Annual Financial Goals

The new year always seems to arrive faster than we think. But it’s never too early or too late to think about your goals for the year—there’s no rule that you have to make all your resolutions on 01-January! Figuring out your yearly goals can be an ongoing process.

The idea of setting goals for the year isn’t meant to lock you into a rigid mindset of success or failure; it’s simply meant to help you reflect on what you want out of life and create steps to get yourself there.

The best goals for the year will depend on where you are in your financial journey. It's always good to see where you stand and update your goals if needed.

*Emergency Fund*

A perfect first financial goal to have because this is the savings that will allow you to weather a job loss or other surprise expenses without going into debt. The recommended amount you should have in your emergency savings is 3-6 months of basic living expenses, but if that seems overwhelming, work on saving your first 1000 and build from there!

*Monthly Budgeting*

A foundational financial goal because this is what allows you to get a full picture of how much you’re making, how much you’re spending, and where there might be a chink that can be managed.

*Side Hustle*

We could all use a little extra cash, to pay debts, increase savings, achieve a financial goal, or retire earlier. No matter what it is, starting a side gig can help speed up your goal timeline.

*Retirement Planning*

The sooner you start saving, the sooner that coveted financial freedom will be within your grasp.

*No Spend Challenge*

While you pay for the essentials like rent, gas, utilities, groceries, and other necessary things, this is a chance to identify bad financial habits and go from usually a couple of weeks to a month, in which you eliminate all non-essential spending.

Do whatever, however, whenever you want and can, but be sure to break up your financial plans into achievable modular short-term, mid-term, and long-term goals. You should also outline the financial goals so that they are measurable and tracked for progress. Also, be sure to set weekly goals to help you make the big goals easier to achieve!

Cryptocurrency

Money is what money does. We are living through several concurrent financial revolutions, with the rise of crypto, Fintech, and Open Banking taking place simultaneously. Just a few short years ago, it seemed unlikely that crypto would enter the mainstream. But that’s exactly what’s happening today. Countries like China, the US and the UK are currently working on Central Bank cryptocurrencies, which would be digital versions of the Yuan, Dollar and Pound. Facebook recently launched a pilot of a crypto-wallet called Novi and is also developing its own stablecoin (a cryptocurrency pegged to another asset) which will be called Diem. Notably, MasterCard is about to give banks and merchants on its network the ability to integrate crypto into their products.

As crypto adoption grows at a rapid pace across the world, the big question on everyone's mind is - will cryptocurrency be the future of money? There is a growing intersection between the traditional financial world and the crypto world, particularly between banks and non-banks. Traditional banks are looking to offer more digital asset services and this will drive more interoperability because at the end of the day people, companies and governments need to be able to use different sources and mediums of money interchangeably and seamlessly.

The concept of currency is something that is constantly evolving. There was a time when currency was in in barter which got evolved to physical money (notes) which existed only in the physical form, but today, we can't imagine a world without digital payments. It may come as no surprise that at some point in the future, cryptocurrencies too will work as exchange currency. Many experts have estimated that the recent pandemic has hastened the decline of cash by almost half a decade, a few are asking whether digital currencies will actually succeed. Instead, it’s a matter of when they will go mainstream.

Single to Double: Money Management for Couples

Becoming a couple comes with a lot of compromises and discussions to get together on the same page when it comes to planning for the future and investing. Shortly after your wedding and honeymoon, reality sets in. When you start co-living and co-existing, you also start co-spending and co-saving. This may all seem a little overwhelming as you embark on this new journey. However, instead of shying away from your partner, adopt an approach that’s governed by absolute honestly.

When you get married, friends wish you to have joy and happiness in your marital life. However, a single word - ‘money’ can create a huge chink between spouses, owing to poor money management skills. If you can plan your money matters well, you can avoid any dispute with your spouse. 

Financial decisions are always better when taken together. Initially, couples may find it difficult to manage their finances due to differences in penchant for risk and priorities. This is common in most households, but, a couple should agree on having a budget and an investment plan to lead a financially stable life in future.

Budget Plan: Having a budget plan on spending is a must

Investment Plan: Discussing investment according to the financial commitment and risk capacity is a good idea, as each person will have their own interest and ideas of investment. Some individual are risk averse while some like to invest in risky assets.

Emergency Plan: Maintain an emergency fund where the funds are readily available on an immediate basis, to be used when one has taken a break from work or when there is no income from one of the couples.

HRA: If couples are living on rent they can split the HRA. This would ensure that both can claim HRA benefits under 80C of the Income Tax Act.

Insurance: Couples should have separate term insurance as well as health insurance which will take care of the expenses at the time of need.

Commotion of IPO Hysteria

With hullabaloo around the IPOs hitting the markets yet again following the trend throughout 2021, with the companies going public in a rush, a primary consideration is that a trend in the market can be a double-edged sword with the flip side risk commensurate to the upside potential. The motto in the investment parlance should be "You Win Some, You Lose Some". While India's primary market has attracted a lot of interest from the investors with more than 2X funds raised by firms on a Y-o-Y comparison between 2020 and 2021 (till end of Oct'2021, and several still tentatively lined up before the end of the year), not all who received allotment garnered a fortune.

Many investors have been searching online and consulting financial advisors for strategies and tricks - tracking GMP, putting through multiple applications through demat accounts held by friends and family, applying at the earliest possible from the IPO opening hours etc to improve the chances of getting an allotment in a ‘Good IPO’. However, these strategies seldom work in a highly unpredictable IPO market. No wonder, Warren Buffett said it right: “An IPO is like a negotiated transaction - the seller chooses when to go public but it’s unlikely to be at a time that is favourable to you.”

The real game analysis and predictability is built upon the capability to segregate the bad apples (over-priced, over-valued, poor quality business, and disastrous motivation for listing) from the right bets (growth prospects, business & industry stability, and future earning potential). Many times expectations and IPO price are too high to subscribe at the time of IPO. As a company takes some time to deliver on expected growth, impatient investors or investors with a myopic vision (just for profit making to make a few quick bucks) sell out. Investors who are optimistic of the changing situation and macro- or micro- economic factors that will or may influence the price movement, buy in or stay invested and benefit from any appreciation. Only savvy investors understand the meaning and value of being “patient” with companies which have long-term potential.

Millennial's Guide to Real Estate Investing

From the pandemic induced lock-downs and remote working options , to loss of pay due to loss of employment and increased financial burdens, the situation had many of us think about our future plans and financial goals.

The low-interest rate regime, and clarity due to the implementation of RERA are giving confidence to millennial home-buyers to get into real estate investing. However, compared to renting out a house, purchasing a house involves a lot more research, meticulous planning, and deliberation since it will most likely be the biggest financial decision for most people. For millennial on the lookout to purchase their first home, a few important aspects to be factored in before investing -

Budgeting: This possibly is the most important factor before going ahead with any purchase. Keep the following checklist: 

1) Your credit score (check across the credit information bodies like CIBIL, Experian, Equifax etc, as different financiers refer to one/more scores) 

2) The repayments (EMI) for the intended loan amount should ideally not exceed half your monthly budgeted spend target or savings

RE Consultant: With an abundance of real estate aggregators and agents, offline as well as online, one should engage with a intermediary who will 

(1) help with detailed information and understanding of prevailing dynamics in the project, vicinity you are investing in 

(2) facilitate the paperwork, assist in coordinating with legal teams, the registrar's office, etc. which can be a painful process for a first-time buyer

Identification: While, most suggestions around are of opting for a ready-to-move-in unit considering that the construction quality levels are confirmed before purchase, it is also paramount to identify a developer with a good track record. For developers having a consistently good track record in delivering quality homes, you can bet on both ready or under construction projects.

Connectivity: It is prudent to factor the amenities, connectivity to transport hubs along with an understanding of the neighborhood and the future infrastructure development potential on offer.

Portfolio Management Services

To invest is to allocate money in the expectation of some benefits in the future. Investment can be done in various categories or asset classes like:
a) Private Equity Investments into Startups, SMEs and other promising projects

b) Investment in Equity & Debt Securities

c) Investment for short-term returns by trading strategies

Portfolio Management Solutions is an investment portfolio in Stocks, Debt and Fixed Income products managed by a professional money manager. As you invest in PMS, you own individual securities unlike a mutual fund investor, who owns units of the entire fund. This investment plans enables the investor to purchase a stake in a good company, while the company selling the stake receives capital infusion to grow its business. As an investor you have the freedom and flexibility to tailor your portfolio to address personal preferences and financial goals. Although portfolio managers may oversee hundreds of portfolios, your account may be unique.

Why Should You Go For PMS?

1) Professional Management: Professional management of portfolios with the objective of delivering consistent long-term performance while controlling risk

2) Continuous Monitoring: It is important to recognize that portfolios need to be constantly monitored and periodic changes made to optimize the results

3) Risk Control: A research team responsible for establishing the investor's investment strategy and providing the PMS provider real time information to support it, backs any firm's portfolio managers

4) Hassle Free Operation: A customised service for the investor. The fund management team takes care of all the administrative aspects of the investor's portfolio with a periodic reporting (usually daily) on the overall status of the portfolio and performance

5) Flexibility: The Portfolio Manager has fair amount of flexibility in terms of holding cash (can go up to 100% also depending on the market conditions). He can create a reasonable concentration in the investor portfolios by investing disproportionate amounts in favour of compelling opportunities

6) Transparency: PMS provide comprehensive communications and performance reporting. Investors get regular statements and updates from the fund management house or team. Web-enabled access, in some cases, ensure that the investor is just a click away from all information relating to the investment. The account statements give a complete picture of which individual securities you hold, as well as the number of shares you own. It will also usually provide the current value of the securities owned, the cost basis of each security, details of account activity(ies) like purchases, sales and dividends paid out or reinvested, portfolio's asset allocation and portfolio's performance in comparison to a benchmark

7) Customised Advice : PMS can be structured to automatically exclude investments you may own in another account or investments you would prefer not to own. For example, if you are a long-term employee in a company and you have acquired concentrated stock positions over the years and have become over exposed to few company's stock, a separately managed account provides you with the ability to exclude that stock from your portfolio.

Who, If and When

The Investment solutions provided by PMS cater to a niche segment of investors. The investors can be Individuals or Institutional entities with high net worth. The offerings are usually ideal for investors: who are looking to invest in asset classes like equity, fixed income, structured products etc, who desire personalised investment solutions, who desire long-term wealth creation and who appreciate a high level of service.

Apart from cash, the investor can also hand over an existing portfolio of stocks, bonds or mutual funds to a Portfolio Manager that could be revamped to suit his profile. However the Portfolio Manager may at his own sole discretion sell the said existing securities in favour of fresh investments. Meanwhile, the tax liability of a PMS investor would remain the same as if the investor is accessing the capital market directly.

How are Population Growth and Economic Development related

The relationship between population growth and economic development has been a recurrent theme in economic analysis for a very very long time.

As far as I consider, the answer to it depends on the context, type of economy and standard of living of the average population. While economic development can mean a lot of different things, like it can just refer to the economic growth in terms of monetary value as a whole or principally economic development can be said to be the continued, progressive, and active efforts of the public and private sectors of a country that promote the standard of living and economic health of the country. 

The effect of population growth on the economy can be positive or negative depending on various factors and circumstances. While, on the one hand, a large population has the potential to be great for economic development, as the more people you have, the more work is done, and the more work is done, the more value (or, in other words, money) is created. Based on the history of all the developed economies, we see that human capital is a major component of growth. This can be basically deduced from the fact that resources required for economic growth are driven by the availability of human capital. Other positive affects of population growth are economies of scale, the possibility of increasing the market for the goods produced in the country and the new outlook, attitudes, ideologies, creativity they bring compared to the older population. But population growth may also have adverse effect on a nation’s growth as many resources has to be spent on the rising population and it would create pressure on the limited resources the country has and diverts the resources to maintain the capital than increasing the stock of capital per worker.

There are generally 3 schools of thought and views:

a) Opposing the positive impacts on economic development

b) Supporting the negative effects on economic development

c) Believe that there is no correlation between economic development & population growth

What are your thoughts: Is population growth good or bad for economic development?

Real Estate: Investment and Wealth Creation

Traditionally, most investors have trusted the stock market as an avenue to pool in their hard-earned money. While stocks are a well-known investment option, not everyone knows that buying real estate is also considered an investment. Under the right circumstances, real estate can be an alternative to stocks, offering lower risk, yielding better returns, and providing greater diversification. Investing in real estate or stocks is a personal choice that depends on your financial situation, risk tolerance, goals, and investment style.

Real estate investing involves the purchase, ownership, management, rental and/or sale of real estate for profit. It includes data driven solutions like Data Collection, RE Monitoring, Performance and Benchmarks, Fundraising, Investor Reporting, and much more.

Real estate assets are typically very expensive in comparison to the other widely available investment options. Unlike stock and bond investors, real estate owners can use leverage to buy a property by paying a portion of the total cost up front, then paying off the balance, plus interest, over time. Investments in real estate deliver returns in two ways - capital appreciation and rentals. Investing in commercial real estate is not as difficult as it may appear. This is because commercial properties have certain standards that the owner or builder must observe when constructing a business.

For retail investors, the key considerations for investing into commercial assets should be thorough assessment of their risk appetite, investment horizon and the purpose of investment (rental return, long-term investment and diversification). In addition, location of the project, micro market performance, project quality, lease covenants (rent, escalation, lock-in period, etc.) and bench-marking should be part of the due diligence process. Also, one should see whether the micro market is preferred by a diverse occupier mix or a specific industry. This is particularly useful if the investment is in an upcoming commercial project with no pre-leasing activity. At the end of the day, it is a trade-off between risk and return.

Options available to participate in commercial real estate can be shops, offices, land parcels and real estate investment trust (REITs). Commercial properties yield 8-10% in major Indian commercial markets depending on factors such as location, demand-supply dynamics, quality of asset and maintenance. Currently, the commercial market is on an upswing with strong demand momentum and leased options are at a premium. The commercial property market is forecast to remain robust with ~35 Mn sq.ft of average absorption in the next couple of years. If you have an appetite for commercial real estate and are looking for long-term investment, this is the sector for you.

If you have been considering the real estate industry, there is no need for you to hold back any longer. This is an industry that you can be successful in if you are motivated. No need for years of education, or even a great deal of money to get you started. With minimal education and money, you can get started in the real estate industry and be on your way to making money. Why not get started today and join the best industry that there is!

Senior Citizen Saving Scheme (SCSS)

One of the safest investment for senior citizens, with the interest being paid out quarterly. Since it is backed by the central government, the returns are assured, but it comes with a lock-in period of 5 years. You can invest up to Rs 15 lakh and rely on quarterly interest pay-outs for liquidity needs. SCSS also offers tax deductions under section 80C. The SCSS interest rate is amongst the best on offer amongst debt instruments.

               

At the juncture of retirement, the most important thing that a senior citizen or retiree is looking for is the safety of capital, followed by substantial returns, liquidity and tax saving.At present, there is no other financial product that can fulfill these requirements other than SCSS. With a lock-in period of only 5 years, and you have the best financial investment product suitable for senior citizens.

SCSS has been specifically designed keeping senior citizens in mind, as it is in simple terms, a deposit scheme with guaranteed returns and minimal risk. The investor can conveniently use this scheme to generate a regular income flow. SCSS, in true sense can bridge the shortfall between the pension and regular expenses of a senior citizen.

Old age and retirement bring a lot of uncertainties and doubts in the minds of people and lack of financial awareness is one of them. Senior citizens are always wary of putting their money in financial products out of fear of losing their capital. SCSS with its sovereign guarantee of capital protection can be an ideal investment vehicle at this stage of life.

2nd Innings Financial Liberty

               

Consider this: You have always been smart, financially aware, meticulously planned your future and the silver days. You are confident taking inflation into consideration, the corpus you have built or are building would be more than sufficient to take care of your post-retirement days -- the most basic and standard fallacy in most of our lives. What is paramount is not the accumulation but smarter investment, diversification and planning the maturity timelines, to ensure they are able to take care of your expenses too, while they grow and assure you and your beneficiaries dividends in future.

There are a plethora of saving schemes for senior citizens. But, with time not on their side, senior citizens look for investment avenues that carry minimal risk.Here are a few financial instruments that you ought to have in your portfolio to achieve this goal.

• Senior Citizen Saving Scheme (SCSS):One of the safest for senior citizens, with the interest being paid out quarterly (liquidity), backed by central government debt funds (risk), and only a 5-year lock-in (tenure)
• Pradhan Mantri Vaya Vandana Yojana (PMVVY): A government-backed scheme, it comes with no credit risk and a longer tenure of ten years. The scheme was to end on March 31, 2020, but the central government decided to extend until March 31, 2023 due to its popularity amongst retirees
• Life Insurance Annuities: Unlike PMVVY and SCSS, annuities offer guaranteed returns over a much longer term of 30-40 years, covering your entire retirement phase.
• G-Secs: Being a sovereign security, it is highly secure, and provide average stable returns. With longer tenures, and an option to exit, if the need arises, these are very lucrative instruments, guaranteeing semi-annualised payouts