic purpose of investment is to ensure that your money grows at a rate greater than that of inflation, that’s how you can create wealth. An investment choice is made by taking into account the considerations on the basis of which is evaluated your risk profile:
If you belong to the age group of 25-30 years, your risk taking capability is relatively higher than the others. Your areas of investment can be Equity, Stocks and Mutual Funds. These sectors require taking a high risk but provide for higher return on your investments. In general, the formula governing an individual’s share of investment in the Equity sector is:
% Equity = ( 100- age of the investor )
It is advisable to get a Pension Plan in the very first year of you permanent job. This ensures accumulation of a corpus which will meet your monetary requirements post the retirement age. When you start investing early, the accumulation ( or vesting period ) phase of your money increases. The second phase of a Pension Plan is Annuity, wherein you start receiving the accumulated amount as per your choice i.e. in the form of monthly or annual installments.
If you are a novice in the investment market, refrain from stock trading without proper guidance. Mutual Funds can be a relatively safer alternative to predict the capricious stock market. A Systematic Investment Plan ( S.I.P ) is the best choice to begin with. In the recent times, MFs come with an insurance cover and don’t charge any entry load ( the fees to enter the trade market ). Hence 100% of your investment goes into buying the units of the Company as per the NAV ( Net Asset Values ) which differs every month. MFs are generally open-ended i.e. an investor can enter the market any time. In the close-ended schemes, the Company declares the NAVs of the units and declares a deadline for the investors to file in their folios. The investor is granted a fixed number of shares / units as per the Company’s discretion. These schemes are also called as Initial Public Offerings ( IPO). If you have a limited corpus, then opt for mid-cap fund as compared to small or large-cap.
For a person above 30 years of age, children’s education, family, health becomes a priority. Hence, the risk-taking capacity is substantially reduced. An insurance is now recommended at this stage. It is again of two types:
1. Traditional Plan: It assures guaranteed low returns ( about 8% ) and premium payment commitment for the entire tenure in which insurance cover is provided.
2. Unit Linked Insurance Plan ( ULIP ) : they are similar to Mutual Funds except that they come with an insurance benefit. They serve the dual purpose of security + investment. Yet, various charges ( Premium Allocation Charges, Fund Management Charges (FMC), Mortality Charges ) are something to watch out for. A company provides for various under funds under this scheme in which the investor can invest his annual premium. The funds vary in the percentage investment option of the investor in sectors like debt and equity. The premium payment term is generally for 3 years and the insurance cover can be sustained over a longer period as per the selected tenure on the payment of yearly charges.
Health, Children’s Education and Pension Plans are available under the ULIPs. Premium can be paid as a singly or as yearly installments for the fixed tenure.
Insurance also gives you the advantage of tax-rebates at the time of filing your IT- Returns. The revised slabs for annual taxable income are :
Females : above Rs. 1,35,000/-.
Males : above Rs. 1,00,000/-
Senior Citizens : above Rs. 1,85,000/-.
The tax rebate is applicable under section 80C.
It is important that you have an access to your money in the time of need. This brings in the concept of “Liquidity”, wherein assets are converted to cash. Gold is a preferred liquid asset for its time-value. MFs and ULIPs also offer you flexibility as far as withdrawals are considered.
To conclude, I would say that financial planning needs to personally undertaken by every individual. It provides us the much needed security during crisis. My only suggestion to one and all – invest wisely and live well!
Friday, February 13, 2009
Thursday, February 12, 2009
Civic Duties
CIVIC DUTIES
They form a set of “do’s” and “donts” which are conveniently ignored by a majority of citizens. The attitude is a result of the current generation never being exposed to captivity and bonding. They have over the years breathed the free air and thoroughly exploited the privileged rights delineated by the Constitution. The efforts required to turn overleaf and understand the basic and the simplest of duties, were never put in.
At this juncture, when the lapses of the Government, breakdown in Parliamentary and Constitutional machinery are so evident and coming to the forefront, its easy to realize that youth awakening is the need of the hour. As citizens of the nation, as members of a Constituency ( assuming that many of us have bothered to get ourselves enrolled and are going to exercise the less exploited “Right to Vote” ) , it is duty to repay the society which allows us to live freely ( though not securely, kindly forgive me for the pun ). Now, there is no need brooding over security lapses which are inevitable in a country which houses a substantial fraction of the world population.
“Easy” Steps that we can take for the betterment of a Nation, so worthy of our love and concern, are enlisted below:
• The most important one, forgive the Government. Stop cribbing about its policies, price-hikes, politics, etc.
• Voice your opinion and make sure you are heard. The media is at your disposal – press, radio, the blogosphere and Viewspaper ofcourse!
• Vote for the impending elections. Atleast get your documents ready to procure your voter-identity card; so that you don’t miss out on voting for the elections henceforth.
• The next time you see over-zealous / jilted lovers painting the walls with their love in vermilion red ( scribbling heart shapes with arrows to depict pain), kindly stop them. Request them to exhibit their art-work in their homes, so that even their parents get to know of the same! Let your city walls and city-transport look clean and enviable.
• Be a diligent traveler. If you find anything suspicious about a fellow passenger, do inform the security personnel. The helpline numbers are on display in most of the public places.
• Take the efforts to register police helpline numbers in your phonebook.
• The government has empowered you to stop a fellow from spitting or littering on roads. P.S. This stunt to be performed only if the fellow in question is not more that three times your size and you are not held off-guard!
The next set comprise of “duties” which can be graded as moderate on a scale of difficulty.
• Casting your vote doesn’t serve your purpose completely. Pat your back for realising the importance of voting. But now its time to pass on this realization and create awareness. Spread the word of “duty” by joining public rallies and online forums.
• As an educated individual, understand the importance of learning. Be a part of community service programmes undertaken by various Non-Governmental Organizations. They train college students to take lessons in BMC Schools.
• Donate blood and save lives. Blood donation can be done by a healthy individual over 18 years of age, once in every three months. The Government recognizes this noble action of yours and certifies you for the same.
• Take tuition classes for your maid’s child. Donate books, clothes and toys to the underprivileged children of the society.
• Close that tap when you are done with brushing your teeth. Switch OFF the lights when not in use. It is not that difficult! Just realize the need to contribute to power saving when we are facing a crisis in the supply of the same.
Having successfully performed the above set of duties, it will be easy for you to execute these most arduous tasks.
• Respect every fellow being in the society, be gentle person in the truest sense. But do raise your voice against violence and injustice.
• Help your needy neighbour.
• In this world ravaged by war, hold out your hand to embrace the philosophy of brotherhood and fraternity.
• Practice the religion of Humanity; and I assure you that the world will be a better place to live in!
If the above duties are thoroughly performed by majority of the youth today, we will realize that we are a part of an alert and responsible township. Taking the strings of the governing system in your able hands is the next best step to be taken.
The list of duties is amended greatly to answer the hour’s calling.
Dear Citizen,
Perform these simple duties.
Be a part of the Renaissance.
The Nation beckons you……
They form a set of “do’s” and “donts” which are conveniently ignored by a majority of citizens. The attitude is a result of the current generation never being exposed to captivity and bonding. They have over the years breathed the free air and thoroughly exploited the privileged rights delineated by the Constitution. The efforts required to turn overleaf and understand the basic and the simplest of duties, were never put in.
At this juncture, when the lapses of the Government, breakdown in Parliamentary and Constitutional machinery are so evident and coming to the forefront, its easy to realize that youth awakening is the need of the hour. As citizens of the nation, as members of a Constituency ( assuming that many of us have bothered to get ourselves enrolled and are going to exercise the less exploited “Right to Vote” ) , it is duty to repay the society which allows us to live freely ( though not securely, kindly forgive me for the pun ). Now, there is no need brooding over security lapses which are inevitable in a country which houses a substantial fraction of the world population.
“Easy” Steps that we can take for the betterment of a Nation, so worthy of our love and concern, are enlisted below:
• The most important one, forgive the Government. Stop cribbing about its policies, price-hikes, politics, etc.
• Voice your opinion and make sure you are heard. The media is at your disposal – press, radio, the blogosphere and Viewspaper ofcourse!
• Vote for the impending elections. Atleast get your documents ready to procure your voter-identity card; so that you don’t miss out on voting for the elections henceforth.
• The next time you see over-zealous / jilted lovers painting the walls with their love in vermilion red ( scribbling heart shapes with arrows to depict pain), kindly stop them. Request them to exhibit their art-work in their homes, so that even their parents get to know of the same! Let your city walls and city-transport look clean and enviable.
• Be a diligent traveler. If you find anything suspicious about a fellow passenger, do inform the security personnel. The helpline numbers are on display in most of the public places.
• Take the efforts to register police helpline numbers in your phonebook.
• The government has empowered you to stop a fellow from spitting or littering on roads. P.S. This stunt to be performed only if the fellow in question is not more that three times your size and you are not held off-guard!
The next set comprise of “duties” which can be graded as moderate on a scale of difficulty.
• Casting your vote doesn’t serve your purpose completely. Pat your back for realising the importance of voting. But now its time to pass on this realization and create awareness. Spread the word of “duty” by joining public rallies and online forums.
• As an educated individual, understand the importance of learning. Be a part of community service programmes undertaken by various Non-Governmental Organizations. They train college students to take lessons in BMC Schools.
• Donate blood and save lives. Blood donation can be done by a healthy individual over 18 years of age, once in every three months. The Government recognizes this noble action of yours and certifies you for the same.
• Take tuition classes for your maid’s child. Donate books, clothes and toys to the underprivileged children of the society.
• Close that tap when you are done with brushing your teeth. Switch OFF the lights when not in use. It is not that difficult! Just realize the need to contribute to power saving when we are facing a crisis in the supply of the same.
Having successfully performed the above set of duties, it will be easy for you to execute these most arduous tasks.
• Respect every fellow being in the society, be gentle person in the truest sense. But do raise your voice against violence and injustice.
• Help your needy neighbour.
• In this world ravaged by war, hold out your hand to embrace the philosophy of brotherhood and fraternity.
• Practice the religion of Humanity; and I assure you that the world will be a better place to live in!
If the above duties are thoroughly performed by majority of the youth today, we will realize that we are a part of an alert and responsible township. Taking the strings of the governing system in your able hands is the next best step to be taken.
The list of duties is amended greatly to answer the hour’s calling.
Dear Citizen,
Perform these simple duties.
Be a part of the Renaissance.
The Nation beckons you……
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