Hirannya

Author: hirannya

  • Budget – How does it matter?

    Budget – How does it matter?

    Just for a moment think that you have been always a prudent investor and you understood very well the power of compounding and impact of inflation on return. Now suppose you always schedule your yearly vacation during budget time. So this means you go to some place far away may be in North-East India or in Galapagos or in Timbuktu island just few days before the budget day. You do not get any internet there, no newspaper, no TV channel. And you come back almost after 7 days since annual budget is presented every year. Do you really think that your overall portfolio would get seriously suffered due this untimely(!) holiday of yours? Time proves – it would not. Chances are it would instead benefit you! As long as you save and invest regularly and your portfolio is designed to beat inflation over long term – you are safe and destined to succeed.

    Budget is of utmost importance for country’s economy and for functioning of government. Yes it mentions changes in tax slabs sometime and sometime also changes in product basket that qualifies for tax exemption. It increases or reduces your post tax income. Budget also mentions that some items will get dearer and some will get cheaper. This also may increase or reduce your expenses. So the changes in tax slab alone cannot decide your cash-flow situation. So many other factors are also there. Hence it can be safely said that your overall family budgeting and discipline will finally matter. Nothing else actually.

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    Some of the indirect tax rules may also see changes in this budget. Some industry may get tax sops, some may have to face more tax burden. Changes in excise or customs duty may adversely or favorably impact some industries. There will be surely some knee-jerk reaction for sure and effect can be seen in stock prices of such companies in short run. But again in long run, a company’s stock price is most likely to reflect only how well a company’s management manages cash-flow, generates return on equities, creates value for shareholders. Hence if in your portfolio there is a stock which is well bought i.e. you bought an above average company at a below average price, you are safe and did a commendable job. Stay assured that such buys will always create lot of real wealth for you in long run.

    So the basics remain unchanged. You can skip this budget if you are already on right path. And how the ‘right path’ looks like? See below:

    1) Focus on your family budget. Along with your household and lifestyle expenses also allocate fund for leisure, entertainment, travel but stay within limit. Do not overspend.

    2) Write down your financial goals. Set your targets. Look at the possible scenarios. Check your surplus. Start investing accordingly, and remain rock steady.

    3) Keep emergency fund ready in liquid instruments.

    4) Calculate and then take right amount of life cover.

    5) Depending on the city you live, likely expenses in nearby hospitals – take right amount of health cover (popularly known as medi-claim).

    6) Saving tax is definitely a good idea but not by compromising on life goals’ strategy. If some tax saving investments get fit into your recommended portfolio to achieve financial goals in time, then fine, go for it (early in the financial year) and save tax.

    7) Monitor your investments and review your financial plan at regular interval.

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    Phew! You are almost done! So pack your bag and go for a vacation. Will see you post budget. Happy journey! 🙂

     

  • Children’s Education & Marriage Planning

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    Most of us have the goal of accumulating enough corpus to meet the funding need for our children’s higher education and marriage expenses and rightly so..

  • Retirement Planning

    Retirement
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    The goal to plan for retirement is common to all of us. We all are looking forward to a happy, secured and satisfying retired life.  This goal is unique in many ways.

  • Financial Planning

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    Financial Planning is often rightly termed as blueprint or roadmap of your financial journey. This roadmap is essentially lifelong. At Hirannya FinPlan we understand and acknowledge this.

  • Wealth Management

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    When you set out in the journey of creating wealth, managing portfolio of different investment products takes the centre stage. During creation of the portfolio three things that we consider..

  • Estate Planning

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    You work hard to build your assets—your investments, home, personal property—and to provide a level of financial security for loved ones. Then, doesn’t it make sense to work just as hard .

  • Tax Planning

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    Tax Planning is not meant to be a year-end affair and investing your hard earned money in any tax saving product that come on your way.Tax Planning can be defined as an arrangement of one’s financial.

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  • Education Planning

    Education Planning

    GIVE YOUR CHILD A PROMISING DREAM FUTURE:

    You as a parents dream of fulfilling all the requirements and drams of your kids. You want to give the best to your child. Best of education, best of toys, best of health, best of everything!. The only problem of these best things is that these have the best price tags too. These days Child education is one of the biggest goals of any parents because of the high cost of education and tough competition. It is very important to start saving for your child education. To plan your child’s education check out this ‘education planner’ which will give you an insight on how much you need to save today, to provide for your child’s education at a future date.Cost of education is increasing yearly than inflation. Now a day’s college education is an expensive – but not an impossible one. With the right strategies, you can go a long way to meeting this challenge whether your child is still in preschool or already in high school.

    Step No.1: Generally children’s goes to college for under graduation at the age of 19 yrs and post graduation from 22 yrs of age. You can fix your term depending on your child current age and when you want the funds. Now you know the years left for your child higher education..

    Step No.2: Every parent has different dreams when it comes to child education. The courses like MBBS, MD, MBA, ENGINGEERING, Technology courses are very expensive one. First assume your child is   going to join the college from today then in that case what is the cost of education in today’s value.

    Step No.3: Now you know the cost of education in today’s value. But remember the cost of education is going to increase year on year because of inflation. In that case when your child goes to college after some years then find the cost of education will be that time. This is the amount you actually need at that time.

    Step No. 4: Once you know the target cost of education then you can start preparing for that. Here you have to take an important step before investing either systematically every month or one time investment. You have to find out whether you can achieve your target with the expected rate of return after adjusting inflation. Everybody has a different investment knowledge and risk appetite. Based on these factors you can choose different investment products to achieve your goal. If you are not comfortable in taking risk then just avoid that investment. Having said that generally equity investments gives better return over long period say 10 yrs and more. You have to satisfy yourself with suitable returns which will be able to achieve your target amount. More importantly if you have more years for your child higher education then you can invest monthly which will reduce your monthly outflow significantly.

    Important Decision: Your dream of giving best possible education to your child will be in dream only unless you insure yourself. It is always advisable to take the term insurance plan equal to your target amount. This will take care of your child dream education in case unfortunately if you are not here. Now for more details if you want to start planning for your child dream education planning.

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  • How to save tax in F.Y. 2014-15?

    How to save tax in F.Y. 2014-15?

    That time of the year has come. You receive a reminder from your employer to furnish details of your tax saving investments. It comes with a deadline, e.g. you need to give the details maximum by 1st week of January or February. Then 3 things happen –

    1. You ask and take opinion of the most profound expert in this field – your colleague!
    2. You feel great if someone takes effort to come to your desk and helps you making the investment … even if it is not at all suitable for you!
    3. You forget all these as mandatory year-end tasks and carry on as if nothing happened!

    I recommend you to first take note of the following 3 things instead –

    1. Tax saving investments can be made… err sorry… can be planned at the start of the financialyear itself i.e. in the month of April and not when you are asked to furnish details.
    2. Know your tax liability first. And it is easy; you need not even consult a CA for the same. Numerous websites are there to help you, just Google. Or even a simpler way is there – visit our website www.hirannyafinplan.com and try ‘tax calculator’.
    3. Make plan to achieve all your financial goals – short term, medium term and long term. Take care of your contingency. Make sure you bought adequate term cover and health cover and renew the same without fail. If all these investments also allow you to claim tax benefit – fine! If not, then also follow the plan ditto and pay tax instead.

    You can save taxes under various sections – 80C to 80U. You can check the details of all these sections in our website very soon. Before that I would like to bring your attention in the following 3 sections – most discussed and popular –

    80C

    Limit raised this year up to Rs. 1,50,000. Tax exemption on the amount invested can be claimed if investment is done in any of the following – Life insurance premium paid (only if yearly premium is less than 10% of sum assured), ELSS Mutual Fund, Tax Saving FD of 5 years tenure, NSC. REMEMBER first to find out the total EPF contribution that you make in the whole year + term insurance renewal premium that you pay + PPF investment if you make any + principal component of all your home loan EMIs + tuition fees part of school fees paid on children’s education. If the total is equal to or more than Rs. 1,50,000 then you need not to make any investment under this section. If the total is less than Rs. 1,50,000 – you can make investment of differentiate amount under this section –provided it makes sense or in line with your planned investment.

    80D

    You should always have adequate health cover. Ideally it should be a family floater cover of amount 5 lakh or more depending on the city you live in or likely cost that you may incur in case of hospitalization. The premium that you pay for this cover could be less or more than Rs.15,000 (the maximum amount that can be claimed as tax benefit). Even if it is less, you should not feel bad as long as you have bought a good and adequate health cover. You can buy health insurance cover for your senior citizen parents also and claim tax benefit up to Rs. 20,000. Here again, the focus should be on right insurance product and adequate insurance cover, and not on tax saving.

    Section 24B

    Most of the young families today, have a home loan to pay. Govt. encourages you to buy home and hence doles out tax benefits. Whereas principal component of your home loan EMI qualifies for tax benefit u/s 80C, interest component qualifies for tax benefit u/s 24B. Here there could be two scenarios – either the home that you have bought is put on rent or you are staying there. If you are staying there, then you can claim tax benefit up to Rs. 2,00,000 of interest paid. For let out properties, there is no such limit.

    Hope the above guidelines will help you in making right decision at right time. If you have any queries whatsoever please ask. Do comment. We are all ears.

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  • Retirement Planning

    Retirement Planning

    Nothing is permanent in this world. Everything that comes will definitely go including us. But we don’t know when. Apart from this everybody would like to live life peacefully as long as they live. You have to decide whether you want to depend on somebody or live on your own without compromising your life style throughout your life. That is why it is best to put our best efforts and save more for the future. The important thing you have to begin with is to have a retirement plan for you today.Retirement Plan is very important in our life. The earlier we construct the structures to attain a wonderful retirement the better for us. Saving for your retirement is one of the toughest and most vital things you will do in your working years. Because you have to save for your children’s college education, paying your home loan, children’s marriage, buying cars and all the other everyday costs.  Everyone has their own retirement dreams as well.The thumb rule is that you will need approximately 70% to 80% of your pre-retirement  income  to maintain your lifestyles in retirement. However, depending on your own situation and the type of retirement you hope to have, that number may be higher or lower.

    THERE ARE LOT OF FACTORS ONE SHOULD CONSIDER FOR RETIREMENT SAVINGS.

    • Retirement Age: This is the first factor you should consider at what age you expect to retire? In reality people say that they will work even after retirement from current job. Here you have to consider like health problem, job instability, or change of workplace etc. Assume that your retirement age is 60 then earlier you retire you need more money throughout your retirement life. It is best to prepare for unanticipated events that may force you for an early retirement.
       
    • Life Expectancy: Nobody knows the life expectancy. There are few factors which may give     you a hint. Your family history – like your parents and your relative’s current age or how long they lived. Common diseases in your family.  Your past and present health status etc. These are all the factors you have to consider when calculating your life expectancy. You will approx find the number of post retirement years you will spend.
       
    • Inflation: Inflation is one of the main factors while you save for your retirement. Just to save for retirement you start saving but forgot the impact of inflation then your savings will not sufficient. If you don’t account inflation while saving then inflation will reduce your value of your savings. So it is very important that your saving has to exceed inflation.
       
    • Your Lifestyle: Different lifestyles are being adopted by different people. Generally Lifestyles are usually simple for most the people. But it is very important that what type of retirement lifestyle you would like to enjoy. Like travel, or hobbies you would like to pursue etc. These are all questions can help you to decide your required corpus for your retirement. Many people tell that they would like to work part time after retirement. But the answer is practically not possible.
       
    • Health: Nowadays it is very important to consider the cost of health care. Health care costs are rising every year than inflation. People get health insurance cover from employers generally till retirement. Very few offers this after retirement. If you are not taking this in to account then it will eat your savings later. It is better advisable to buy long term health insurance for your better tomorrow.