3 ways to quickly check if you need a financial planner

3 ways to quickly check if you need a financial planner

Personal finance and investments related advice is omnipresent today. Open any regular newspaper and they have a daily page devoted to personal finance. Surf the TV and even normal entertainment and mainline news channels have programs which “help” customers on their personal finances and give product-related advice. On most infotainment portals, Personal Finance is a separate section and every few articles, one on personal finance advice pops up.


This surfeit of information has created a not-so-desirable impact for us though – easy access and availability of so much information makes us think that we now “know enough” and can even “do it ourselves”. That said, there is an information overdose even on the products side, so how does one be sure? That’s where financial planners and advisors come in. In our experience, hiring a financial planner is usually a big decision for people to make, and hence they end up delaying both this decision as well as their investment decisions, doing themselves more financial harm in the process.


So, how can you decide if you need a financial planner to help you with your personal finances? I am sharing below 3 simple thumb-rules which can help you decide. If your answer to even one of these is a NO, then you surely need one.




RULE 1 – THE SAVINGS RULE – Save at least “your Age %” of post-tax income


What – At age 25, you should be saving at least 25% of your post-tax income, and as you grow older, this % should increase beyond your age. Eg. at age 35 should be 40-45% and at age 45 should be 50-60%.


Why – Remember, for every year you work, you will live a year, possibly even more, post-retirement. Now, even assuming that your needs in retirement are more spartan than when you are young, unless you save an average of 40% of your income across your working life span, you may end up not having enough to fund your retirement.



RULE 2 – THE NET WORTH RULE – Your NW should be at least “(your Age * Pre-tax annual Income) / 10”


What – Your Net Worth is defined as your Assets minus your Liabilities. Do not include the house that you stay in, unless you are willing to liquidate it and move into a smaller one.


Why – This rule helps you assess 2 things – how much your savings have transformed into assets and how over-leveraged you are in terms of liabilities. Also, this is a “minimum” rule, to check whether you have “enough”. To understand whether you are “wealthy”, multiply this by 2 (or more). Eg. If you are 40 and your pre-tax income is Rs. 50 lakhs per year, then your minimum Net Worth should be (40 * 50 lakh) / 10 = Rs 2 Cr. Remember this is net of your liabilities and the house you are staying in.



RULE 3 – THE ROI (RETURN ON INVESTMENTS) RULE – Your investments should grow at minimum your country’s nominal GDP rate


What – Return on Investments is the rate at which your investments are growing on an annualized basis. Nominal GDP is Inflation + Real GDP. Your investments include both real and financial assets (excluding the house where you stay).

(NOTE: An easy rule to calculate your current ROI is the Rule of 72 – Divide 72 by the number of years it took you to double the value of your investments. Eg. If your investments were Rs 2 Cr in 2012 and today their value is Rs 4 Cr, ie. took approx. 7 years to double in value, the approx. ROI you have generated is 72/7 ~ 10%).


Why – In an Indian context, the nominal GDP over the next couple of decades can be conservatively estimated to be around 10% (4% Inflation + 6% real GDP growth). Preferably, add 1-2% to this, since lifestyle inflation is usually higher, and investment returns can be much more volatile than national Inflation/GDP, hence some buffers are needed so that you don’t fall short as you near financial goal horizons. So, a good number to plan for is 12%.




Benjamin Graham once said “The investor’s chief problem – and even his worst enemy – is likely to be himself”. And as if on cue, Jack Bogle said “An advisor serves as an emotional circuit-breaker, so you don’t abandon a well-thought-out plan”.

Frequent, sometimes even addictive perusal of “information” ends up making us over-reactive and take wrong decisions in the short-term, apart from stressing us out. A good financial planner allows you to forget about your money worries and gives you peace of mind, while also acting as a safety-net to prevent you from taking wrong money decisions.



So, use the above 3 rules to quickly check whether you need a financial planner to help you manage your finances. And use the bonus rule to assess whether your money is worrying you, rather than working for you.



Image Credit: TheDigitalWay, Pixabay


Rule 2 Credit: While the other 2 rules are commonly used thumb rule, Rule 2 is formulated by the authors of the book “The Millionaire Next Door”


Finwise is a personal finance solutions firm that helps both NRI and resident individuals and families plan for their financial goals, follow their passions and achieve financial independence.

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For advice, please reach us at getfinwise@finwise.in or +91 9870702277/9820818007.

Women must develop the right money mindset for a fruitful post-retirement life

Women must develop the right money mindset for a fruitful post-retirement life

When we are still working, we make so many plans of things to do once we retire. And as we get onto the home stretch in the last few years, the excitement begins to build, of course, with a few butterflies in the stomach as well. So many places to see, so many people to meet, so many suppressed aspirations to fulfil, all of course, while juggling one’s hard-earned wealth and believing that there is enough, not only for ourselves but also to bequeath.


But retirement is not always as rosy as you imagined it to be. The transition to retired life is sudden, and there is a vacuum of time, that has to be fruitfully filled. That vacant space has to be occupied with activities that need to be created, not only to feel gainfully employed, but also to feel good about oneself. The actual retirement, therefore starts with a whole lot of unexpected dilemmas and mental adjustments.


What are those scenarios that one must adapt and adjust to?


Read our latest article, recently published on Moneycontrol.com (link given below).




In retirement, the role of money is to allow one to fulfil our bucket list of desires, while ensuring that there is enough to take care of our balance life-times, including exigencies. Nothing more, nothing less. Hence, as a retiree, use money to bring you happiness and add meaning to your life, while taking care that it is safely working for you as well. 


Image credit: Moneycontrol.com


Finwise is a personal finance solutions firm that helps both NRI and resident individuals and families plan for their financial goals, follow their passions and achieve financial independence.

To receive our articles through email, pl subscribe here.

For advice, please reach us at getfinwise@finwise.in or +91 9870702277/9820818007.






My Equity Portfolio is down 20%! Have I made a mistake? What should I do now?

My Equity Portfolio is down 20%! Have I made a mistake? What should I do now?

The last 18 months have not been kind to investors in the stock markets. Depending on which period you are looking at, there have been severe corrections, across all market-caps. When mid and small-cap indices fell severely from their Jan 2018 highs, large-cap indices still held on and posted marginal gains. But post the budget presented in July 2019, they too have thrown in the towel.


So, how badly has equities done, and how much has it actually impacted investors? To put things in perspective, a diversified multi-cap index portfolio has fallen approximately 12%, both from the market peak in January 2018 (approx. 18 months back) as well as from the recovery peak in August 2018 (approx. 12 months back). The below table gives the details.


Of course, this varies across market capitalizations, with large-caps still managing to hold on, losing only between 4-9%, mid-caps dropping 18-22% and small-caps plummeting as much as 28-40%.


So, in such a situation, what should one do? Is the market likely to drop further, and if yes, should one exit one’s portfolios? Are equities not the right asset class to invest now?


In the short-term Equity is volatile. In the long-term, Equity builds wealth!

There are enough and more market news and views answering the above questions, with necessarily no improvement in clarity post reading them. I do not intend to add more to this confusion by also pitching in. Rather, in my view, the best thing to do in such situations is to go back to the “wise men” and learn from them on how to handle such situations. So, let’s see what five such wise men have to say.



You get recessions, you have stock market declines. If you don’t understand that’s going to happen, then you are not ready, you won’t do well in the markets – Peter Lynch


The first lesson is about having the right attitude to invest in equity. Be prepared to travel the roller-coaster ride that it will take in the short term and to be unpleasantly surprised despite precautions. Building the temperament needed to invest in the stock markets takes time, so invest only what you can bear and slowly increase it over time as you get comfortable.



The stock market is filled with individuals who know the price of everything but the value of nothing – Benjamin Graham


Markets gyrate excessively, basis the laws of demand and supply, which in turn are driven by sentiment, fueled by a continuous dose of “news”. If you have the temperament and the knowledge, volatility can be an opportunity. That said, timing the market is tough and not advised and for the average retail investor, these are the times when your SIPs and STPs MUST continue, and if possible, topped-up, to take advantage of rupee-cost averaging.



Only when the tide goes out do you discover who has been swimming naked – Warren Buffett


When markets take a dive, the natural response from a retail investor, even some of the experienced ones, is to sell the stocks (or funds) that are holding on while retaining the stocks that have crashed, since they want to “wait for it come back up”.


It is pertinent though to remember that in good markets, even the mediocre performers get “swept up by the tide”. It is when markets go down that these average performers get called out. Also remember, every growth cycle has a different set of dominant contributors. So, use downturns to get rid of your not-so-good stocks while retaining the ones that are still good, thereby building a future-ready portfolio. While the urge to wait for markets to come back up is high, remember, that the good stocks by then would have run up even more.



It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent – Charlie Munger


Building a good, long-term, high-quality portfolio takes time and requires pain-staking effort. Make sure you are taking advice from a qualified investment advisor, whose interests are aligned to yours. But once done, sit back and enjoy the view. The key to benefiting from good equity investments is allowing them time to grow and compound. So, stay the course, and don’t take recourse to stupidity, such as exiting perfectly good portfolios just because the prices are down.



If you don’t know who you are, the stock market is an expensive place to find out – George J W Goodman


Lastly, investing in equity without having sight of what you are hoping to achieve, and over what time-frame, is fraught with risk. The danger is that since you do not know either, you will tend to over-track and get impacted by short-term volatility and performance. Anchor your investments to a goal, and you will suddenly see the big picture, and will not get swayed by what happens during the journey. A good financial planner will help you identify the right investments for your goals and will also help you course-correct over time, and ensure that your portfolio is always future-prepared, thereby allowing you to have peace-of-mind and enjoy the present.


In summary, use the below 5 inferences as guard-rails to both smoothen as well as make safe your equity investing ride.


1.     Build the temperament to invest in equity, by gradually increasing your investments

2.     Volatility is good. Ride it out, and if anything, use it in your favour through your SIPs

3.     Use downturns to clean up your portfolio and make it future-prepared

4.     Once you have a future-ready portfolio, stay the course, and avoid short-term decisions

5.     Finally, know why you are investing. Anchor your investments to your goals


Finwise is a personal finance solutions firm that helps both NRI and resident individuals and families plan for their financial goals, follow their passions and achieve financial independence.

To receive our articles through email, pl subscribe here.

For advice, please reach us at getfinwise@finwise.in or +91 9870702277/9820818007.


Image by Mediamodifier from Pixabay

Do you know your “Finish Line”?

Do you know your “Finish Line”?

Over the last few weeks, Std X and Std XII results across various boards have been announced. As usual students all over have done very well, with many students scoring a full 100% as well, and 95-96% almost seeming like an underperformance!

At the risk of sounding a bit geriatric, it seems to me that while our times were reasonably high-scoring too (if am not wrong, my school topper in Std X got around 88-89%, and I was very happy to be in the same decile), in this generation, this scoring business has gone a bit too far. I would like to think that, beyond a certain point, how much you score doesn’t actually determine success in later life, and vice-versa. Also, this extreme focus on scoring in academics in the early years takes away from valuable life-skills and competencies that should be learnt or built, that, I can say, from experience, are likely to hold our children in greater stead in the later years.

But as is said, life is a race, and you have to run it, like it or not. It’s just that no one tells you what kind of race it is! And hence, despite our best efforts both during education and work, we aren’t adequately prepared for it!

 Life in school and junior college seems like a 100-meters sprint, with everyone (well, it seems like nearly everyone nowadays!) scoring in the top few percentages (just like in a 100 mts race, where every finisher is within a few milli-seconds of each other).


And hence when we reach “real life”, ie. higher and post-education years, we are still prepared for a sprint and we get a rude shock when it starts resembling something completely different!

 My take on this is that Life is actually a special kind of long-distance race because of the following two reasons.

 One, like a steeple-chase, there are some reasonably-heighted thresholds that one needs to get past. Beyond a point, how high you jump doesn’t matter, as long as you cross the thresholds.

 These thresholds are personal performance as well as personal skills related, ie. making sure that you do reasonably well in your education and initial corporate life, including learning the necessary life-skills. Eg. good performance in your major exams, landing a good job, getting the right breaks at work, building the right professional skill-sets, etc.

 Like in a race, success is about making sure that one doesn’t trip on these thresholds. Else, the race in future can have various handicaps.

 Two, like in a long-distance race, while all are running, each is running at a different pace, and after a time not running together at all. The race also has a bit of trail thrown in, where one can get lost for a while, in search of directions! Importantly, after a point, each one is running his or her own race, trying to do as best as possible.

Like all races, this one too is a success only if you finish it. The unique thing about this race is that one can determine where is the “finish line” and plan for it. In a way, everyone has his or her own finish line, which they have the freedom of deciding, and which then, they have to reach.

 Reaching your finish line successfully means that you have gained financial independence and have the freedom to retire, to do what you love with your time, to follow your passions.

 The key to winning your own race is to identify your finish line well in time, having a plan to run this race well, including for any unplanned detours on the trail, and reaching your finish line in good shape, feeling happy that you could actually run a couple of miles more!

 So, do you know your finish line? What and where is it? If you do, then do you have a plan to reach it in good shape? And if you still have a good bit of the race to go, are you prepared for the thresholds that will come your way?

 Photo by Jenny Hill on Unsplash.com

Finwise is a personal finance solutions firm that helps individuals and families plan for their financial goals, follow their passions and achieve financial independence. For consultations, please reach us at getfinwise@finwise.in or +91 9870702277/9820818007.

How close are you to FIRE?

How close are you to FIRE?

The term FIRE has gained popularity in recent times. For those of you who haven’t heard it before, it stands for – Financially Independent, Retire Early. Many articles are being published on what it means and what one should do to be part of this “elite” community. Speaking to a few millennials made me realize that it definitely has caught that generation’s imagination.

At the core, FIRE is about becoming financially free. I have written about becoming financially free before (here is the link), hence wont go into it again. Suffice it to say that becoming FIRE is not an event or an end-point in itself. In fact, beyond a certain stage in your personal financial life-cycle (having successfully planned for all financial goals and still having money to spare), it is an enabler to a different way of life. Let me explain.

Becoming FIRE is not at all about having a target pot of money and spending all one’s energies saving, investing and managing it. That would defeat the purpose of attaining that status. It is about identifying what one wants to actually do and how much minimum money does one need to move on to actually living one’s life the way one wants to.

Hence importantly its about 2 things –

  1. Stripping and clarifying your finances to a level where one is clear what is a must and what is not, so that it keeps you happy, while not dependent on money.
  2. Being clear about what one wants to do in one’s life. Everyone has their passions, secret desires that one would life to fulfil. Dare I say, every one of us has our own stories about “what I would do if I had enough money”.

The starting point to becoming FIRE is to actually know what one wants to do and where one wants to be financially to achieve that purpose. Everyone’s needs and wants are different and everyone therefore needs a different amount of money to reach FIRE status. One only needs to remember that the purpose at the core should be something that gives you immense happiness, and beyond a point, “there are many things in life that money still can’t buy”.

Also read this nice article by Mrin Agarwal in Mint about some of the checks and safeguards that people in FIRE status also need to have, while living their life.

Image by Jill Wellington from Pixabay

Dont just plan to invest, Invest to a Plan

Dont just plan to invest, Invest to a Plan

“If you don’t know where you are going, you will probably end up somewhere else” – Laurence J. Peter

There are two reasons why people don’t achieve financial independence, despite being able to. I have earlier written about one reason, which is the importance of “understanding (as against underestimating) the long-term”. Today, let us talk about another, which I have termed (a bit simplistically) as “lack of direction”. Lack of direction here pertains to 2 important aspects of our personal financial “kundli”, which is unique to each one of us.

While it is good to enjoy the journey, its important to know where you are going!

The first is about knowing how good (or bad) is our financial situation with respect to the quality of life that we are leading currently. As a people, we are savers, and most people we meet usually show fair diligence in terms of managing their personal “fiscal” situation. A few times though, we do come across clients who need help in managing their “personal budgets”. Where this goes awry usually is in terms of either having excessive debt, especially of the wrong kind (to fuel a lifestyle which threatens to become unsustainable) or being prone to impulse big-ticket purchases – either for unplanned holidays or gifts or expensive goods to add to their home.

Such situations are relatively simpler to address, since all it requires is enabling people to “allocate” their incomes to different “wallets” and to have the discipline to do this consistently, month after month. There are easy tools that do this such as maintaining separate accounts for incomes and expenses, using pre-set sweep-outs to ensure regularity, maintaining the savings in a not-so-accessible demat account, and having a monthly income-vs-expenses check.

The second aspect is about how well are we preparing to face our future financial needs. While most people have a handle on their present financial situation, when it comes to knowing how prepared they are for their future, most are fairly unprepared. Here, what’s interesting to note is that while we are good savers, we aren’t necessarily good investors. This could be because our investing decisions are usually ad-hoc, driven by what friends and acquaintances tell us or to meet our aspirations.

Quite a few clients we meet don’t necessarily know what they are investing for (except that it seems to be a “good” avenue for “returns”) and what is the “outcome” that they desire from this investment. A key “minimum qualification” to become a good investor is to know what one’s financial goals are, which part of one’s investment portfolio addresses which goal, and with what compatibility.

An easy tool for this is what is simply called a “personal financial plan” which maps your savings and future investments to your goals, and also recommends the best investments to achieve the goals in the most effective and optimum-risk manner. A good financial plan ensures the right mix of asset classes to provide both liquidity as well as stability, the right priorities in terms of goal-funding and the right amount of risk taken to generate the best return, depending on the time-frame of the investment and the risk-profile of the investor.

Achieving financial freedom (or even getting on the road to it with an even chance of getting there) requires you to know what your future financial goals are, and put in place a good plan to fund them from your savings today, thereby giving you the peace of mind that you are not compromising your tomorrow. A good financial planner, whose interests are aligned to yours, can help you put this together for a reasonable fee, while taking the load off you entirely in terms of monitoring and course-correcting, allowing you to live your life fully in the present.

Finwise is a personal finance solutions firm that helps individuals and families plan for their financial goals, follow their passions and achieve financial independence. For consultations, please reach us at getfinwise@finwise.in or +91 9870702277/9820818007.

Image credit: Kdsphotos from Pixabay

The Finwise Woman series – In celebration of International Women’s Day – 2

The Finwise Woman series – In celebration of International Women’s Day – 2

The second person whose story we share today is Brindha Rao, a blogger and avid gardener. She says

“SAHM. The title I bestowed upon myself to raise my daughter. That does not mean I can’t understand or talk money. My husband has always made me an equal partner in all our financial decisions. And now Finwise has helped us plan our daughters education and hopefully our retirement. I know I am in safe hands with Prathiba’s judgement about our finances. The best that comes out of financial planning is that you get to live and spend at measure and without guilt. Thank you Finwise, I am a wiser and more financially sorted person now.” Feel free to share with other successful women that you know who you think are also financially savvy. #FinwiseWoman #WomensDay #financialindependence

So, what does it mean to become Financially Free?

So, what does it mean to become Financially Free?

Dear readers, as I said in my last article, the most significant words that I have experienced since becoming an independent adult have been “Become Financially Free”. So, how did these words happen? And what do these words mean?

As I mentioned in my earlier post, early in our careers, (am talking about 1999-2000), like most people our age, we were merrily travelling along life’s highway, earning, spending and salting away a bit for the future, and ticking away at various “achievements” which were largely material acquisitions. But our middle-class genes also automatically built in some caution and I remember that we had started thinking about what should be the financial goal that we should be looking to build to “be comfortable”. At that time, the number “x” seemed both luxurious and unattainable and hence that was the number that we set ourselves a “target” to reach.

Of course, as a few more years passed by (by about 2005-6), the number started looking small! Not because our nest egg was getting closer to the number though, since we had continued to follow a fairly haphazard (in hindsight) approach to building wealth – a second house, some bit in the stock market, some insurance, etc. Just that “x” suddenly seemed both “within reach” and “not enough”. So, the target became larger (about “3x”) and we continued to earn and spend while saving up.

As we entered our middle years (around 2011-12) and our kids started growing up, life began to resemble a treadmill. Just that while the run in itself was enjoyable, the faster we went, the faster the treadmill also seemed to go and the ultimate destination seemed like a mirage. The target again started seeming “not enough”. That’s when we consciously decided to slow down the treadmill and asked ourselves a few questions.

  • What kind of lifestyle did we desire for ourselves and our children?
  • How much of a role should debt play in our lives?
  • What is really the corpus that we wanted to “be comfortable” for the rest of our life?

Our search for answers to these questions helped us fulfil our need for financial security as well as discover the concept of “financial freedom”. Essentially, Being Financially Free in the simplest way meant having enough money that one need not have to work for money for the rest of his or her life. That said, it isn’t as one-dimensional as that. Being Financially Free necessitates the following

  • Having enough money to ensure that all foreseen (and unforeseen) expenses are taken care of
  • Still having money post that to take care of all future events/milestones until one’s death
  • Making sure that assets are in the right form to enable one to live the lifestyle that one has planned for
  • Last but not the least, making sure that your money is invested wisely enough to ensure that it is not getting eroded by factors such as unplanned expenses, inflation, market cycles, illiquidity, concentration, etc.

This process also helped us recognize the fact that how much people go wrong in their understanding of money and their efforts to build wealth. And 2 reasons stood out

  • Underestimating the long term – both in terms of inflation as well as asset composition
  • Lack of direction – Building assets doesn’t necessarily build adequate wealth, unless one knows what are one’s milestones and goals

In our personal case, as we underwent and completed the comprehensive planning exercise for ourselves, we discovered that the “number” we were looking for to be “comfortable”, rather “financially free” was about “10x from the original number we started with, and that too in current value terms. We now know what is the number we are working towards, and we also have a clear understanding of what are our future financial milestones and how we need to plan for them.

As an aside, our personal experiences with money helped us set up Finwise, a firm that helps busy people achieve their financial goals, grow their wealth substantially and work towards financial freedom. In a way, we ourselves were our first “financial planning” customer!

I hope our story helps you understand what it means to “Be Financially Free”. Do let me know your thoughts at getfinwise@finwise.in.


Finwise is a personal finance solutions firm that helps people plan for their financial goals, follow their passions and achieve financial independence. For advice, please reach us at getfinwise@finwise.in or +91 9870702277/9820818007.


Image credit: Stockified.com, shot by ab-dz