Skip to main content

Saving Mistakes

 Start ELSS Funds SIP Online
 Smart saving goes beyond putting occasional extra money into an earmarked account. It also entails not committing silly blunders. Here are some common mistakes that could throw you off course.
 

#1: Not stepping up your savings rate as your income increases.

A painless way to increase your savings is to make sure that as you get raises, you are actually setting additional amounts aside. It's a great way to build your overall wealth. Let's say you set aside Rs 2,500 which is invested every month into two mutual funds. You do this when your earnings are Rs 50,000, which translates into a savings of 5%. Should your salary go up to Rs 60,000, it would be foolish to keep the amount you invest constant. Instead, stick to saving at least 5% of your earnings – which would translate to Rs 3,000.

#2: Not keeping an eye on your standard of living.

With increments and (hopefully) more savings, consumption too goes up. A strategy that says 'I'm going to keep saving 20% of my income' also means that you are going to spend 80% of it. The fallout of such a tactic is that your standard of living rises so quickly that your savings actually lose pace.

The problem is, when one raises their standard of living, not only do they increase their spending, they generally lift how much they are going to be spending for the rest of their life. So every increase in their spending is an increase they are going to have to fund for 30 years of retirement.

Financial planning expert Michael Kitces suggests an alternative to the idea of saving 20% of your income: instead of focusing on how much of income is saved, focus on how much of the raise is spent.

Give yourself permission to spend 50% of every raise that you get going forward. It's a pretty good number. You are going to feel like you are getting wealthier and you are spending more every year. But what actually happens over time is, if you merely spend 50% of every raise, you are implicitly saving 50% of every raise.

#3: Investing too conservatively for your time horizon.

For people who are decades away from retirement, they cannot afford to shirk equity. Their portfolio must be predominantly invested in stocks and only as they get closer to their retirement age should it tip more into safer securities.

Investors are often told to pay attention to their risk tolerance when allocating assets. That is sound advice. However, that does not mean volatility can be completely bypassed. There will be volatility in a market-linked instrument and it should not upset investors. In fact, they must learn to live with it. The rewards will be evident over the long term when the returns outpace inflation and result in wealth creation.

#4: Making investments based on recent performance.

One thing we often see is that investors tend to want to drive with the rearview mirror. So they look at whatever has performed best in the recent past and they decide that's where they want to put all their money. Oftentimes that is the category that is the most highly valued. So the security prices have already enjoyed a strong run-up or perhaps it just has a lot of risk baked into the asset class.

Shopping based on past returns is often not a good idea. You really do need to think about the fundamentals of the investment, think about its risk reward characteristics, think about, if you're investing in some sort of a fund, product, think about the types of investments that are in that fund, and think about whether they are attractive or not.

#5: Ignoring fees.

Ignoring fees is a mistake that we see investors oftentimes making when managing their portfolios. And those fees, even though they seem small and innocuous, because there are expressed usually in just percentage terms, they might look like they won't be a big deal. But over time, if you're invested for a period of , say, 10 or 20 years, the difference between a low expense fund and one that charges maybe twice as much, is very substantial in terms of your take-home returns. So do comparisons. Generally speaking, you're better off sticking with the product that has the lower expenses attached to it.

It's not the only driver of your investment but one of the few quantifiable drivers of investment results. So, you do need to pay attention to it.

Along the same lines, don't be too quick to exit funds. Even if you have made a wrong choice, stop fresh investments but sell your units when you can avoid short term capital gains. Expenses, taxes and inflation are what eat into your savings and you need to combat them as best as you can.

-----------------------------------------------
Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds

Top 10 Tax Saving Mutual Funds to invest in India for 2016

Best 10 ELSS Mutual Funds in india for 2016

1. BNP Paribas Long Term Equity Fund

2. Axis Tax Saver Fund

3. Franklin India TaxShield

4. ICICI Prudential Long Term Equity Fund

5. IDFC Tax Advantage (ELSS) Fund

6. Birla Sun Life Tax Relief 96

7. DSP BlackRock Tax Saver Fund

8. Reliance Tax Saver (ELSS) Fund

9. Religare Tax Plan

10. Birla Sun Life Tax Plan

Invest in Best Performing 2016 Tax Saver Mutual Funds Online

Invest Online

Download Application Forms

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

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

Leave your comment with mail ID and we will answer them

OR

You can write to us at

PrajnaCapital [at] Gmail [dot] Com

OR

Leave a missed Call on 94 8300 8300

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

Popular posts from this blog

ICICI Pru Mutual Fund Dividend

ICICI Prudential Mutual Fund has announced dividend under the following schemes: Scheme Dividend ( Rs /unit) ICICI Pru Capital Protection Oriented Ser V Plan B-D 0.03611325 ICICI Pru Capital Protection Oriented Ser V Plan B Direct-D 0.03611325 ICICI Pru Balanced Advantage Direct-DM 0.06 The record date has been fixed as February 08, 2017. ------------------------------ ------ Invest Rs 1,50,000 and Save Tax upto Rs 46,350 under Section 80C. Get Great Returns by Investing in Best Performing ELSS Funds Top 4 Tax Saver Mutual Funds for 2017 - 2018 Best 4 ELSS Mutual Funds to invest in India for 2017 1. DSP BlackRock Tax Saver Fund 2. Invesco India Tax Plan 3. Tata India Tax Savings Fund 4. BNP Paribas Long Term Equity Fund Invest in Best Performing 2017 Tax Saver Mutual Funds Online Invest Best Tax Saver Mutual Funds Online Download Top Tax Saver Mutual Funds  Application Forms For further information contact  SaveTaxGetRich on 94 8300 8300 ------------------------------ ------ Leave y...

What is Financial Freedom?

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)     There were many things common between our Freedom fighters. All had the Single vision (Free India), common goal (independence) and had a disciplined and focused approach. They were ready to do anything and everything and had made so many sacrifices to see India free . But the road to freedom was not easy .They had faced lot many hardships, went to jail so many times and even confronted physical and mental torture from the British. There was one more thing which proved to be an advantage to our fighters that most of them were professional lawyers. The knowledge of legal issues and its impact on our country at large has helped them counter various bills and proposed new laws by the then government. It is due to their continuous effort that we are able to achieve the goal of Independent Indi...

Hidden Bank Fees

  What Banks Hide From Customers Imagine after a peaceful and exciting holiday you receive your bank statement with steep charges. You then rush to your bank and start confronting staff members and to your dismay, you come to know that the high end debit card was charged very heavily. Wouldn't this cause damage to your finances? So remember, the world outside is full of deceptive and double cheating people. Unethical practices are always used by company sales person in order to meet the target. Credit card companies, mutual funds and bank institutions always play dirty tricks to lure customers and the practices are rampant. So here's how you should be careful while dealing with your banks: High End Debit Card Charges While opening an account with a bank you opt for a debit card with minimal charges. But later on when you upgrade your card and opt for high end debit card the annual charge rise by a good amount. Though such a card has slew of features but it all comes at a high ...

Partial withdrawal from PPF

  Public Provident Fund (PPF) account has a lock in period   If you opened a PPF account to meet your retirement needs,, think twice about withdrawing from this fund before retirement. But provided it's an emergency here are the rules. Public Provident Fund (PPF) account has a lock in period before which you cannot withdraw your money.   The partial withdrawal is allowed after the completion of 6 financial years . This means that you will be allowed a partial withdrawal from 1 April 2017. The maximum partial withdrawal allowed is the least of the following: 50 percent of the account balance at the end of fourth financial year, 31 March 15 50 percent of the account balance of the end of previous financial year, 31 March 17.   There's a loan option available on your PPF account between the fourth and the sixth financial year. You can obtain a loan of up to 25 per cent of the balance in your account. However, this will attract interest of 2 percent more than the prevailing ...

Updating a minor PAN card upon becoming adults

  Updating a minor's PAN card once they become adults A PAN card issued in the name of a minor does not contain the minor's photograph or signature, and therefore, cannot be used as a valid proof of identity. Once a minor PAN card holder turns 18, the relevant changes must be made in the PAN records. A new card is then issued bearing a photograph and signature. Application The applicant is required to fill up the "Request for new PAN card andor changes or correction in PAN data" form. The form can be filled up online by accessing NSDL's Tax Information Network website and clicking on the online PAN application tab. Information The applicant must mention the existing PAN number in the application and check the `photo mismatch' and `signature mismatch' boxes, and submit the online form. The form must also be printed out, signed by the applicant, and submitted along with two photographs. Documents Identity and address proof in the form of a copy of the app...
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