Hirannya

Tag: Tax

  • 15 Things Your Financial Advisor can do for You – Part 3

    [Continued from previous post]

    (11) Keep you informed

    In good times and bad, your financial advisor will keep you informed of how market moves are affecting you and your portfolio and strategy. He or she will also let you know about important events that may affect your investments – including elections, global unrest, changes in tax rules etc. You have more important things to worry about than the state of your portfolio at any given time, but your financial advisor does not.

    (12) Teach your family basic concepts

    You can't do it alone. If your family is not on board with the plan – it will be more difficult for you to reach your goals. Your advisor should be able to explain basic concepts to your children so that they understand how to manage their money and your money. Good habits are best when begun early. And bad habits should never be allowed time to take hold.

    Financial advisor

    (13) Plan for your future

    As your circumstances change you will need to update the way your finances are planned. Your financial advisor should do this for you – make sure you are in the best shape to take the next step on your financial journey – from single to married to parents to new jobs, no jobs and even grandparents and retirement.

    (14) Offer you special investment opportunities

    Sometimes a financial advisor can offer investment opportunities which are not available to the general public. Those will be opportunities that you know will be appropriate to you and your circumstances. And you can rest easy that the offer will be made in your best interests. As a registered advisor – the code of ethics – bind your advisor to make sure that your interests are served before his own.

    (15) Connect you with experts

    Your advisor is a professional and is connected to a range of other professionals and specialists to refer you to for your various requirements. This might include a lawyer, an accountant or other. The advisor can also work with your existing professional relationships if you already have an accountant or a lawyer. The idea is they all work together and make sound decisions that will make your financial strategy more seamless to manage. 

    [Inspired and in part taken from JAS Wealth’s eBook of the same name]

  • 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.

    indias-finance-minister-arun-jaitley-budget-2014-15-fiscal-year

    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.

    Mr Bean

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