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Income tax calculator

Posted in Finance.

The excel based Income tax calculator can be used for computing income tax on income from salary, pension, gifts, fixed deposit and bank interest, house rent and capital gains(short and long term gains). This tool cannot be used for computing income tax from business or profession.

Income tax calculator

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File Income Tax Return Online

Posted in Finance, Income Tax, India.

From assessment year 2013-14, E-filing has been made compulsory for the person who is an individual or a Hindu undivided family (HUF), if his or its total income, or the total income in respect of which he is or it is assessable under the act during the previous year, exceeds Rs. 5 lakh rupees for the assessment year 2013-14 onwards. It clearly states total income and not taxable income.

Please read below to know how you can file income tax return online yourself.

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Investment Planning for Wedding: What (Knot) to Do

Posted in Finance, Investment.

We got to agree that Indian weddings are not a ceremony, but a phenomenon. The phrase “Big Fat Wedding” is used only with India, though there are six countries richer than us. While it is a fun experience to attend an Indian wedding, hosting one is an altogether different story. The desire of making it a memorable evening, and the pressure of meeting expectations of hundreds of people, is intimidating, unnerving and of course, expensive. Very expensive.

The beginning of every wedding investment planning

The beginning is – in most cases – started from the the birth of the child and goes on for up to two decades. The infamous Indian inflation makes it necessary to start saving early. Sadly, the amount required to marry a daughter is still more than that for marrying a son.

How much does a wedding cost?

The three major heads of a wedding involve

* The cost of feast (venue and food)

* The cost of (bride’s) jewellery,

* Money, clothing, or items given to family members

While there are several other costs that swell up the wedding bill, these three make up for the biggest part of the pie.  Venue cost can fluctuate depending on the ‘austerity quotient’ of the day. Food – sold by the plate count – can vary from Rs. 500 to Rs. 2000 for a middle-class family. And the jewellery and other items are also highly volatile depending on the number of relatives, their expectations, and the spending capacity of the family. While it is almost impossible to give a generic figure to the cost of a wedding, it is important to gauge the expense under each of these heads and start planning backwards.

How to go about saving for a wedding?

From piggy banks and gold jewellery to bank accounts and properties, there is a wide range of investment and saving instruments that have been around for long. But as a wedding planner, how do you make a decision on which instrument to pick, and more importantly, which instrument to not pick. Some insights that will come handy in making decisions:

1) You can start small. But start yesterday.

The best investments aren’t big, they are just early. For wedding-based investments, do not wait for a specific age for your child to reach. Even if you can start Rs. 500 a month, it is best to start as soon as you can. The secret sauce of all investing is the power of compounding over time. Finish reading this article and – if you already haven’t – start your first investment right after.

2) Beat the market by periodic investing

Instead of investing 1 Lakh one time in a mutual fund, invest Rs.8500 every month. By doing this, you beat the market inflation in the longer term. Also, you can park your surplus in a dynamic RD without any lock-in, and earn some basic interest on it. Same trick applies to investing in stock market. Do not put all your eggs in one basket, or at one time.

3) Recalibrate your investments when necessary

If the annual performance of one Mututal Fund is steadily better than the other’s, you can consider parking more money in the former. Similarly, if the tax rate on FDs goes higher, it’s time to start channeling that money is say NSC or ELSS. Similarly, it has been noticed that gold and stock market are often inversely proportional. Lastly, keep into account taxation related policy changes, for both salaried and business professionals – when planning your short and long term investments.

4) Get updated, stay updated

A smart (and hence richer) investor considers investing like news. Reading the newspaper once a week or month isn’t going to keep you updated. Similarly, knowing one instrument at length, or one type of mutual fund can be futile, often fatal to your wedding-focused investment plans. If as a working professional you have limited time or interest in staying at the top of things – as is commonly seen – it is recommended to use a guided portfolio that is customized according to your goal and liquidity. The GPS or Guided Portfolio System by Edelweiss is a good option given its simplicity and security aspects.
Lastly, whether you have a male child or a female child, do not plan a fancy wedding at the cost of their education and personal growth. Along with their wedding, make sure you have scoped for their education requirements as well.


Beginner’s guide to Retirement Investment Planning

Posted in Finance, Investment.

Retirement planning should – in an ideal world – begin with your first paycheck. Yet, there are several reasons that keep us from it, lack of awareness being the biggest. In this post, I’ll run you through the basics of retirement planning, what you are doing wrong, and how to start, or do some course correction with some handy tips. Let’s start with the most important question:

How much do you need on retirement anyway?

Let me illustrate this with an example. Let’s say you are 30, and expect to retire at 60 (not very obvious in private jobs thought). Your current monthly expenses are INR 50000 per month today. If you live till the age of 75, you need a whopping INR 7.7 crore in those 15 years. So thirty years to save 7 crore. Which – without compounding –  means INR 23 Lakhs a year.

Things you need to stop doing. Right now.

Spending more than necessary

Which is often the money you don’t have (credit cards), to own things you don’t need, to impress people who don’t matter. This is a very common behaviour when you have surplus money. And if you remove these expenses from your cost of survival, your retirement goals will suddenly become a lot more attainable. For instance, if you cap your monthly spends to INR 35000 instead of INR 50000 today, you will need a whopping 2.2 crore less on retirement.

Living in denial

This means a lot of things. You are young and in the best of your health so the thought of falling ill or old age feels alien to you. Or you disregard the cost of healthcare because you haven’t had a serious health issue so far, or your company insurance has taken care of it. In all likelihood, none of these things will stay with you after the age 60. Start seeing the long term picture, and plan accordingly.

Not starting saving early

This is probably the most common problem. We first wait for finances, then for financial literacy, and by the time we begin, we’ve lost the super-power of compounding for a good number of years. Remember, the trick isn’t to start big, but to start early.

Most importantly, not diversifying your investments

The risk-appetite for Indian investor has been traditionally low. We are inclined to buy low risk low return instruments like LIC, gold, land, property and other government-led debt saving instruments like National Saving Certificates, FDs, PPF and EPF. While safe, the returns on these instruments just about makes up for the inflation. It is therefore very important to diversify into other instruments like stock market, ELSS, and Mutual Funds.

While markets may seem volatile or low-grown in the short term, they are always a wise diversification choice for long term. For instance, if you’d invested Rs. 100 in stock market in 2005, as of today (Jul 2017), they’d have become Rs. 433.

Not starting self-investing. Yesterday.

Given that the awareness of, and the convenience of investing into MFs is more than it ever was, this is the best time to start investing. There are a lot of Mutual Funds to invest into, depending on your requirement. Here’s a super useful tool that tells you the returns you will command on your mutual fund investments.
Conclusion: There are more than one smart ways to reach your retirement goals. The idea is to be aware, open to trying new things, and be ready for course correction when it comes to investing. Go ahead, start working on your final innings grand.


Natives and Expatriates guide to Systematic Investment Plan (SIP)

Posted in Finance, Investment, Mutual Funds.

expats

Expatriates working up their investments in India are often too occupied or not informed enough to get the better of Indian investment ecosystem. I’ve written this post to give them some pointers that might come handy. First, you must keep in mind the inflation rates in India v/s the country you’re working/were working in. Indian inflation, which has never dropped below 5%, went as high as in double digits in the past 10 years, but is now apparently tending back to around 5%.

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The finer points of Health Insurance and why you need it

Posted in Finance.

There are quite a few people out there who would consider health insurance a luxury; then again, there are those who don’t consider it at all. Insurance, especially health insurance, is extremely important. More so these days than ever before. To read more please click here.


Open Letter to Narendra Modi

Posted in Education, Finance, Government, Income Tax, India, News.

Respected sir,

Before anything else, I’d like to thank and congratulate you on furthering the Swachh Bharat Abhiyan with the master stroke of cleaning the black money menace. It is a very good exercise and will eliminate the existing black money to a great extent.

While all noble ideas emerge from our mann (heart), it often takes our dimag (mind), to execute them to fruition. Therefore, here I humbly propose some ideas to ensure that demonetization brings forth the impact you and your team visioned, while minimizing the trouble for the common man.

Now, we should try to restrict the methods for generation of new black money and identification of jugaads (hacks) done by people to convert their black to white in these famous 50 days.

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Never too late to buy a life insurance plan

Posted in Finance, Insurance.

If you are the one who had always procrastinated the decision to buy a life insurance plan or a protection plan then it’s time you buy it now. There are various kinds of life insurance policies available, some are sold through life insurance agents and some are sold online. The most famous and purest form of insurance sold online is term insurance. Term insurance plans are plans which provide protection to your family members in case an unfortunate event of death occurs to the nominee.

Why you should buy a term plan?
If you would ask me I would say a term plan is a must for everyone who has dependents like parents, spouse, kids, young siblings so that their future is secured even in your absence. Term plans are pure protection plans, they provide a higher sum assured at really low premiums.

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Do you need a critical illness insurance

Posted in Finance, Insurance.

Do you need a critical illness insurance if you have health insurance?

The answer is yes ! MediClaim or health insurance and a critical illness insurance works differently and has different utility. A few of the differences between MediClaim & Critical Illness insurance are:

  • Medical insurance operates on the concept of reimbursement of medical expenses unlike Critical illness insurance cover provides a lump-sum amount on diagnosis of a predefined critical illness.
  • On an average MediClaim cover is generally taken for less than 5 lacs which is mostly adequate for normal hospital and surgical treatments. However, the amount generally ends up being grossly insufficient for treatment of critical illnesses.
  • Critical illness insurance is cheaper than MediClaim . A limited number of illnesses are covered under Critical Illness insurance and the probability of those illnesses hitting a person is much lower than the general category of illnesses which are covered by MediClaim policies.

Critical illness insurance

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New Age Unit Linked Insurance Plans

Posted in Finance, Insurance.

Unit Linked Insurance Plan:
Unit Linked Insurance Plan (ULIP) is type of insurance product, which gives policy holders both insurance and investment under same plan. A part of the premium is utilized to provide insurance cover to the policy holder while the remaining portion is invested in various equity and debt schemes (depending upon chosen plan). Policy holders can select the type of funds (debt or equity) or a mix of both based on their investment need and appetite.

Next Gen – ULIP Version 2:
Thanks to internet, insurance companies are now selling directly to customers and this helped in bringing cost down by eliminating middle man commissions.
Some low cost ULIPs which are directly available online are Aviva i-Growth, Bajaj Allianz Future Gain and Edelweiss Tokio Wealth Accumulation.

Some new ULIPs have lower costs than what many mutual funds charge. It makes sense to invest in the new and much-improved version of ULIPs. As ULIPs have longer lock-in (of five years), fund manager have at least five years, and returns can be higher considering a longer view. Plus they add risk cover also which mutual funds don’t have. Like Wealth Accumulation Accelerated cover (WAAC) from Edelweiss Tokio Life is already 5 star rated by MorningStar

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The best critical illness insurance plan

Posted in Finance.

The occurrence of illnesses has grown tremendously in India. Health insurance also known as mediclaim has become an integral part of an individual’s insurance plan. Most of us have a mediclaim policy which provides us a specific amount as sum assured. These mediclaim policies cover many illnesses ranging from minor to major. Now, it’s important to understand that mediclaim covers only hospitalisation costs and not any other cost incurred by you or your family but what if you need a lump sum amount for your immediate expenses or for an advanced treatment? That’s when you’ll need a critical illness insurance plan. Critical illness insurance plans cover certain predefined critical illnesses. Now when you have a mediclaim why should you opt for a Critical illness plan? Assume Raj suffered from Malaria so his entire treatment came up to Rs 75,000. Ten years later Raj was detected with cancer the expense for the treatment was around 15 lakhs altogether. Hospital charges for the surgery were only Rs 5,00,000 which was paid by his mediclaim policy.

It is important to understand that the treatment for a critical illness is more expensive, when one is diagnosed with a critical illness the income earning capacity is hampered, there could be a need to travel abroad for advance treatment, etc. and hence all this may require a lump sum amount which is provided by critical illness insurance plan.

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