Are you on the path to Financial Freedom?

Independence Day normally involves a short holiday, hosting gatherings or planning outings with friends and family. I’m sure a lot of you are also targeting your own financial independence ? In fact, a very large number of investors whom we work with, when asked about their financial goals, indicate that they would like to achieve financial freedom. When we ask them what financial freedom means to them, their answer is: ‘When we do not have to work for the money and can actively decide how, when, and with whom we choose to associate in our professional life.’

Financial freedom can mean different things to different people. Financial planning allows them to be financially free i.e. decide how they wish to lead their lives. Over my years of running a practice, here are two examples of people we work with, who we believe financial planning has helped achieve the freedom to do what matters most to them.

Dr. Kumar (name changed) is a cardiologist and runs a hospital in suburban Mumbai. Irregular and long work hours mean that there is very little time to spend with his two young kids and his wife. What he really looks forward to, is spending time with his family and enjoying the kids’ growing up and continuing to stay connected with his wife. Booking and planning his holidays each year – one long international holiday, another week to ten day long domestic holiday and some weekend breaks are what he absolutely loves. The finances for these holidays are a part of his financial plan. Whilst there are clearly earmarked long term investment strategies for his longer term goals like retirement and education for the children, there are also separately defined strategies for shorter term holiday goals through the use of financial instruments that can give him the most optimal returns for these goals, on a post tax basis.

Sanjay and Rashmi (names changed) are currently 41 and 39 respectively and they have a young daughter. Sanjay runs a small sized family business and Rashmi works with a chartered accountancy firm. When most couples are just about beginning to save for their financial goals, and are looking to save for their retirement and childrens’ future, both Sanjay and Rashmi have already achieved their financial goals i.e. even if they do not save any monies from here onwards, and let their existing portfolio grow, they should be achieve their financial goals. This has been possible through a combination of a conservative lifestyle with controlled expenses, a savings rate in excess of 40% of total income, controlled use of leverage on a home loan that has been prepaid aggressively, and a diversified portfolio across equities, fixed income, real estate and gold, that is rebalanced regularly.

Just like India has had many historic events which finally helped us achieve freedom, your path to achieving your financial freedom will be a long-term process, wherein there will be struggles

and various factors which you will be unable to control. However, staying on the path to financial freedom for yourself and your family is the key to pursue your dreams.

Happy Independence Day!

Read Full Post »

Large-Cap funds best option for investors with long-term goals – Article by Shalini Dhawan in TOI

Read Full Post »

Final Checklist for NRIs – Things you need to know!

Recently one of my good friends received a job offer with an upcoming IT company in Silicon Valley which would take him away from India for at least a few years. I congratulated him on his dream job in a new country and he asked me about what to do with his existing investments and potential NRI investment options in India? This is a question that comes to us very often from NRIs all over the world – whether they are in the Middle East, Europe, Australia or the US.

With the Indian economy being one of the fastest growing economies in the world and a home bias that tends to exist for many families, many NRIs choose to invest in Indian markets to achieve their life goals such as planning for a child’s education and marriage, planning to purchase a property in India or abroad, or planning for one’s retirement.. Whilst both Indian equities and Indian real estate, along with Indian fixed income options are a great way to boost the overall yields on your portfolio, there are a few critical items that you need to keep in mind especially as you try to build a large corpus to sustain life events that you would come across during your 25-30 years post retirement, when there would be no income stream of salary or professional income to depend on.

Choice of Assets & planning for them

You need to have a financial plan in place so you can have a holistic view of your finances to make financial decisions with confidence. Having large accumulated savings in your bank account can sometimes expose you to taking investment decisions that are sub-optimal for your overall financial health, as you may be in a hurry to put it away.  Your financial plan will show you how much you need to invest starting today, for each of your life goals, and will also enable you to create an appropriate mix of equity, fixed income and real estate exposure in your portfolio.

Repatriating your money:

Confused with so many bank accounts? You need to be clear whether you want to invest your funds in Indian rupee or a foreign currency, and also if you wish to have complete flexibility in repatriating the monies overseas. A NRE account that is designated in INR can be a savings account, current account or term deposit account without any taxes from an Indian perspective, and allows complete repatriability. Once you become an NRI, your existing bank account will be converted to an NRO account (Non Resident – Ordinary). You can deposit all your earnings in India into a NRO account. As per RBI guidelines, you can remit or repatriate an amount up to USD 1 million per financial year from the NRO account.

Currency Fluctuations:

When you earn and spend in one currency, and invest in a different currency, currency risks have to be well understood in relation to the goals and investment product selected. An investment today may offer attractive returns in rupee terms; it may not remain attractive when it is repatriated. Considering that India has traditionally being a high inflation economy vis a vis many other global economies, potential currency depreciation tends to be an important factor to keep in mind.

Tax Treatments:

It is critical to understand the tax implications in both countries as a part of your financial plan. You may need to seek the help of a tax advisor in both India and your home country, so that there is complete clarity on the same. In addition, there may be Double Tax Avoidance treaties in place that allow you to set off the taxes you pay at in one country against taxes due in India, or vice versa, so that you are not taxed twice on the same amount. This is extremely critical as income which is tax free in one country may be subject to tax in the other, and it is therefore critical to get good tax advice around the choice of investment products that you buy.

Frequent Home Visits:

This is one type of recurring and large expense many families may be facing overseas. It may be  common for some NRIs, that they should book and send tickets for their parents and other close relatives, when they have to visit them in the host country, or certainly when they visit India. Don’t forget to add this as a different goal in your financial plan.

To conclude, NRIs need to better understand the potential currency fluctuations, taxation and income and expenses pattern in their country of residence and retirement, before making investment decisions. Creating a financial plan should help you and your family have a very clear roadmap for yourself and your family.

Read Full Post »

#AddMeaningToFinances How important it is to take charge of finances at the right time – Vishal Dhawan’s Article in TOI

Read Full Post »

Market Mantra May 2014

With most opinion polls and exit polls predicting a scenario for the BJP led National Democratic Alliance (NDA) wherein they would fall short of a majority by themselves or just about be able to cobble together a majority, the final numbers that came in were definitely a surprise, with the BJP winning an absolute majority all by itself, the NDA getting a significant number over the numbers required for a majority, and the Congress being reduced to the equivalent of a regional party.

The large margin of the victory means that the balancing act that most coalition governments have had to manage in the past to keep multiple constituents of the coalition happy, is not going to be a challenge for the new government. The other heartening fact was that the election was won on a development and growth plan which is an endorsement of the fact that the young India voted on issues that are very different from the past. In fact, this voting pattern on the plank of development is a continuation of similar behavior in multiple state elections in the last few years, and is certainly a trend to watch out for, creating more accountability on the political class and is potentially something which could be a game changer as governments, both at a central and state level, focus on economic issues far more than they did in the past.

The financial markets also seemed to be excited by the fact of India getting ‘Modi’fied as it is commonly termed.

On the day of the election result, the SENSEX temporarily crossed the 25000 level. Thus over the last month, the SENSEX and midcap indices have risen 7% and 11.2% respectively.

 

In spite of the fact that indices are at an all time high, the forward valuations are reasonable, with both Price Earnings ratios and Price to Book Ratios being below averages.

Cyclicals also continue to be at significant discounts (Price to book). Refer Graph.

 

Small cap and midcap are also significantly at discount to the fair value vis a vis the 10 year average (refer to the graphs below):

The low level of equity ownership of domestic investors is also a positive for mid and small caps as there had been a tendency
historically for retail investors to build exposure to equities through mid and smaller sized companies.

With the expected impetus of the new government to focus on the revival of the investment cycle and infrastructure creation, the challenge for the new government will be to set realistic expectations on when the turnaround can actually materialize, and not get drawn into the dangerous game of sacrificing what is good for the economy longer term at the altar of short term gains.

The choice of the Finance Minister and the role of the RBI governor in balancing the growth vs inflation dynamics is likely to be crucial moving forward, especially with the possibility of a weaker monsoon and worries of inflationary expectations in the economy starting to build up once again.

With fiscal challenges continuing in the economy, one can expect that the budget slated in early July will provide a better perspective on how the new government looks to focus its limited resources and direct them for maximum effect. Structural reforms like the roll out of the Goods and Services Tax( GST), direct tax code changes and reduction in red tape need to get immediate attention.

The weight of managing expectations on the new government is likely to be a challenge in itself, and whilst there will possibly be a 12 to 18 month honeymoon period for the new government, one needs to remember that global factors including liquidity flows, will continue to be needed to be watched out for very closely Confucius once famously said “ The expectations of life depend upon diligence; the mechanic that would perfect his work must first sharpen his tools.”

Investors will need to focus on their strategic asset allocation so that they do not get carried away by the euphoria that tends to come with unexpected outcomes that are viewed as positive. In case portfolios are underweight equities, they will need to be added to, whilst portfolios that are already overweight equities, may need to see some rebalancing towards fixed income.

Investors will also need to avoid the temptation of giving up the process of diversifying their portfolios overseas, as that continues to be a crucial risk mitigation tool on portfolios and the appreciating equity or currency markets in India should not come in the way of continuing that process that has only just begun for most investors.

Fixed Income: Even though the Equity markets are rejoicing the NDA win, debt markets still appear skeptical. The 10 year GSec yield still ranges between 8.75% and 9%, as the debt market tries to get a better sense on government finances, and RBIs view on interest rate direction . Repo rate is also more and more dependent on Consumer Price Inflation (CPI) numbers. Therefore, if the CPI does not come down the Repo rate is unlikely to be revised downwards.

Investors in fixed income can look at enhancing exposure to longer term fixed income products like duration funds gradually, as a focussed fiscal consolidation effort by the government is likely to be looked upon by the RBI as a positive for inflation, and could be supported through monetary policy decisions that are not as aggressive as they have been in the past.

Currency: The fair value of rupee is believed to lie in the range of 58-62. RBI has been buying dollars to avoid appreciation of rupee. Inflow of foreign currency over the positive growth expectations of Indian economy could contribute to appreciation of rupee. However, one needs to keep in mind that these inflows are significantly a function of risk appetite amongst global investors and thus the Indian currency appreciation in 2014 thus far, has not been an isolated event, as you will notice in the graph showing the INR vis a vis other emerging market and Asian currencies. As long as inflation differentials of India vis a vis the US continue to be high, the currency will need to depreciate to keep the economy and exports competitive.

Gold: The outlook on Gold still remains negative and the attractive valuation of asset class like equity makes it a less attractive investment vehicle. In addition, import duty cuts and currency appreciation could continue to be challenges for gold in the shorter term.

 

Read Full Post »

Are your personal finances more about you and less about finance?

I absolutely love summer, despite the intense heat in India. There are two reasons for this – firstly, summer vacation for kids which makes them so much happier ( I’m not sure if it’s the vacations or the mangoes that brings a broader smile on their face though), and secondly, unlimited ice cream to keep oneself cool and refreshed. A recent afternoon out with friends and family allowed me a double delight – having icecream with kids. Whilst each of us made our selection of ice cream, I realized that it had taken us the better part of an hour for four adults and four children to decide which ice cream flavor we wanted. The decision making process involved multiple criteria from the way of the ice cream looked to the sweetness of the ice cream, flavor, mood, etc . As I stood there and watched, I realized how personal each decision was in terms of the ice cream that was selected.
This seemed to be in sharp contrast to the way many investors take buying/selling decisions on their finances. When gold fell sharply last month, investors flocked to jewelers to buy gold, irrespective of the gold that they already have in their lockers and homes. When stock markets fall sharply, everyone looks for the exit door before it falls further, even if all they have left in their stock portfolios over the last few years is only a small percentage of their overall wealth. The boom in real estate has made selling a piece of real estate look stupid unless it was traded for a bigger piece of real estate. As investors become aware of the benefits of buying term insurance, everyone wants to have some of it in their portfolio, so what if they are old enough or wealthy enough not to need term insurance any more.
In my view, there really is no one size fits all strategy for your finances. What’s good for your closest friend with a salaried income, may be terrible for you as a self employed professional? What seems like a perfect investment strategy for your parents who are retired in India could be terrible for the money that you are sending to India to take care of your retirement 20 years later?
The moot question is – Do you have a financial plan that is for you or is it someone else’s plan/ product/ suggestion that you are following? To me, following someone else’s plan sounds a lot like going to a pharmacy, to buy a drug on the basis of the doctor’s prescription for your uncle.
Your personal financial plan needs to be about you – your vision for your ideal retirement destination, your vision for your retirement lifestyle, your vision for the quality of education for your children, your vision of how you would like your family to be taken care of in case something happened to you or your spouse, your vision of how you would like to be treated medically in case something happened to you. Basis your thoughts on each of these, your financial plan should incorporate your ideas and desires, which can get you where you want to be.
Whilst you enjoy time with your children and ice cream this summer, please take some time off to think if your finances are about you and your thoughts and ideas. If not, it’s time to use the summer break to think and draw up your personal financial plan, a plan that’s about you.

Author – Vishal Dhawan

Read Full Post »

Do NRIs need a Financial Plan

From our experience of interactions with nonresident investors, we have found that a significant number of investments by NRIs tend to be made during their short visits to India.

During that period, when they visit their bank or speak to relatives/ friends, they get a broad view on what is happening to various asset classes – be it real estate, stock markets, or bank deposit interest rates. Between the various social obligations, time with family, and other things to do in their action packed agenda, quick investment decisions tend to be made, a large number of which tend to be long term commitments through investments in long term insurance policies/ real estate investments. Unfortunately, a large number of these investment decisions are not necessarily aligned to long term financial goals of the NRI and his family. Once NRIs return back to their home overseas, they then tend to wonder if it was the right investment decision or whether haste made waste, especially as they now get time to think about it. They wonder whether these investments fit in case they wish to return to India at a latter point in their lives or in case they wish to use these investments for children’s education or their own retirement, or to support their family members back in India.

In addition to the alignment to financial goals for self and family, it is critical to ensure that the investment products chosen allow non residents to invest in them, the repatriation restrictions (if any) on the principal amount and the gains, as well as the taxation of the gains in both India as well as the overseas location of the NRI. A lot of these answers can only be obtained when there is clarity in terms of what role the investment is expected to play for the NRI in his portfolio.

It is therefore critical to ensure that the focus on working to a financial plan is given the same degree of importance, irrespective of whether the individual is a resident or a non resident. In fact, working to a plan tends to be even more critical for a non resident than a resident, due to a legacy holdings and finances that they may have from their days in India.

A very large number of NRIs tend to leave India during a phase of their life when they have already begun their financial life – they have probably opened regular savings bank accounts in their names, bought investment products like stocks/mutual funds/insurance products/PPF accounts, or even made a real estate investment. Since there is a tendency to leave India on an overseas assignment/project, a higher education and then decide to settle down overseas, the starting point for a financial plan is to get your existing portfolio of investments in order.

 

The following steps need to be taken to ensure that the existing finances are aligned to the needs of a non resident

1. Close all resident bank accounts or convert them to nonresident ordinary (NRO) accounts. These NRO accounts can be used to credit amounts from investments that may have been made earlier, for example, dividends from stocks, rental income, amongst others.

2. Ensure that the tax returns in India have been filed. Whilst filing a tax return is not mandatory if the income is less than the taxable limit, it is important to be sure that the total income is less than the taxable limit.

3. Review your demat accounts so that they can be converted to nonresident demat accounts.

4. Change your mutual fund portfolios (if any) to a non resident status and link your NRO bank accounts to these investments.

Once the legacy portfolio of investments have been put into order, it is crucial to begin the process of setting up your financial goals through a financial plan. Whilst a financial plan may sound rather complex, it is simply a roadmap that allows you to think about what you want to achieve with your life goals and how your finances will allow you to get there.

Let me illustrate this with an example. Let’s say one of your life goals is to have your child study at a particular post graduate program. How would you design your financial plan towards this life goal?

1. Establish the current cost of the education that you want to plan for – The costs for higher education vary significantly depending on the type of college, country of education, type of program and number of years of education. The total costs of education should be established including the costs of living and travel and not just education costs.

2. Understand the impact of inflation on current costs – Inflation rates on education may vary significantly depending on whether you wish to plan an education in India or overseas. You need to establish the corpus required for the education after adjusting for inflation.

3. Choose the appropriate asset mix to achieve your target – It is critical to establish the right balance of stocks and fixed income exposure so that you understand the returns and associated risks that you will take on the portfolio in order to reach your target.

4. Choose the appropriate product/products to achieve this targeted amount – Once the above steps have been undertaken, you can move to the product selection stage where you can look at the merits/demerits of using deposits, mutual funds, insurance plans , stocks or other options to achieve your target.

5. Evaluate the progress towards your goal at regular intervals – It is important to review the progress of your financial plan to ensure that you are on track to achieve your financial goals. However, it is important that you give your products adequate time to deliver as per their designed objectives. A review once a year should be adequate.

A financial plan can be developed for all your life goals accordingly. You may need to take the help of a financial planner to integrate all your goals into a plan so that your overall finances can be aligned to all your goals. For example, your retirement plan could vary depending on whether you wish to finally settle down in India or continue to live overseas once you retire.

In addition to each of planning for your financial goals, you need your financial plan to cover:

1. Taxation of these investments in your home country – Tax treatment of investment products in the home country may be different from those in India. For example whilst there is no long term capital gains tax on equities or equity mutual funds in India, capital gains tax may be chargeable on these investments in the country that you live in. It is therefore critical to understand the tax implications at both levels as a part of your financial plan. You may need to seek the help of a tax advisor in both India and your home country, so that there is complete clarity on the same. In addition, there may be double tax avoidance treaties in place that allow you to set off the taxes you pay at in one country against taxes due in India, so that you are not taxed twice on the same amount. Your tax advisor should be able to help you on this.

2. Succession planning – Inheritance laws tend to vary from country to country. In addition, whilst India does not currently have any estate duties and taxes, a large number of countries have an inheritance tax. Since you could end up inheriting assets from your parents/ other family members and also having your assets transferred to your family members on death, it is critical to ensure that succession planning documents like wills are created keeping the inheritance laws of both countries in mind.

Once you are clear about your financial goals, taxation and succession laws, you will be in a position to pick your investment products far more easily and can focus on tracking how your investment products are taking you closer to your financial goals.

 

This article was written by Vishal Dhawan, CFP^CM 

Read Full Post »

Ready for life transitions?

Harsh and Harshita were our usual client couple, happy go lucky, no worries, successful in their careers,  double income, company accommodation, company car, company perks, and you name it.

As they came in for the customary annual plan review meeting, they seemed a little distracted. This was not their usual selves and obviously, the planner in me quickly moved to FPG mode (friend , philosopher, guide ) to understand what’s happening and where I could help.  After some chatting, I gathered Harsh had quit his job as his organization was moving to South India for consolidation reasons. Harshita was apprehensive as they were expecting a baby and she was planning to take a break for family and care giving reasons. Obviously as informed clients, they understood their financial plan and investments needed to be looked at afresh.

Their case is no different from the many life transition situations that we face in numerous client interactions. Infact today, more than ever, most clients are facing multiple life transitions without even realizing so.

Some examples of life transitions are:

• Children moving out of home for education reasons / marriage
• Becoming a parent
• Job losses / Job changes
• Becoming  an entrepreneur
• Divorce
• Widowhood
• Sudden inheritance
• Retirement
• Dependent parents and long term care
• Sudden illnesses and associated medical expenses
• Sudden Demise of family member

In all cases of life transitions, there is a commonality. The commonality is that whether one realizes or not, these life transitions affect your finances. Even if there is no direct impact, these life transitions usually tend to affect one emotionally thereby leaving lesser time and mind space to focus on your finances.

These transitions also naturally do tend to unsettle your financial plans at different points. Although I don’t profess to be a crystal ball gazer and don’t expect clients to be one, the only way life transitions can be actually managed is by putting thought to what surprises life may throw up at you and be prepared for these transitions. Essentially a Plan B.

Besides emotional support from family and friends, the client’s own preparedness would be the other weapon to take on life’s surprises. If you are already going through one of these transitions or foresee it in the near future, please talk to your financial planner about it. If not, prepare for it anyways.

Author – Shalini Dhawan

Read Full Post »

Play the Balancing Act

There has been a sea change in the expectations that we have from our lives today—whilst we were once happy visiting friends and family at our native place during vacations, today we want holidays to exotic locations overseas.

From the option of having to pick between a Fiat and an Ambassador, we now have 30 new car launches in the next few months to choose from, not to forget the hundreds of models already available, with variants of all kinds. Whilst this explosion of choice has obviously been beneficial, it has also resulted in an increased focus on short term gratification.

Anything that gives us instant pleasure is given precedence over benefits that are likely to accrue over the long term. For example, we have seen a declined focus on saving for retirement because it is so far away amongst people who are younger. In this environment, it is critical to focus on achieving a balance between long-term and short-term financial goals.

So how does one go about achieving this balance?

1. Make a list—Just like a grocery list is recommended when you go to a supermarket to ensure that you don’t overspend, you should list out your financial goals—education for your children, their marriages, asset purchases like homes, and cars, parental support, annual holidays, and, of course, regular day-to-day expenses. List each of your goals clearly.

2. Quantify your goals—A goal without a number is unlikely to get you anywhere.

Different financial goals have different values and can also differ from individual to individual. For example, a retirement in Mumbai could come with very different costs vis-à-vis retirement in Kolkata. It is, therefore, critical to put a number to each of these goals based on your own expectations. Do not forget the impact of inflation on these goals—Rs 40,000 per month that you spend today could be in excess of Rs 2,50,000 in the next 25 years. You may need to seek the help of a financial planner to do this exercise.

3. Rank the goals in order of importance—Remember, your neighbour’s financial goals are not yours. Your neighbour’s shining new car should not suddenly result in a situation where your most important financial goal is a new car purchase. You will probably find that achieving all your goals may not be possible, so a process of prioritisation may need to be undertaken. Try to achieve a balance between short-term and long-term goals. Too often excessive focus on short-term goals or any one of the goals tends to compromise your overall financial wellbeing. For example, overstretching yourself on your residential home purchase could result in a compromise of your child’s education or your own retirement.

4. Manage the risks—Current lifestyles could expose you to health risks, life-threatening or otherwise. Ensure that you have adequate life and health cover to insure your risks. Buying them early increases the chances of getting them cheaper as well as when you are in a good state of health. The gap between needs and funds can always be funded by insurance.

5. Diversify your portfolio—Use a combination of financial instruments—stocks/equity, mutual funds, bonds, precious metals, real estate and bank deposits in line with your financial goal requirements and risk appetite. The products that you buy should be aligned to deliver to your financial goals; for e.g., avoid buying equity for a short-term financial goal where you are likely to need the money in a year as equities can be very volatile over short periods. Similarly, using a 100 per cent fixed income portfolio, though very safe, can result in your portfolio value not being able to match up with inflation.

6. Put the plan into action—Ensure that you start saving towards your financial goals diligently. There is a tendency to put off the implementation of the plans and then try to make up lost time by investing too aggressively. This may not be an appropriate strategy.

7. Monitor your portfolio regularly—It is extremely critical to monitor your portfolio and financial plan annually. There is a high probability that some of the financial goals change along the way and your financial plan may need mid-course correction. However, be careful that you don’t check your portfolio each day, as that could do you more harm than good.

“The trick to juggling is determining which balls are made of rubber and which ones are made of glass.”

This article was written by Vishal Dhawan, CFP^CM and appeared in theEXIM INDIA newsletter  on 15^th July 2011 .

Read Full Post »

Balance short term and long term goals

Plan your financial goals for safe future

The World has become a much smaller place in the past few years as we now have more access to media — internet and television in addition to print.  This exposure has also meant that our dreams have also become bigger — a foreign education for a child, a dream home or a summer vacation. As the Indian economy grows, we have started to believe that nothing is impossible.  However, a reality check is always a good idea to see if your beliefs are in line with the reality. If you are newly married or are planning to start a family, a relook at your financial goals and a reassessment of your priorities is crucial — to see if your finances are aligned to the big changes in your life.

Balance short term and long term goals —

When you were younger, you had the option of saving without any particular goal in mind. After your marriage, there are now a whole new lot of financial goals to think about — education for your children, their marriages, asset purchases like homes, and cars, parental support, annual holidays, and of course regular day to day expenses. Make a list of your goals. Put numbers to each of these goals — since each of these goals could have different meanings for different individuals. For example buying a house in Mumbai may be different from buying a similar house in Hyderabad, hence it is critical to put a number on each of these goals based on your expectations.  You may need to seek help from a financial planner to get a better idea of some of these numbers and the impact of inflation on each of these costs.

Prioritise your goals —

You will probably find that achieving all your goals may not be possible at the same time, so you need to know which goals figure at the top of your priority list.  Try to achieve a balance between short term and long term goals. Too often excessive focus on short term goals or any one of the goals tends to compromise on your overall financial wellbeing.  For example, over stretching yourself on your residential home purchase and its interiors could result in a compromise in your child’s education or your own retirement.

Don’t forget the risks

Current lifestyles could expose you to health risks. Ensure that you have adequate life and health cover to insure yourself.   Buying them early and when you are in a good state of health increases the chances of getting the policies at a cheaper cost. The gap between needs and funds can always be funded by insurance. Diversify your portfolio— use a combination of financial instruments —stocks/ equity mutual funds bonds, precious metals, real estate and bank deposits in line with your financial goal requirements and risk appetite. Put the plan into action —Ensure that you put your financial plan into action and monitor and review it regularly.

This article was written by Vishal Dhawan, CFP^CM and appeared in the Asian Age  on 16^th  April 2011 .

 

Read Full Post »