Feeds:
Posts
Comments

Posts Tagged ‘#EducationPlanning’

financial planner

A lot of people wonder “Why do I need a financial planner?” or “Why do I need a planner when all financial calculators are available online?”. Some people also think that “I cannot afford a financial planner as I do not have enough wealth!”. Many people who are not aware of the benefits of having a financial planner think this way. These thoughts and ideas are some of the myths that we shall address in this blog today.

With the abundance of information available online, the role of a financial planner becomes even more critical as every financial plan is customized to suit the needs and goals of the individual. A planner will give you a bird’s eye view of your financial situation because they are on the outside and can look at your finances holistically.

With the ever changing and dynamic global and domestic economic conditions and financial markets having a financial planner is of utmost importance. A prudent planner cannot predict, but will always guide you well to be prepared for global or domestic events which can have material impact on your financial goals.

A financial planner advises you on the following-

  • How much you need to save while you are earning?
  • How much would you need for retirement as per your lifestyle and nature of expenses?
  • What type of loans you should have or payoff?
  • How much and what type of insurance you need?
  • How much you should have as contingency funds?
  • How can you be more tax efficient in your investments?
  • How much returns should your investments generate in order to achieve your goals?
  • How inflation will affect your goals and finances? What projections and estimates are to be considered to account for inflation while planning for goals?

 

A financial planner helps you to organize your finances and assesses how prepared are you for your goals – for example – retirement. Professional financial planning goes far beyond just picking stocks or products. Hiring a planner arms you with the expertise and resources with which to approach planning your financial future.

 

A common misconception that people have when it comes to financial planners is that they will make you a millionaire overnight or advise you to invest in stocks which will give you multi-bagger returns. Financial planners help you to prioritise your financial goals and work with you to devise ways to achieve them.

 

A financial planner would be aware of appropriate financial opportunities and investments which will help you in taking wise financial decisions. Helping clients avoid ‘buy high and sell low’ is also one of the great benefits financial planning can bring. A planner will help you stay invested  in a bear market and at the same time will help you not get over-optimistic in a bull market.  A recent neuroscience experiment has proved that people with expert financial guidance are less stressed and better able to face challenges and absorb information relating to their own financial decisions.

 

So you may say that – “Why do you need a Financial Planner? I can do all this for myself”. For this you have to ask yourself these few questions-

  • How prepared are you to spend hours to assess the fundamentals of a mutual fund or company whose stock you are buying?
  • Can you spend hours analysing and building a portfolio that can give you retirement income and is tax efficient?
  • Can you analyse the complexities of different PMS products, mutual funds, insurance plans and annuity plans and determine the best mix for yourself?
  • Can you keep regular track of your goals and related investments?
  • Can you objectively assess your portfolio and keep emotions out of your financial decisions?

Usually we find the answers to most of the above lead to the need of seeking the professional help of a financial planner.

 

A financial planner possesses specialized training, knowledge, certifications and the requisite experience to handle all the above possible options. A financial planner is therefore better equipped to plan for you.

To put all of this in a nutshell, a financial planner helps you set your priorities and financial goals, helps understand the corpus needed for each of them and guides in devising customised ways and means to achieve your set goals.

Even in the busiest or most stressful times in your life – be it marriage, birth of a child or job change or any such transition, the financial planner is able to safeguard and nurture your wealth with sound advice and experience. In such situations of transition, a planner instils a kind of financial discipline and diligence which is much needed.

When you normally want to get a job done right, you usually hire an expert, so why should the same not hold true in the case of your finances? Talk to Plan Ahead Wealth Advisors today to know how a financial planner can help you.

 

 

Advertisements

Read Full Post »

Retirement-Coin-Jar-Thumbnail

National Pension Scheme (NPS) which is a defined contributory savings scheme was introduced by the government with an intention to provide retirement solutions for Indian citizens.

Under the NPS there are two types of accounts – Tier I (pension account) and Tier II (investment account).

  • Tier I is the a mandatory account which allows limited withdrawal options until the person reaches the age of 60.
  • Tier II which is a voluntary savings/investment account is more flexible and allows the subscribers to withdraw as and when they wish without any restrictions.

In Jan 2018, the PFRDA (NPS regulator) relaxed the withdrawal norms and allowed the subscribers to withdraw up to 25% of the balance after the completion of 3 years. The purpose of withdrawal included treatment of specified illness of a family member, education of children, wedding expenses of children and purchase or construction of house.

Partial withdrawals – some more options now

The PFRDA has recently added two more events under which partial withdrawal from the NPS can be made before retirement. They are as follows:

  • Partial withdrawal towards meeting the expenses pertaining to employee’s self- development/ skill development/ re- skillingwill be allowed. This includes gaining higher education or professional qualification for which the employee might require in and out of India. However, if such activities on request of the employee are sponsored by the employer then these will not be considered as a class for withdrawal as in such cases the employer bears all the expenses.
  • Partial withdrawal towards meeting the expenses for the establishment of own venture or a start upshall be permitted. However, if an employer-employee relationship exists, then in that case the partial withdrawal will not be applicable.

There are certain limitations to the partial withdrawal clause which remain unchanged:

  • The subscriber should have been a member of NPS for a period of at least 3 years from the date of joining.
  • The subscriber shall be permitted to withdraw accumulations not exceeding 25% of the contributions made by him or her, standing in his/her credit in his or her individual pension account as on the date of application from the withdrawal without considering any returns thereon.

For instance, if you have Rs. 2 lakhs in your account out of which Rs 1 lakh was contributed by you and Rs 1 Lakh was contributed by your employer, then you will be able to withdraw only Rs. 25000 or 25% of your contributions.

  • The frequency of total partial withdrawals shall remain unchanged i.e. the subscriber shall be allowed to withdraw a maximum of 3 times throughout the entire tenure of the subscription of the NPS. For the withdrawal, the subscriber must make a request to the central record keeping agency or the Nodal office.


Adding equities to your retirement corpus

In addition to adding more withdrawal options, there have also been increases in the allowed equity percentage to the retirement corpus. The percentage of equity assets that a subscriber can choose under active choice have been increased. The percentage of equity assets allowed has been increased to 75% from 50% (applicable for non government employees).

All in all the PFRDA is trying to make the NPS more attractive as a retirement solution. Depending on your age, time horizon, risk profile and current retirement corpus investments, the NPS could still prove as one of the avenues that you could consider using for building a retirement corpus.

 

Read Full Post »

%d bloggers like this: