Skip to main content

Saving and not earning more is key to wealth

Invest In Tax Saving Mutual Funds Online

Call 0 94 8300 8300 (India)

 

 

Save a larger portion of income in a disciplined manner

 


Deepak Kohli, 46, was born in Lucknow and brought up in Allahabad. He works for the government of India. Deepak and his wife Alka, 41 have two children — Twinkle and Rohan. His father was in the armed forces and mother a housewife.

What is the couple saving for?

The couple wants to buy a home worth Rs 60 lakh in a year, save Rs 18 lakh for their children's education and another Rs 18 lakh for their marriage. Post retirement, the family would require Rs 7.5 lakh annually to meet their expenses. Apart from these goals, they wish to buy a luxury car and plan a foreign trip. The costs will be revised based on inflation.

Where are they today?

Cash flow: The couple's total annual inflow from all sources is Rs 16.13 lakh, against an annual outflow of Rs 9.95 lakh. The outflow comprises routine household expenses, insurance premium and house rent. Over and above their mandatory and voluntary expenses, they are regularly saving Rs 6.5 lakh in various saving instruments.


Net worth: Total assets are worth Rs 70.38 lakh, which includes cash and near-cash assets worth Rs. 2.5 lakh, assets for self consumption worth Rs 4.3 lakh. There are no liabilities.


Contingency fund: Mandatory monthly expenses of the family are Rs 55,000. Against this, the balance in savings bank account, liquid funds and cash held at home is Rs. 2.5 lakh. This is approximately 5 months' reserve.


Health & life insurance: At present, the family does not have any health insurance policy. However, all their medical expenses are completely covered by the government for life.


Deepak has a life insurance cover of Rs 4.5 lakh and Alka Rs 2.1 lakh. The government also provides cover. Additionally, they have a group insurance policy for their children worth Rs 3 lakh.


Savings & investment: The couple is saving approximately 44% of their gross annual inflow. Invested assets comprise shares and equity mutual funds worth Rs 14.24 lakh, fixed deposits and debentures worth Rs 19.51 lakh, balance in provident fund of Rs 16.11 lakh, cash value of insurance policies worth Rs 3.35 lakh and real estate from investment perspective worth Rs 10.36 lakh.


Fiscal analysis: They are saving a substantial portion of their income. Most of their assets are for building long-term wealth. Overall assets are diversified across equity, debt and real estate. While they do not have a dedicated health cover, the government will cover their expenses. Similarly, life cover is not sufficient but it would suffice for the time being since there is a cover provided by the government.

The way ahead

Contingency fund: They should maintain a contingency reserve of Rs 160,000, of which Rs 20,000 should be held as cash in hand and the balance in FD linked to savings bank account. The excess funds must be utilized to fund goals.


Health & life cover: There is no need for health cover as costs are reimbursed by the government. However, life cover will have to be enhanced when they opt for a home loan.

Planning for financial goals

Home buying: The couple wishes to buy a house worth Rs 60 lakh within a year. The provision for making a down payment of about 25% can be made by redeeming fixed deposits and equity mutual funds. The balance can be funded by taking a home loan.

 

Children's education: The couple wants Rs 9 lakh each for their children's education. This goal can be partly achieved by utilizing the investments made in debentures and the balance can be generated by regularly saving monthly surplus in debt-based mutual funds.


Children's marriage: Once they buy their home, they should start an SIP in a mutual fund which has a combination of debt and equity to build a corpus to meet this goal.


Retirement Planning: Post retirement, the family would require Rs 7.5 lakh annually to meet their routine expenses. Deepak would receive an annual pension from the government. Also, he has two investment-oriented pension policies which will support him. Existing investments in shares, provident fund and real estate along with regular savings will help provide for the shortfall.

Planner's eye

The couple is doing well financially not because they have a large income but they are a saving large portion of their income in a discipline manner. There could be some struggle in the next decade as all their financial goals — home buying, education and marriage — will follow in quick succession. However, their habit of saving will see them through with ease

Happy Investing!!

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

Leave your comment with mail ID and we will answer them

OR

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

---------------------------------------------

Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

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

------------------

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

Popular posts from this blog

How to generate a UAN Online

Best SIP Funds Online   In order to make Employees' Provident Fund (EPF) accounts portable, the Employees' Provident Fund Organisation (EPFO) had launched the facility of Universal Account Number (UAN ) in 2014. Having a UAN is now mandatory if you have an EPF account and are contributing to it. So far, you got this number from your employer and every time you changed jobs, you had to furnish this number to the new employer.  However, in order to make it easier for you to get a UAN , and without your employer's intervention, the EPFO now allows you to go online and generate a UAN on your own. This facility can be used by freshers, or new employees, who are joining the workforce as well as by employees who have older EPF accounts but do not have a UAN as yet. As a new employee, you can simply generate a UAN and provide the number to your employer at the time of joining, when you need to fill up forms for your EPF contribution. As per a circula...
Read more

Income Tax Basics for beginners

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Tax is a compulsory payment made to the Government, but there are ways to optimise it   Income tax is an instrument used by the government to achieve its social and economic objectives. Simply put, tax is duty or tariff that income earning individuals pay to the Government in exchange of certain benefits such as law and order, healthcare, education and a lot more. With proper planning, your tax liability can be reduced and optimised effectively, leaving you with a greater share of your income in your hands than being paid out as tax. Income earned in the twelve months contained in the period from 1st April to 31st March (Financial Year) is taken into account when calculating income tax. Under the Income Tax Act this period is called the previous year.   ...
Read more

Am you Required to E-file Tax Return?

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Am I Required to 'E-file' My Return? Yes, under the law you are required to e-file your return if your income for the year is Rs. 500,000 or more. Even if you are not required to e-file your return, it is advisable to do so for the following benefits: i) E-filing is environment friendly. ii) E-filing ensures certain validations before the return is filed. Therefore, e-returns are more accurate than the paper returns. iii) E-returns are processed faster than the paper returns. iv) E-filing can be done from the comfort of home/office and you do not have to stand in queue to e-file. v) E-returns can be accessed anytime from the tax department's e-filing portal. For further information contact Prajna Capit...
Read more

Total Returns Index brings out real Equity Funds Performers

From February, equity mutual funds have to change their benchmarks to account for dividend payments. Until now, funds used price-based benchmarks alone. TRI or total return indices assume that dividend payouts are reinvested back into the index. What this does is lift the overall index returns, because dividends get compounded. For example, the Sensex TRI index will consider dividend payouts of its constituent companies while the Nifty50 TRI index will consider dividends of its constituents. Using TRI indices as benchmarks comes on the argument that an equity funds earn dividends on the stocks in its portfolio, which they use to buy more stocks. Therefore, using an index that also considers dividend reinvestment would be a more appropriate benchmark. Shrinking outperformance With a stiffer benchmark, it is obvious that the margin by which an equity fund outperforms the benchmark would shrink. Rolling one-year returns from 2013 onwards, the average margin by which largecap funds out...
Read more

HDFC Prudence Fund

Best SIP Funds to Invest Online   HDFC Prudence Fund is now HDFC Balanced Advantage Fund HDFC Prudence Fund (HPF ), the country's largest equity-oriented mutual fund scheme with assets close to Rs 37,000 crore, will now be known as HDFC Balanced Advantage Fund and can switch entirely between equities and debt. Until now, it could invest only 40-75% in equities. On 25 April, HDFC Asset Management Co. Ltd announced plans for many of its schemes, as part of the ongoing merger and re-categorisation exercise. Most other fund houses, too, have announced their plans to re-categorise their schemes. If you don't agree with your schemes' new form, you have a chance to exit without paying an exit load. Here's how you should decide what to do. Your scheme could change... If there is no change to your scheme, you have nothing to worry about. But if your scheme is about to change, check how big or small it is. For instance, if you own a large-cap fund th...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now