Financial Planning | Finwise

You spend across the globe, do you also invest internationally?

Girish Ganaraj Financial Planning, International Investing, Personal Finance April 26, 2019April 26, 2019Diversification, financial planning, International Investing, Investment Planning 0 Comment

One of the key pillars of building a stable yet strong investment portfolio for your long-term goals is Diversification. The objective of diversification is simply to “not put all your eggs in one basket”. Ie. apportion your money across different investments, in order to reduce risk. Conventionally, diversification for retail investors has meant the following –

Invest across asset classes – eg. Equity, Debt, Gold, Commodities, Real Estate
Invest across categories – eg. within Equity – large/mid/small cap, within debt – liquid, duration, credit risk

One key area available for diversification, yet, not taken advantage of by the retail investor is – Geography. Think about it – while we all agree that as a country India has a great long-term future and is one of the fastest growing markets in the world, from a risk perspective, having all your investments in one country – isn’t it another way of “having all your eggs in one basket”? While during happier times your pure Indian portfolio might grow healthily, what about the volatility risks during uncertain times (eg. global recessions, oil prices peaking – haven’t we seen these before?) when global money flows out of emerging markets such as India?

One key factor that large and HNI investors use successfully to not only de-risk their portfolios but also take advantage of global growth cycles is investing internationally. This has many advantages

Companies such as Apple, Google, Amazon, Facebook, Netflix – are driving huge behavior and consumption changes across consumers. And none of these are Indian. Investing internationally means having a finger in this pie.
Most clients we meet today have a significant portion of their goals planned abroad. Eg. Children’s foreign education, International holidays every few years both before and after retirement, destination weddings abroad. Investing internationally helps you plan for these goals better.
While India is a higher-growth market, it is also a higher inflation country, and hence its currency depreciates against most developed country currencies eg. Dollar, Euro, GBP. Investing abroad allows you to take advantage of the rupee depreciating and adds to the gains.

Remember though, investing internationally also has its share of “new” risks that one needs to plan for. Eg. knowledge of global cycles, international geo-politics and its impact as well as currency risks. That said, there are significant investment opportunities available today that helps us invest internationally. More importantly, not investing internationally may be a bigger risk over the long term, keeping in mind the increasing inter-connectedness the world is moving towards.

It is also not something that a retail investor can DIY. It is important to reach out to a trusted financial advisor who can help you sift through and find these opportunities. For our clients, who have anywhere between 10-25 years left for retirement, we recommend at least 10-20% of their investment portfolio should be invested abroad, both to take advantage of global investment opportunities as well as act as a hedge during volatile times.

Going on international holidays or spending on international products – a good part of your expenses goes towards international companies. Then, why haven’t you invested a decent part of your inve/stments in them yet?

Finwise is a personal finance solutions firm that helps both residents and NRIs 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 by stokpic from Pixabay

Why being a diligent saver may be making you a bad investor

Girish Ganaraj Financial Freedom, Financial Planning, Personal Finance April 10, 2019April 20, 2019financial planning, Saving vs Investing 0 Comment

“Saving is a great habit, but without investing and tracking, it just sleeps” – Manoj Arora

In general, we are aggressive savers and “keeping something aside for a rainy day” comes to us more naturally than most (probably because we live in a country that is used to quite a bit of excess rain! 😊). We are people who save because we are taught to save. For most of us, our earlier generation (or the one before that) has gone through tough times bringing their children up and we have seen it. We have lived through times of “scarcity” and this scarcity has automatically built into us the values of both prudence (living within our means) and caution (hesitation to take the risk).

This prudence has held us in good stead and manifests itself in our lives in many ways. Not only do we usually have Plan Bs (ie. jugaads) ready for most important situations (ab kya karein is not something we get stuck at usually), it has also taught us to have a savings habit and spend carefully. Our ability to survive and manage short-term household cash crises is also quite good, purely because there is some savings lying somewhere that turns up to be used in that emergency.

At the same time, this caution has led us to being not-so-good investors. For most of us, our investing experiences are formed by what people around us have done. Hence the moment one has a secure job, “ghar kareedna hai” becomes the goal. For our earlier generation, investing a large part of their savings in gold was common since “bachchon ki shaadi mein dena hai”.

The values of caution have also been built into us because of past experiences that we may have had or seen. Someone in the family losing all their money because “usne share-market mein gawah diya” can be a very tough experience for a young adult and can form the basis for his or her life-long investing thinking process.

As financial planners, we commonly see large parts of client savings parked in illiquid assets such as gold or real estate. Most clients we get usually have significant holdings in these asset classes, to the extent of being too dependent on the performance of these asset classes to secure their financial futures. What such strategies also end up risking is that while we spend our lives building “assets”, we don’t necessarily have enough wealth when the time comes, and corrective actions in such situations, unless taken in time, also can prove costly.

It is only recently that people are getting more comfortable with financial assets such as mutual funds, and stocks. Even today, personal finance and investing isn’t taught to kids right from school to graduate programs. It is ironical sometimes to see senior professionals, directors and vice-presidents in large companies, managing company balance-sheets and P&Ls, but struggling at home to have a clear plan that will help them secure their long-term goals.

The fundamental issue with not knowing the basics of investing means 2 things. One, you are dependent on the mercies of whichever “salesperson” you meet (whether from a bank/NBFC, a newspaper ad or a well-wisher friend/relative) to take your investing decisions. Two, even more importantly, you are dependent on the vagaries of luck and time to determine whether you have made the right choice or not.

So, what can we do about it? While Saving is about controlling your expenses to keep aside something for the future, Investing is about making sure it is enough when the time comes. This requires the layman to have some rudimentary knowledge about various financial assets, the return they can generate as well as the risks they entail over various time horizons. Importantly, it also requires us to recognize the corrosive power of inflation on our savings and the ability to assess which investments can build wealth over the long term and which erode it.

Investing is primarily about understanding risk and putting your money to work when and where it favours you. It is not something alien to us since we generally take risks in other domains all the time. In today’s times, we cannot remain ignorant about the basics of investing especially when it does seem that the future of wealth creation lies more in financial assets like equity, mutual funds and bonds, rather than conventional old-time favourites such as real estate and gold. Start your learning and investing journey today. If required, reach out to a good financial planner, just make sure that their interests are aligned to yours.

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: Mohamed Hassan, Pixabay.com

Lets talk money, honey!

Prathiba Girish Financial Freedom, Financial Planning, Finwise Woman, Personal Finance April 3, 2019April 3, 2019financial independence, financial planning, women empowerment 0 Comment

To know a person fully, it is important to know their attitudes towards money. This is a critical step towards being truly ready for your happily-ever-after story.

Read this article written by me in my monthly column on Moneycontrol.com by clicking the below link.

https://www.moneycontrol.com/news/business/personal-finance/viewpoint-lets-talk-money-honey-importance-of-discussing-finances-in-a-marriage-3674541.html

Dont just plan to invest, Invest to a Plan

Girish Ganaraj Financial Freedom, Financial Planning, Personal Finance March 20, 2019March 20, 2019financial freedom, financial independence, financial plan, personal financial planning 0 Comment

“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.

Image credit: Kdsphotos from Pixabay

The Finwise Woman series – In celebration of International Women’s Day – 8

Prathiba Girish Financial Freedom, Financial Planning, Finwise Woman, Personal Finance March 7, 2019March 7, 2019financial independence, financial planning, finwise woman, personal finance, womens day 0 Comment

Our final Finwise Woman is Mrunali Majmudar Sathe, a successful corporate executive, someone who has worked at senior levels in the corporate world as well as has successfully run her own company. For her, money has always been a means to an end, towards achieving her ambitions and desires for her and her family.

Mrunali says,

“As a working woman I have always been financially independent, driving many of our financial decisions of key investments like house and big expenses as well. But as the kids grew up and I took a year off on sabbatical, it struck me that one day I may not be able to earn and the burden will fall on my husband alone or on our meagre savings.

Thats when I realised I needed a personal financial advisor. Enter, Prathiba. I have ever been so grateful that she came into my life. I can say that today my financial future is absolutely secure thanks to her meticulous planning and coaching. All I do is follow her. I can now even think of expensive college education for my kids which I had all but given up on.

In a city like Mumbai if both partners don’t think and act alike to influence their financial status, it is difficult to thrive. Thanks to Finwise, I am wiser and in charge of my and my family’s financial future.”

We hope you enjoyed reading the stories of how these women took charge of their financial lives and went about building financial security and independence as a bulwark for their futures. It is never too late to begin and we urge all women to begin their journey towards becoming “finwise” today!

#finwisewoman # financialindependence #womensday

Finwise is a personal finance solutions firm that helps successful women gain financial and emotional security by helping them plan for their financial goals and achieve financial independence. For consultations, please reach me at prathiba.girish@finwise.in or +91 9870702277.

The Finwise Woman series – In celebration of International Women’s Day – 7

Today’s Finwise Woman is someone who is surrounded by aromas, both at her job and when she is not (her passion is to see the world)! Anusha Iyer is Creative Fragrance Director and is based out of South Africa with her spouse.

She says

“It’s been about 20 years since I started working and I’ve been managing not just mine but also our household finances till date. My goals in life were to have my own house, be debt free and travel the world. Successfully managed to achieve the first two and the latter is work in progress. Having become a travel addict and with a long-term goal of maintaining our current lifestyle I realized it’s time for me to up the game.With Finwise am looking forward to a great partnership to help achieve my dreams!”

#finwisewoman #financialindependence #womensday

The Finwise Woman series – In celebration of International Women’s Day – 6

Prathiba Girish Financial Freedom, Financial Planning, Finwise Woman, Personal Finance March 6, 2019March 6, 2019financial independence, financial planning, finwise woman, personal finance, womens day 0 Comment

Our next Finwise Woman is Mandira Chowdhury, a retired Govt. employee who takes pride in being in charge of her own financial affairs, while pursuing her joys – her grandson and classical music.

She says,

“As a working woman, (in those days, it was not as common as it is today), I always had exposure and enough interest to understand finance and various options available to me.

Added to this, I was married into a progressive family with a strong mother-in-law. I was always aware of our investments and was part of healthy discussions regarding it.

Therefore, when I lost my husband a few years back, I knew where to pick up the threads. While it is a blessing to have a concerned and affectionate family, consisting of my daughter and son-in-law, I take great pride in having the last say in managing my money while recognising the need for impartial and trustworthy professional advice. Prathiba has very ably and patiently helped me in my journey so far.One never knows what life has in store for us, best to wake up and take charge of your financial life now!”

#finwisewoman #financialindependence #womensday

The Finwise Woman series – In celebration of International Women’s day – 5

Our fifth Finwise Woman is a someone who has lived life on her terms, and built financial security for herself through sheer perseverance. Kavita Krishnamurthy is a successful executive, working as a General Manager in a logistics firm, and a mother of one.

Kavita says,

“As a senior executive, and parallelly an independent mother, I have learnt to be cognizant of managing my funds well and conserving my resources optimally. Without any such backing and support for my future, some far sight and advice taught me well to keep my future secure and dependable.

Financial awareness and the right investments have been largely catalytic in helping me manifest these goals. It is indeed a matter of pride to reflect upon how far I have come in life thanks to my prudence and ability to take anything thrown at me and make something worthwhile out of it.

Being on top of your finances is not a choice, it is a compulsion, especially so for us women!”

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

Prathiba Girish Financial Freedom, Financial Planning, Finwise Woman, Personal Finance March 5, 2019March 5, 2019financial independence, financial planning, finwise woman, personal finance, personal financial planning, womens day 0 Comment

Our next story is about another doctor, a scientist from the reputed Tata Memorial Cancer Hospital, Omshree Shetty.

Dr. Omshree says,

“Come to think of it, how many women have access to top class education and circumstances conducive to building a career? Given the opportunity it is important to make the most of it and build a strong and independent financial base. It is a non-negotiable step to be able to have choices in life and exercise them.

Being a professional myself, I am a strong advocate of seeking professional help in areas outside one’s expertise to help one live a fulfilling life.In this era of women empowerment, the true sense of independence that women can enjoy is financial independence and that can be accomplished with careful planning and smart investment. So be wise, invest smartly and live with peace of mind and happiness.”

#finwisewoman #financialindependence #womensday

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

Today’s first Finwise Woman story is about another strong woman, who, in an era of male dominance, has been an inspiration for many other women. She is Dr. Neela Dabir, Dean, School of Vocational Education at the internationally reputed Tata Institute of Social Sciences.

Incidentally, while her spouse is a very successful surgeon in his own right, she is usually the one involved in the finer details of their personal wealth.

Dr. Neela says

“I have always been interested in money matters, and I go the extra mile to keep myself updated with the latest information and trends. In fact, my CA appreciates that I understand the financial matters for both of us. Being on top of things and constantly monitoring the how and why are important to me and give me a lot of peace.

I truly believe that it’s important for financial decisions to be joint, failing which, one must at least be informed of where the money is being spent or invested. Every one learns to cope when forced to, but doing so voluntarily can take away a lot of unwanted stress and mistakes when you can least afford it.It is equally important to hire the right professional who places your interest on top and I have Prathiba and Finwise doing that for me by bringing all our finances together meaningfully and helping us live our dreams, while knowing that our financial future is being secured.”

#finwisewoman #financialindependence #womensday