We’re taking a much needed pause to wait for people who would like to take this website/vision forward. We did not started this on a commercial note, and it will never go that way.
Interested please contact admin(at)thetradersforum.net on how you can help.
Yes this is a tough choice; but unlike the Indian Ministers, we chose to take a pause rather than going defunct.
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Independence Day
India obtained its independence from British Rule on 15th August 1947. India became independent and wants to develop and prosper with its own decisions.
Constitution
Though we are independent, we were not having our own constitution. Without constitution it is difficult to take the right decisions for growth. So we needed our own constitution which will be the principles and guidelines, based on which we will be able to take the right decisions at the right time. Constitution also deals with the procedures and methodology of taking decisions.
Republic Day
The Constitution of India came into effect on 26th Jan 1950 which we call it as Republic Day. Since 1950 we were able to continuously grow with the guidance from our Constitution. Without an effective constitution, this exponential growth could have become impossible.
Amendments
So far we have made 96 amendments in our constitution in the last 62 years. Amendments make the constitution more dynamic and implementable in the changing times.
Financially Independent
You will be financially dependent on your parents till you complete education. Once you get a job you will become financially independent. You can take your own financial and investment decisions. You may want to financially grow and achieve financial goals like buying a car, buying a property, children education and marriage, and having a comfortable retirement.
Financial Constitution
Do you have your own financial constitution? That is you need to have a set of financial principles guiding you to take the right financial and investment decisions. Without these guiding principles it is difficult for one to financially grow and achieve financial goals. This financial constitution or financial plan details the step by step procedures and methodologies of taking sound financial and investment decisions.
Illustrating a case:
Rahul would like to retire in 25 years. He would like to have (when retiring) investments which can generate lifelong, the equivalent of Rs.50000 per month and additional Rs. 2 lacs per annum at today’s costs.
A Mediocre Approach:
Rahul may choose invest now and then. He may contribute Rs.3000 in one month, Rs.15000 in another month. He may skip investments at times. So his financial picture will not be very clear. He will not know how much he will be accumulating when retiring. He will have insecurity throughout.
Financial Planning Approach:
Financial planning approach has got some principles and guidelines. These principles and guidelines are like a light house for a ship. They give you the right direction at any point in time.
Investment Principles and Guidelines in Financial Planning Approach:
1) A good investment need to generate a decent inflation adjusted return.
2) Not investing in risky avenues like stock market is also riskier.
3) When doing trading, you are not investing.
4) Asset allocation is a proven strategy to reduce the overall risk of the portfolio. Periodically rebalancing the assets will enhance the potential of wealth creation.
In the financial planning approach, the situation will be detailed with more facts. As you have well established procedures and methodologies in financial planning, you will be able to do a sound plan and course of action to be taken to achieve the financial goals.
| Present Age | 30 |
| Retirement age | 55 |
| Life expectancy | 85 |
| Expected Annual Income
(Post Retirement in today’s value) |
800000 |
| Inflation | 6% |
| Pre-retirement return | 12% |
| Post-retirement return | 8% |
| FV Expected Annual Income | 3433497 |
| Retirement Corpus | 79582501 |
| Required Annual Investment | 596866 |
| Required Monthly Investment | 49738 |
If Rahul is able to invest Rs.49738 per month, he will be able to accumulate the retirement corpus easily.
Alternatively Rahul can start with Rs.22000.per month, and increase the contribution every year by 10%. Even in this method he will be able to accumulate enough towards his retirement.
Amendments Vs Review:
Financial planning reviews are what amendments to a constitution. When there is a change or deviation from our original plan, we need to do a review to control the change. The reviews of financial plan accommodate the changes and deviations and make the whole plan achievable.
When celebrating the Republic Day of our country, why don’t you create your own financial constitution /financial plan for a better prosperity?
Long live Republic.
The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Director and Chief Financial planner of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in.
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Whenever people have surplus money, they want to invest. When they invest, they just want to act or execute. They don’t want to spend time on understanding the product and various investment strategies. They would like to take investment decisions without doing any homework. There is no plan of action. Their attitude is “I have surplus money; just tell me where to invest”.
Misselling:
These kinds of investment decision making will make you fall prey for misselling. As you are not interested in doing the homework and if someone comes with a long chart and calculations for 20 years, then you may find it interesting and end up buying products like ULIPs. When you realize that you have invested in a mediocre product, you will blame the agent or broker and not yourself and your wrong decision making approach.
Market Moods: [click to continue…]
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Most of today’s problems are yesterday’s challenges overlooked. It is always considered a wise thing to perceive problems before they arise and attend to them at the earliest. By doing so, you will be spared from the trouble you may have to undergo in the later stages. Here are few pointers to assist you in identifying the problems related to your spending and saving patterns.
Potential problems related to your spending habits
You are finding it difficult to repay your debts.
Potential Problem: You decided to splurge in on your salary and went ahead purchasing everything you ever wanted on monthly installments and did rest of the shopping on your credit card. A few months later, you come to terms with reality not being able to service all your debts.
Possible Solution: You must take into consideration the fact that all your loans combined should not go beyond 30-40% of your salary. It is imperative that you bore this fact in your mind before taking any new debt.
You find yourself in a tight financial corner every next month. [click to continue…]
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