Feeds:
Posts
Comments

Archive for the ‘Childrens Education’ Category

opt 3Having a girl child is a moment of great joy for parents! But planning for the darling daughter’s future is also something that is always top of the minds of Indian parents. Early and sound planning can go a long way in ensuring the future of your daughter. Following are some ideas that as a parent you could consider when planning for your daughter’s future:

Ensuring Medical Cover is in place:In an ever changing environment and the growing threats of lifestyle related health problems, children are no more immune to major health concerns. As such, having them medically insured should be on high priority. While a stand alone health policy might be excessive, including them in your family floater is a practical option. Depending on the policy you chose, the minimum age requirements can range from 91 days to 3 years old.

Investing for your Daughter’s Future:Indian parents today are still actively looking to fund for their child’s future. Additionally parents of the daughter are still largely expected to fund for the “Big Fat Indian Wedding”. Following are some of the investment options out there which parents could consider and evaluate basis their requirements:

 

 

  • Sukanya SamriddhiYojana: A government initiative to encourage Indian parents to invest specifically for their daughter’s future. It provides the highest guaranteed returns of all government investment schemes and is currently providing 8.4% p.a. tax free. Furthermore, contributions to it are eligible for tax deductions upto Rs. 1.5 lakhs under Sec 80C. While some might criticise its lock in policy, the other way to look at this that it is a significant tool to partially, if not fully fund, the most important requirements of the daughter i.e. Her Education and Marriage

 

  • PPF: Another popular government scheme. Similar to Sukanya SamriddhiYojana in providing tax benefits under Sec 80C. However the current tax free returns are 7.9%. With a 15 year fixed lock in policy, its highly advisable that the parents open the account during the daughter’s early childhood and invest regularly in it to achieve a sizable corpus.

 

  • Mutual Funds: A combination of Equity and Debt Mutual Funds are a great way to ensure both short and long term goals of the daughter are met. One needs to identify which type of mutual fund and subsequently which scheme under that type would be most appropriate to invest into basis the requirements.

 

  • Gold: An all time favorite for Indians. While traditionally Indians have always bought and kept physical gold, there are more convenient options now available. Gold ETFs and Sovereign Gold Bonds are becoming increasingly popular among Indian investors.Both track gold prices and have the added advantage of no storage/making costs and no risks of theft/tampering.

 

  • Child Plans: Various Mutual Funds and Insurance Companies provide plans that are specific for children. Most of these options have a stringent lock in period and take exposure in equity and debt markets.The lock ins on these plans may work in favor when parents are looking to match the lock-in with the daughter’s goals.

Estate Planning:As a minor, two aspects become critical in ensuring that whatever hard work that went into planning for the child does not go to waste in case of a sudden demise of one/both parents. A will helps to confirm who will be the legal guardian of the child in case of an unfortunate event. It will also ensure that the money meant to go towards the requirements of the daughter actually is received by her at an appropriate time and the wishes of the parents as regards their monies for the daughter are honored.

Parents are always concerned with providing for their children. As such, it is always advisable to start planning early on in the child’s life. Understanding the child’s near and long term needs is a good way to start planning. And the correct planning can ensure peace of mind and happiness for both the parents and the daughter.

 

Advertisements

Read Full Post »

Debu Blog Image

As a passenger, getting from point A to B simply includes sitting on your assigned seat and enjoying the flight till the destination. You are completely unaware of the preparation and planning that goes behind every flight.  A smooth flight is an end result of the meticulous preparatory work including facing any emergency.

All sorts of emergencies can happen during a flight. Engine malfunctions, instrument failures and unanticipated weather issues are just some of the emergencies pilots can face at any time.  In such times the long hours of training, learning from past experiences and pre flight preparations comes to the front and saves the day. Sometimes passengers are blissfully unaware of the issue and continue to enjoy the flight. All this all possible because one aspect, planning! More specifically, planning for an emergency.

Yet, more often than not, pilots in the Indian aviation sector seem to be unprepared for one kind of emergency that is their own personal financial emergencies.

Personal financial emergencies can be broadly classified into two types based on nature of emergency i.e. (A) loss of job or life and (B) unexpected big ticket financial commitments.

While both can prove to be a heavy toll on one’s finances, if we look back to the last 5 years of the Indian Aviation Industry, job losses have been a major theme throughout.

Now as a pilot you earn a handsome salary starting from a young age. Hence your lifestyle tends to be on the more plentiful side.  And this only increases in significant jumps as you climb higher in your career. As such expenses are always on higher side. Luxury cars, high discretionary expenses, significant EMI’s and top notch education for children. All well within your reach. That is as long as you continue to earn that kind of money.

But what happens if you can’t? What if salaries are not paid for months or worse, you are given the golden handshake. What then? Take a step back and think about this for a minute. Ask yourself, will I be able to continue to live the life I have led so far under such circumstances; at least temporarily till I can get things back on track?

A majority of pilots will fail to have an answer to this. And that’s far from ideal!

So what should you do now? How do you start preparing for such unforeseen events? A thousand questions and ideas might run through your mind. Maybe you can get it right, maybe not. But with the help of a trusted financial advisor, who knows the intricacies of the aviation sector, you could stand a much better chance of confidently facing such troublesome periods, safe in the knowledge that you were geared up for it in advance. Exactly like handling an emergency while flying a plane.

As professionals specialized in planning for the worse, it definitely be worth your time for us to meet and discuss how to enrich your life.

Till then, happy flying!

Read Full Post »

There was a time when most Indians saved in bank Fixed Deposits, insurance policies and PPF accounts for various goals including child’s education. However, with the cost of education escalating rapidly and domestic education aspirations turning to international, there arises a need for inflation beating products to invest in, for securing your child’s future aspirations. With PPF rates traditionally being kept at an elevated level plus their significant benefits of offering tax free income, the recent decision to make them market linked, and subject to a quarterly review, makes PPF returns a significantly more volatile product in our view. Relying on them in isolation for goals like your child’s education will not help.

blog 1.JPG

Image Source: www.uncwpse.org

What to do?

If you wish to send your child abroad the cost of education will be higher. To be able to beat the escalating costs and to ensure you do not fall short of funds when you are nearing your goal you must approach it in a planned manner. Choice of products is important but strategy is equally important. When you know how far the goal is and what is the current cost, apply inflation to it to know the future cost. Do not forget to factor in possible currency depreciation impacts.

Choice of products is important but strategy is equally important.

blog 2.JPG

Image Source: doablefinance.com

Strategy: Equities perform well over longer terms. Therefore, keep a higher percentage allocation towards equity. Take exposure to gold as a partial currency hedge in the portfolio. As time passes move towards fixed income exposure. When you are 3 years away from the need for the monies shift all your money into fixed income to avoid a dent to your savings due to market volatility. Towards the end maintaining the amount that you have saved will be a priority rather than increasing them because education is a goal which cannot be delayed due to financial market volatility.

When you are 3 years away from the need for the monies shift all your money into fixed income to avoid a dent to your savings due to market volatility. Towards the end maintaining the amount that you have saved will be a priority rather than increasing them because education is a goal which cannot be delayed due to financial market volatility.

blog 3.JPG

Image Source: finvisionconsultants.com

Products: To start with, broadly divide your portfolio between equity, debt and gold. Based on your risk tolerance, choose products for yourself. Since education tends to be a goal that is hard to fully realize the scale of when your child is younger, ensure that you get into a flexible product that enables changes with minimal cost impacts.. On the equity side use a combination of diversified equity funds and equity ETFs . Ensure that you stay diversified between sectors, Asset Management Companies and market capitalisations. You can also look at balanced fund which have approximately 65% towards equity and rest towards debt. Avoid exposure to direct equity, unless you can give it time. On the fixed income side you can look at PPF, debt mutual funds, and bonds. For gold you can look at gold ETFs and sovereign gold bonds.

Since education tends to be a goal that is hard to fully realize the scale of when your child is younger, ensure that you get into a flexible product that enables changes with minimal cost impacts..

All in all, keep it simple and keep it flexible.

PPF still works, but only for a portion of the portfolio.

 

Read Full Post »

Saving and investing for your child’s higher education is one financial goal that you should begin to pursue as soon as the child is born. While the range of opportunities available to your child may be greater than you had in your youth, the fulfillment of those goals will only happen at a steep price.

PIC 1

Image Source: www.idealistcareers.org

Let us get an idea of the sort of money you will need to fund your child’s higher education dreams. An undergraduate degree in medicine in India could set you back by Rs. 5.5 lakh to Rs. 50 lakh. If the child were to pursue the same degree in the US, the cost would skyrocket to Rs. 1.8-3 crore. An engineering degree within India could cost you anywhere between Rs. 5 lakh and 25 lakh. The same degree pursued in the US would cost Rs. 1.2-2 crore. An MBA degree in India could cost Rs. 15.5-45 lakh. The same degree pursued from the US could cost you Rs. 72 lakh to 2 crore. These are indicative figures that we have provided based on our research. If you have an inkling of the profession that your child is likely to pursue, do your own research. Alternatively, do research on the costs of most of the major courses. Visit websites of universities and institutes to get an inkling of the costs involved. Your research will show that higher education is prohibitively expensive. What makes this an even harder summit to climb is that the cost will not remain static but will keep growing each year. Financial planners say that education inflation is almost 1.5 times the consumer price inflation.

An MBA degree in India could cost Rs. 15.5-45 lakh. The same degree pursued from the US could cost you Rs. 72 lakh to 2 crore.

In addition, if you plan to fund an overseas education, you need to factor in a possible depreciation in the value of the currency as well. There has been a tendency for the Indian rupee to weaken against major developed world currencies such as the dollar, in the range of approximately 4% per annum in the last 25 years. This further compounds the burden of saving adequately for a child’s foreign education.

Thus, the overall inflation number chosen for education may be significantly higher than that of regular inflation.

Pic 2

Image Source: www.dailyhunt.in

As has happened in other aspects of our lives, the education goal too has fallen victim to what is known as “lifestyle inflation”. This term basically means that as we turn more affluent, we are no longer content with the standard of life we had earlier. We seek to enhance it and in the process raise our expenditures. This has happened to the education goal as well. Our parents’ generation may have been quite content to study at government institutes, but for our children we want reputed private institutes that boast of world-class infrastructure. Children who have been raised in more affluent circumstances also become dissatisfied if they have to slum it out in government institutes having threadbare infrastructure. But studying at posh institutes comes with a steep price tag.

Our parents’ generation may have been quite content to study at government institutes, but for our children we want reputed private institutes that boast of world-class infrastructure.

Most upper middle class and wealthy families today aspire to send their children to foreign institutes for higher education. Education at these institutes is expensive, as the numbers mentioned earlier (for education in the US) demonstrate. Why higher education, today many students pursue the international baccalaureate curriculum in school, which prepares them to go abroad right after finishing their plus-two education. If a child is going to pursue both undergraduate and postgraduate study abroad, the parents’ burden doubles.

In the future, as the government of India liberalises its norms for higher education, many branded universities from the US, UK and Australia may set up their offshore campuses in India (as has already happened in cities like Dubai and Singapore). While the cost of studying at these campuses is likely to be lower than studying at the mother campuses, their fees will still be much higher than what Indian institutes charge.

Most upper middle class and wealthy families today aspire to send their children to foreign institutes for higher education.

If your child dreams of making it big in life by pursuing higher education, and you too have high ambitions for her, remember that fulfilling those dreams will cost a packet. As a conscientious parent, you should begin saving and investing for this goal right away. In the articles that follow, we shall offer a roadmap to help you achieve this goal.

Read Full Post »

Scan_Doc0016_1 Scan_Doc0016_2

Read Full Post »

For the past few months, there has been a debate on whether starups set up by teams in their twenties are more likely to succeed than those set up by teams in their 40s and 50s . While youth does stand for innovation as shown by Carwale, Ola, age also stands for wisdom as is evident from IBM, GE, Nestle and Ryanair. Just like myths exist around start-ups,there are many such myths surrounding personal finance too. This article was written by Vishal for the Indian Express five years ago. Whilst the blackberry mentioned in this article is probably dated, the myths around personal finances are still as relevant.. Please do comment if you have heard any other things that could be myths around personal finance in your view, please let us know and we would love to share our thoughts.image-0001

Read Full Post »

Fin Plan for woman entrepreneur

Read Full Post »

%d bloggers like this: