In saving intensely for the future, don’t forget to enjoy the present

In saving intensely for the future, don’t forget to enjoy the present

Financial planning has different connotations to different people. To us who have been interacting and partnering with people in their pursuit of financial well-being, it means living a fulfilling now while planning to sustain the same lifestyle throughout your life.  

 

In our numerous interactions with people, we have noticed many kinds. A few are balanced in their need to live a good life today as well as save for the future. Some are very involved in the now, and live an indulgent life-style with no worries of tomorrow. While some are constantly worrying about the future, so much so that they compromise on even little things which bring them great joy. We are going to discuss this last category since we have noticed some common traits which distinguish them and strongly believe a different approach can significantly change their lives.

 

Read on more in our latest article below, published on Moneycontrol.

 

https://www.moneycontrol.com/news/business/personal-finance/financial-planning-in-saving-intensely-for-the-future-dont-forget-to-enjoy-the-present-5490201.html

 

 

Image Credit: Moneycontrol

 

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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Loan moratorium: When interest compounding works against you

Loan moratorium: When interest compounding works against you

Over the last 3 months, for many, salaries have been truncated, jobs have been lost and the health and lives of near and dear ones have been threatened. And for most, this is a first-time experience.

 

In support, the salaried middle-income person has also been given some breaks, importantly, an initially three, now extended to six months “moratorium” on their loans through banks/NBFCs. These include all kinds of loans, including credit card debt.

 

The terms of the moratorium are simple – it only defers your EMI, doesn’t waive it. There is no interest waiver. Non-payment (ie. deferral) does not impact your credit score.

 

Hence, it is advisable to pay your EMIs, and not take the moratorium, unless there are dire circumstances, because of which you are unable to pay. And if you do, pay back the deferred EMIs as soon as possible, to minimize the long-term impact.

 

But why so? The reason is simple. Taking a 6-month moratorium on a home loan that has 15 years left adds another 18 EMIs! And this is because of the effect of compounding over long periods of time.



Our latest article, published on Moneycontrol, explains exactly why. Click on the below link to read on.

 

https://www.moneycontrol.com/news/business/personal-finance/loan-moratorium-when-interest-compounding-works-against-you-5461361.html




Image credit: Moneycontrol

 

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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Finwise Person Sketch – Start Early, Learn from Experience and Stay the Course – basic ingredients for a financial fairy tale!

Finwise Person Sketch – Start Early, Learn from Experience and Stay the Course – basic ingredients for a financial fairy tale!

In the last couple of years, we have featured a few people in our Finwise Person series on International Women’s Day, giving you a sneak-peek into their approach to money. As part of our financial planning practice and even otherwise, we have had deep conversations with quite a few people on how they manage their finances. What stands out from our experiences is two things.

 

One, while many have managed to put themselves in line for a financially-secure future, only a few were necessarily financially aware or savvy from the word go. Most of them learnt along the way, from parents, peers or other personal experiences, to craft a path towards a financially-secure future for themselves.

 

Second, while many have got on this path, by design or by default, most are still playing catch-up, and only some have managed to get ahead in the journey towards financial security. Through adequate and diligent planning, they have secured their futures, outsourced their risks, and made provisions for estate planning too.

 

Our featured Finwise People have generally managed to clear both the above filters – gaining awareness as well as taking necessary actions to secure their futures. It is also interesting to understand how they traversed this journey, and our previous story on Mrs M did just that.

 

We are today featuring a detailed sketch on another Finwise person, and it is only a coincidence that this is also a woman, it could also be a Finwise man or a family, hopefully soon. This time we feature Uma Vinay Gathani,  an entrepreneur, who is 58 years old. She is financially savvy and has managed to secure her future as well as generously support her kith and kin who have not been as fortunate or well planned.

 

If you are thinking many people would tick these boxes, think again. While the number of people who do so are few, they are significant, and we would love to cover all of them. We understand though that not everyone is comfortable discussing their journey with unknown people, and we are very grateful to Mrs M and Uma who agreed to share their personal stories. The purpose of sharing these journeys is to encourage and motivate more people to take active interest in their finances and embark on their journey towards financial fulfilment.

 

We go back to the beginning to understand what Uma’s earliest experiences were.  We have noticed this could have a significant influence in the way we deal with money in our lives. She is the youngest among 5 daughters and was born and brought up in a well-to-do family. Her father was money wise and took it upon himself to provide financial security for all his daughters.

 

When she was young, she gathered that while her father did reasonably well for himself, he had many obligations and too many people to think of and hence was not very good with investing his money and prioritizing his own future needs. As a child she remembers her house was always filled with guests, some close relatives and some acquaintances. Her father was generous and took it upon himself to help people as much as he could and her mother was a warm, kind, and hospitable person making every visitor feel totally at home. She does not remember even one instance where her parents expressed any regret for not having any male child or dissuaded either her or her sisters from doing anything due to their gender.

 

When she was all of 17, she was pursuing her graduation and her college timings left her with a lot of free time. When an opportunity came her way to take up a job, from 11 to 5 (she was done with college by 10 am), her parents gave her their blessing and were happy that she was occupied doing something productive. Her first job meant she had a salary and she could do exactly as she pleased with her money. She spent most of her money on eating outside and some small indulgences on top of it. Her mother encouraged her to travel comfortably and even paid for first class train tickets. The job was never about income for her or her parents.  

 

Her earliest experience with savings was a local reputed chit fund, enrolled by her father in her name, and when she eventually completed her graduation and took up a job which paid better, she decided to start contributing towards the same. She did not have any pressing need to start saving, her only objective was to fend for herself and not become another responsibility for her father who already had plenty of people to worry about. While she started small, she was consistent with her savings right from when she started earning.  

 

She married into a Gujarati family young and was fortunate to have supportive in-laws who encouraged her to continue to pursue her career after her marriage. When she had a daughter, she was able to continue her career without a break, thanks largely to her mother and mother-in-law who supported her by taking care of her daughter in her absence. With new responsibilities, she started an RD and invested in FDs whenever she had a surplus, while she continued with her chit fund.   

 

Her first foray into building assets was buying a house, which came naturally to her as she had seen her father attach a lot of importance to real estate as an asset. She was clear in pointing out that she did not have any plan, and never thought of retirement or savings. She believed in enjoying her now, and in her early days would often deplete her entire financial savings to splurge on a vacation or something which took her fancy.  She also said that earlier she had no concept of emergency fund or saving up for daughter etc. When quizzed if she would do things differently were she given a chance to live her life again she said and instantaneous, emphatic “No”,  her retort was “we made some beautiful memories and if I were to do it all over again, I would do the same”.  That said, she strongly feels that savings should begin early, and one should be consistent to be able to enjoy one’s sunset years with-out any stress.

 

Her only form of savings was real estate since she purchased her parental home from her mother and since she was busy paying it off, she did not have much to invest in any other asset. When she realized she had to move beyond real estate, she decided to diversify by investing in stocks. Unlike now, nothing was digital, and she had to depend on a broker, she realised that she would have to outsource this to someone else since she did not have the knowledge, the time or inclination to manage investing on her own.

 

Some of her initial experiences were bad and she lost a large sum, when she trusted someone to handle her stock portfolio, and leave aside appreciation, she lost even the entire capital invested. That is when she decided to stick to simpler products which she understood. She started out with mutual funds by making a small beginning around 10 years back. She kept investing consistently and was able to diversify her portfolio.

 

While she is not a great believer in having a plan and sticking to it, she has a nose to sniff out risks and stays out of complicated products. She is able to sleep sound at night knowing that she is doing her best to ensure her lifestyle is not compromised post retirement. When asked why she was generous in helping others, she said it is the dual effect of genetics inherited from her father and a husband who believed that money is only a means not an end.

 

When we look back at her journey what strikes me is even though she may not have had a written-down plan which she followed meticulously, she was mindful of the fact that there will be a tomorrow where she may not be able to generate an income, and she was diligent in stashing away something for the future.

 

Her choice of assets have evolved with time, and it is smart to start with something you are familiar with and then look out for other options. She quickly realised that having all eggs in one basket, in this case real estate, was not desirable and hence diversified into financial assets.

 

Importantly, most people would be deterred by an initial setback, but she was able to look it in the eye and continue on her financial savings and wealth-building journey, by ensuring that now she relied on someone dependable but continuing with the process of investing.

 

She has also been prudent to ensure her risks were outsourced and she had sufficient insurance to cover any contingency. And despite having an only child with clear succession, she has embarked upon making a will and tying all the loose ends together.

 

All in all, this insight into the life of someone who has managed to take active interest in her financial wellbeing, recognise her limitations, persevere even when she was let down  and make best use of the resources available to her, makes for fascinating reading, as well as inspiration for others who are traversing the same path, towards financial security and well-being.

 

And this can also be comforting for someone who has not yet given a serious thought to getting his or her financial life sorted. Because, it is never too late, and a few years of consistent savings and focus can make a world of difference.

 

 

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.

Personal Income Tax – which regime should I go for, New or Old?

Personal Income Tax – which regime should I go for, New or Old?

 

As the economy slowly begins to start up and get back on its feet, it is the time of the year, post extensions, when companies require you to let them know what income deductions you will be availing of in the current financial year and the quantum of investments in various tax saving schemes. This year, however, there is an added dimension to this, you will have to also let your company know if you will be availing of the previous tax regime or the new one.



While this decision is entirely dependent on your ability and willingness to invest in tax-saving instruments as well as various deductions available to you, we are writing to give you some broad indications of which one may be suitable for you.





Below is a quick recap of the tax slabs in both the old and new regimes. The rows highlighted in grey in the new regime are the income slabs which are benefited on income tax versus the old regime. Also, important to remember that if you choose the old regime you can avail of various deductions, whereas you cannot avail of any deductions in the new regime.


Most availed deduction/exemptions in the old regime are as follows

  • Standard deduction (available by default to everyone)
  • Sec 80C – up to Rs 1.5L (normally taken care by the EPF contribution for employees, as also school tuition fee or principal repayment of house)
  • Sec 80D & Sec 80DD – Medical insurance Premium paid for self and Parents
  • HRA benefit
  • Home loan interest repaid

 


Let us look at which option seems beneficial under various scenarios.

 


You are able to avail of entire 80C and 80D medical benefit without investing in any further instruments

What we have noticed with a large part of our customers is EPF or NPS contributions take care of the entire Sec 80C limit. In a few cases where it is not so, the education tuition fees of children or principal repaid from home loan can cover up.


No one takes health insurance to save tax. It is supremely important to have a medical insurance to ensure that your financial goals are not de-railed thanks to an illness.   Most customers do have medical insurance and are able to claim a deduction of 25K for self and family. If you are paying the premium for senior citizen parents, you can get a further deduction of 50K.


Since you are not forced to invest any further money to save tax it normally makes sense to stay with old regime.

 


You have a home loan


If you have a home loan, it is a no-brainer to stick to the old regime, primarily because you will get home loan interest deduction upto 2L apart from availing 80C for principal repayment.

 


You are a senior citizen investing in PPF for 80C and have fixed deposits or Senior citizen saving scheme


If you are a senior citizen who has been investing in PPF for many years and are comfortable investing further and you hold substantial FDs or Senior Citizen Savings Scheme (SCSS) it would be beneficial to stick to the old regime. This is because you get deduction of Rs 50,000 on interest paid under section 80TTB. This is over and above 1.5L deductions under 80C for investments in PPF.


If you are wondering why a senior citizen will be investing in PPF, many of our customers use this as a tax-free estate planning device. They keep investing and leave it behind for their children. As part of asset allocation, they put some part of their debt monies into such schemes.

 


HRA deduction


If you are eligible for HRA deductions and can avail of deductions under 80C for your ongoing investments or expenses, it is an added reason to be in old regime.

 


If you are taking Voluntary Retirement and expect to get a compensation amount


Compensation upto Rs 5L received under voluntary retirement scheme is exempt from tax once in your life time. If you are choosing to avail of Voluntary retirement this year, you should stick with the old tax regime.


While the above are basic pointers, there are additional benefits available to you if you choose to invest Rs 50,000 in the NPS scheme, have an educational loan or plan to donate to recognised institutions, in all such cases the old regime is beneficial.


As you can see, I have highlighted many cases where the old regime is beneficial. You must be wondering why bring a new tax structure if it is not beneficial for most. The key to this is that you can claim deductions without making fresh investments in sub-optimal instruments only to avail of the tax deductions. Also, we have looked at the above primarily from a salaried employee’s perspective.


For self-employed or professionals where Sec 80C is not a given, they will need to invest money to avail of tax benefits. In many cases, the choice of investments will be at cross-purposes to their financial goals. In such cases it would be better to opt for new regime and invest your money in instruments of your choice which are aligned with your overall financial goals.


If you have already made the choice of tax regime as a salaried employee, you can change your mind at the time of filing your tax. This is not an option with non-salaried people. As mentioned earlier it is always a good idea to consult with your financial advisor/ tax consultant to get advice which is customised to your unique situation. However, the above pointers may help you understand the reasoning behind the choice.


Image credit: Gerd Altmann, Pixabay


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.

10 money steps to help you stay prepared in case of a job loss

10 money steps to help you stay prepared in case of a job loss

As the impact of the COVID-19 crisis takes a further hold on the economy, its impact is beginning to be felt on its foot soldiers as well. Over the last few weeks, more and more news about planned salary cuts have been percolating, and over the last few days, the dam seems to have broken, with large job cuts also being announced.



This is likely to be wide-spread, and in the last few days, we ourselves have seen cases of 25% salary cuts, work without pay for the next 6 months, and finally, job-losses.



How to handle such a crisis is something someone impacted would be struggling to grapple with. And in case you are not hit by it as yet, count yourself as lucky and prepare for an eventuality like this. The below 10 steps should hopefully help you plan for it and address much of the impact.




Please read our latest article, published on Moneycontrol.


https://www.moneycontrol.com/news/business/personal-finance/10-money-steps-to-help-you-stay-prepared-for-a-job-loss-5325361.html



Image credit: Moneycontrol



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.

Don’t wait for a hard landing to set your money matters in order!

Don’t wait for a hard landing to set your money matters in order!

The last few weeks have been a turbulent roller coaster of a ride, and even the most astute and calm investor would have had stressful moments while their portfolio values gyrated violently.



Given this kind of unseen volatility, it is not uncommon to expect calls from customers during such times, wanting to discuss their portfolios and share their concerns. Even then, there are some calls though which startle me and forces me to take a break.

I do also realize though that in some cases, counselling can only do that much and sometimes, only a hard landing sometimes serves the purpose of making people realize the risks of living without a financial safety net.

Read more in our latest article, published on Moneycontrol.

https://www.moneycontrol.com/news/business/personal-finance/dont-wait-for-a-hard-landing-to-set-your-money-matters-in-order-5217561.html



Image credit: Moneycontrol



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.

The mistakes do-it-yourself Investors make when the going gets tough

The mistakes do-it-yourself Investors make when the going gets tough

The last few days have been unprecedented and will be part of stories which we tell our grandchildren. We have been proactively in touch with many of our customers over the last few days, to understand their worries and allay their fears. And we are pleasantly surprised by their typical response to the situation.

 

On the other hand, we get a lot of calls from DIY customers who want a sounding board during difficult times. They are looking for some advice, they are essentially gauging if they are on the right track. What we notice with a vast majority of them are the following

 

Read more about this in our latest article, published on Moneycontrol.

 

https://www.moneycontrol.com/news/business/personal-finance/the-mistakes-do-it-yourself-investors-make-when-the-going-gets-tough-5078681.html

 

 

Image credit: Moneycontrol

 

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.

The Finwise Couple series – In celebration of International Women’s Day – 4

The Finwise Couple series – In celebration of International Women’s Day – 4

For our next couple, equality doesn’t come with having to contribute to the monthly budget. They know one another since being college-mates and after nearly 2 decades of being married, can both complete each other’s sentences as well as together enjoy the silences in between.

 

Rajesh Kodoth is Regional Business Head at Ola Cabs and Swetha Rajesh, manages their wonderful home, having decided to leave her career early to devote her time to family. Over the last few years, they had built an assorted but real estate heavy portfolio and decided that it was time to seek professional help to future-proof their investments.

 

On the trigger to seek professional advice, Rajesh says “While we have been investing it wasn’t necessarily based on what was required to cover long-term financial needs. Also, our asset allocation was not balanced. Finwise helped me create investment plans to maximise returns on the current investments and plan the future.

 

On being asked about Swetha’s involvement in their financial well-being journey, he had this to say “Swetha is an integral part of our expense planning and in the journey to financial well-being. Her involvement helps make right decisions, gives an alternate perspective and overall comfort of a partnership.”

 

Being involved in a financial well-being journey together does not necessarily require both the spouses to be equal contributors financially. What it does require is the mindset that the other person can bring something to the table, and from our experiences, we can surely tell you that in such cases, one plus one turns out to equal much more than two!

 

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.

The Finwise Couple series – In celebration of International Women’s Day – 3

The Finwise Couple series – In celebration of International Women’s Day – 3

Our third couple are equals in every sense. Amish & Trupti Jasapara are doctors and both are in corporate practice. Amish is Senior Consultant at Fortis Hospitals and Trupti is Senior Consultant at SR Mehta & Sir KP Cardiac Institute. And in their personal lives, both take turns – whether it is in managing the various expenses of their family or in funding for their goals of the future.

 

As Amish says, “As doctors who face the same challenges every day, there was no way we could have been anything but equals. Trupti has single-handedly managed the family and has taken decisions without hesitation, when I took a sabbatical to study in Germany. She is a prudent investor and her involvement has meant that we have not added unnecessarily to our lifestyle and have saved before we spent. We both ensure we are on the same page before we embark upon any new investment/expenditure.”

 

On being asked about when they discovered the need for professional advice, Trupti had this to say “As doctors, if there is one thing which is in short supply, it has got be time. Lack of proper knowledge of investments, some losses incurred and shortage of time directed us towards getting professional help for our investments. Finwise through their systematic analysis helped us understand that healthy financial goals are a reality.

 

Their being professionals themselves, they didn’t have to hesitate when it came to seeking professionals when planning for their future goals, including their retirement. Having done that, they are now able to spare valuable time on other aspects of their personal life – scaling further heights in their professional careers and enjoying the small pleasures in their present, without having to feel guilty about it.

 

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.

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

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

While in many households, it is common to see that the responsibility of managing investments falls upon one, having a spouse who is also interested in the nuances of money need not be threatening at all to the person managing it. If anything, it helps by having a bouncing board, and allows you to get another perspective. A person who knows you and is equally responsible in the money management process helps ensure that individual biases if any get identified, since the risk-tolerances of both is not likely to be the same.

 

The couple we talk about today is one such. They are Pramod Marar & Suvena Bansal, both of whom work in the banking & financial services sector. Pramod is COO – Commercial Banking at HSBC India and Suvena is Head – Risk Policy at Aditya Birla Finance Limited.

 

Both Pramod & Suvena have been judicious about the need to put money away, and have been active savers and investors right from the beginning. So how did Pramod & Suvena decide that they needed help in reviewing their finances? In their words, “We felt the need to consult with professionals, when we reshuffled our real estate portfolio and realized we needed a better asset mix for our mid-term goals. Time was running out, there wasn’t enough time to plan, research and execute. We also needed someone whom we could trust and yet they weren’t too close, as financial matters can strain relationships.

 

On both being involved in the decision making on their family’s finances, they say, “Both of us from the beginning have had a say in all the investment decisions we have made. It has been a together thing always, we just don’t know to do it any other way.”

 

Their comfort with managing money together has helped Pramod & Suvena over the years jointly formulate a plan that will help them meet their financial goals for their family and achieve financial security. And being financially secure, is helping them focus more on the other things in life. In their words “Parents are getting older so we like to spend as much time as we can with them. Kids are in the teenage phase and require a new orientation, something we are working on. Work as new responsibilities so overall, a plate that is overflowing full.”

 

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.