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For parents, there was a time when grown-ups and working sons were synonymous with both financial freedom and security. But with changing times and new social structures, that concept of financial security has become almost non-existent, at least in most of urban India.


Other than raising their children, parents themselves have to think about their post-retirement financial security. And with the demand and popularity for such approaches increasing, there are financial planners and advisors who are there to help, for a fee of course.


In the run up to the Independence Day, we spoke to three investment planning experts about how they would guide their clients towards financial freedom. Here is what they had to say:

For retired individuals

1) Don't run out of cash: You should keep cash and cash equivalent that can take care of your household expenses for at least six months.

2) Match expenses with income: Suppose of the total Rs 1-lakh expenses per month, Rs 75,000 is on food and essentials, while another Rs 25,000 is discretionary spending. Always make sure you have a regular source of monthly post-tax income of Rs 75,000. This can also include a systematic withdrawal plan (SWP) which can save more taxes for you.

3) Ensure growth: This is for that part of investment that will take care of incremental incomes and help you beat inflation in the years to come, and will insure you against running out of cash. For this, systematic investment plans (SIPs) in good mutual fund schemes are unbeatable options. This can also help you take care of your discretionary spends.

4) Get into another profession: You have retired from a job, but not from your life.

Also learn and/or do something that you always wanted to do but never got the time during your working years, like taking up a hobby, etc. Also, learning how investments are done is a good option. But never spend more than 40% of your time in the new profession and keep 60% of your time reserved for all other things like hobbies, new learning, etc.

 

5) Get a good financial advisor: You have a life partner. Now do a proper due diligence and choose an advisor who will remain a friend for life.


For women

1) Get on top of numbers: Don't let numbers make you cross-eyed! Investing is about understanding yourself and what you want your money to do for you, understanding concepts and then numbers…and someone else can always crunch the numbers for you.

 

2) Health cover: Don't count on the health policy of your company alone to take care of any future medical expenses. You should also have one of your own. Here, the younger you start, the cheaper it is.

3) Don't sign anything blindly: Most women do not take their own investment decisions but depend on the men in their lives like fathers, brothers and partners. Love with your heart, but sign with your brain.

4) Make your CA fall in love with you: Get him to teach you how to save tax. Sometimes you can save more in tax than the stock markets can give you in returns.

5) Don't be afraid to take risks:
Studies show that women are generally risk-averse and so tend to save rather than invest. However, the only way to build wealth is to invest. Riskaverseness could be due to not understanding how financial investments work, so take small steps and dip your foot in the water!

For young and first-time savers

1) Upgrade your skills: As lifecycles of products and services get shorter, and technology innovations cause disruptive changes, growing income consistently will only be possible by investing in oneself by constantly upgrading skills through training, learning and development workshops. Set a training budget for yourself, just like budgeting for regular and lifestyle expenses.


2) Manage expenses: You should learn to differentiate between your needs and wants. Once you learn that, you would be in control of your money in a much better way than otherwise.


3) Get risk cover: You should have adequate risk coverage to protect your whole family from any potential loss of assets and income. So, have a life insurance policy, health covers and also house insurance.


4) Set clear financial goals: Not only that, you should also measure the goals and how far have you reached at a pre-determined frequency. Any divergence from the set course should also call for a course correction.


5) Have a plan B: Learn to have a contingency plan, for everything. Have an investment strategy in place that should take care of your financial needs in case of loss of job, if the rate of interest goes up and your EMIs start shooting up, which in turn may be a stress on your expenses and savings, and various other such situations.

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

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You can write back to us at PrajnaCapital [at] Gmail [dot] Com

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These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

  1. ICICI Prudential Tax Plan Invest Online
  2. HDFC TaxSaver Invest Online
  3. DSP BlackRock Tax Saver Fund Invest Online
  4. Reliance Tax Saver (ELSS) Fund Invest Online
  5. Birla Sun Life Tax Relief '96 Invest Online
  6. IDFC Tax Advantage (ELSS) Fund Invest Online
  7. SBI Magnum Tax Gain Scheme 1993 Invest Online
  8. Sundaram Tax Saver Invest Online
  9. Edelweiss ELSS Invest Online

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Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Tax Saver MutualFunds Invest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

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