Chota Bheem's bada ideas...

(The author is the Founder and CEO of Money Avenues, a Wealth Management firm based in Chennai which offers   i.S.M.A.R.T financial plan. Feedback can be sent to ismartfp@ gmail.com) 


Chota Bheem's bada ideas for financial planning...

Ever since Chota Bheem was launched in 2008, he has been captivating audiences across the age group... Right from toddlers to the grannies...

Chota Bheem's character offers variety of insights on Management, Leadership, People skills etc etc in his own ways and methods. It would be interesting to borrow his insights on personal financial planning for individuals.



 1. Keep it simple: 

 

Chota Bheem loves to keep things simple. Financial planning is all about keeping it straight and simple. A simple plan can take care of your financial planning for life long. Financial planning is no rocket science and keeping it simple becomes imperative for better financial future. Keep it simple is the key mantra...
 

2. Age doesn't matter (for financial planning):

Age doesn't matter to CB, for him age is just a number. Financial planning is a must for people of all age groups. One need not equate financial planning in terms of a specific age. Some one who has just finished college, or someone who has got a job or some one who is on the verge of retiring, can still have a viable financial planning. In the times of uncertain economic conditions, financial planning becomes important across all age groups...


3. Have clear (financial) goals: 

Chota Bheem works on specific goals to achieve and achieves them in his own style. Financial planning is all about having specific goals and a plan to reach those goals in a time bound manner. With great clarity, one can attain the financial goals in a seamless manner.



4. Plan Well

Planning well for one's financial goals is an important task for a successful financial planning process. World we live in is getting complex by the day. We face risks on all fronts, professional and personal. Financial risk is a key risk we run these days. And we live longer after our retirement, which means we need earn, save and earn on that saving to make our longer retirement life more enjoyable and independent. Having a plan works wonders in life.
 
5. Involve everyone:

 Involving everyone connected with us is the  best way to manage the financial planning. Each member will have their goals and aspirations, and not always can those be honoured. Its best to involve everyone to make the financial planning process more meaningful. This also means to get a specialist financial planner who can do that job.
 

6. Take reasonable risks:

Chota bheem loves taking risks. After all, life is all about taking reasonable risks. We are in the age of high inflation or cost of living with lesser avenues for better financial returns. With returns from financial products on the diminishing trends, its important to take few meaningful risks on the financial planning. A good financial planner will help you to do that.

7. Celebrate life:

 Life is all about having the right mix. Chota Bheem loves to celebrate his life with his favourite laddoos on every success and on every mission. Financial planning is all about having the right mix. And that helps to carefully manage the finances which helps to focus on goals and enjoy the life too. Celebrate life with careful financial planning...



(The author is the Founder and CEO of Money Avenues, a Wealth Management firm based in Chennai which offers   i.S.M.A.R.T financial plan. Feedback can be sent to ismartfp@ gmail.com)


 

Power of Compounding and its magic...

(The author is the Founder and CEO of Money Avenues, a Wealth Management firm based in Chennai which offers   i.S.M.A.R.T financial plan. Feedback can be sent to ismartfp@ gmail.com) 

Power of Compounding works on your money... But do you?

Power of compounding works like a magic... Of course, only if you allow it to work... Want to look at some numbers??

Story of three friends:

Mr. Smart
Mr. Responsible
Mr. Fun

Generally its assumed that people take higher risks in the early stages of life and reduce the risk levels as they grow old. Same is assumed here...

Each invest Rs 1 lac in the following ways:

Mr. Smart           - at the age of 30 @ 18% PA
Mr. Responsible - at the age of 35 @ 15% PA
Mr. Fun              - at the age of 40 @ 12% PA

At the age 50, lets see how they have done....

• Mr Smart invested Rs 1 lac at the age 30 @ 18% PA and accumulated a mind boggling,

Rs 27.40 Lacs

• Mr Responsible invested Rs 1 lac at the age 35 @ 15% PA and accumulated just about

Rs 8.14 Lacs

• Mr Fun invested Rs 1 lac at the age 40 @ 12% PA and accumulated a meager

Rs 3.11 Lacs

The winner was Mr. Smart because of 3 important reasons:

1. He did not just save..
2. He started investing early on..
3. He got efficient returns..

And look at the difference in the numbers each one made...And it was possible only because of the power of compounding which worked very well in Mr. Smart's favour... And of course he did his home work to take the advantage of the POC..

For the other two, their cases were double edged swords... They not only started late and but also invested in low yields...Though the difference in % returns is not very big, but the difference is too huge in actual returns because of starting early and efficiently...

Moral of the story:

• It's wise to start saving...
• It's wiser to start investing early on..
• It's wisest to invest investing early on with efficient returns...

Only then the power of compounding will be extremely beneficial to your money... An efficient financial planner will be able to guide you to realize the power of compounding for your investments...

If you have missed it...

(The author is the Founder and CEO of Money Avenues, a Wealth Management firm based in Chennai which offers   i.S.M.A.R.T financial plan. Feedback can be sent to ismartfp@ gmail.com) 

Neil Armstrong's financial planning tip...

Neil Armstrong's financial planning tip...

Apollo insurance covers:
Neil Armstrong led the historic voyage into the space way back in 1969, but his mind was filled with the worries about his family's finances in case of his absence due to a mission failure... And the crew could not afford life insurance with their federal salaries.

What did they do to protect their families?

So about a month before they were set to take off to moon, Neil Armstrong, Michael Collins and Buzz Aldrin got themselves locked into a room and started signing hundreds of autographs on envelopes with space images, which can become financial valuables for their families just in case if the mission perishes their lives.... They are now referred as Apollo Insurance covers....

Now, most of us are financially well off and need not think of such ideas to protect our families. All one needs to do is to spend Rs 5** a day to protect one's family....

Protect your family right now....

What can Rs 5 get you?

Rs 5 per day** can get you a cover for your health care costs:

**For an individual aged 35 for 1 lac health cover.

All one needs is just Rs 5 per day ** to ensure basic personal health cover.... And Rs 5 these days get nothing substantial for us. Think about it.

Wide variety of features in health insurance plans give you useful options for the entire family:

• Exclusive senior citizens' plans with and without medical tests.
• Maximum cover can go upto 50 lacs.
• No upper limit in entry age.
• Single cover can cover three generations of one family (Grand parents, children, in-laws, grand children).
• Periodic free health check up.
• Life long renewal.
• Special discounts in premiums.
• Tax benefits under Section 80D upto premiums payable upto Rs 35,000.

Health care costs are sky rocketing....

If, cost of a major surgery is now Rs 5 lacs, can you imagine what can the same surgery cost after 10 years???

Rs 31 lacs

A whopping 31 lacs for the same surgery which may cost Rs 5 lacs. That's the effect of rising costs of health care.

Call 9 55 11 55 11 6 for suitable health insurance plan.

My live show in Raj News TV on Equity & Economy

On 6th August 2012

Financial Planning tips: Health Insurance

(The author is the Founder and CEO of Money Avenues, a Wealth Management firm based in Chennai which offers investment solutions through  i.S.M.A.R.T financial plan. Feedback can be sent to ismartfp@ gmail.com) 

Financial Planning Tips: Health Insurance:

Having a separate health cover, apart from what your company provides, makes a lot of sense. Going forward the current generation will confront health care concerns as we are the in the age of rapid lifestyle changes and stress filled careers. All studies point out to the rising health scares in the future as well and compounded by the rising health care costs. With very few exceptions, most diseases are curable these days, thanks to the innovations in the fields of medicine and technologies. But such innovations and life extending technologies come at a huge cost to the people availing health care benefits. This with other factors necessitate one to have a comprehensive health care cover.

Look at the 7 reasons why one must have a health insurance cover right now:

1. Your company's group health insurance  cover you, but may not be sufficient:

Employees and their dependents by and large are covered through group insurance in respective organizations. But many a time, such covers are not sufficient though. For a family of 5 (Husband + wife + kid + dependent father + mother) even a cover of 10 lacs may not be sufficient. But in many organizations, cover may not even exceed 3 - 5 lacs for the total family. Having an independent health cover is paramount, because no one these days work for one organization for their life time. 

2. Risk for dependent parents:

Many organizations have little or restricted covers for the elder dependents, as the risk premium is high on them for the organizations. It is important to have a separate cover for the dependent parents/senior citizens for which one can avail tax rebate under Section 80D. Remember, beyond 60s, taking a health cover for the elderly becomes really tough as the age and health factors make it expensive and cumbersome. Remember during the times of medical emergencies, their health care costs can drain your hard earned savings.

3. Job changes:

In the current career trends, people do not stay with one organization for ever. People keeping moving from one to another at a reasonable pace. The present organization may not offer something similar to what the previous organization offered on group health cover. The vagaries of such changes can be negative many times. One will be left with no cover during the times of transition, from one job to another.

4. Health care costs sky rocket:

Health care costs are set to sky rocket in the future. Thanks to innovations in the field of medicine, most diseases are curable these days with very few exceptions. But unfortunately, such innovations come at a huge cost. Be prepared for such sky rocketing costs in the future.




5. Only you retire, not your needs:

Our generation may not have a predictable retirement lifestyle, given the fact that private sector does not provide us social security post retirement. With the break down of family systems, retirement life will be largely independent and lonely. Health care costs will be an important component in the retirement life. Take a comprehensive health cover now which can come along with you till your life time. Be prepared in a smart way.




6. When PRETIREMENT is the order of the day:

This generation is not fancied about working the usual way for too long... It can be starting our own venture, doing social work, pursue dreams etc., All have aspirations and ambitions of chasing our dreams in life. I don't see many of us working beyond late 40s and 50s... Be prepared for such circumstances by proper planning. Everyone wants to Pretire and not retire..... 


7. Tax benefits under section 80D:

Government extends tax concessions for medical insurance premiums under section 80D. This section allows you to take the benefit for the premiums paid upto Rs 15,000 for self and family, and upto Rs 20,000 for dependent parents. So go ahead and plan your medical insurance and enjoy the tax benefits too....



(The author is the Founder and CEO of Money Avenues, a Wealth Management firm based in Chennai which offers   investment solutions through i.S.M.A.R.T financial plan. Feedback can be sent to ismartfp@ gmail.com) 

Not taking risk is THE greatest financial risk...

(The author is the Founder and CEO of Money Avenues, a Wealth Management firm based in Chennai which offers   i.S.M.A.R.T financial plan. Feedback can be sent to ismartfp@ gmail.com) 



Not taking "RISK" is the greatest financial risk...

Surprising!!! ???


But that's the reality. During our times, the greatest financial risk in one's life is not taking risk... Our generation is going through roller coaster lives. We are in an era of reasonably high income, higher lifestyles, higher aspirations, higher costs, lack of time, dwindling investment choices etc.,


We do take risks in life, careers, jobs but when it comes to investing, we tend to shy away from taking risks. And that will lead us to a definite dead end...


Let's look at the reasons why "not taking risk is the greatest risk in our times"...




Sky rocketing cost of living:

While our incomes are running, costs of living are sprinting... Let's consider few numbers...

• If you were to spend Rs 7.5 lacs for a professional degree for your child now, can you guess what could it cost after 15 years???

Rs 62 lacs

• If you were to spend Rs 20 lacs for a foreign degree now, can you imagine what could it cost after 15 years???

Rs 1.63 Crores

• If you were to spend Rs 15 lacs for a wedding now, can you guess what could it cost after 15 years???

Rs. 1.23 Crores

• Ok, let's see how much would your idli vada coffee breakfast cost you... If you were to spend Rs 60 now, after 20 years...

Rs 990

• If you were to retire now and you need Rs 50 lacs as retirement fund, after 20 years...

Rs 8 Crores

• If your monthly expenses are Rs 25,000 now , the same budget after 20 years would be...

Rs 4.10 Lacs

These numbers give very strong indications about the future costs for sure... These numbers should make one realize that not taking risk is the greatest financial risk....


Let's take the case of retirement:

• Let's assume I need 8 crores for retirement fund after 20 years based on the current estimate of Rs 50 lacs... 
• Let's also assume I deposit Rs 50 lacs in an FD which gives me an average annual return of 9% for 20 years.

After 20 years...

What I need is

Rs 8 Crores

But what I got is

Rs 2.80 Crores.

with the investment @ 9% returns...

The gap between what I need and what I got is too huge to bridge... And that's the cost of not taking enough risks while investing...


Remember, we are living in a globalized economy, wherein risk taking is a key ingredient for successful businesses. Investing in the stocks of such businesses can only add value to our wealth creation efforts...


Before closing, a recap of the story of five friends...



Story of Five friends:


Mr. Lazy
Mr. Fun
Mr. Cautious
Mr. Calculator
Mr. Smart


All of them put Rs 1 lac at the same time and after 20 years lets see how they have done?


Mr Lazy             @ 6%    - Rs 3.21 lacs  
Mr Fun              @ 9%    - Rs 5.61 lacs 
Mr Cautious       @ 12%  - Rs 9.65 lacs 
Mr Calculator     @ 15%  - Rs 16.36 lacs
Mr Smart           @ 18%  - Rs 27.40 lacs


If you observe, the difference between each one is just 3% in returns, but look at the difference in returns over the period of time... And that's the power of compounding for you my friend... It works very silently... 



Mr. Smart took risks and he was rewarded by the power of compounding...


Remember,


Not taking risk is the greatest financial risk




(The author is the Founder and CEO of Money Avenues, a Wealth Management firm based in Chennai which offers   i.S.M.A.R.T financial plan. Feedback can be sent to ismartfp@ gmail.com)