Few Money Lessons from Lord Ganesha

In Hinduism, Lord Ganesha holds the unique distinction of being the “Prathama Pujaya”, meaning the first lord to be worshipped. Every occasion or religious ceremony starts with the worship of Lord Ganesha. In India, and especially in Maharashtra, the 10 days of Ganesh Chaturthi celebrations mark joy, fervour and optimism for the future. We will find almost every home/office/shops adorned with an idol of Ganesha because of the eternal lessons that Lord Ganesha offers. Let us learns some important Money Lessons from Lord Ganesha:

 1. Listen everything but be focussed in Mind 

When we plan our finances, there are two important points. Firstly we must get the bigger picture right and then move on the investment plan in an organized manner. In the financial markets, listening to different viewpoints is the best way to get the bigger picture before taking decision. Lord Ganesh’s large ears embody the willingness to listen while his small and keen eyes embody a mind that is absolutely focused on the goal. When it comes to financial planning, we need to thoroughly weigh all the options but once the decision is made, we must channelize all our energies to focus on the goal. That is what Lord Ganesha teaches us.

2. Flexibility & Adjustments

Ganesha is also known as Vakratunda- the one with a curved trunk. His trunk is very strong but is also very flexible and can pickup very small things also. Similarly as an investor if a new opportunity knocks on the door, we need to make adjustments to reap additional benefits. We should regularly review our portfolio and keep looking for better opportunities. We should be flexible in terms of asset diversification, timeline adjustments and the amount of investment based n circumstances.

3. Have thirst for knowledge

Lord Ganesha is believed to have documented Mahabharata with great speed and clarity  this represents the highest levels of intellectual curiosity. Similarly we should remember the biggest investment is in knowledge and self improvement. That is an important lesson in the dynamic world of financial markets. Many variables/indicators keep on changing which means that we need to keep on expanding our knowledge base and incorporating new ideas and techniques. That is only possible with a thirst for knowledge. It is this thirst for knowledge and intellectual curiosity that can empower us to manage your investments and finances in better way. Keep learning about new investment products, new investment ideas, new methods to achieve financial goals.

4. Take Calculated risk

Risk taking is a must because without risk there is no return. The sumptuous belly of Lord Ganesha represents the risk appetite. It also represents the need to know the difference between risk appetite and risk capacity. The particular instance when Lord Ganesha circum-ambulates his parents (Lord Shiva and Goddess Parvati) as representative of the universe is a classic instance of letting your head rule over your heart. Lord Ganesha teaches investors to measure their actions by their risk capacity and to be driven by clear analysis.

5. Be Humble

Despite being supreme power Ganesh have a little mouse as his vehicle. It is always at his feet. Here Ganesha tells us to keep our temptations and desires in control. When we manage to get a few investment ideas right the immediate response is to become supremely confident. Lord Ganesha constantly reminds us the lessons of humility. As it ever happens, if not kept in check, a tiny mouse can bring the house down.

Lord Ganesha’s Visarjan on tenth day (on Annant Chaturdashi) also teaches us an important lesson that all good things are ephemeral. The message is Good times don’t last forever but good ideas and strategies does.

This year as we celebrate the joys of Ganesh Chaturthi, Let us also spend a moment to reflect on the important Money and life lessons of Lord Ganesha.

 

 

How should we save money for our Kid’s future

Most of us, the moment we become parent, start thinking of the future of our child “ Mera Beta (Beti) bada hokar mera naam karega “ is a famous Indian saying.

To make his future bright we do everything so as to give him the best education and organize a stylish wedding and for all this we need money in fact lot of money. Here comes various things in mind; how to build the corpus for these expenses, some of them are:

1. Which instruments are suitable for my requirements?

2. Will these help me to build an adequate corpus for my all goals?

3. Are ULIPS/Child Insurance Plan are right investment option for future goals, or should we take PPF or Sukanya Samriddhi Yojana for my daughter?

4. What about real estate? Is this a good deal, or Gold is better option?

5. Or should I simply put all my money in fixed deposits?

Most of the time people keep on randomly putting their money in various options due to ignorance and/or wrong advice without understanding the long term implications of the same. The common mistakes people do while investing are:

1. Thinking too much about safety then return

2. Inconsistent Investments

3. Not starting early

4. Ignoring their own health

5. Not taking proper life insurance

These mistakes results to in-adequate corpus to fulfil child’s ambitions or then digging out the retirement corpus to compensate the same.

So what is the right way to create sufficient corpus for the child’s future and how should we go for it. Let’s understand this.

1.  Firstly we should know how much amount in current value is required based on his/our ambitions.

2. We need to calculate the future value of the corpus based on the time horizon

3. Based on time horizon we need to decide the right asset allocation for the investments. i.e. how much amount or percentage should be invested in debt, equity, gold, real estate etc.

4. Based on asset allocation we need to decide about the instruments i.e. which company’s equity? Should we invest direct equity or through mutual funds, In debt whether FD or PPF or Sukanaya Samridhi or Debt Funds or Balanced Funds, In Gold should we take physical gold or ETFs? In Real Estate residential or Commercial, and in which City? Etc..

Now let us find out the answers of some of the common questions.

(a) What is the right options for investments?

Mutual Funds could be one of the best option for regular investments through auto pilot mode. We need to construct an optimum portfolio with right mixture of equity and debt based on investors risk appetite and time horizon. For a long-term goal, it is better to have investments inclined towards equity, whereas for short-term goals, have more exposure to debt. Once the scheme/portfolio is finalised we can let the money keep on investing in those funds on regular basis through SIP route. For more details read my previous post the link of which is given below.

 Mutual Funds are not just Right, they are Better also

(b) PPF, FDs, Sukanya Samridhi Yojana (SSY) are Safe and Secure, So should we go for it?

These are debt products which are relatively safe and can be invested if our time horizon and risk appetite demands so. However we should remember that although PPF and SSY but there interest rates also changes every quarter based on the current interest rate scenario and we should not expect very high returns from them. Further PPF is 15 year instrument and SSY is also 10-15 years instrument so we should also keep in mind the future requirements.

(c) What about ULIPS or Child Insurance Plans, how good are they ?

Investment and Insurance are two other things and we should not mix them. All the Child insurance normal endowment plans gives 5-7% returns, while ULIPS are equity debt mix and give market return less of various expenses i.e. morality charges policy admin charges etc. and there will also be GST on the premium amount. We should always remember that It’s not the children who need insurance, but parents. A prudent option is to go for a combination of a term cover and mutual fund investment. For further details read my previous posts Mutual Fund Term Insurance: Best of Both Worlds .

(d) What about Real Estate, is this good investment option?

For last several years real estate has given almost negligible return. Apart from that it is kind of illiquid investment which cannot be sold in short notice in case of urgent The rental yields are 3-5% which are very low and unattractive. Besides, there are various other charges that we need to pay like property tax, maintenance cost, high transactional costs, or capital gains when you sell it. Further a property is not divisible and we cannot sell one room in a flat or a house to meet an immediate expense.”

All those issues makes real estate an un-attractive investment option.

(e) Is Gold better to invest for long term?

Normally we all Indians need gold for our Child’s wedding, but buying physical gold has its own draw backs. One is if we buy gold jewellery it may be outdated by the time our child marries or he/she may not like it. Secondly there are storage expenses and purity issues. 

So what could be the better option to buy gold? The answer is Either ETFs or Sovereign Gold Bonds, further as Sovereign Gold bonds gives interest of 2.5% besides paying back the market price of gold at the time of maturity so this could be better option if we need to buy gold in future.

(f) Should we take Education Loan or dig out form my Retirement Corpus to fund my Child’s Education?

Taking education loan is better option due to following reasons,

·        This keeps our Retirement Corpus safe,

·        Our Cash flow from existing corpus remains intact

·        By taking Education Loan we create sense of discipline and responsibility in the child that he should be sincere on his studies and take up the repayment responsibility

·     Education loans are easily available for good course, both for Indian and foreign higher education.

·      The interest rates start at a low 8-10% and no guarantor or collateral is required for loans below ₹4 lakh.

·        Education Loan has tax benefit also as the entire interest portion of the loan is eligible for deduction under Section 80E of the Income Tax Act.

·        There is grace period of one year, as mandated by the RBI, after the child finishes his education and starts repaying the loan. Hence child will have sufficient time to start repaying the loan

For further details read my post, the link of which is provided below.

Education Loan: An option to enrich your skills even if you can’t afford it right now

As we can see from above points it’s better to take loan rather than digging out from retirement corpus.

Nothing is impossible in this world, If we plan it properly and timely we can achieve great goals and dreams for our kids in a very easy and simple way.

How to counter Long Term Capital Gain Tax

Finally the biggest fears of equity investors has become a reality now. Much speculated long term-capital gains (LTCG) tax on equities is back. The proposal of LTCG made by the Finance Minister on 1 February 2018 rattled the stock market, sending the markets on a downward spiral. The Sensex is almost 2,000 points down since the announcement. Although grandfathering of capital gains till 31 Jan 2018 i.e. LTCG earned up to this date won’t be subject to tax—prevented the market from plummeting on Budget day, but it could not rein in the fall the day after as there are other negatives like continuation of STT, not providing indexation benefit to long-term equity investors, etc. later will keep the sentiments down for the time being.

1. Impact of LTCG

As proposed the LTCG tax is 10% without indexation for equities. Currently for Debt funds there is 20% LTCG tax with indexation benefit.

If we assume a return of 10% from both equity and debt funds and 5% inflation.

The effective return post LTCG tax on debt funds works out to be 9% {10- (10-5)*20%}.

And for equity also it will be 9% (10-1)%.

So if the returns are less than 10% then indexation benefits (assuming 5% inflation) will reduce tax liability and for more than 10% returns the 10% straight tax (without indexation) improves the returns for the investors.

Normally we expect 10%+ returns in the equities so indexation may not be very helpful in that case. However there is also STT (Securities transaction tax) of 0.1% which will reduce the net returns a little bit.

2. Who will be impacted?

       i.          (i) Individual investors who are investing in Equities or Equity Mutual funds have to pay the   tax.

 (ii) Being trustee of investors’ money, Domestic mutual funds/Insurance companies, don’t   have to pay LTCG tax so for them there will be no impact. Only the investor when he   redeems need to pay the tax.

(iii) FIIs i.e. foreign institutional investors will have to pay tax on their trades which will push up their costs. Also, though the grandfathering clause provides some relief, it increase their operational costs due to tax compliances.

3. What will be the impact on Market?

Now after the introduction of LTCG tax, the difference between the STCG and LTCG is only 5% now. Due to this few investors may wait for a year to sell. Investment decisions will now be based on the market situation and not based on tax concerns as the 5% difference between LTCG and STCG, will not be so lucrative for investors to wait for an entire year just to avail of this extra  tax benefits. Earlier even if they wanted to book profits they normally use to stay invested for minimum one year just to get the gains tax free now this will not be the case.

This will result into more volatility in the stock market.

4. So what can an investor do?

Government has proposed that LTCG on equities will be tax free up to ₹1 lakh per financial year. So for small investors it may not impact much. For example if an investor is investing 5000 monthly SIP and expected return is 12% the total capital gain would be approximate 1.12 lakhs after five years. So by taking some redemptions in between he may not be required to pay any tax. Or for one time investor who has invested 8 lakhs and with 12% returns it comes just 96000 so no need to pay tax on the entire gain.

With a 10% Dividend Distribution Tax (DDT) being introduced on Equity Mutual Funds only, the overall outgo in hand of investor will reduce marginally. However the MF dividend remains tax free in the hands of the investor. This is specifically for retirees. So it is better to avoid dividend option in mutual funds.

However for large investors there will be an impact which can be reduced to some extent by constantly booking profits on regular intervals.

Since we can’t carry forward the ₹1 lakh sum—hence we cannot claim ₹10 lakh exemption over a 10 year period. So, we will have to book profits each year. “Instead of accumulating capital gains forever, investors now need to churn their portfolio (book profit and invest again in other assets) on a regular basis to lower their tax liability.

So for very small investors there may not be any effect if they book profit time to time and for large investors they may have to pay some tax and hence to achieve their goals they may be required to increase the investment amount by 10-12% so as to achieve their pre decided goals.

To Conclude

It is more important than ever to stop churning the portfolio of MF in the name of “More Returns” or “Asset Allocation”. as we may save the 1% exit load but will incur the 10% LTCG., so we should redeem only to book profit when it is reaching 1 lakh limit or the scheme is not doing good.

Remember, the risk is in our investment strategy not in the market. If we have put together an investment for a Financial Goal no other asset class except equities (even after LTCG) will allow us to achieve it.

Finally we must consult our advisor to define priorities and risk profile before starting investments. It’s even more important with the new tax regime in place.

The Mistakes we should avoid while doing SIP in Mutual Funds

We all have heard a lot about benefits of systematic investments and SIP is the favourite tool for small investors to create wealth by making small- small investments. Regular investments is most effective tool for investors to create wealth in a disciplined and systematic way. In SIPs a small investors who has as small as Rs. 500/- also has the same opportunity to earns as  an individual who has got thousands or lakhs of rupees.  This is due to the power of compounding where every interest on interest is added to provide maximum returns. While almost all of us are aware of the power of Systematic Investment Plans or SIPs, we some times make a few fundamental errors when it comes to the actual investments and maintaining it. Here we are going to point out a few so that nothing comes between us in the process of creating wealth.

1. Plan your regular investment by analysing at future cash flows

The most important feature of SIP  that distinguishes it from other means of investment is the small amounts that we can invest. Hence, if we commit a huge amount at that start and then fail to continue it for few months because of lack of savings, high expenditure or some financial problem then we have actually lost the avenue for investment for those months. Although we can still invest the instalments missed for those months later on. However, out of 12 months if we manage to invest only for 10 or 8 months, our investment would not generate the return we would have expected?

So it is better that instead of being overly ambitious or optimistic regarding the monthly systematic investing, we should analyse of future cash flows first and then decide a realistic amount which could be manageable. It is important that we are comfortable with our finances after the investment. Our investments should not become a burden. If we cannot invest a stipulated sum on a monthly but on a quarterly basis we should opt for that option as well. Picking an amount that is too high or too low can put an unnecessary pressure and affect the performance of our investments.

2. SIP is not just for Small Investors

There is a common myth associated with Systematic Investment Plans that investors who cannot invest through lump sum should invest through SIPs. Or it is generally for the investors who have small amounts. This could not have been far from the truth reality.  SIP can be made for any amount and there are investors who invests lakhs of rupees on regular basis. It is like Instead of Rs. 5000 a month, if you we spare र 500,000 a month; we can always still invest in SIPs. The fundamental of Systematic Investment Plans or SIPs, i.e. time value of money, rupee cost averaging and compounding do not change irrespective of the amount invested. So if we can manage to invest large sums in lump sum or regularly per month, we can still invest in SIPs and get the same benefits.

3. SIP’s are for a year or so

As mentioned above SIP’s run on the basic principal of time value of money, rupee cost averaging and compounding, so if someone is investing in SIPs for a year or so he will actually won’t get any significant benefits and the purpose of SIPs gets defeated. The value of investments is not created through the amount we invest but it is created by the time period of that investment. The longer we stay invested, higher will be the value of our investment.

Value of Systematic Investment Planning over a period of time
Monthly Investment (Rs.)	Investment Period (Years)	Expected Annual Rate of Return	Invested Amount (Rs. Lakhs)	Maturity Amount (Rs. Lakhs)	Absolute gain (Rs. Lakhs)
5,000	2	14%	1.2	1.39	0.19
5,000	5	14%	3.0	4.36	1.36
5,000	7	14%	4.2	7.15	2.95
5,000	10	14%	6.0	13.10	7.10
5,000	15	14%	9.0	30.64	21.64
5,000	20	14%	12.0	65.82	53.82
5,000	25	14%	15.0	136.36	121.36
5,000	30	14%	18.0	277.85	259.85

As we can see form the example above  , if we continue the investments for a number of years, has been shown. In th first two years the corpus of Rs. 1.20 lakhs increase by only Rs. 19000 which is just 15.8% of the investment value.  However if we continue investing the same amount month after month and stay invested for 25 – 30 years the corpus grows to a phenomenal Rs. 1.36 crs to Rs. 2.77 crs which is 9 to 15 times of the total investment amount. As can be seen from the table above the investment value is created by the time period of investment and thus benefits from the power of compounding. Hence, if we are thinking of redeeming after a short period of time we would be losing on potential wealth creation and may also result in losses.

4. As the market falls we also fell of SIPs

We have heard a lot about it that someone says that I stopped my SIP as the market is falling so no point to continue with it. We try to time the markets and invest in rising markets and redeem in falling markets. In fact it should be the opposite, where the investors should redeem or stay invested in rising markets and invest in falling markets. Investors investing through SIP redeem SIPs when markets fall and this is a big mistake. They should look at this as an opportunity to invest more because if they invest in a lower market they get higher number of units as the NAV is low and benefit in terms of rupee cost averaging. Common investors do not have the expertise to filter noise from information. Short term market fluctuations are created by noise in the market and they have no significant impact on investments. Hence, if we hurriedly redeem our investments without analysing the situation we may actually be losing out on potential wealth creation.

Investors mistakenly think that short term fluctuations can erode their investments. That cannot happen. In fact, if we have planned to stay invested for a long period of time, these fluctuations should hold no value at all. The longer we stay invested, the lesser will be the impact of short term fluctuations.

5. Regular Income makes me feel happy

As an investor when we are choosing the fund to invest, We have two options: Dividend or Growth option. Dividend is basically a withdrawal from the corpus and thus if we are opting for that, the compounding effect is reduced and it hinders the growth of our targeted corpus. In growth option, no dividends are paid or declared and thus the corpus continues to grow and benefit.

Compounding, often called the eighth wonder of the world, works by creating a chain of interest on the interest calculated to the last divisible penny. Hence, the returns through compound interest are way higher than the return that is calculated through simple interest. In case you have already opted for the dividend option, we can change it to growth option or for dividend reinvestment option later on also. Dividend reinvestment option also gives same benefits of growth however it increases the number of units.

6. Keeping the SIPs same even if income is growing

As the time grows our income and expenses also keep on moving up. We may also go through financially lean periods and financial highs. During the period of financial high, we should accumulate as much as we can. However, if we do not have any urgent financial requirement or anything particular to do with that sum, the chances are we may spend it. Instead of allowing this to happen, we should add this to our existing SIP fund. Now few mutual fund companys offer options wherein we can automatically increase the SIP amount over a specific period. We can also add lump sums to the same fund in the same folio or account even if we are investing a lump sum amount. Adding a lump sum once in a while boosts the investments. After all, the SIP amount and a lump sum are bound to generate more returns than just monthly investment. If we have lump sum, we should always add it to your ongoing investments.

7. Redeeming in between then for

We some time tend to redeem parts of their SIP investments whenever there is requirement for some amount during some urgent need etc. And later on decide to either adding back the amount or not adding it at all. While adding later puts back the corpus to where it was supposed, however returns may not be similarly. However, If you have redeemed a part of the corpus only to add it back six months later, you have lost the return that the part redeemed corpus could have generated in those six months. We should always remember that It is not the corpus or the amount that determines the returns; but the duration of investment and the discipline that makes the difference. More importantly, the momentum of generating the targeted corpus for the long term gets disturbed. We should never redeem your SIP investments partly or fully during the SIP period. Systematic Investment Plan is a long term investment idea for wealth creation and therefore should not be used like a bank account. For any emergency or unforeseen events we should have sufficient balance in your savings bank account or liquid funds.

Conclusion

We can learn form mistakes but it would be much better if we learn from others mistakes or the from the experience from the experts It is often said, learn from your mistakes. We are not required to make the above mistakes to learn from them. As now we already know what the common mistakes are, we need to ensure that we don’t repeat them with our investments. Once we can follow these principals, there is nothing that stands in our way of wealth creation.

The golden savings tips while maintaining your current lifestyle

Generally when we talk about personal finance it is related to investing. However the biggest question comes how to invest, if we don’t have enough savings? Although regular savings habit is part of our ancient culture but in current environment, with rising cost of living, better lifestyle and with consumerism part of our culture,  Saving sufficient amount is becoming increasingly difficult and challenging. In this post, we will discuss some golden savings tips that can help us, without compromising in our lifestyle.

• ·        Make a monthly budget:

If we sincerely make a monthly budget half of our job is done regarding controlling the expenses. However we should be careful while making budget, it should not be a theoretical exercise but based on all practical needs and not on gut feelling. When we prepare your monthly budget, it should start with absolutely necessary items, e.g. food, rent, utility bills, transportation costs, children’s school fees, insurance premium, home loan EMIs etc. After that we should keep some money aside for emergency needs. The balance is discretionary spending. We should always try to minimize our discretionary expenses and maximize the savings. So how can we do that? First we should take out our monthly bank or credit card statement, and study our spending habits. We should check each and every items whether it is necessary or discretionary and eliminate wherever possible. The other option is to set a savings target and stick to it assiduously.

• ·        Debt only when desperate:

Loans means spending tomorrow’s income on today’s expenses so we should avoid debt and take it only for very essential things. Debt comes in many forms e.g. credit cards, buying expensive electronic gadgets/ items in equated monthly instalments etc. We should always remember that debt, in whatever form, have its cost in the form of interest expense. If we cannot control our buying habits than we should use debit card, instead of credit card. If we are using credit cards, we should ensure to pay the full amount due on a monthly basis. Setting up an ECS to pay the full amount due on credit card on a monthly basis before the due date, will prevent us from incurring interest expense and late payment fees. We should avoid EMI payment schemes for purchases the simple logic is if we cannot pay in full, probably we cannot afford to purchase the product as of now. So we should wait till we have saved enough to purchase it by paying the full amount or opt for a lesser priced product. We should not be enticed by promotions like “zero interest” EMIs for purchase of certain items. There is no such thing as a free lunch. For such items with zero interest EMIs, we are likely to get a discount if pay upfront which is similar to interest cost. If we already have debt, it should be paid in full, before we spend on non-essential items. However there are certain loans like Home loan which are not bad if taken to buy home for living as in that case we are buying assets and will also get income tax benefit.

• ·        Plan before buy:

In earlier days like our parents first prepare a shopping list, before going for grocery shopping. The shopping list has a great use, if we are trying to minimize our spending especially when we are shopping in a supermarket. With a shopping list we shop with a sense of purpose and only buy items that are really required. On the other hand if we are shopping without a list, we may end up buying unnecessary items that catches our fancy, rather than the utility. The ambience and product placements in supermarkets are designed to make us spend more and feel good about it. For example, the music in the supermarket often has a slow rhythm. The idea is to make us walk leisurely, so that our wandering eye can catch some attractively packaged stuff that most probably we do not need. Smart product placement often makes us spend more. Generally the most expensive brands are kept at the eye level and the less expensive brands are kept in the upper or lower shelves. Naturally the most expensive brands will first catch our attention and make us buy it. Many supermarkets have consumer durables next to fruits and vegetables. Although, it does not make logical sense but there is a science behind the product placement. The bright colours of fruits and vegetables serve to brighten up our mood. The happier we are, the more we are likely to spend on a consumer durable item that we may do not need. On the contrary If we have a shopping list, we will buy only those items that are required and leave.

• ·        Wait before buying:

When it comes to buying gadgets like TV, Laptops, smart phones, tablets etc very often we want to buy the latest model. But we should also remember that latest model is often the most expensive one too. First we should ask our self, do we really need the latest model. If we can afford to wait for few months, we may get the same model at significant discount. However, I do realize that it is easier said than done. When it comes to electronic gadgets, people are led by “herd mentality”. We should, however, remember that smart savers are never influenced by what their peer group is doing, because most people in the peer group are not smart savers.

• ·        Shop Smartly:

In the current age of internet and ecommerce online shopping could be a smart and time and money saving. Online shopping cheaper because real estate cost of brick and mortar stores are getting expensive by the day, especially in big cities. Online retailers buy their merchandise directly from the source, instead of going through intermediaries. Some online retailers are well funded by venture capitalists. They can afford to adopt predatory loss pricing to capture the target customer segment. Online retailing is picking up in India at an accelerated pace. However, some customers are worried about quality, reliability and customer service issues. Some shoppers like to touch and feel the product before buying. You can visit a brick and mortar store to get a closer feel of the product. But you can always order it online and save costs. We can follow some simple tips to make the online shopping safe and enjoyable experience.

o   We should shop in a trusted familiar and well known online sites. Searching for a product on Google may throw up very enticing offers, but we cannot be sure about the trustworthiness of many websites. On the other hand if you shop from well-known online sites likelihood of things going wrong is quite less.

o   Before purchasing we should always compare prices of the same item on different websites so as to get the best deal. Different online shopping sites run different promotions and there are chances that we can get a better deal if we explore multiple options

o   Shipping charges could be a hidden cost and we should check it before placing the order. Otherwise, we may be hit with a nasty surprise when at the time of final bill.

o   Always check for security of website for making online payment through credit card we can check it through SSL encryption which is depicted by the icon of a padlock on the address bar.

o   We should fill out only the mandatory personal information, when making an online purchase. There is no use in filling out non-essential personal information like date of birth, spouse’s names etc. which can actually be misused by cyber thieves.

o   We should always use strong passwords, with combinations of upper case and lower case, numbers and symbols.

o   When on the move, we can use mobile apps for online shopping through our mobile phone. This will ensure online shopping on mobile a more efficient experience.

• ·        Savings through liquid funds:

Generally most of us keep funds in our savings bank that we will not need in the next few weeks or even months. Liquid funds are an excellent destination to park those funds. Liquid funds are better alternative to savings bank. While having an emergency fund parked in savings bank is essential from a financial planning perspective, if we can wait for a day to withdraw the funds, liquid funds are an excellent alternative to savings bank account. While savings bank interest is usually around 4%, liquid funds provide almost double returns in the range of 7.5-8.5%. This extra income is very useful from a long term perspective, because we can re-invest it in high yielding assets like equities and earn higher returns over a long time horizon. While liquid funds are subject to market risks, the nature underlying instruments in a liquid fund ensures a very high degree of safety. Withdrawals from liquid funds are processed within 24 hours on business days. Some liquid funds offer cash withdrawal facilities with ATM cards.

• ·        Start investing Regularly & Systematically:

In hindi there is a saying “ bund bund se ghara bharta hai”. Saving regularly is the best and easiest way for long term wealth creation. If we opt for systematic investing on predetermined dates directly through our bank accounts, It forces us to save more, by leaving a smaller surplus in our bank for discretionary spending. After a careful analysis of our regular expenses, we should prepare our monthly budget as discussed earlier and set a savings target. Based on this savings target, we should start a monthly systematic investing plan and set up an ECS with our bank account at the start of every month. That way we will prioritize long term investment over discretionary spending. With a systematic investment plan over a long time horizon we will benefit from the power of compounding of our investment returns and create wealth. The table below shows a scenario analysis of the corpus built over various periods of time at different investment return rates, with a monthly SIP amount of 5000/-