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Looking at Investment Options for Your Financial Goals

So for we have completed two steps of Financial Planning. In the first one that is understanding your current financial status, we have seen cash flow statement role and net worth statement in detail. With the help of these two statements, we can assess our current financial status at a given point in time. In the second step that is writing down your financial goals, we have seen how important it is to write down your goals, quantify them and also put certain timelines to your goals. In the current video, we are going to cover the third step of financial planning in detail that is looking at investment options for your financial goals. There are a lot of investment options available in the market like traditional debt instruments deadlines, debt funds, pure equity, equity funds, etc.But what options you ultimately choose for your financial goals depend on four factors which are listed here,

Four Factors of Financial Goals Time available for your goal or investment horizon. Current fi…
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Writing Down Your Financial Goals to Become Rich

We all have wishes and dreams, but the one that needs money to fulfill are actually our financial goals. Now, these financial goals could be anything, like your daughters higher education, her marriage, your bigger house, etc. We have these wishes, dreams, on our mind and in our heart. But do we write them down? No, we don't. The second thing we don't do is, we don't quantify our goals. Let us see, you want your daughter to have a higher education in the US, but what is the corpus you would need when she actually grows up, the third thing we don't do is, we don't set a timeline to a goal. Again in the example where you want your daughter to have higher education in the US, by what time you need that corpus?.

So again, you need to have a timeline to your goal. So what you see in front of you are the most common goal that people have, that is buying a house or shifting to a newer one, child's higher education, child's marriage and retirement planning. This l…

Net Worth Statement and Financial Planning

A net worth statement tells you your true worth at a given point in time. A net worth statement is nothing but your assets subtracted by your liabilities. Now what all is to be included under assets? Assets are of five types,

The first is equity - it includes direct stocks, equity mutual funds and ULIPs. The second one is debt, which includes fixed deposits, debt funds, PFs, Post office investments, Traditional life insurance premiums, insurance policy could be a money back policy, endowment, etc. The next asset class is liquid, it includes cash, your savings and current account balance and liquid funds. Fourth asset class is gold, which includes gold coins, bars, gold funds and gold exchange treated funds. We have intentionally excluded gold jewelry from gold asset class because we might think it is an asset but we sold on selling. The last asset class is real estate which includes your house, land and commercial space.

It includes all your loans which could be pe…

Withdrawal Benefits of Employee Pension Scheme (EPS)

Let us discuss about the situation, why can withdraw your pension benefit and how to calculate your pension. So let us look at the withdrawal of the pension benefit. For calculation of your service period a tenure of less than 6 months is rounded off to 0 and a tenner more than or equal to six months is rounded off to 1. For example, if your service period is 9 years and 6 months, it is rounded off to 10 years and if your service period is 9 years and five months, it is rounded off to 9 years.

Withdrawal of the Pension Benefit
Pension benefit withdrawal is possible if total employment is less than 9 years and 6 months and your age is less than 50 years. It is also possible if you attain the age of 58 years, but your total employment is less than 9 years and six months. It is also possible by the family members of a deceased EPS member who was dying after the age of 58 years, but his total employment is less than 9 years and six months. Now what is the amount that you get on withdrawa…

Understanding Your Current Role of Financial Status - Cash Flow Statement

When you want to understand your current financial status, two statements will help you, the first one is a cash flow statement and the next is a net worth statement. Let us look at the cash flow statement briefly in this article.

Cash Flow Statement
It would tell you whether you are generating surplus after paying your taxes and after your lifetime expenses. The data you are is to be taken for a financial year as some of your expenses would be yearly. We should take care of your thumb rules which will tell us whether your saving enough and not spending too much. Years of 50/30/20 guideline which will help you track your budget.

The Year 50 stands for your expenses. It should be a maximum of 50% of your take home pay, that is after you pay your taxes. And this would include all your household expenses, your rent and EMI. Household expenses would include your utility bills, food, entertainment, education, fuel, etc. The 30% here stands for saving. You should be able to save at least 3…

Importance of Financial Planning and the Steps Involved in it

Financial planning is an ongoing process. It helps you take the right decisions about money, so that you achieve your financial goals. It is not just about buying financial products. Financial planning is very similar to planning for your health. Let us see you want to reduce weight, so you checks what is your current weight, how much you want to loose, what are the exercise options which tempt to join and then you hire a personal trainer. Then you create a plan out of it and then track it. Financial Planning is also like this, first you understand your current financial status, you write down your goals, you look at the investment options available, you select the right investment options for you and make a plan out of it and you implement the plan and review it periodically. What you just saw are the exact steps of financial planning.

Why is a Financial Plan Important?
Do you remember the price of Mango bite or Panpasand you used to eat? it was just 25 paise, but today it costs rup…

Employee Pension Scheme (EPS), Contributions and Some Features

Employee Pension Scheme is also known as EPS. It is the pension scheme for the employees of the organised sector. The Pension is provided in case of retirement, disability and it is also provided to the family member or nominee in case of unfortunate death of the EPS member or the EPS pensioner. Let us talk about the contributions now,

Contribution of EPS
If you are a part of EPF that is Employee Provident Fund, 12% of your basic and DA is your contribution and as you already know even the employer matches your contribution. Now out of this employer contribution 8.33% goes to the EPS account, so here your employer is contributing and not you. Even the government contributes 1.16% of your basic and DA to your EPS account and both these contributions, that is the employer and the government contribution is limited to a maximum of 15,000 rupees in basic and DA. That is not more than 1,250 rupees is contributed by your employer and not more than 180 rupees is contributed by the governmen…