The New Rules of Financial Planning for Dummies in India

How you can effectively do the Financial Planning for your Retirement & for your Child’s future and build enormous Wealth for you & your future Generations in India by SIMPLE Financial Planning?
[ For Resident Indians & NRIs]
Investta.com A Personal Finance Forum, Discuss Everything about Financial Planning…!!! MyJourneyToBillionaireClub.Com India’s Leading Personal Finance Blog

Asav Patel
Personal Finance Blogger, Ahmedabad, India Blog: www.MyJourneyToBillionaireClub.com Forum: www.Investta.com E-mail: asav4u@gmail.com

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Index
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. Introduction: Financial Planning in India What is Financial Freedom? – The Definition Know the Power of Compound interest before starting Financial Planning How much is enough to retire in India? Budgeting: The most important Exercise Why Budgeting? – So you spend less than you Earn Get out of Debt: The first step of Financial Planning How to get out of debt? Emergency Fund – A Must Thing Financial products available in India Financial planning for Retirement Financial planning for child’s future Consider inflation Basic asset classes Investment time horizons The power of long term investing Best financial products in India Best asset class – Equity – Know the power of equity Worst financial products in India- Avoid these products any how Keep (Insurance) agents out of Financial planning game ULIP Charges in India The Simple & most Powerful Financial Planning formula – Term Insurance + Mutual Funds + PPF Pure term life insurance Online term insurance plans in India Medical check-ups for Term insurance plans – Is it necessary?

PAN Card 42. When to Buy a Home on Home Loan? 41. KYC (know your Client) for the Mutual Funds 35. Asset allocation 29. Corporate (Company) Fixed Deposits in India . Income Tax Return (ITR) filing – Which ITR Form to Use? 49. How to Invest in Indian Mutual Funds? 34. Mutual funds 27. Direct Equity Investing: Myths & Facts – Is it for You? 36. PPF (Public Provident Fund 28. IPO Investing – Good or Bad? 40. The power of SIP (Systematic Investment Plan) 32. Value Investing – Benjamin Graham Formula 39. Fixed Deposits & Government Bonds in India 50. Income Tax Benefits on Home Loans in India 44. Wealth Tax in India 48. NFOs – A Risky Bet – Beware NFO Lovers 31. Gift Tax in India 47.26. How to Choose Best Mutual Funds in India? 33. HRA – House Rent Allowance 45. Tax Planning for Dummies in India 43. Tax Saving Infrastructure Bonds – Section 80CCF 46. Mutual Funds Portfolio Building 30. What is Demat Account? How to open Demat account in India? 37. How to learn stock market investing? 38.

WILL – A Very important step of Financial Planning 65.Feedback .Special Offer to the Readers .About MyJourneyToBillionaireClub. How to Generate Steady Income after Retirement? 61. Personal Loans 60. Health Insurance (mediclaim) in India 58. Gold Investing in India 53. Art Investment in India 56. 5 Model Portfolios of Intelligent Indian Investors . Chit Funds in India 54.About Investta. Car & Auto Loans in India 64. Top 14 Most Common Financial Planning Mistakes 66. Gold Loan in India 59.com .Download “My Journey To Billionaire Club” eBook for FREE . Post-office Savings Schemes in India 52. Offbeat Assets 57. EPF (Employee’s Provident Fund) 63.About the Author . NPS (NPS) – New Pension Scheme – A Bad Idea 62. Digital Assets / Web Properties The Next Generation Investing 55.Financial Planning for NRIs .com .51.

1.in India. However. Introduction: Financial Planning in India Financial planning is not a new concept in India. This eBook is useful for both Resident Indians and NRIs to do the Simple and most effective financial planning to secure their own future as well as the future of their kids. Since centuries people are doing financial planning in India. lifestyle expenses and many other expenses and that’s why day after day it is becoming more and more difficult for the people to retire with the financial freedom. medical services. This eBook is mainly for the dummies who don’t have any idea about financial planning and don’t have much knowledge about various financial products available in the market. So just sit back. You can use this eBook as a reference book or simply print it and keep it with you so that before taking any financial planning decision you can refer the new rules of financial planning given inside this eBook. This book will helpful to you to choose the best financial products available in the markets to build long term wealth. in the modern world because of the introduction of vast range of financial products have made financial planning a difficult task. Day by day various expenses are rising such as education expenses. get relaxed and learn the new rules of Financial planning for dummies in India . In this ebook. I have given quick over view of modern financial planning. cover your life and secure your financial future.

Financial Freedom = Monthly Passive Income > = 2 * (Monthly Expense) Thus. royalties.10. Weather you work or NOT. financial freedom means having hundreds of crores in the bank accounts. stock dividend. If you can generate a passive income stream in your early life (30s. this income will keep flowing into your bank accounts for the rest of your life. Business income. web properties income…etc… -If you want to retire in 2030 and want to do Rs. -Everything in financial planning revolves around this simple concept of passive income. if your monthly expense is Rs. Example – Interest income. capital gains. Here is the real definition of financial freedom. you can retire early. rental income.000 and your monthly passive income is Rs. you will need to generate at least more than Rs.1 lakh of monthly expense after your retirement than to become financially free.2 lakh of monthly passive income. Many people think that.25. Investment income.2. What is Passive Income? Passive income is the income to earn which you don’t have to work hard. What is Financial Freedom? – The Definition Before starting financial planning it is very important to understand the meaning of financial freedom. But well. Than and only you are financially free in true sense. . this is not the truth.000 than you are financially free. 40s & 50s).

This is because people who started early have invested more time and time is the important element of success of financial planning. He also said that. start financial planning. The best time of investment was 20 years before & the second best time is NOW…!!! So Start investing NOW…!!! . Many people argue that. investment/financial planning is not just the game of money but it’s the game of money and time both. retirement is still decades away so why to hurry? Well. Just remember one thing that. “The Compound interest is the 8th wonder”. “The Compound interest is the greatest Force in the Universe”. The more money and time you invest.3. you will never become rich. savings and investing right now. If you never save and invest your money. the more it will grow and more financially free and rich you will become. the compound interest will never work for you and thus. So if you are reading this eBook than no matter in which age group you are. Know The Power of Compound Interest before starting Financial Planning – START EARLY & WIN THE RACE…!!! Albert Einstein once said that. if you know the power of compound interest. you will understand that the people who have started investing early will accumulate more wealth than people who started just 5 years late even if they save and invest double amount of money for the rest of their lives.

. how much you want to spend after your retirement every month and after that do some simple algebraic maths and calculate that how much capital you will require to generate that much of monthly post-tax income? And this much of capital should be your ultimate financial planning goal.100 crores are not enough to retire peacefully. ask yourself that. So how much is enough to retire in India really depends on your level of lifestyle. if you are turning 65 in 2015 in Tier-II cities of India having moderate lifestyle than Rs. May be Rs. This is because you will have to consider inflation also.com) ask me very often.1 Crore is enough to retire as it will generate Rs. How Much is Enough to Retire in India? This is the most common question that readers of my blog (MyJourneyToBillionaireClub. in which city of India you live and how much you want to spend after your retirement and of course at what age you want to retire? Of course. Also keep in mind that in which year you want to retire. it depends.1 Crore or Rs. So what is the true answer of this question? Well.1 Crore may not be enough as the inflation will drive the lifestyle further higher. So what I advise you is.6-7 Lakh post tax return every year but well if you are turning 65 in 2030 than Rs.4.5 Crores are sufficient to retire peacefully in India or may be Rs.

its very important. I personally keep a small pocket book with me in which I note down my each and every expenses. budgeting means keeping track of your each and every expense. I seriously doubt that if anyone is using them. You can do budgeting on simple paper and pencil or a small pocket book also. Budgeting is MUST but well. . And at the end of month. In fact. No need of complex software & worksheets Now a days. But well. Budgeting: The Most important Exercise Budgeting is the most important financial planning exercise. But well. I personally find it very boring exercise.5. I analyze all of my expenses and try to cut down all the bad expenses. income and cashflow. lots of complex softwares and worksheets are available online for FREE for budgeting. So what is budgeting? In layman’s language. I know that many of you find it boring exercise. The ultimate goal of budgeting is to keep the track of your each and every expense. it should not be complex.

you minimize your expenses. So do budgeting every month and keep the track of all your expenses. increase your income and thus increase the Cashflow (Income – Expense) and divert this cashflow towards long term investing. Many people spend more than they earn by excessively using the credit cards. the logic behind budgeting is. you can’t be financially free and rich. “You Should Spend Less than You Earn” Unless you keep track of your all income sources and all kind of expenses. Image Source: bythedrop. build wealth and fulfill your financial goals. The idea behind Budgeting Exercise is.com . Unless.6. you divert your cashflow towards investing to build wealth. Why Budgeting? So you “Spend Less than You Earn” I know that budgeting is the most boring part of the financial planning game. you will never know that weather you spend less than you earn or not? And spending less than you earn is the key of successful financial planning . It’s most boring exercise. And many people ask me that what is the importance of budgeting? Well.

What do you think that. Red Indians & the Power of the Compound interest DO YOU KNOW that in 16th Century Red Indians sold Manhattan to the USA people for just US $ 16? Well. how much it will become after 400 years if you invest $ 16 at the rate of 8% annual return? Well. The compound interest is very powerful and make you very rich over a time. What do you think that. The entire Manhattan (Where World Trade Centre was located). . Red Indians can not only buy back the entire Manhattan but they can also buy the entire New York.!!! This is the power of compound interest. yes. suppose if the Red Indians put that $ 16 in the Bank FD at the rate of 8% compounded annual return than today after 44 years can they buyback Manhattan back from USA? Let me tell you that the approx valuation of Manhattan is US $ 2 Trillion today. world’s one of the costliest city was sold to USA by Red Indians for just US $ 16. it becomes US $ 8 Trillion and more…. Moral: Start Investing as early as possible & stay invested for the long time horizon to build Wealth. London & Shanghai today.Break Time….

People are scratching their credit cards like hell. buy expensive cars on loan and live a luxurious lifestyle on borrowed money. Credit card is the worst form of debt thus. Borrower is a slave to Lender…!!! Unless you will pay off all of your debt. Get Out of Debt: The First Step of Financial Planning The first step of successful financial planning is getting out of debt. Paying off your debt is the Best investment. So first of all get out of debt. cut down all of your credit cards and replace them with debit cards. Think the future of your children before taking a car loan or any other kind of consumer loans. Get out of your car loans. People ask me that which is the best investment? My answer is. 1) 2) Abhay – Bank of India Disha – ICICI Bank . you will have to work like a slave in the economy.7. Following are the debt help (Financial Counseling) services in India. Indians have now started adopting the western culture means buy today and pay tomorrow. If you are in a deep debt than consider to sell off your some assets or seek debt relief services.

Otherwise. Then begin intensely getting rid of all debt (except the house) using my debt snowball plan. Debt Snowball Method by Dave Ramsey to Get out of Debt • The principle is to stop everything except minimum payments and focus on one thing at a time. First accumulate $1. then list the higher interest rate debt first. We can also apply the same principles in India also. Paying the little debts off first gives you quick feedback. List your debts in order with the smallest payoff or balance first. Dave Ramsey American Financial Author DaveRamsey. Do not be concerned with interest rates or terms unless two debts have similar payoffs. Do what is necessary to focus your attention.8. and you are more likely to stay with the plan. The famous American financial author Dave Ramsey has suggested Debt Snow Ball method to Get out of Debt.com • -Stop Borrowing More Money -Cut Down Your Credit cards & replace them with Debit Cards. still maintaining minimum payments on everything else. nothing gets accomplished because all your effort is diluted.000 cash as an emergency fund. Keep stepping up to the next larger bill. You attack the smallest debt first. How to Get Out of Debt? Getting out of debt is not easy because it’s related to our psychology. .

where should they invest their emergency fund? Well. Many people ask me that. But well. •Your Brother-in-law’s birthday is not the emergency. Many people argue that. a credit card is not the Emergency fund. An emergency fund should be used for emergency purposes like medical emergencies. Emergency Fund – A Must thing Emergency fund is the 3-6 months of you r monthly expenses sometimes 1 year of monthly expenses. job loss or any other kind of financial emergencies. You should have separate emergency fund for emergency purpose. •Emergency fund is mainly for the financial emergencies like medical emergency •Your credit card is not the emergency fund •Emergency fund is not for investments or burning it into the stock market. The emergency fund will protect your long term investments like investments in mutual funds and equity to get liquidated during the time of financial emergency. Most of the people don’t keep emergency fund with them and that’s why they have to liquidate their long term investments during the time of emergency. emergency fund is not for doing investments but it is for emergency use so forget the idea of investing your emergency fund. You can keep your emergency fund in cash form or in your bank savings accounts or in liquid mutual funds. they keep credit cards with them in their pockets for the emergency purpose. .9.

10. TRUTH: The Truth is that. Financial Products available in India • • • • • • • • • • • • • • • • • • • • Stocks Bonds Fixed deposits Gold Mutual funds Real estate Term Life insurance ULIPs Whole insurance plans Money back insurance plans Pension plans / retirement plans Health insurance (Mediclaim) Post-office savings scheme PPF (Public Provident Fund) Home loans Gold loans Car/Auto loans Personal loans Credit Cards Auto/Car Insurance MYTH: to become financially free one has to invest in all the financial products available in the market. only few financial products from this list can help you achieve your financial goals and you should combine these financial products in different proportions according to your risk appetite and financial goals to become financially free and rich. • Not the all the Financial products can help you to achieve Financial Freedom. •Many people invest in all types of financial products available in the market – This is a BIG Mistake…!!! •To do the effective financial planning. Mutual Funds & PPF . you need to understand which financial products are best and which are worst? •Only 3 financial products are useful for financial planning – Term Insurance.

-Consider INFLATION while counting your financial goals for retirement -Consider each and every major and minor expense that you want to do after your retirement. One international tour per year with your spouse – Rs. -Many people want to retire before 60 years of the routine retirement age so consider this factor before doing retirement planning. -Equity mutual funds are the best financial products to build enormous wealth for your retirement . if we consider 10% annual returns from fixed income instruments and your annual expense is Rs. after retirement their expenses will be reduced because they will be in old age then. Financial Planning for Retirement Before starting financial planning for retirement. So now. So take a paper and pencil and write down all of your expenses that you want to do after your retirement say for example. Say for example. Two Domestic tours per year with your spouse – Rs.30. Monthly expenses – Rs. you should calculate that how much you will need after your retirement? Many people have a false belief that. you need to build a capital that can generate this much of income every year post-tax. Do the total of these expenses.1-1. also remember that after retirement. you will be free and that’s why your expenses like travel and many other expenses will increase. And so on….11.10 lakh after your retirement than you will have to build Rs.5 Lakh 3. 1.20 crore of capital to retire peacefully. But well.2 Lakh 2.000 4.

Here are the few major expenses that will occur for your child’s better future.12. First of all calculate and decide that how much you will need for each and every expense? And then start investing for your child’s future. -Consider INFLATION -Equity is the most powerful tool to build wealth for your child’s future -Equity mutual funds are the best financial products to build wealth for your child’s future -Child future plans and other insurance cum investment products offered by insurance companies are worst. The second best time is now. Financial Planning for Child’s Future Financial planning for your child’s future is no different than financial planning for your retirement. -The best time to start financial planning for your child’s future is the first day he/she born. you can ‘t build enough capital for your child’s future in just few years. . Education Expenses Marriage Start-up Business Expenses The above are the 3 major expenses that you will have to plan for your child’s future and build capital accordingly. Avoid these products. 1. You will need more than a decade to fulfill your child’s financial goals so plan ahead and start as early as possible. 2. Remember that. 3.

Consider Inflation… While doing financial planning for retirement as well as for your child’s future. you will surely fail. So take a compound interest calculator and consider the inflation while planning the financial goals for your retirement as well as your child’s future.15 lakhs for the marriage of your daughter than in 2030 you will need Rs. Today suppose if you need Rs. And if you don’t consider inflation while doing the financial planning.60 lakhs to do the same level of marriage. .80 Lakhs if we consider the inflation at 7% annual rate.20 lakhs (In 2011) but after 20 years from now in 2030 the same expenses will be Rs.1 Crore to retire peacefully in India (2011) than you will need almost Rs. you will have to consider inflation. government inflation figures are much lower than the actual inflation in the economy so always consider higher inflation rate while planning your financial goals. Say for example.4 Crores in 2030 to retire peacefully with the same level of lifestyle and expenses as that of today (2011). today the abroad educational expenses are around Rs. Suppose if you today (2011) need Rs.13. -You will require a Compound interest calculator to calculate inflation -Consider 7% annual inflation rate (8% better and to be on safer side) in India for next 20 years at least. -Remember that.

3. -Digital assets can give you highest returns than any other asset class in this world. 5. Silver…etc. coke bottles. 4. 4. 3. Stamps Coins Collectibles (Vintage toys. Domain names Blogs Websites Forums Online properties -Assets multiply your money and over the time make you rich and financially free -Equity (Stocks) is the only traditional asset class which has given highest returns than any other traditional asset classes -Young generation (Who born after 1990) believe in digital assets and invest in these digital assets to become rich & financially free.) [Includes Gold ETFs] Modern (Information Age)/Digital Asset Classes 1. 2.) Art & paintings [includes Art funds] Antiques Vintage jewellery .. 5. -Buying assets out of your money is known as INVESTMENT. 2. 3.14. Offbeat assets 1. 4. stamp papers…etc. 2. Stocks (Includes Equity Mutual Funds) Bonds (Includes Fixed Deposits & Debt Mutual Funds) Real Estate (Includes Real Estate Mutual Funds Metals (Gold. 6. Basic Asset Classes Traditional (Industrial Age) Asset Classes 1..

Government & Private sector Bonds .Debt Mutual Funds .Gold . -Equity is not for the short & medium time horizon investments because of volatility.Bank Fixed Deposits Medium Time Horizon (3-5 Years) .Gilt funds (long term) -Equity is the best Asset class for long time horizon -Long time horizon investments are to multiply your money & build Wealth .Equity Mutual Funds .Bank Fixed Deposits .Short & Medium time horizon investments are to preserve and grow the purchasing power of your money for the purpose of near future -Ultra-short time horizon investments are not to multiply your money but to maintain the liquidity of your money say for example Emergency fund.Medium term Gilt Funds Long Time Horizon (> 5 Years) .Real Estate . Ultra-short Time Horizon (< 1 Year) Cash on Hand Bank Savings Accounts Liquid & Money market mutual funds (Ultra-short term debt funds) Short Time Horizon ( 1.Short term Debt Mutual Funds . Investment Time Horizons Before starting financial planning you should understand various time horizons and best financial products suitable for these time horizons. & NSC . I personally divided them into 4 time horizons.KVP.3 Years) .15. .Equity (Stocks) .

Q.70 Lakhs The investor who started at age 55 has just Rs. Here is one example of the power of compound interest & long term investing.1 Lakh per year in Equity Mutual Funds and earns 20% annually. investment is not only the game of money but it’s the game of MONEY & TIME both. The lesson is clear: The earlier you start the less you have to invest to reach your financial goal.4 Crores The investor who started at age 45 has just Rs. Consider the following four investors ages 25 – 55. To build wealth and become financially free. The person who starts investing at the age of 25 will invest 10 years more time than the person who started investing at the age of 35 and 20 years more time than those who start investing at the age of 45. It is obvious that the younger investors get a lot more “heavy lifting” from their investments because of the power of the compound interest. Start Early. you don’t have to just invest lots of money but you will also have to invest lots of time to work compound interest work better in favour of you. How to invest more time? At age 65: • • • • The investor who started at age 25 has over Rs.26 Crores The investor who started at age 35 has just over Rs. .12 Lakhs A.16. It’s Simple. The only way to become successful in the game of financial planning is you START EARLY & invest more time. Each invests Rs. The Power of Long Term Investing As I have already explained in beginning that.

1 Gold coin = 1 Rs. people decided to print 5 notes of 1 rupee each for the transaction purpose. these people became greedy & they thought that printing money will solve their financial problems so they printed 5 more rupees and pushed it into the circulation. the purchasing power of money goes down & the price of the gold goes up because now more money is available to buy the same amount of gold. now 1 Gold coin = 2 Rs. One day. Gold has doubled in its price from 2007-2010. Right? Moral: It is not actually the price of gold which is going high. It is actually the price of money going down & this is known as inflation. this means governments from all around the world (mainly US Government) has doubled the money supply by printing money out of thin Air…!!! .Break Time… What is Inflation? Once upon a time there was a small island which had 5 people and 5 gold coins and nothing else. So now how much one gold coin worth? Well. Whenever. So how much one gold coin worth now? Well. the governments & central banks from all around the world print money. The gold is same here (5 coins). Right? Now after a year.

Child future plans. 8. Bank FDs & Post office savings schemes are best financial products to generate steady income after retirement safely. [1.5% Annual Fund management charge] -Insurance companies claim that their financial products (ULIPs. pension plans.17. -Term insurance is the only best product being sold by insurance companies . 7. 4. Best Financial Products in India 1. 5. 10. 3. 2. -Equity mutual funds and equity are the best financial products to build long term wealth -Term life insurance is the best financial product to cover your life with adequate cover -Bonds (Government & Private sector). money back plans…etc) are better than any other financial product available in the Indian market but well this is not the TRUTH. Stocks Equity mutual funds Term insurance PPF Post-office savings schemes Bonds Bank fixed deposits Health insurance (Mediclaim) Gold & Gold ETFs Real Estate (If carefully chosen) -Above are the best financial products in India that you will require to do the effective and successful financial planning. 6. 9. -No other financial product is as cheap as Mutual Funds in India as they will charge 0% Entry load and 0% Exit load after 365 days of investing.

Inflation 2. But for that you will have to start Investing early. -It means over the time the volatility in equity reduces and it gives you excellent returns. Equity is the must have asset class in anyone’s portfolio to build wealth in today’s world. -Equity can build enormous wealth for you in the long run that you can fulfill all of your and your child’s financial goals -95% of the people have made money from equity who invested for 5 years and 100% have made money from it who invested for 10 years. Bank FDs and Government Bonds. But well. Benjamin Graham – Equity is a Voting Machine in short Run & Weighing Machine in the Long run. Is it -No need to learn direct equity investing now a days. -Equity mutual funds are so much convenient and professionally managed and cheap (Entry load is 0%) that they can build enormous wealth for you in the long run. Equity mutual funds will do all the job for you. . 1. Tax So consider.18. Equity has power to transform an ordinary individual into a financially free and independent individual over the period of time. equity as a major asset class in your portfolio during the first decade of your active earning life at least. Best Asset Class: Equity – Know the Power of Equity Really Risky? Gone are the days when people used to build wealth with fixed income instruments such as PPF. equity can beat the two biggest wealth killers in the long run and provide highest returns than any other traditional asset class in the world. Most of the Indians don’t invest in equity because they think that equity is RISKY.

5-10 lakh of life cover which is peanut size in comparison to the term insurance plans.19. 6. term insurance plan is the best product and to build wealth/investments equity mutual funds are the best products -ULIPs. ULIPs (Unit Linked Insurance Plans) Whole life insurance plans Money back insurance plans Pension / retirement plans Child future plans Any INSURANCE CUM INVESTMENT product -Insurance + Investment = Bad Combination -Never mix insurance with investment or buy any financial product which is the mix of insurance and investments -For a life cover. you will get just Rs. 3. So for Rs. Worst Financial Products in India – Avoid These Financial Products ANYHOW …!!! 1. 2.1 lakh of annual premium. -Many ULIPs and other insurance cum investment products charge 20-100% premium allocation charge from your first premium. -ULIPs and other insurance cum investment products give you just 5 to 10 times life cover than the annual premium. . 5. While mutual funds charge 0% Entry and Exit load (After 365 days). 4. Whole life insurance plans and all the other insurance cum investment products selling by insurance companies in India are very very COSTLY. These products will charge lots of charges from you and invest very less money for you.

Don’t get fooled by these words. “This Pension plan will give you GUARANTEED 40% return per annum. . So keep them out of the game of financial planning. Following are the commonest promises/speech of the insurance agent. In India.” There is a JOKE on insurance cum investment products. The agents are getting huge huge commissions on these costly financial products. “The insurance cum investment financial products are the most profitable financial products when you are on Selling Side…” It means you can only make huge profits from these products if you sell them to other fool.20. Sometimes 100% of the first premium…!!! The above are the commonest SLAES SPEECH of the insurance agents. the only job of insurance agent is to sell the financial products of the company for which he is working. “This ULIP will double your money every 3 years”. Keep (Insurance) Agents out of your Financial Planning Game There is not any role of (Insurance) agents in successful financial planning. Term insurance is the only best insurance product being sold by the insurance companies and all the other insurance cum investment products being sold by the insurance companies in India are very costly.” “Get out of this insurance plan and invest in the new plan” (Because I am getting huge commission on this new plan) “This Child future plan will build a wealth for your child” “Money back insurance plans are better than the term plans.

get out of this even after loosing everything and start investing in mutual funds. 1) Premium allocation charges: This is the charge where the insurance company will hit you hard. so directly go this section – “ULIP Charges”. -Never forget to see Premium Allocation charge + Policy Administration charge. .21. you really don’t need to pay anything behind such services if you have the following knowledge about the charges. Many financial planners will charge you Rs.5% per annum 4) Mortality charges 5) Switching charges -If the total of the above two charges is more than 10% (Which is usually more than 20% most of the time). This can be 20-100% for the first premium & up to 4-30% for the subsequent premiums. This is because Mutual funds have 0% Entry & 0% Exit load and just 2. ULIPs and any other insurance cum investment product should be strictly avoided as they are very costly & they don’t have any roll in successful financial planning. So never forget to look this charge 3) Fund management charge – Up to 2. this charge will be 10-15% per annum . But in that case. -If it is 2-10%. How to Review any ULIP Plan in India? Step: 1 Visit the website of the insurer & Download the ULIP Brochure in PDF format. And if you have already invested in ULIPs.Thus. However. the policy is too costly. . Many ULIPs say that they have NIL Premium allocation charge. Step: 3 Here are the common ULIP Charges. -Government insurers like LIC & SBI don’t even show ULIP charges in their product brochures. Step: 2 ULIP charges are mentioned in small letter from anywhere between page 4 to 7. 2) Policy Administrative charges – This is the second charge.5% annual fund management charge.500-1000 to review your ULIP portfolio to give you a financial advise on it. it is still costly. ULIP Charges in India ULIPs are the most costly financial products selling in the Indian markets and should be avoided any how.

The above simple formula/financial combination is both for your retirement planning & child future planning. The Simple & Most Powerful Financial Planning Formula Term Insurance + Mutual Funds (Equity & Debt) + PPF The most simple and the most powerful financial planning formula to build wealth . -Mutual funds have 0% entry load & 0% Exit load after 365 days. whole life insurance plans & money back insurance policies) is just 5-10 times the annual premium which is a peanut size in comparison to the life insurance cover provided by the pure term life insurance policies. -ULIPs & other insurance cum investment products will charge 0 to 100% as premium allocation charge from your 1st & subsequent premiums. Pension Plans . Child future planning is not different than your retirement planning. . Term Insurance + Mutual Funds (Equity & Debt) + PPF No other financial product is as cheap and as effective than the above simple combination. save tax and cover your life (insurance) is. -ULIPs. You don’t need any child future plans or complicated financial products by insurance companies to build a wealth for your child’s future. child future plans.22. As these products offered by insurance companies are very costly. Money back insurance plans & child future plans are costlier than this simple combination of 3 financial products. The life cover provided by the ULIPs & other insurance cum investment products (Pension plans.

very costly as they charge 20-100% of entry All the insurance cum investment financial products in India are very load from your annual premiums by various charges like premium allocation costly and should be avoided. If you have invested in just 1 term insurance plans -Insurance cum investment products are than this won’t be possible.50 lakhs than buy 3 term insurance plans of 20. I personally advise people to divide their life cover in 2-3 term insurance plans.30-75 lakh of insurance cover to cover his/her entire life and that’s why this is the best financial product available in the market. you can discontinue the annual premium which is very small in comparison to term insurance plans. Ideally one need anywhere between Rs.23. Pure Term Life Insurance Pure term life insurance is the BEST insurance product available in India as it covers your life at very cheap cost. During your retirement/old age when your dependents become financially free and you become liability free. mortality charges.20 and 10 lakh cover. -Never mix insurance with investment means never buy any financial product in India which offers you the benefits of both life insurance and investments offered by insurance companies in India You will diversify the risk of rejection by dividing your life cover -Insurance cum investment products will in 2-3 term insurance plans. Say if your insurance need is Rs. you need a pure term life insurance policy to cover your life. charges…etc… -Many insurance cum investment products charge 100% from your 1st Premium…!!! . 1 or 2 term insurance plans and reduce your life cover and premiums also. give you just 5 to 10 times life cover than 2. 1. equity mutual funds charges. Remember that. This has two advantages. administrative to build a wealth and PPF to save lots of tax under section 80c.

the insurance companies don’t have to pay agent commissions and that’s why they pass on this benefit on you.24. I advise you to invest in 1 or 2 online term insurance plans also as they are very easy to buy. ICICI iProtect AEGON Religare – iTerm Kotak e-Insurance Plan Metprotect Online Many other online term insurance plan will come in future . . they will require no medical checkups. Online Term Insurance Plans in India Online term insurance plans are the new generation concept in India. 5.Cheap: The main advantage of online term insurance plan is that. It will make your life really easy. Try this new generation term insurance plans. And thus. 4. . as they are online. Online Term Insurance Plans in India 1. Advantages .Wide Availability: Another advantage of these plans is that. the annual premiums of online term insurance plans is much lower than the traditional offline term plans. All you need is the internet connection and a credit card to pay premiums. 2. 3. you can buy them from any city of India. You just need the internet connection and a credit card to pay online and buy term online insurance policy.No Medical Check-ups: The main advantage of online insurance plans is that.

take your ECG and then you will be examined by a physician. But well. the premiums will be low. CBC) -Blood Sugar -ELISA for HIV -Serum Lipid Profile -ECG -Chest X-ray (If necessary) Well. this is the scenario of western countries. Don’t do this mistake. Many people avoid buying term insurance plans because they want to avoid the medical check-ups. recently the online term insurance plans have entered into the market which does not require any medical check-ups and the premiums are also lower than the offline plans. your painful Medical premiums will be higher and if you show that you are fit checkups before buying the life insurance. . Why medical check-ups before buying term insurance plans? Is it really necessary and what if someone is afraid of medical check-ups? Well. Tests required for Term Insurance Plan .25.Physical check-up by Physician appointed by the Insurance Company -Hemogram (Hb. if you don’t go for medical check-ups. In India. collect a sample of your blood and send for various investigations. All they will do is. Think of your nominees/dependents and go for it. However. medical check-ups are MUST before buying term insurance plans in India (Offline). you MUST go for medical check-ups before buying a term insurance plan. don’t afraid of medical check-ups. Medical Check-ups for Term Insurance Plans – Is it Necessary? Many people ask me that. Online Term Insurance Plans are No Medical Checkup Plans which are Alternatives to Basically as a rule.

gilt…etc. Mutual funds (Equity & Debt) are the best financial products available in India to build some serious wealth. mutual funds are so much professionally managed that its hard to beat the returns generated by them unless you have extremes levels of expertise in direct equity investing. Start investing in equity diversified mutual funds as early as possible via SIP. You don’t even need to invest in government bonds and bank fixed deposits because gilt funds and debt funds are available in the Indian market.26. debt. Mutual funds are available in all the varieties means equity. -MFs charge 1. mutual funds are costly and they will invest in equity by themselves. -Exit from any insurance cum investment product and start SIP in mutual funds. Mutual Funds Mutual funds are the best and most cost-effective financial products to build wealth in India. gold. -Mutual funds have 0% Entry load & 0% Exit load after 365 days of investing. Only 2-3 equity diversified mutual funds are enough to build enough wealth for your child’s future and for your retirement. . No need to invest in child future plans offered by insurance companies. exchange traded funds. But well. -No other financial product is as cheap as mutual funds.5% Fund management fees every year -All the insurance cum investment products offered by insurance companies are HIGHLY OPAQUE mutual funds which charge 20-100% entry loads by various charges so avoid them anyhow. Many people have a false belief that..

you can put your money in PPF account and in next 3-5 years it will be matured and whole the maturity amount will be tax-free and earn you interest of 8%. Open the PPF account in the name of all your family members at the interval of 2-3 years so that after 10-12 yrs .70. -The commonest bank to open PPF account in India is SBI. The maximum limit of PPF is Rs. After 10-12 years. fill the PPF form and submit identity documents and submit them and get your PPF passbook. So that in the future you can get this benefit. Think after 10-12 years. It’s that much easy. definitely PPF can’t help you in near future but think long term. PPF (Public Provident Fund) PPF is one of the best tax saving financial product in India. This is because PPF has a long lock-in period of 15 years (with intermittent partial withdrawals). This long lock-in period discourages many investors to invest in PPF.000 per annum which is tax free under section 80C and not only this but it also gives you 8% annual returns which is best in India. Why to open a PPF account even if you don’t need it? Many people ask me this question. -Visit your nearest SBI branch. you have each PPF account maturing in a period gap of 2-3 yrs and you can use it as a investment product which gives 8% assured tax free return How to open PPF account in India? -You can open PPF account with any nationalized bank as well at your local post-office branches.500 per year for account to be active. open the PPF accounts in name of all your family members including your minor children. And it just costs Rs. Well. -PPF is not for NRIs - - - . So even if you are not going to invest lots of money in PPF right now.27.

And you can buy just 3 eggs from it. Today governments & central banks around the world are printing money out of thin air to solve the financial problems of the nation. But well. In 1923. hyperinflation means excessive inflation in very short period of time. Moral: Printing money is not the solution of financial problems. See the photographs on left side. . Germany had also suffered from the Hyperinflation after World War I. this will cause hyperinflation.Break Time… What is Hyperinflation? Do you know that What is Hyperinflation? Well. It is the Zimbabwe Hyperinflation in 2009. the purchasing power of the money goes down markedly. You can see the 100 Billion Zimbabwe dollar bank note. When the government prints money out of thin air to solve the financial problems of the nation.

-Many financial advisors advise people to invest 100% in debt after retirement (60 years) but I personally believe that. Asset allocation is very important in financial planning because various asset classes perform differently in different market conditions. Thus.28. if your age is 20 years than you should invest 80% in Equity in 20% in debt while if your age is 50 years than you should -Remember. Rule: 2: Never invest more than 10% of your portfolio NET Worth in GOLD. Here is the Rule of Thumb for asset allocation. -I have personally modified the rule of thumb for asset allocation. class to build wealth if you start early and stay invested for more than 10 years of time horizon. Many people started investing lots of money in gold after 20032010 gold rally. asset allocation means putting all of your eggs in different baskets. But remember that. one should invest in equities even after retirement. Asset Allocation In layman’s language. So don’t ignore the importance of equity in your portfolio & never invest more than 10% of your net worth in Gold. you should invest 100% in equity & 0% in debt to build enormous wealth. Here eggs means money and baskets means different asset classes. . in your young age (20s & early 30s). when you don’t have any dependents and retirement is still far away. equity is the only asset class which can give you highest returns than any other asset class in the long run. Rules: 1:100 – your Age = % Equity Allocation of your portfolio and rest should be in Debt. -According to me. equity is the most powerful asset invest 50% in Equity and 50% in Debt.

8. gold. 1 ELSS is enough. debt. 2. Virtually all the varieties of mutual funds are available in the market such as equity. Don’t be collector of mutual funds. Invest more in largecap funds if you want stable portfolio 10. highly regulated by SEBI and cost effective (Entry & Exit loads are 0%) that you don’t need to invest in any financial products except Term Insurance & PPF to do effective financial planning. whole life insurance plans and child future plans or retirement plans thinking that they will fulfill their two needs – Insurance & Investment. Index…etc. Invest in mutual funds having past record of proven performance of at least 5 years. 9. So avoid these combined financial products. 2 debt funds and 1 ELSS. Term Insurance + Mutual Funds + PPF is most cost effective and powerful financial combination that no insurance cum investment product can beat. Mutual Funds Portfolio Building Mutual funds in India are so much professionally managed. money back policies. 1. Invest more in mid & small cap funds if you want aggression in your portfolio. Never collect more than 4 equity mutual funds. Invest via SIP 5. Never invest in NFOs Invest in 3-4 Equity Diversified mutual funds 3. Avoid Sector/thematic funds. Mutual funds have 0% entry load and 0% exit load after 365 days and just 1. Invest in mutual funds via SIP regularly for long term and build enormous wealth for your retirement and for your child’s future. 4.5 % annual fund management charge which is reasonable while insurance cum investment products charge you anywhere between 20-100% premium allocation charge and lots of exit/withdrawal charges and long lock-in periods.29. 6. Many financially unaware Indians invest in insurance cum investment products like ULIPs . Principles of Mutual Funds Investing. 1-2 Debt funds are enough 7. gilt. . But well..

30. NFOs don’t have any past proven record of good performance and that’s why they should be avoided. I have seen people who have invested in dozens of NFOs available in the market. It’s the normal human psychology that it loves to try something new and this psychology also reflects while investing. Are NFOs really cheap? Nope. the underlying market is same stretched or contracted.10 per unit NAV price. Here are the Top 2 reasons why people invest in NFOs.1100 per unit. 1. Unit price (NAV) does not have to do anything with MF returns. Even though the NFOs have Rs. Suppose if Fund A has NAV of Rs. Yes.10 and Fund B has NAV of Rs. NFOs – A Risky Bet – Beware NFO Lovers…!!! Most of the people in India are NFO lovers.10 per unit. A smart investor is one who invests in mutual funds having past proven record of more than 5 years of good performance. I call them NFO lovers because they simply can’t resist their temptation to invest in NFOs (New fund offers) by mutual funds. This is because people think that NFOs are cheap because they have NAV of Rs. the NAV of fund A will be Rs. 2.11 per unit and fund B will be Rs. . Second thing is that.1000 having identical portfolios and after one year suppose both the funds will generate 10% return.

The compound interest is so powerful over the time that it will multiply your money in a breath taking manner. Start monthly but REGULAR SIP in equity diversified mutual funds since the first day of your active earning life and do this SIP for 10. this strategy will dramatically reduce your overall entry price in the market and gives your excellent returns.31.15.in SIP (Systematic Investment Plan) is the most powerful way of invest in equity via mutual funds and build wealth over the period of time.20 or even 25 years or even more and see how wealthy you will become. they sell their stocks and run away from the market. SIP develops patience and systematic discipline in your investments and build huge wealth over time. Over the time. they run to buy stocks and the market is down. The Power of SIP – Always invest via SIP Image Source: Fidelity.co. you will buy less units (automatically) and when the market is down you will buy more units (automatically). In the real life people do exactly reverse means when the market is up. - - . SIP works like this – when the market is up.

All you need to do is. Here is how? Valueresearchonline. How to Choose Best Mutual Funds in India? There are so many mutual funds available in the Indian market since 2000 than finding a best mutual fund in any category itself is a job. You can also read his articles on his website Valueresearchonline. India’s Best MF Rating Agency . Valueresearchonline. And in today’s world it is really difficult to believe someone.com and I personally follow his mutual fund investing advises.com Valueresearchonline. But well. Review your funds rating every 6 months and suppose if it drops to less than 4 star than its time to exit that fund and move your money to some other 4 or 5 star rated mutual funds. It will take just 1 minute to find a best mutual fund in any category.32. Finding best mutual funds from the market without the need of anyone is this much easy. there is one easiest way to choose best mutual funds in India in every category. Dhirendra Kumar is the CEO of Valueresearchonline.com is India’s independent unbiased fund rating agency. visit this website and find 4 or 5 star rated mutual funds in various categories and start investing in them.com.com Dhirendra Kumar CEO.

. Fidelity & Templeton. However. NRIs & Mutual Funds -NRIs can also invest in Indian mutual funds. Many other online demat services in India also gives the same service. you will have to submit all the physical documents and lots of paperwork. While in case of buying mutual fund units directly from the fund house. ICICIDirect. according to SEC. Buy Mutual Fund units directly from the fund house Invest in Mutual Funds via Online Demat account You can either visit the website of any mutual fund house and download the form and fill it with required documents and submit it to your nearest fund house office.com gives this facility. 2. 1. -All the other Indian origin mutual funds are open for NRIs. You can also invest in mutual funds from your online demat account. The best thing about investing through online demat account is that. the NRIs living in America can’t invest in Indian mutual funds of US origin say HSBC. you don’t have to do any paperwork as everything is online.33. How to Invest in Indian Mutual Funds? There are three ways to invest in Indian Mutual Funds.

So complete this formality if you want to continue investing in the Indian mutual funds. investors can also provide an attested true copy of the relevant documents.Salaried Photo PAN Card Passport / Driving License / Identity Form Residential Proof KYC Form & NRIs -If you are NRI than no need to come to India. The originals of the documents along with a copy each to be presented and the original will be returned after verification. After that Investors could invest in the schemes of all mutual funds by merely attaching a copy of the KYC acknowledgement slip with the application form / transaction slip when investing for the first time in every folio (Post KYC) in each Mutual Fund house. Overseas Employment issued by the Government Foreign passport / National ID Card / Social Security Card (For PIO) . without the necessity to submit the KYC documents again. KYC is MUST for both resident Indians & NRIs. Alternatively.Investors have to provide the relevant documents and information ONLY ONCE for complying with KYC. KYC (Know Your Client) Form for Mutual Funds Since January 2011. Attestation could be done by Notary Public/ Gazetted Officer/ Manager of a Scheduled Commercial Bank. Download KYC Form Here Documents required for KYC .34. . Additional KYC Documents for NRIs Notarized GPOA Copy of CDC & Mariner Declaration (For Mariner) Indian Passport. the KYC form is MUST for all types of mutual funds investments in India.

this is not the right kind of equity investing. -Only go for direct equity investing if you are willing to invest 1-2 hours a day for equity market research . you will surely do a large disaster with your money.5% annual fund management fees to the fund managers? Well. -Returns generated by professional direct equity investing and mutual funds are exactly the same. Many people also plan to invest in equity by following the advise of their friends/broker/brother-in-law.What is the PE of Reliance Industries right now? And weather its over valued. Well. let me ask you the simple question. To save that 1.35. -If you are going to invest in equity by following the advise of your friend/broker/brother-in-law than direct equity investing is not for you. -Mutual funds have a team of research analysts who take highly informed decisions on behalf of you.5% annual fund management fee. Direct equity investing demands lots of time investment on daily/regular basis to research the markets and the best scripts in the market. under valued or fairly valued? If you don’t know the answer of this simple question than well. You can’t build fortunes in direct equity investing by following your brother-inlaw’s advise. Direct Equity Investing – Myths & Facts: Is it For you? Many people ask me that why not direct equity investing rather than investing in mutual funds? Why to pay 1. You will surely burn your money in direct equity investing. direct equity investing is not for you. If you are not going to invest this much time in the market than direct equity investing is not for you. .

What is Demat Account & How to Open a Demat Account in India? Before 1995. So now. ICICI Direct Kotak Securities -See for the online demat services SBI Sharekhan -Services which provide online Motiwal Oswal trading terminals are good Angel Broking -See customer reviews online before India Bulls going for demat services And many others…. less for trading is the best brokerage rate. It may be your bank.10% or brokerage service. and sell shares online with a single click. Following are the few best demat services in India. Passport/Driving License.50% or application form to open demat account with your bank or some other less for delivery base and 0. sell or transfer shares in India without Demat accounts. You can open Demat account with anyone. And this new digital form of the shares is known as Dematerialization (Short form “Demat”). You will need to submit PAN Card. But after 1995.. the shares (Stocks) in India were traded in the physical form. Residential proof along with a demat -See the Brokerage rates – 0.36. you can not buy. Now a days. the government of India and SEBI has digitalized everything.. But without demat account you can not trade shares. private broker or independent brokerage service. online demat accounts available in the market so that you can buy Before choosing a Demat Service. .

2. Warren Buffett. Moneybhai. 3.com and they will deliver the book on your Indian home address. So still want to invest in the stock market directly and want to learn direct stock market investing? Well. If you want to learn equity investing in India than this is the best website to learn Equity Investing in India. The book is written in very simple language. these are the best books ever written on the stock market investing and anything else available in the market about stock investing is a garbage. the world’s most successful investor has learned his value investing principles from this book only. The Intelligent Investor Book by Benjamin Graham – This is the best ever book written on stock investing in the world. Security Analysis Book by Benjamin Graham – This is another book written by Benjamin Graham about securities analysis in detail.com is the best online Indian stock market game that tracks the real time stock prices of Indian listed companies. Give it a try…It’s FREE…!!! Warren Buffett The Legendary Investor . How to learn Stock Market Investing? Ok.com – The Online Indian stock market Game – Moneybhai. than here are the few useful books and websites from which you can learn the stock market investing.37. 1. This book is available in all the Crossword stores and you can also buy it from Amazon. Believe me.

300/monkey and sell it to another stranger for 500/monkey and make Rs. Always buy stocks at discounted prices from the market. Several years has been passed but none of the stranger came back. he wanted to sell his monkeys for Rs. But villagers did not have any monkey. So they bought all the monkeys from the new stranger for 300/monkey and now they started waiting for the previous stranger. After all who wants these monkeys? Very soon the village became empty of monkeys.300. There was very hard to find even a single monkey. One day. another stranger came to the village and told people that. once upon a time there was a village of 1000 population. a stranger came & told to villagers that he is from other country & he need monkeys for his business and he will pay Rs.500 per monkey. Moral: Never overpay for any stock for more than its real Value no matter how bull the market is.200/monkey profit. Value investing is the method to buy stocks at discounted prices than its real value. The villagers started picking monkeys and started selling to this stranger. .100 for each monkey. One day the stranger again came back & told the villagers that he really need more monkeys & he is willing to pay Rs. After few days. This is how the stock market works in the real life. villagers thought that they will buy these monkeys from this stranger for Rs.Break Time… How Stock Markets Work? The Monkeys are Costly Do you know that how the stock market works? Well. The village was full of monkeys and nobody really like those monkeys.

4 / Y Warren Buffett is the Value Investor & Where. If the price is less than value. -Analyzing each stock in the stock market by this method is not difficult but time consuming. Anyone with average IQ V = Intrinsic Value of the Company can go for value investing & build EPS = Company’s last 12 months Earnings Per Share wealth 8. while an RGV of greater than one indicates an undervalued stock and should be bought. Value Investing – Benjamin Graham Formula The value investing method was first described by Benjamin Graham in 1928 which he described in his two books – The Intelligent Investor & Security Analysis. And this is the reason I advise people that if you are not willing to spend your time.5+2g) *4. when this model was introduced Y = the current yield on AAA corporate bonds Interpretation • An RGV of less than one indicates an overvalued stock and should not be bought. method only. its undervalued and one should buy the stock and if the price is more than value than its overvalued and one should stay away from the stock. Here is the RGV (Relative Graham Value) Formula: RGV = V/P V = EPS * (8. This method is based on “Margin of Safety” Formula. we can now that weather the price of the stock is more or less than its value. direct equity investing is not for you. Each stock has its price and an intrinsic value.38. Benjamin Graham -This calculation should never be used in isolation. quality of current assets and other macroeconomic factors. -The investor must take into account other factors like Debt to Equity ratio.4 = he average yield of high-grade corporate bonds in 1962. . he takes investment decision by this RGV = Relative Graham Value. With the help of Graham’s formula. net current asset value.5 = the constant represents the appropriate P-E ratio for a no-growth company as proposed by Graham g = the company’s long-term (five years) earnings growth estimate 4.

Many people think that all the IPOs list on premium price on the day of listing. IPO Investing – Good or Bad? Now a days.com -Invest in IPOs only if you think that the company is fundamentally strong and you are willing to stay invested for a long time horizon (> 5 years) -Check the CRISIL IPO rating before investing .15 or 20 years or even more… See Standard & Poor’s CRISIL IPO Ratings before investing in any IPOs. this is not the truth & this is not the definite way to build long term serious wealth. -Most of the government PSUs have 4+ CRISIL grading. This is because investing is not just about doubling your money but its about multiplying your money and you can’t multiply your money in the stock market without investing for a long time horizon say 10. every Tom. . CRISIL IPO Grading Scale– 5/5 – Strong Fundamentals 4/5 – Above Average Fundamentals 3/5 – Average Fundamentals 2/5 – Below Average Fundamentals 1/5 – Poor Fundamentals Image Source: Rediff.CRISIL IPO Grade 3 or more is the good indicator to invest in IPO. I personally never invest in any IPO if I am not willing to stay invested for at least 5 years in that stock. But well. Dick & Harry is investing in the IPOs (Initial Public Offerings) of Indian companies going public first time.39.

-But well. because of the easy availability of the home loans. you should build wealth first before going for a home loan.1 crore of Mutual funds portfolio for your child’s education. first of all keep in mind that. when should you buy a home? Years before our parents and grand parents used to buy a home during the time of their retirement when they have accumulated the enough corpus. But well.1 crore value home to fund your child’s education but you are definitely going to liquidate your Rs. But now. one should go for home loan as early as possible in their life. many people have started buying home since the first few years of their active earning life. going for a home loan in your early life (20s & 30s) is a good idea only if you are simultaneously going to build wealth by investing in mutual funds and other asset classes. Because in just few years because of the inflation. When to Buy a Home on Home Loan? Buying a home on home loan of 15-30 years of tenure is the very key and important financial planning decision. Never consider your home as your investment even though the price of real estate goes high. your home is not your investment.40. Investment is not just a game of money & inflation but it’s the game of time also. it was the era when there was nothing like home loan in India. This is because you are not going to sell your Rs. -The TIME that you have spend behind EMIs is never going to come back and during the same time period you could have build a great wealth by simply investing that money in Mutual funds via SIP. So what I am saying is. -Many financial planners argue that. . But well. your income will go high & you will feel that your EMIs are small. If you are going for a home loan considering your home the biggest investment than sorry. So when you should buy a home? Well.

starting a business or anything else… How to apply for PAN Card? Download Form 49A Here -You can also apply for PAN Card Online from. PAN Card What is PAN Card? PAN means Permanent Account Number.41. It’s the 10 digit alphanumeric number given to any Indian entity (Individual or a Company) for the purpose of filing tax. equity investing. Your Full Name Your Fathe’s full name Your date of birth Your Pan Number Your Signature Your Photo -PAN Card is also MUST for NRIs Why do you need a PAN Card? For any financial transactions in India. 1) NSDL Website 2) UTIISL Website . mutual funds investing. opening demat account. Your PAN Card contains. filing returns. Say real estate investing. you need a PAN card. opening bank account.

Gift Tax 1. Tax Saving under Section 80C (Maximum Limit Rs.Deductions in respect of rents paid (If you are not getting HRA) 7. Tax planning is broadly divided into two things. 2. Sec 80G .Deduction in respect of maintenance including medical treatment of a dependent who is a person with disability 3. 13. charitable institutions 6. Exemption of Leave Travel Allowance (LTA) or Leave Travel Concession (LTC) (For Salaried) 10. Sec 80GG . 9. 8.Deduction in respect of donations to certain funds. Sec 80U . 4. 2. 11.42.1 Lakh in any Financial Year) Tax Saving beyond Section 80C Tax Saving Beyond Section 80C Section 80C deductions Sec 80D – Medical Insurance premium deduction Sec 80DD . Provident Fund (PF) Voluntary Provident Fund (VPF) PPF Life Insurance Premiums ELSS Home Loan Principal Payment (Home Loan Interest Payment – Sec 24b) Stamp Duty & Registration charges NSC Pension Funds – Sec 80CCC Bank FDs having 5 year maturity Senior Citizens Saving Scheme Post office Time Deposit Account . 10. 1. 3. etc. House Rent Allowance – HRA – Section 10 (13A) 9. Sec 80E . Sec 80DDB . . 12. 5. 6. Tax Planning for Dummies in India…!!! In India. 2.Deduction in case of a person with disability 8.> 5 Years Children’s Education Expenses 7. 1. Sec – 80CCF – Tax Saving infrastructure Bonds 11.Deduction in respect of medical treatment. 4.Deduction in respect of interest on loan taken for higher education 5.

You can claim Stamp Duty & Registration charges also under Section 80C Take a Joint Loan: Buy House with parents & Siblings as joint owners so that you can get more tax benefits You can take unlimited deductions for your second home loan interest payment under section 24(b). It should be your second property only. If you and your spouse are both working then there are double tax benefits to be availed by taking a home loan. Read this page carefully before taking a home loan.5 lakhs in every financial year. 3. .1. interest component of EMI is eligible for deduction from taxable income if the loan is on a property/house that you are currently living in. Interest: Under Section 24(b). 1) 2) Tax Benefits on Principal Tax Benefits on Interest Few things that you might know about Home Loan Tax Benefits 1. 2. you can claim MAXIMUM Rs. Principal: Under Section 80C. Broadly home loans come with double tax benefits. Income Tax Benefits on Home Loans in India There are lots of tax benefits on home loans in India. Here I have outlined all of them in brief.43. There is no upper limit. you can get tax deductions up to Rs. 4.1 lakh every year on the principal amount paid.

you can still claim HRA under section 80GG • . 1. and the rent you pay is Rs. Actual HRA – Rs. 1. 1. HRA must be included in your salary component 2. • • HRA received from your employer Rent paid in 10% of the Basic Salary 40% of Salary (50% in case of Metro City) Say for Example. Your rent is more than 10% of your BASIC salary How to Calculate HRA? The Least/Minimum/Lowest of following 3 will be considered as HRA deduction. HRA – House Rent Allowance If you are an employee of some company and getting the HRA component in your salary and if you are living in a rental house than you can claim tax deductions under HRA. 2. 3.5000 is the permissible HRA Deduction. and Rs. Some Useful Tips -If you are living in your own house than you can not claim HRA even if you get HRA allowance from your employer -If your house is in your parents’ /spouse name than you can claim HRA by showing that you are living on rent.20000 is your basic salary.5000 2. -If you are not employee (selfemployee/businee owner) & living in rental house.44. and have Rs. you are based out of metro city.7000/month. Rent paid in excess of 10% of basic salary Rs. 5000 3.8000 So the minimum of the above three values which Rs.2000(10% of 20000) = Rs. You are staying in the rental house 3. -If you have taken a home loan to buy a house and you are living in rental house than you can claim HRA & home loan tax benefits both.5000 as the actual HRA received. Here Section 10 (13A) applies. 40% of salary (50% if residing in a metro) Rs.7000 – Rs. Who is Eligible for HRA? An Individual who fulfills ALL the 3 following conditions.

if you invest Rs.6180. -Demat account is necessary for investing in these bonds -NRIs can’t invest in these bonds -If your annual income is more than 8 lakh (30% tax slab) than it makes sense to invest in these bonds. 20 & 30% by investing in these bonds. They have 5-10 years of lock-in period depending on the issue.2060. So what if you have invested the same money elsewhere say for example in equity which gives 15-20% compounded annual return.20.6-5 lakh (10% tax slab) than it makes no sense to invest in these bonds. 1. the tax benefit of these bonds will rise as your income slab will increase. -If your annual income is Rs.2000 (10% tax slab). So according to your income slab you can deduct 10. Thus. -Inflation in India is high (10% or more) and these bonds offer 8% annual return. Tax-Saving Infrastructure Bonds – Section 80CCF [ Tax Planning Beyond Section 80C] You can deduct tax by investing in Tax Saving infrastructure bonds under section 80CCF. -Tax saving bonds have 2 drawbacks.1.1 lakh limit of section 80C. if your tax slab is 20% than you can save maximum Rs.6-5 lakh) than you can save maximum Rs.000 in some infrastructure bonds than you can get Rs.4000 (20% tax slab) and Rs. -.45. If your tax slab is 10% (Rs.1. So your actual return is -2%. Long lock-in period 2.if your annual income is 5-8 lakh (20% tax slab bracket) than invest in it if the lock-in period is 3 years.6000 (30% tax slab) tax benefit. Inflation -The long lock-in period is a problem with these bonds.4000 and if your tax slab is 30% than you can save up to maximum Rs. . And this benefit is beyond the Rs. Rs. So keep watch on the market news. The main advantage is that. How to invest in tax-saving infrastructure bonds? You can invest in these bonds during the time of issue of these bonds.

the gift you receive is considered as your income and added in your total income and you will be than taxed according to the tax bracket you fall. 50 Lakh from your father’s brother’s wife (your aunt). -Gift money to your Major Children: Suppose if you have Rs. -If you receive a gift of Rs. it will not attract gift tax. it will not attract gift tax. Say for example. How much is Gift Tax? Well. 50 Lakh from your wife’s father (your father in law). spouse of your brothers & sisters. if you receive more than Rs. sister.000 value of gift. -If you receive a gift of Rs.30 lakh house than you directly shoot up into 30% tax slab (Income more than 8 lakh per annum) and you end up paying near Rs. if you receive a gift of Rs. it will attract a gift tax. Example – spouse. Gift Tax Exemptions • When you receive gifts from your blood relatives. parents.46.50 lakh than income generated by investing this money will be taxable. 50 Lakh from your father’s brother (your uncle ). In this case you can divide this money & gift to your major children and then it will be considered as their income and tax slab thus you will save tax. .10 lakh tax on it. Gift Tax in India What is Gift Tax? When you receive gift from anyone (spouse/family/friends). When you have to pay Gif Tax? In any financial year. it is not taxable. -If you receive a gift of Rs. 50 Lakh from your wife’s father’s brother (your wife’s uncle). -If you receive a gift of Rs.50. it will not attract gift tax. it is included in your income and taxed according the tax slab you fall. it is considered as your income and added in your total income and taxed according to the tax slab you fall. brother.

000 Any land donated for the religious purpose or to charitable trust is not subjected to wealth tax.30 Lakhs – 1% on the amount which exceeds Rs. grandchildren.10. But you will have to pay tax on anything which exceeds 30 lakhs. .30 Lakhs – NIL Net Worth – > Rs.Assets transferred to son’s wife. Wealth Tax in India Tax the Rich…!!! The wealth tax is the tax which is to be paid on your wealth. Residential House Moto car Jewellery Yacht / Boat Aircraft Urban land Cash on hand Wealth Tax Rules are same For Resident Indians & NRIs Wealth Tax Exemptions -Cash on Hand < 50k -Aircraft or boat used for business purpose provided by the company -Furniture & electronic items for personal use -Accommodation provided by the company or organization to its employee. Here you don’t have t pay any wealth tax on the entire 40 lakhs. How much is Wealth Tax in India? Net Worth .47.40 lakhs than you are liable to pay tax on extra 10 lakhs at the rate of 1% per annum means Rs. The annual salary of the employee is less than Rs 500.30 lakh Say for example if your net worth is Rs.< Rs.000. & assets held by minor child. Here are the few things which are considered as your wealth. . spouse.

-You can now file your IT Returns Online in India. . -Visit Government of India Online Tax Filing Website & file your IT returns online. -There are several private websites that also offer you online tax filing services. or for people having income from house property or business / profession.48. Form ITR2 ITR-2 is for individuals and Hindu Undivided Families (HUFs) having income from: • Salary / Pension / Family Pension • Interest • House Property • Capital Gains Form ITR3 • From ITR-3 is for individuals or HUFs that are partners in firms. ITR4 • Form ITR-4 is for individuals and HUFs that have income from a proprietary business or profession. but who are not carrying out business or profession under any proprietorship. Income Tax Return (ITR) Filing Which ITR Form to Use? Form ITR1 For Individuals having income from. Salary / Pension / Family Pension Interest • Form ITR-1 is not for people having capital gains.

But in 1971. the world should again adopt the Gold Standard to solve its all the financial crisis. .Break Time… The History of Gold Standard Do you know that the bank notes and coins in your pocket is not the real money? Well. Before 1971. you could redeem your bank notes for real gold if you don’t have any more faith on government policies. And thus. The Modern money is not the Money in true sense but it’s the “CURRENCY”. Your 100 rupee or 5 dollar bank note in your pocket is a piece of paper without any intrinsic value. simply by visiting your local bank branch. The government has printed that money out of thin air only. Today many Economists believe that. the entire money supply of the world was backed by gold. all the countries of the world has adopted this standard. And it means that governments can now print as much money as possible according to the need of the economy. yes. modern money is not backed by gold. And that’s why before 1971. President Nixon of United States removed the gold standard & dollar became free float currency. Followed by USA. The Modern banking operates through Fractional Reserve Banking System.

Bank FDs earn anywhere between 6-10% returns depending on the type of bank and tenure of the FD. 1) 2) Inflation Tax -Debt Funds are better than Bank FDs because if the interest rates are rising. it is advisable that you invest 100% of your money in Equity and 0% in Debt (FDs& Bonds) to build wealth. you will have to break that FD and do another FD to take advantage of higher interest rates. Thus. debt funds will automatically change their rates while in case of FDs. Government Bonds generate 6-8% (Slightly lower than FDs) compounded annual returns. The Truth is that. . . Another problem is Tax. And breaking FD will attract 1-2% penalty charges. -Bank FDs & Govt. -Many people never invest in equity & invest their entire life in FDs & Bonds and think that they are playing it safe – But this is the Biggest Financial Planning Mistake…!!! The only problem in India is higher inflation. Fixed Deposits & Government Bonds in India Bank FDs & Government Bonds are the age old financial products of India to save money and generate steady income from your saved money. actually you are loosing 2% every year from your money parked in these instruments in terms of purchasing power. Suppose if the inflation rate is 10% per annum and your FD/Bonds generate 8% annual return than your actual return is -2% (Negative). there are two major killers of these fixed income instruments. -During the initial years of your active earning life (20s & 30s). In India.Many people argue that FDs & Bonds are safe because they give guaranteed returns. However. Bonds are the instruments to generate steady income from your capital after your retirement. Interest income will be included in your total income and will be taxed according to the tax slab you fall. Inflation & Tax are the 2 major silent killers of your money parked in these instruments. But this is a Myth.49.

-Divide your debt portfolio in Bank FDs. NBFC (Non Banking Financial Companies) & private companies are also offering fixed deposits.1 lakh per branch while Corporate FDs are not secured. Avoid FDs having less than A rating. Now a days. Tips to invest in Corporate Deposits -Invest in Company FD after seeing its credit rating from CRISIL. Should you invest in Corporate FDs? If you want to park your money for short to medium term and are comfortable with little bit higher level of risk than these are the good options as Company FDs give you higher returns than regular Bank FDs. there was only one option to invest in Fixed Deposits to generate steady income and that was Bank FDs. Bank FDs give only 6-10% annual returns. -Avoid if the Company is not giving regular dividends to its shareholders. A or higher rated FDs are better. Government bonds & Company FDs. -Avoid investing in FDs whose parent companies offer more than 15% interest. Corporate (Company) Fixed Deposits in India Up to now in India. ICRA & CARE.) Premature Exit from company deposits are not as easy as Bank FDs & demands lots of paperwork. But now there are several options available in India. Risks with Company FDs Default risk Unsecured Deposits (Bank FDs are secured by RBI up to Rs. -It is advisable to check company performance & its share price every 6 months.50. Don’t put all of your eggs in one basket (Company FDs) . The main advantage of Corporate Fixed Deposits is that. they offer higher returns than the regular Bank FDs say 9-16% per annum.

1) 2) 3) 4) 5) 6) 7) 8) Post-office Savings Account 5-Year Post-office Recurring Deposit Scheme Post Office Time Deposit Account Post Office Monthly Income Account PPF (Public Provident Fund) Kisan Vikas Patra (KVP) National Savings Certificate (NSC) Senior Citizens Savings Scheme -Post-office savings schemes are mainly for small investors. Here are the various post-office savings schemes. They open an account after some paperwork & give you a passbook for your account. You can not invest huge amount of money (Say more than 10 lakhs) in many of these schemes. -For young people (20s & 30s). -These are all the Debt products means they are mainly to generate steady income from your money & not to build wealth. -These schemes are best for those who want to generate regular & steady income from their investments. Rs. save tax & generate regular and steady income from their capital. How to Invest in Post Office Saving Schemes? Visit your nearest post-office branch and you can open any of the above schemes from there. .51. Post Office Savings Schemes India Indian post office savings schemes are the best financial products offered by government of India These schemes are basically for the small investors to save money. -These are tax deductible schemes under section 80C up to Max. To build wealth. Equity is still the best asset class. Equity is still the best asset class to build wealth.1 lakh -I personally advise to go for such schemes after the age of 45-50 years when you have build sufficient wealth and want to generate steady income from it.

a.5% per Annum Minimum INR 50/-. A/c 6. 100/-.2007. INR. Account can also be closed after six months but before one year without interest. Maturity period is 6 years. 1961 from 1. A/c 6. Senior Citizens Savings Scheme 9% per annum . Maximum INR 1.5 lakhs in single account and INR 9 lakhs in joint account. Deposits quality for tax rebate under Sec. INR. can also be purchased jointly by two adults.000/-. Post Office Time Deposit Account Interest payable annually but calculated quarterly.p. Minimum INR. The investment under this scheme qualify for the benefit of Section 80C Post Office Monthly Income Scheme (MIS) In multiples of INR 1500/. 500/. 1000/-. Post Office Savings Account 3. Premature closure is allowed after one year on deduction of 1.per month or any amount in multiples of INR 5/-.25% 2 yr. 5000/. 500/. 1000/-.in all Head Post Offices. 10. KVP 8.& INR.00. Deposits can be made in lumpsum or in 12 installments. NSC 8% (Compounded half-yearly) but payable at maturity A single holder type certificate can be purchased by an adult for himself or on behalf of a minor or to a minor.for an individual account. 5000/-. Available in denominations of INR.25% 5 yr.4.SCHEME Interest Rate Investment Limits Key Features Cheque facility available.000/. Can be prematurely encashed after one year but before 3 years at the discount of 2% of the deposit and after 3 years at the discount of 1% of the deposit. The investment under this scheme qualify for the benefit of Section 80C of the Income Tax Act.and in multiple thereof.50% 3 yr. TDS is deducted at source on interest if the interest amount is more than INR 10. (Discount means deduction from the deposit. 50.000/. 80C of IT Act.00. 500/-.000/. Interest is completely tax-free.Interest Tax Free. Age should be 60 years or more. 70.50% 8% per Annum Account may be opened by individual. No maximum limit. Withdrawal is permissible every year from 7th financial year. There shall be only one deposit in the account in multiple of INR.000/-. and 55 years or more but less than 60 years who has retired on superannuation or otherwise on the date of opening of account subject to the condition that the account is opened within one month of receipt of retirement benefits.) A bonus of 5% on principal amount is admissible on maturity in respect of MIS Deposits qualify for deduction from income under Sec. INR 2.000/.in a financial year. PPF 8% per Annum (Compounded Annually) Minimum INR. Minimum INR 10/. A/c 7.Maximum INR 4. A single holder type certificate may be issued to an adult for himself or on behalf of a minor or to a minor. INR. in all Post Offices and INR. Period Rate 1 yr.4% (Compounded Annually) Money doubles in 8 years & 7 months. 2.5% per Annum (Quarterly Compounded) One withdrawal upto 50% of the balance allowed after one year. No maximum limit.Maximum INR. INR.No maximum limit available in denominations of INR. 10. 100/. A depositor may operate more than a account in individual capacity or jointly with spouse. 100/-. 5 – Year Recurring Deposit Account 7.000/. No limit on investment. Maturity period is 5 years.3 & 5 year account can be closed after 1 year at discount. Loan facility available from 3rd Financial year. Minimum INR 200/.5% interest & after 2 years 1% interest. A/c 7. 80C of IT Act.1000/maximum not exceeding rupees fifteen lakh.for joint account.

So the best way to buy a physical gold at market price is. Here the fund manager collects money from large number of investors and buy a physical gold and keep it in safety custody on behalf of you. Gold ETFs: they are just like mutual funds. -It is true that gold is an excellent asset class and Indians have emotional attachment with this asset class but well. So if your sole purpose to buy gold is investment purpose than Gold ETFs are the best options. How to invest in Gold? 1. Advantages of Gold ETFs – -No Purity issue -No Security issue -No Wealth Tax on any amount of Gold investing -Annual Fund management charges . . Buy Physical Gold . Gold Bars & Gold Jewellery 2.<1% -You can buy them just like Mutual Funds How much to invest in Gold? -Note More than 10% of your Total Portfolio Worth.Gold Coins. Gold is not the asset class to build wealth. Equity is the only asset class to build wealth. HDFC & Bank of Baroda or directly from the jewelers. SBI. And the problem with buying gold from banks is. they will charge you 10-15% more price than the market price for that certified gold & not only this but your bank won’t buy back that gold. keep in mind the following facts about Gold Investing. Gold Investing in India Gold is the most precious asset class and Indians love to invest in Gold. It can just beat the inflation & provide stability to your portfolio. Demat Gold – Gold ETFs Where to Buy Physical Gold? You can buy gold jewellery from the gold jewelers in your city and gold coins & bars either from banks like ICICI. However. Jewelers Vs Banks – Which is better? Both have pros and cons. The problem with buying gold from jewelers is the issue of purity. find some TRUSTED JEWELER & buy from him.52. -On and Average 5% of your total portfolio worth.

Chit funds don’t have any role in successful financial planning. next month the group people have 3060 already with them and they have to pool for 6940 only which when divided by 20 will be 347 for that month. what are my thoughts about investing in Chit Funds? Well. And still if you invest in Chit Funds. It’s the pure SPECULATION…!!! I am including this issue here because I receive several queries about the chit funds every month. . The answer is that 3000/. so instead on paying 500 (fixed amount) you are paying only 347 so profit of 153 rs for that month and the same kind will go on till the term some times less amount or the fixed amount (500).000 and getting 7000 and what happens to the left out 3000. How Chit Funds Work? Say there are 20 people who are investing 500 rs per month for a term of 20 months a fixed amount so the total is 10. Chit Funds in India Chit Funds are very popular in South India and many other parts of India and many people ask me that. In fact.000 every month now say on 5th of every month they will gather and bid for 10.some body from the group will take on interest or the owner (who has started the chit) will keep it on interest (say at 2% Pm)so 60 rs interest on 3000.53. I personally don’t consider Chit funds the asset class / Investment vehicle to build wealth. And in my opinion.000 now say 'x 'says I want only 8000 from this 10. this is a PURE FORM OF GAMBLING in my opinion & one should not give priority to such kind of schemes to build wealth. Don’t consider it as an Investment.000 and so on 'y' says 7500 and 'z' says 7000 only then the winner will be 'Z' he will get 7000 rs of amount now how a person earns when he is investing 10.

-Website Flipping is the hottest investment & money making opportunity online. Right now the young generation (teen agers. Anything else which is on the Internet -GoDaddy. -Always make overseas online payments for web property transactions via PayPal.com is the largest online marketplace to buy and sell domain names. 20s & early 30s) from all around the world is investing in the web properties for huge profits.com or Escrow. Website flipping means developing a Web Properties/Assets: website/blog out of scratch or buying an already established website/blog & selling it for huge profits later on. Advantages of investing in Web Assets: Fastest growing asset class Potential to make you very rich in young age Low investment capital required -Sedo. Digital Assets / Web Properties investing… The Next Generation This is the information age and you MUST be familiar with the new asset class – Digital Assets also known as Web properties or Internet Assets.com .500/year charge. Forums -Flippa.com is the reputed marketplace where you can buy web Facebook Applications properties for investment purpose and later on sell them for huge iPhone Applications profits.com is the website where you can buy domain names for just Rs. Domain names Websites -Domaining/Domain flipping: means buying & selling domain Blogs names.54.

However. Art is not just for hobby purpose but you can actually invest in art and generate huge returns just like any other asset class. 5.eBay Buy from Auction Houses – Christie’s. bonds. Art Investment in India Art is the asset class just like any other asset class in India such as stocks. real estate & mutual funds. Buy directly from the Artist Buy online . -Invest in art with the help of an art expert Art Funds in India: 01) Copal Art 02) Edelweiss Securities 03) Crayon Capital 04) Osian’s Connoisseurs Art -If you don’t have expertise to invest in art than the art funds are the best option. -Always buy art from reputed auction houses and reputed sellers & art galleries.5 / unit -Never invest in direct art if you are not an expert in art investing. -Art funds sell units just like traditional mutual funds and later on buy good arts on behalf of you. many art funds have lock-in period.55. 3. gold. How to invest in Art in India? 1. 4.1015 Lakhs -Unite price for Art Funds: Approx: US $ 2. How much returns Art generate? – 15-30% Compounded annually . 2. Sotheby’s Buy from Art Gallery Invest in Art Funds -Minimum Investment amount in Art Funds: Rs.

this is not the truth. Invest in offbeat assets only if you have expertise in it or you know someone who help you to invest in these assets. Here are the few offbeat assets in which you can invest. Offbeat Assets Many people have a false belief that only Stocks. Gold & Mutual funds are the only assets. But well. Many people in India and around the world invest in the offbeat asset classes and make huge profits. How much return Vintage/Offbeat Assets generate? Where to buy & sell offbeat assets? You can expect 20-30% compounded annual returns from these assets. . You can buy & sell these assets on eBay. Bonds.56. auctions or from private seller. Stamps Coins Old Coke Bottles Vintage Toys.. Caution: Investing successfully in offbeat assets require deep knowledge of the market otherwise you will end up buying artificial assets at over price. Guitars & Cars Stamp Papers Collectibles Antiques…etc. Real Estate.

-Many people argue that so & so insurance company has high rejection rates so should they go for those company health plans? Well. Health Insurance (Mediclaim) in India In India. the health insurance is mainly a product of Life insurance companies. 1) Life Insurance Companies 2) Non-Life (General) Insurance Companies The health insurance is provided by both of these companies in India. . -If you feel injustice you can anytime go with IRDA or consumer court. Health Insurance by Life Insurance Companies: The premiums of these plans are higher than non-life companies The premiums will be fixed for at least 3-5 years. The premiums of these plans are lower than life companies You will have to renew this policy every year so the premiums will go high year after year Health policies by general insurers are of shorter duration than life companies. in India health insurance is mainly the product of Non-Life -Always see for the Cashless facility in your Companies. Health policies by life insurers are more long term in nature Health Insurance by Non-Life (General) Insurance Companies: Recently. However. many five-star hospitals have withdrawn Cashless facility by general insurers. all around the world. You will have to understand pros & cons of health local area nearest Hospitals where you are insurance provided by both the types of insurance companies likely to admit during medical emergency before buying it for you. there are basically two types of insurance companies. -Health insurance provided by PSUs & private insurance companies are same & all of them are highly regulated by IRDA so go for anyone. However. the rejection depends on several criteria so its not so that one insurance company has low rejection rate than the other one.57.

Today you will have to Save & Invest your money to maintain its purchasing power by growing it. But after 1971. “Saving Money” is the age old financial advise which is no longer effective to ensure any kind of financial success? In fact. the Gold standard has been removed & the money became Currency. But well.Break Time… “Save Money” – Old Financial Advise “Save & Invest” – New Financial Advise Do you know that. Before 1971. Moral: Investment is now a MUST learning skill for everyone who want to become financially free. you will surely meet the financial disaster. I am talking about the era before 1971 when there was a Gold Standard in the world & the entire money supply of world was backed by Gold. today if you follow this advise. . Today if you only save money. This is the only way to maintain the purchasing power of your hard earned money. inflation will erode its purchasing power as it is no longer backed by any gold. Today the scenario is different. it was the Gold standard era. As our parents told us that stay away from investments as they are risky. saving money means actually you are saving that much amount of gold. Why “Save Money” was effective Financial advise once upon a time & not now? Saving money was the golden financial advise during the time of our parents & grand parents.

2. . Don’t borrow money against gold to do speculative investments. Gold Loan in India Advantages of Gold Loan – Good for Bad Credit History Individuals Low interest rates (10-17% per annum) No Income proof required Lower income people can apply for it Quick approval Gold Loan interest rates in India – 10-20% per annum which is much lower than personal loan interest rates (15-24% per annum). -Smart investors borrow money against gold.58. -Traditional LIC (Non-ULIP) policy is the best alternative to Gold loan which gives 90% loan to surrender value at just 8% interest rate. Regular option: Means you pay Interest + Principal as Monthly EMI Interest Only option: Here you pay only interest during the entire tenure of the loan and pay the entire principal at single shot at the end of the tenure. invest it in businesses and generate huge returns from this idle asset class. HDFC & many other banks Private Companies: Muthoot Finance. Which Banks/Institutes offer Gold Loan in India? Banks: SBI. Manappuram Finance Tips of taking a Gold Loan in India -Cheapest Gold Loan: if you can restrict your loan amount to around 50% of the market value of the jewelry than the interest rates are most reasonable. ICICI. -You can take up to 80-90% loan as that of market value of your gold. -Gold loans usually don’t have pre-closure charges Loan repayment options – 1. your lender will sell your gold jewellery which is psychologically disturbing. -Documents required: Original Identification proof & Residential Proof nothing else. Because in case of your default. -Only go for gold loan if you really think that you will repay that money. -Take gold loan for genuine reasons when all the options to raise money have failed.

C) Never use personal loan for Travel. Quick Approval Minimum Paperwork Available at short notice Tips: A) For Emergency Purpose. So on your last EMI also you will pay the interest on the entire loan amount. keep in mind the following key facts before taking a Personal Loan in India. Facts about Personal Loans: Very Costly: They charge 15-30% Annual interest rates Processing Fee: The Bank will also charge upfront processing fee which is non-refundable to give you this loan.2 lakhs outstanding and not the entire 5 lakhs like flat rate like flat rate.59. Flat Rate Vs Reducing Rate – Which is Better? -Always go for Reducing rate personal loans. shopping or any other un-necessary things as its costly. you should have Emergency Fund & not the Personal Loans.5 lakh of loan and paid Rs. if you have taken Rs. Because of the above features the Personal loans in India are very popular. B) The Best Financial Planning is one in which the person has build emergency fund so that during any financial emergency he does not have to take personal loan.3 lakhs than you will have to pay interest on just Rs. Personal Loans Personal loans are the best options to raise money in Emergency because of its following features. -Flat rate means at the time of your loan your lender will calculate the interest payment on the entire loan amount for entire tenure and divide it and add it into each EMI. -Your lender will tell you that flat rate is better than reducing rate because of several reasons but this is not the Truth. -Reducing rate means you are paying the interest on the amount outstanding. However. Prepayment penalty: Prepayment of the loan will attract 1-5% of penalty on amount outstanding. Say for example. - - .

4. Bank FDs (6-10% interest per annum) Corporate (Company) Fixed Deposits (9-17% per annum) Government of India (GOI) Bonds (8.FMPs – Fixed Maturity Plans – 8-8. Well. 4. here are the few ways to generate fixed & steady income after your retirement.Post-office Monthly Income Scheme (MIS) – 8% per annum .5% annual return) Debt Mutual Funds (6-8% annual return) .5% for a 1-3 year tenure 3.5% return -The highest income earning scheme is post-office senior citizens saving scheme (9%) -Post-office MIS has maximum limit of Rs. -GOI Bonds will give you yearly or half-yearly interest income.Income Funds . 1.5 lakh for single account & Rs. How to Generate Steady Income After Retirement? This is the commonest question that people in their 50s ask me. -FMPs give you the benefit of indexation and returns could be in the range of 8-8. 5.NSC – National Savings scheme (8% annual return) .9 lakh for joint account. -Only invest in Corporate FDs having AA or AAA bond ratings by CRISIL.Senior Citizens Saving Scheme (9% per annum) .60. Post-office savings schemes .Liquid Funds .Gilt Funds . ICRA or CARE. -Never invest in corporate deposits which offer more than 15% returns. 2.

1) PPF has a lock-in period of just 16 years while EPF is to save money for the entire active earning life but unfortunately. -So at this movement. if you are going to lock your money for 30 years than why not midcap and small cap stocks also? -If you invest your money in equity mutual funds than they are sufficient to build a wealth for your retirement.61. NPS [ New Pension Scheme] – A Bad idea…!!! In mid 2009. -The fund managers of NPS are bound to invest only in Largecap stocks. If you are going to lock your money for full 30 years than why not 100% equity? Why to even go for a debt? NPS has Max. Tier – I Accounts: We can not withdraw money in tier-I Tier – II Accounts: We can do unlimited withdrawals in tier-II .50% equity exposure. the Government of India has launched the New Pension Scheme also known as NPS. 2) Both the schemes (EPF & PPF) are pure debt schemes means they don’t invest in equity. EPS & PPF are better options in government’s portfolio to build wealth for your retirement & no need to go for NPS. But well. -Tier-I scheme is still not implemented well in India and the government guidelines are very unclear. The government of India already has two such kind of schemes. most of the people blow out all of the money from EPF at various stages of life as you can withdraw money anytime and nothing remains after the retirement for steady income. Why NPS is not a good idea? -Lock-in Period: Its longest lock-in period is its biggest drawback. No need to go for NPS. There are 2 major limitations of EPF & PPF. NPS has equity component in it so it can provide better returns than EPF & PPF. 1) EPF – Employees Provident Fund 2) PPF – Public Provident Fund The logic behind NPS – The main logic behind launching NPS is to provide all the Indians the true pension scheme at cheapest cost. While on the other hand. While NPS (Tier –I) has a long lock-in period of around 30 years or before you retire and there is no other way to withdraw money from it before maturity so the logic is that people will have some capital on their retirement.

you will have to contribute 12% of your basic monthly salary in EPF account & your employer will also contribute the same amount in your EPF account. EPF [Employees’ Provident Fund] – Pays in Long-run…!!! EPF is a statutory body of the Government of India under Ministry of Labour and Employment. you can withdraw your money prematurely also. -My only concern about EPF is that. You can withdraw all of your money at the age of 55 years.. -EPF is 100% Debt instrument & my concern is that if you are going to lock-in your money for 15. The interest rate payable is 9. If you invest 12% of your basic salary every month at the rate of 8-10% per annum than it can grow very well over the period of time.20.62. What is the Scheme? Well. Under this scheme. -And suppose if you are not financial genius than also you can invest the same amount of money every month in Equity mutual funds via SIP & generate 15-20% returns and build much more wealth than EPF. in that case he can invest the same 12% of basic salary every month somewhere else (Say equities. The basic aim of EPF is to develop Regular & Disciplined investment approach in your life.30 years than why to go for Debt products & why not Equity? .5% per annum which changes every year according to the government policies. what if somebody is Financial genius? Well. This one of the best savings scheme promoted by Government of India after PPF to save money & build corpus for your retirement and various other purposes.) and generate much more returns than EPF. under special circumstances. However. web properties…etc. if you are an employee (Government or private sector) working in India than you can apply for this scheme. The entire interest income is Tax-free just like PPF. private businesses.

But you will have to pay 4-5 EMIs in advance. As the tenure increases. This is because no several car financing options are available in India. Here you put 10-20% of car’s cost as margin money (Just like down payment in case of real estate purchase) and the bank will give you 80-90% amount of loan as that of the value of the car. 3) Security Deposit Scheme: Another variant of regular auto loan. 1) Regular Auto Loan (Margin Money Scheme): This is the simplest car financing option. You will earn interest on your deposit and get back this deposit when you will repay the loan. -Car lease is not a good option for employees but best option for selfemployees & business owners for the tax purpose. Here you pay 10-30% of the loan amount to the bank as a security deposit and your bank will finance 100% of the car value. the monthly EMI will reduce. -Never consider your car as your investment. Here the bank/institute owns the car & give you the option to buy the car at the end of the tenure or return it back. -If you are a car lover & want to own a car for just 2-3 years than the car lease is the best option as you can use a new car model for 3-4 years and give it back to the financer and go for another car. The tenure of this loan is usually 3-5 years. -If you want to keep a car for years or decades. Means here you don’t really own the car but only pays for its depreciation. . Here you get loan for the 100% of the cost of car. The rate of interest is usually 14-16% per annum which is higher than the home loan but lower than the personal loan. Here are the all the possible car financing options. Car & Auto Loans in India You can now buy a car of your dream in India. 2) Advanced EMI Scheme: This is just the variant of the margin money scheme. regular auto loan is the best option for you. 3) Car Lease: This is the most exciting car finance option.63. A car is not your investment/asset as the value of a newly bought car always go down and down.

Details of Property & Ownership Details of Ownership Signing the WILL in presence of 2 Witnesses .A Very important step of Financial Planning The financial planning is not complete unless you make a WILL. You can make a WILL on a plain paper in India. The WILL ensures that after your death. WILL . give everything in some charitable organization. It’s not legally necessary to make a WILL on stamp paper. However. -Make a WILL to avoid any disputes between your nominees after your death -If you don’t want to give anything to your nominees.64. your wealth/assets are divided among your nominees according to your desire and no foul playing is done. -You can change the WILL anytime. in the new WILL make it clear that the old one is cancelled otherwise it will make confusions. it is advisable that you hire some attorney/lawyer to make a professional WILL of your assets. However. Parts of WILL: 1) 2) 3) 4) First Part: Declaration – You will have to declare that you are making WILL in full sense and without pressure of anyone.

com. Top 14 Most Common Financial Planning Mistakes A) Starting Late B) Insufficient/NO Emergency Fund – Credit card is not the Emergency Fund C) Excessive Debt D) Negative Cashflow Spending more than you Earn E) Playing it Very Safe Very less equity exposure in early years of your earning life F) Being a Mutual Funds Collector & Not the Investor G) Investing in Insurance cum Investment Products H) Investing in ULIPs (Costly + Inadequate Life Cover) I) Inadequate Life Cover Go for Term Insurance Plans J) Having only one Term Insurance Plan Divide Life cover in 2-3 Term Insurance Plans K) Excessive Credit card Debt L) Direct equity investing is not the game of everyone M) Excessive exposure to Gold N) Buying a Home on Home Loan Too Early All of us are human beings and we afraid of doing mistakes and we learn from out own mistakes. These are the 13 most common financial planning mistakes that you should avoid.65. .com and since June 2010. Since March 2008 I am advising the financial planning via my blog MyJourneyToBillionaireClub. These are the commonest financial planning mistakes that I have encountered…. I am advising through my forum Investta.

A) Starting Late Name: Ramesh Kumar Age: 45 Years. While someone who started investing at the age of 25 will definitely be ahead of Ramesh Kumar even thoguh he earns & invests much less amount than Mr. Ramesh Kumar earns lots of money every month from his medical practice but he started investing at the age of 45 years.5 Lakh Monthly Expenses: Rs. They think that their income is high so no need to do financial planning & start investing early. he will have to invest lots of money.4 Lakh in Savings Account Started investing in equity mutual funds via SIP just 6 months ago. to retire with financial freedom. Remember.80.1. When you are too smart. Dr. Married.70.70. Ramesh because the compound interest will work more in favour of him as he has invested more time. Mutual Funds Portfolio – Equity MFs – 4 funds Debt Funds – 2 funds ELSS – 1 Gold ETF – 1 PPF – Rs. 2 Children Occupation: Doctor Monthly Income: Rs. Thus.000 Emergency Fund: Rs. You are Too Late…!!! .000 / Year This is the commonest mistake most of the people (especially high earning professionals) do.000 Monthly Cashflow: Rs.

10.B) Insufficient / NO Emergency Fund Emergency Fund Name: Suresh Babu Age: 35 Years. Married.000 Monthly Cashflow: Rs.000 Emergency Fund: ICICI Bank Credit card Term Insurance: 2 Term Insurance plans of Rs. .25.50 Lakhs) Mutual Funds Portfolio: 3 Equity Diversified Mutual Funds. And the ultimate logic of financial planning is you should be debt free Your credit card is not your emergency fund but you should have emergency fund (3-6 months of monthly expenses) for this purpose in your bank savings account. you will scratch your credit card and go into a deep credit card debt.10.25 lakhs each (Total Life Cover Rs.000 Credit Card is not the The only problem with this portfolio is that. Suresh Babu considers his credit card as an Emergency Fund. What will happen during the time of Financial emergency? Well. 1 Child Occupation: Teacher Monthly Income: Rs.000 Monthly Expenses: Rs.15. Mr. This is one of the most commonest financial planning mistake. 2 Debt Funds & 1 ELSS PPF: Annual Investment: Rs.

2 Lakh Monthly Expenses: Rs. many high income group people are passing through this kind of situation. Borrower is a slave to lender.000 Monthly Debt Payments: Rs.25 lakh each Mutual Funds Portfolio: 3 Equity.3 lakh) goes towards paying those loan payments.3 Lakhs and he could have easily become financially free at the age of 55. Married.6 Lakhs Car Loan: Rs. .25 Lakh Term Insurance: 2 Term Insurance plans of Rs. Remember that.50.80.5000 / year The only problem with this portfolio is – “Excessive Debt” Vikas is earning lots of money every month but most of that money (Rs. the more they take debt and than they can’t stop working.C) Excessive Debt Name: Vikas Shah Age: 42 Years. 2 Children Occupation: Software Engineer Monthly Income: Rs.1. In India.3 Lakh Monthly Cashflow: Rs. If Vikas had not taken these loans than today his Monthly cashflow was improved by Rs. They earn lot but the more they earn.1.000 Credit Card Outstanding: Rs.000 Personal Loan: Rs. 2 Debt & 1 ELSS Fund investing via SIP PPF: Rs.8 Lakh Home Loan: Rs.1.20.

the most important financial planning exercise. As a result of this nothing goes towards long term investing (Mutual Funds.) at the end of month..70k + Rs. Thus.000 Monthly Expenses: Rs.D) Negative Cashflow Spending more than you Earn Name: Prakash Parekh Age: 30 Years. by scratching their credit cards and borrowing money every month after month. Prakash is a high earning lawyer but he loves to scratch credit cards while shopping and never do Budgeting. No Children Occupation: Lawyer Monthly Income: Rs. Married.25 lakh Mutual Funds Portfolio: NIL PPF: NIL How someone can spend more than they earn? Well. . he can’t be retire peacefully unless he makes his cashflow positive by spending less than he earns.000 Credit Card outstanding: Rs.60.000 (Growing at the rate of 10k/mth) Term Insurance: 1 Term Insurance plans of Rs.70.Rs. Prakash spends a lot but no wealth is being created out of that spending. Thus.80. PPF…etc.10k Credit card Debt) Monthly Cashflow: .000 (including credit card payments) (Rs.10.

3 Lakh Post-office Recurring Deposit – Rs.80.E) Playing it Very Safe . Equity is MUST in the initial first or two decades of your early earning life to build wealth. 8.2 term insurance plans of Rs. -Age 32 years.2 Lakh SBI Bank FD (3 years.10.Aniket Age – 32 Years. 1 Child Occupation – Public Relation Officer. Married. He loves to invest in fixed income instruments.25.000 Stocks: NIL Equity Mutual Funds: NIL -Mr.1 Lakh TATA Motors Fixed Deposits – Rs. He has not invested anything in equity (Directly or via Mutual Funds). 100% Debt allocation & 0% Equity Exposure -Don’t play it very safe. -Inflation in India is roughly 7% and FDs give 8% returns so real return is just +1% . XYZ Bank Monthly Income – Rs.0% interest) .5 Lakh (Rs.5% interest) – Rs.000 Term Insurance .Rs. 8.000 / month) GOI Bonds (8. -Equity is the only asset class which can give you highest returns than any other asset class so give it a place in your portfolio.30.0% interest) – Rs.1.40.000 / year ICICI Bank Fixed Deposit (5 years. Aniket believes to play it very safe.30 Lakhs each Portfolio – PPF – Rs.000 Monthly Expenses – Rs.000 Monthly Cashflow – Rs. 15.Very Less/NO Equity exposure in Early Years of your Life Name – Mr.

Here ultimately you become the owner of some kind of asset when you repay this debt.Break Time… Good Debt Versus Bad Debt Do you know that not the all types of debts are bad. shopping EMIs. Because if you follow this advise. Here.. the value of which goes down markedly (Say for Example car) when you repay that debt. understand the difference between two types of debts. Good Debt: Whenever you borrow money to acquire (Buy) assets out of that money. This advise can actually harm you. Bad Debt: Whenever you borrow money to acuire liabilities out of that money. real estate mortgage loans. education loans…etc. Many personal finance advisors will advise you to get out of debt as early as possible & stay away from new debt. credit card debt.. Here you become the owner of something. personal loans. A Good debt will make you rich while a bad debt will make you poor. loans for travelling…etc. . you will never take any debt in future – Good or Bad and to become rich many times you need to take good debt. it is known as Good debt such as business loan. it is known as a Bad Debt such as Car loan.

UTI Dividend Yield Fund 3. 11.25 lakh each Emergency Fund – Rs.000 Term Insurance – 3 term insurance plans of Rs. Vipul Patel Age: 42 years. 12. your returns will be average and every stock in the stock market will now be in your portfolio via these dozens of mutual funds.60. They collect dozens of funds in their portfolios in the name of diversification. 5. 8. 6. Templeton India Equity Income Fund ICICI Prudential Dynamic Inst I Reliance Equity Opportunities SBI Magnum Contra Reliance Growth Fund ICICI Pru Dynamic Fund UTI Infrastructure Fund HDFC Top 200 UTI Master Value Reliagre Contra Fund DSPBR Small & Midcap -Many people are not the MF investors but the MF Collectors.1 Lakh Monthly Expenses: Rs. 2 children Occupation: Government Class I Officer Monthly Income: Rs. . married. 9. Quantum Long term Equity Fund diversification. 13. -If you will collect more than 4 funds. [This is Gross Over-diversification] 2.F) Being a Mutual Funds Collector & not the Investor Name: Mr. 10.000 Monthly Cashflow: Rs. 7. 4. Vipul’s portfolio except he has collected 13 mutual funds in his portfolio in the name of 1.5 Lakh in Savings Account Mutual Funds Portfolio – -Everything is fine with Mr. -Only 3 or MAXIMUM 4 equity diversified mutual funds (2 Largecap & 1 / 2 Midcap) are enough to achieve optimal diversification.40.

-Never mix insurance & investment needs. Pension plans. ICICI Prudential Life Stage Pension Plan -Mr. SBI Life Unit Plus Super 2.Prakash Verma Age – 45 years.000 Monthly Cashflow – Rs.70. -ULIPs & all the insurance cum investment products are very costly.G) Investing in Insurance cum investment products Name – Mr.000 / year Mutual Funds – 4 Equity Diversified Mutual Funds (2 Large cap & 2 midcaps) Insurance cum Investment Products – 1. -Mutual funds have 0% entry & Exit loads. LIC Jeevan Nidhi 5.5 Lakh Portfolio Term Insurance – 2 Term insurance plans of Rs.12 Lakh in Short term debt funds PPF – Rs. Married. Never invest in any insurance cum investment product as they are costly & wealth suckers… . They charge anywhere between 20-100% premium allocation charge from your first & subsequent premiums.2 Lakh Monthly Expenses – Rs. -Term Insurance + Mutual Funds + PPF is the best financial planning combination. LIC Pension Plus Pension Plan 4. 1 Child Occupation – Small Business owner Monthly Income – Rs.50 lakh each Emergency Fund – Rs. Verma is fond of ULIPs. SBI Life Smart Scholar (Child Future) Plan 3.50. Child future plans and all the other insurance cum investment products. 1.

000 per year Mutual Funds – 3 equity diversified mutual funds SBI Fixed Deposit – Rs.25 lakh each Emergency Fund – Rs. ULIPs are the WORST FINANCIAL PRODUCTS of India.40. . ICICI Prudential Life stage Pension 4. Anil Kulkarni Age – 34 years.000 Portfolio – (Costly + Inadequate Life Cover) Term Insurance – 2 term insurance plans.5 Lakh in Bank savings accounts PPF – Rs. SBI Life Smart Elite 3.2 lakh ULIPs portfolio – 1. married.000 Monthly Expenses – Rs.000 Monthly Cashflow – Rs.1. Rs.H) Investing in ULIPs Name – Mr. He has collected lots of ULIPs in his portfolio thinking that ULIPs will give two benefits – Insurance + Investment -Well.50. -Get out of all your ULIPs & Never invest in any ULIP or insurance cum investment product. Kotak Wealth Insurance Plan 5. -ULIPs are costly because of charges associated with it and ULIPs provide just 5-10 times life cover than annual premium which is peanut size in comparison to the life cover provided by Term Insurance plans. ULIPs have no role in successful financial planning. Kulkarni is ULIP Lover. SBI Life Unit Plus Super 2. ICICI prudential Pinnacle II -Mr. 1 Child Occupation – Bank Officer Monthly Income – Rs.15.25.

000. Suraj has done BIG financial planning mistake and that is. considering ULIPs to cover his life.2 Lakh in Bank Savings Account Mutual Funds – 4 Equity Diversified Mutual Funds PPF – Rs. 2 Children Occupation – Engineer Monthly Income – Rs..70.80. Married.40. Just think that what if suppose Mr.40.5 lakh Emergency Fund – Rs.2.000 Go for Term Insurance Plans Term Insurance – NIL Life Cover – 2 ULIPs with annual premium of Rs.000 / year -Mr.50.000 Monthly Expenses – Rs. -Term Insurance plans provide adequate life cover with cheapest premium rates so go for them and avoid ULIPs .Probably Not….I) Inadequate life cover Name – Mr. Each ULIP provided life cover of 5 times (Sometimes 10 times) the annual premium (Rs. -You need huge life cover (probably Rs.000 Monthly Cashflow – Rs... Thus.50-75 lakhs) to cover your life and only term insurance plans can provide this much of life cover. Suraj dies today? Will his nominees survive on just Rs.5 lakh of Capital & fulfill their financial goals?. total life cover is Rs. Suraj Age – 45 years.5 lakh in this case). -ULIPs don’t adequately provide life insurance cover.

J) Having only one Term Insurance Plan: Divide life cover in 23 term insurance plans
Name – Rajesh Kumar Age – 50 years, Married, 2 Children Occupation – Professor Monthly Income – Rs.60,000 Monthly Expenses – Rs.40,000 Monthly Cashflow – Rs.20,000 Term Insurance Plan – 1 Term Insurance plan with Rs.75 lakh of life cover. Emergency Fund – Rs.3 lakhs in savings account Mutual Funds – 3 Equity Diversified funds, 2 Debt funds, 1 ELSS Fund & 1 Gold ETF PPF – Rs.50,000 / year -Mr. Rajesh Kumar has adequate life cover of Rs.75 lakhs but the only problem is that, he has only one term life insurance plan so after his retirement if he wants to reduce the life cover, he can’t. -Always divide your life cover in 2-3 term insurance plans so that on your retirement you can discontinue 1 or 2 term plans and reduce your life cover as well as annual premiums. -The advantage of dividing life cover between 2-3 term insurance plans is that, when your dependents become financially free and you become liability free, you can reduce the life cover and annual premiums by discontinuing 1-2 term plans.

K) Excessive Credit Card Debt
Name – Swapnil Age – 30 years, married, No Children Occupation – Business owner Monthly Income – Rs.1.5 Lakh Monthly Expenses – Rs.1.30 lakh Monthly Cashflow – Rs.20,000 Term Insurance – 2 term plans of Rs.25 lakh each Emergency Fund – Rs.7 lakh in short term debt funds Mutual Funds – 4 equity, 1 debt & 1 ELSS funds PPF – Rs.70,000 / year. Credit Cards Outstanding Balance– 1. 2. 3. 4. 5. ICICI Bank Credit card – Rs. 20,000 Citi Bank Money back Credit Card – Rs.50,000 HDFC Bank Credit card – Rs.35,000 SBI Credit card – Rs.42,000 HSBC Bank Credit card – Rs.60,000 -Credit card companies charge 35-50% annual interest rates. -In United states, Credit card debt is the leading cause of Bankruptcy. -Cut down all of your credit cards & replace them with debit cards. -Mr. Swapnil is a frequent traveller & shopper and he is fond of credit cards. He has collected 5 credit cards from major banks and all have thousands of rupees outstanding balance. -Credit card is the worst ever financial product in the history of mankind.

L) Direct Equity Investing is not the Game of Everyone
Name – Gaurav Sharma Age – 37 years, married, 3 children Occupation – Civil Engineer Monthly Income – Rs.60,000 Monthly Expense – Rs.40,000 Monthly Cashflow – Rs.20,000 Term Insurance – 2 term insurance plans, Rs.25 lakh each Emergency Fund – Rs. 2 lakh -Mr. Sharma is the equity lover. He has collected more Mutual Funds Portfolio – 4 equity mutual funds than 50 stocks in his portfolio by blindly following the Bank FDs – SBI & ICICI Bank 5 year FDs advise of his broker & brother-in-law. PPF – Rs.30,000 / year Stocks Portfolio – 1. Reliance Industries 2. HDFC Bank 3. SBI 4. ICICI Bank 5. Jai Prakash 6. Hero Honda 7. Satyam 8. TATA Steel 9. Crompton Greaves 10. LUPIN 11. 40 other stocks….!!! -I ask one simple question – “What is PE? What is the PE of Reliance Industries right now? & weather its fairly valued, over valued or under valued?” -If you don’t know the answer of this simple question than equity investing is not for you. -When you invest in equity mutual funds, you already invest in the stocks than why to buy the same stocks again & again? -Never invest in stock market by following advise of your friend,/family/brother-in-law.

2 Lakh PPF – Rs. Physical gold – 300 grams (Bars. 2 children Occupation – RetailerShop owner Monthly Income – Rs. Equity is the only asset class which has given highest returns than any other asset class & its best asset class to build wealth & beat inflation and tax. Benchmark Gold ETF -After 2007.000 / year Bank FDs – ICICI & SBI. Gold has never outperformed the equity in past 300 years all around the world. Coins & Jewellery) 2.000 Monthly Cashflow – Rs. . married. Reliance Gold ETF 4. Kotak Gold ETF 3. many people started thinking that Gold is better than Equity. But this is the biggest mistake.000 Term Insurance – 2 term insurance plans. 25 lakh cover each Emergency Fund – Rs.50.000 Monthly Expense – Rs.20. -Gold is not to build wealth.30. It just beats the inflation very well. 3 year FDs Post-office saving schemes – POMIS Equity Mutual Funds – liquidated all the equity investments in year 2008 after watching Gold rally and invested all of that money in physical gold & gold ETFs BIGGEST MISTAKE Gold Portfolio – [Gold Allocation – 70% of Total Portfolio Worth] 1.M) Excessive Exposure to Gold Name: Sanjay Mishra Age – 40 years.30. -Never invest more than 10% of your portfolio net worth in Gold.

20 lakhs after 10 years at 20% compounded annual return.35000 goes towards Home loan EMI payment while just Rs. you are actually losing that much of TIME which could have been used to build a huge wealth.000 / year Equity Mutual Funds – Monthly SIP of Rs.20.10. Rs. Only go for a home loan if you are also simultaneously going to invest that much amount of money in equity mutual funds or any other asset class to build a wealth.40 Crores of MF portfolio which is more useful than having a house worth Rs.35. one largecap and one midcap fund. No children Occupation – Software Engineer Monthly Income – Rs.5 crores after 10 years from today & his Rs. married. -The Property value of Akash’s Home will become Rs.1 Lakh PPF – Rs.60.000 Monthly Home Loan EMI – Rs.1. 25 lakh each Emergency Fund – Rs. -If he had started 35k monthly SIP in mutual funds than he would have Rs.000 Monthly Cashflow – Rs.N) Buying a Home on Home Loan too Early Name: Akash Shah Age – 30 years.5 crores .5.5000 goes towards building long term serious wealth.2500 in 2 equity diversified funds.1. . -This is the commonest financial planning mistake. Akash has taken a home loan very early in his life even before building sufficient wealth.000 Term Insurance – 2 term insurance plans. -Every month.5000 monthly SIP in 2 equity funds will become just Rs.1.When you go for Home Loan EMIs in your early life.000 Monthly Expenses – Rs.

8. Term Insurance Mutual Funds (Equity & Debt) PPF Bank FDs & Government Bonds Gold Health Insurance Real Estate 1. 4. 6. 3. 2.66. Following simple financial products are most effective to build most powerful wealth building portfolios. 4. 2. 7. 5. 6. Model Portfolios of Intelligent Indian Investors The Optimally Diversified Most Powerful Portfolios Following are the Top 5 Model portfolios of Intelligent Indian investors in various age groups. Avoid Following Financial Products Anyhow 1. Credit cards ULIPs Pension Plans Endowment Plans Money back Plans Child Future Plans Any Insurance cum Investment Products Direct equity investing (If you blindly invest in it after following the advise of your broker/friend/relative) . 7. Remember that. 3. You really don’t need complicated financial products to do successful financial planning. 5. Financial Planning is to make your life simple and easy.

2.10. 1.20.000 divided into 4k. it is better to open PPF account as early as possible to keep in mind the future. (As in this age group you don’t have any Monthly Income (Salary): Rs.20. After 1012 years. you can start investing in it and than in just 4-5 years you will have Tax-free maturity of your money.60.20% Quantum Long Term Equity Fund (Multi cap Fund) – 30% HDFC Midcap Opportunities Fund (Mid & Small Cap Fund) – 50% Asset Allocation Equity: 100% Debt: 0% Gold: 0% Real Estate: 0% -Just 3 equity funds are enough to achieve optimal diversification -No need to invest in debt/fixed income instruments at all in your 20s. Even if you are not going to invest large amount in PPF.Portfolio: 1 Age Group – 20 to 30 (College going.000 10k in each of the following funds] Total Debt: NIL Emergency Fund – Rs.com as on Jan.000 Monthly Cashflow: Rs. 6k & Annual Salary: Rs. -No need to have any term insurance plan if your age is young (20s).30. 5000 per year. 2011] PPF – Rs. Franklin India Bluechip Fund (Large cap Fund) .000 Mutual Funds Portfolio – [Monthly SIP Rs.A.000 / month dependents on you so no need of term Insurance) Monthly Expenses: Rs. . [ Note: All of the above funds are 5 star rated funds according to Valueresearchonline. Just Started Earning & Without Any Dependents) Name: Sandip Age: 26 Years Occupation: Software Engineer Term Insurance – N. 3.3.50. you are single and you don’t have any dependents.000 in Bank Savings Account.

2 Debt Funds & 1 ELSS is enough for optimal diversification -Never invest more than 10% of your portfolio net worth in Gold Mutual Funds Portfolio – [65% in Equity & 30% in Debt & 5% in Gold] Equity Funds – Four 5 star rated (According to Valueresearchonline.1. Health Insurance – Family Floater Plan .12 Lakh Total Debt: NIL Asset Allocation Equity: 65% Debt: 30% Gold: 5% Real Estate: 0% -Divide Your Life Cover in 2-3 Term Insurance plans so that you can reduce the life cover after your retirement by discontinuing 1-2 policies.1.25 Lakh Name: Jay Age: 35 Years.5 Lakh in Short term Debt Funds Term Insurance (Total Rs.000 / mth Monthly Cashflow: Rs. -4 Equity Funds. 2 Children Occupation: Doctor Monthly Income (Salary): Rs. Married.com) Equity Diversified Mutual Funds – 2 Largecap & 2 Mid cap funds – 60:40 allocation Debt Funds – 2 Debt Funds (5 star rated) ELSS – 1 Tax Saving Fund (5 star rated) 1 Gold ETF PPF – Rs.25 Lakh LIC Jeevan Anand – Rs.25 Lakh Kotak Preferred Term Insurance Plan – Rs.70.60.000 / annum investment in PPF to save tax under section 80C. 2.Portfolio: 2 Age Group – 31 to 40 (Active Earning Phase: 1) Emergency Fund – Rs.00.40. 3.75 Lakhs divided into 3 plans) 1.000/ month Total Monthly Expenses: Rs.000 Annual Salary: Rs. Aegon Religare iTerm Online Term Insurance Plan – Rs.

Mutual Funds Portfolio – [50% in Equity & 40% in Debt & 10% in Gold] Equity Funds – Three 5 star rated (According to Valueresearchonline. Married.000 / annum investment in PPF to save tax under section 80C.25 Lakh LIC Jeevan Anand – Rs.4.25. Health Insurance – Family Floater Plan .000 / mth Monthly Cashflow: Rs.80 Lakh Total Debt: NIL Asset Allocation Equity: 50% Debt: 40% Gold: 10% Real Estate: 0% .50 Lakhs divided into 3 plans) 1. 2.1 Lakh in Bank Savings account Term Insurance (Total Rs.15.Portfolio: 3 Age Group 41 to 50 (Active Earning Phase: 2) Emergency Fund – Rs.25 Lakh Name: Akash Age: 45 Years.000/mth Annual Salary: Rs. This is because if Government hikes the interest rates. your Bank FD won’t increase it unless you break it. -No need to invest in Bank Fixed deposits as debt mutual funds are better than Bank FDs. But mutual funds will automatically hike the interest rates. 1 Child Occupation: Teacher Monthly Income (Salary): Rs.com) Equity Diversified Mutual Funds – 2 Largecap & 1 Mid cap funds – 60:40 allocation Debt Funds – 2 Debt Funds (5 star rated) ELSS – 1 Tax Saving Fund (5 star rated) Gold ETF – Reliance Gold ETF PPF – Rs. reduce the equity exposure of your portfolio and increase the debt allocation.000/ month Total Monthly Expenses: Rs. Aegon Religare iTerm Online Term Insurance Plan – Rs.As your advances.40.30.

12 Lakh Total Debt: NIL Asset Allocation Equity Funds – Four 5 star rated (According to Valueresearchonline.60.70.25 Lakhs ) 1. Omprakash Age: 56 Years. 2 Children Occupation: Government officer Monthly Income (Salary): Rs.40.com) Equity Diversified Mutual Funds – 2 Largecap & 2 Mid cap funds – 70:30allocation Debt Funds – 3 Debt Funds (5 star rated) ELSS – 1 Tax Saving Fund (5 star rated) PPF – Rs.000 Health Insurance – Family Floater Plan Equity: 20% Debt: 80% Gold: 0% Real Estate: 0% -Reduce the life insurance cover & annual premiums by discontinuing 1-2 term insurance plans in your portfolio as your children are financially independent now so no need of much life cover.20. Married. Tax Saving Infrastructure Bonds (Sec 80CCF) – Rs. Mutual Funds Portfolio – [20% in Equity & 80% in Debt ] . Reduce the equity exposure and increase the debt exposure to generate steady income after your retirement.000 / annum investment in PPF to save tax under section 80C. -Start booking profits from equity to debt funds just few years before your retirement .Portfolio: 4 Age Group 51 to 60 (Pre-Retirement Age) Emergency Fund – Rs.000/ mth Monthly Cashflow: Rs.000/mth Annual Salary: Rs.3 Lakhs in Bank Savings account Term Insurance (Total Rs.25 Lakh Name: Mr.1 lakh/ month Total Monthly Expenses: Rs. Aegon Religare iTerm Online Term Insurance Plan – Rs.

Married.30.25.25 Lakhs ) 1.Portfolio: 5 Age Group > 60 Years (Post.6 Lakhs in Bank Savings account Term Insurance (Total Rs. 2 Children Occupation: Retired Army Officer Monthly Income (Pension): Rs.000/ month Total Monthly Expenses: Rs. -Only 1 term insurance plan is enough. Discontinue every other term plans as your children are now financially independent.3.000/ mth Monthly Cashflow: Rs. Aegon Religare iTerm Online Term Insurance Plan – Rs.5000/mth Annual Pension: Rs. Mahesh Singh Age: 65 Years.Retirement) Emergency Fund – Rs. -Go for Senior Citizen’s Health Insurance plan after the age of 65 Mutual Funds Portfolio – [0% in Equity & 100% in Debt ] Equity Funds – NIL Debt Funds – 4 Debt Funds (5 star rated) ELSS – 1 Tax Saving Fund (5 star rated) Health Insurance – Senior Citizens Health Insurance Plan . -Book profits from your equity funds and invest 100% of money in debt funds/Bank FDs to generate steady income after retirement.6 Lakh Total Debt: NIL Asset Allocation Equity: 0% Debt: 100% Gold: 0% Real Estate: 0% -It is better to have large amount of Emergency fund after your retirement.25 Lakh Name: Mr.

gold. art. mutual funds. it’s only one.Break Time… Know the Difference between Assets & Liabilities Many parents ask me that. which is the best personal finance advise that you would like to give to our children? Well. web properties…etc. Teach your Children the Difference between Assets & Liabilities. Watches. . Liability: means anything that starts loosing its value from the day you buy it & takes money away from your pocket. Examples: Car. real estate.. businesses. Buy Assets & Stay away from Liabilities Assets: means anything that appreciates in its value over the time & put money into your pocket (Cashflow). credit cards. electronics. Examples: Stocks. clothes. bonds. Luxurious automobiles. personal loans & other high status symbols items. coins. expensive mobile phones. Club memberships.

Dos & Don'ts for NRIs while investing in India. In this section. in which Indian Financial products & Asset classes they can invest. which are the financial products in which they can’t invest and various Tips.Financial Planning for NRIs The following section is specifically for NRIs or people who are planning to become NRIs. . I have given very important information about financial planning for NRIs in very COMPREHENSIVE manner such as which accounts they should open?.

It can not be opened jointly with resident Indian. Source of Fund: Funds received from within India -Both the accounts can be opened jointly with NRI & both are the Rupee accounts. -When the NRI returns to India. These funds have to be used only for local payments in Indian rupees. Which is Better? NRIs can open two types of banking accounts with Indian banks – NRE & NRO. But the reverse is not possible. It can be opened jointly with resident Indian. -Nomination facility is available in both the accounts. power of attorney can operate the account. However. Tax: This account is taxed as per applicable tax slabs. It is Tax-Free account.NRE & NRO Accounts – Difference. Means funds from this account can easily be transferred to any other country around the world. Both the accounts have different features so it is very important to understand that which type of account suits your needs best? NRE (Non-Resident External) accounts: Only NRIs can open this account Repatriation (Transferring money to abroad) is possible. . -It is possible to transfer funds from NRE to NRO account. NRO account can contain only funds received from within India. Interest earned in this account is Tax free Source of Fund: Funds remitted from abroad NRO (Non-Resident Ordinary) accounts: This account can be opened by both NRIs & Indian residents planning to become NRIs in future but currently living in India Repatriation is not possible with NRO accounts. -Power of attorney holder can’t open NRE or NRO accounts. both the accounts will be converted into resident account.

KVP. If and when the accounts office comes to know of the anomaly. 1. NSC. Recurring deposit scheme & Time deposit scheme) US origin mutual funds like – HSBC. 2. 3. Fidelity & Templeton 5. 4.NRIs & Investing in Indian Assets/Financial Products Which Asset Classes can NRIs Invest in? 1. . Bank Fixed Deposits Corporate Fixed Deposits Stocks Mutual Funds (All the Indian origin mutual funds) Real Estate Insurance products (However. its difficult to buy term insurance). 6. the deposit will be returned to the investor. NRI can invest as much money as he/she wants. without any interest. There is no upper limit of investing in the above assets. Which Asset classes NRIs can’t invest? Government of India (GOI) Bonds PPF (Public Provident Fund) Senior Citizen Saving Schemes Post-office saving schemes (MIS. 4. 5. 3. 2.

-Equity (& Equity Mutual Funds) is the best asset class to invest in India if you are going to lock-in your money for more than 5 years of time horizon. -Insurance agents & private sector banks target NRIs to sell their costly insurance cum investment products. However. All of these are the very costly investments. Insurance cum Investment products: During your visit to India please keep in mind that don’t be fooled by the insurance agents/brokers/bank officials and NEVER invest in any insurance cum investment products of India like ULIPs. So better to start investing in 3-4 good equity diversified mutual funds and 12 debt funds to build wealth for your future in India. Pension plans. - - - . Term Insurance + Mutual Funds + PPF is still the best financial planning combination. keep in mind that you can not invest in PPF as an NRI and pure term insurance plans have several exclusions and limitations for NRIs. always check AA or AAA ratings before investing in any Corporate deposit scheme. Real Estate: The real estate market in India is highly unregulated so take the advise of good and reputed real estate broker before investing in real estate of India. -Corporate FDs are another good options to earn higher interest returns than Bank FDs. A simple equity mutual funds are the best options in India to build wealth. money back policies & whole life insurance plans. So don’t take your any financial decision following their advise. However.Tips for NRIs before Investing in India If you are NRI & want to come back in India in future than.

He loves to drive fast cars. travel the world and dating with world’s most beautiful women. He is on the advisory boards of several Fortune 500 Companies including Xiphi Corporation.!!! . If you want to read my Real Bio than go to the next page. London He is the member of Harvard Business School of Financial Planning He is the member of “Save the World Foundation” He is the active member of “GoDaddy Child care Foundation” He has presented a paper on “Sovereign Debt Crisis” in international G20 summit.) .About the Author Asav Patel is the Certified Financial Planner (CFP) and awarded Gold medal by Hamstring School of Economics. Oxford University. On the next page. - - - - - This is a Joke (Fake Bio). playing golf. you will find everything about me (And that’s REAL BIO…. Please don’t take it seriously. Orex Pharma & Sun Network Digital Media. gambling in world’s best Casinos.

In June 2010. Personal Finance Blogger & the founder of MyJourneyToBillionaireClub. share & solve their financial problems Spreading the Financial Awareness all across the world is the basic spiritual mission of MJ2BC & Investta. I born on 7th Jan 1983. Investments & Entrepreneurship & that’s why I started a personal finance blog MyJourneyToBillionaireClub.com & Investta. Moonshine – Libra. I launched a Personal Finance Forum – Investta. India. Asav Patel. Today the blog receives literally Millions of visitors every year from India & all around the world & it’s India’s leading Personal Finance Blog.com in March 2008 also known as MJ2BC. Basically I am a doctor (Ophthalmologist) but I found my Passion in Personal Finance. The Blog started purely out of my passion as a hobby to teach people personal finance & spread the real financial awareness all around the world. Personal Finance Blogger from Ahmedabad.Real Bio Hiii. Sunshine – Capricorn. I am Asav Patel. .com so that people from India & all around the world can discuss. Gujarat. Ophthalmologist.com And yes. I am just like you who started MJ2BC & Investta out of my passion to teach personal finance & spread financial awareness. that’s my Real Photo & Real Bio…!!! No Kidding…!!! I am not any gold medalist from any economics school nor I am any Certified Financial Planner (CFP). It’s me. But ultimately it turned out to be a Mega Success Online Business.

I started it from my home only on 25th March 2008 & after that in May 2008. My Laptop on my study table in my Hostel room That’s me doing blogging from my laptop on my hostel bed Google AdSense Cheque: My 1st earning from my Blog . Indians are willing to solve their financial problems. Patil Hospital. I used to write 6-8 hours a day during the initial 3 years of this blog. Indians are willing to learn money & personal finance. India. This shows that. such kind of things don’t work. That’s my notebook in which I write down the future articles titles for my readers. Kolhapur.About MyJourneyToBillionaireClub. Maharashtra.com also known as MJ2BC is a personal finance blog which started as my passion to teach personal finance & spread financial awareness in India & all around the world. In March 2008. I have run this blog through my hostel room. I joined my Post-graduate course in MS-Ophthalmology at D. And since then up to May 2011.Y. many people told me that. This shows that. But well. when I first time launched this blog. Today MJ2BC receives millions of visitors every year from all around the world. Many of you may not know that How I started MJ2BC? Well.com MyJourneyToBillionaireClub. Because nobody in India is interested to learn personal finance. Today the readers of MJ2BC have proved everything wrong.

Visit Investta to discuss & solve your financial problems & to see the passion of Investta forum members. entrepreneurship & Investing. experience & mistakes about money & finance on Investta and help other people in India and around the world to solve their financial problems.About Investta. I launched this forum in June 2010. businesses.com and discuss anything about personal finance. just visit Investta. mistakes & knowledge on Investta anytime for the benefit of other people around the world. Share your knowledge. . India’s leading Personal Finance Blog.com not only to discuss & learn personal finance and financial planning but to see the PASSION of Investta forum members. A Personal Finance Forum & MJ2BC.com is a personal finance discussion forum which is also just like MJ2BC born out of my Passion to teach personal finance & spread financial awareness all around the world. personal finance & money on Investta & I will be more than happy to discuss & solve all of your queries. make money online. That’s me. You can discuss & share your personal finance & financial planning problems.com Investta.com & only thing I want to tell you about Investta is. Be the Active member of Investta. The Founder of Investta. You can ask me anything related to financial planning.com . Asav Patel. I am full time available on Investta.

Buy Now On the next page. 25. there is a great deal for you.25. And that’s Rs.50. This is the thing that you will need to do effective financial planning.. So Hurry & Buy your own copy right now for just Rs.000 But as you are a good reader.000 only…. I am giving you 50% Discount.000/Go to Next Page for more offer details. This offer is for the Limited Time PeriodOnly. . The market price for the entire package is Rs.

This is Just a Joke…!!! Well. You will find lots of FREE eBooks online about financial planning and not only this but you will also find FREE Newsletters & Subscriptions. this is just an another joke. the purpose of writing this eBook is not to sell you something. I have put this joke because I want to tell you that. I advise you to make a print of this eBook & put it in your drawer so that you can refer it anytime before taking any financial decision. I don’t have anything to sell you. . But well. I have put hundreds of hours of mind work to prepare this Financial Planning eBook because the real purpose of this eBook is not to sell you something but to teach you financial planning in simple. Everything that I know about Financial planning is already described in this eBook. their sole purpose is to sell you something. But the real purpose of writing this eBook is to educate you to do effective financial planning for you & your future generations. quick & most effective manner.

So feel free to ask & discuss any of your financial problem/query on Investta.Feedback Give your Feedback / Suggestions: So Finally. if you have any query about financial planning / personal finance that is still in your mind and didn’t solve after reading this eBook than the best way is to put your this query in detail on my Forum – Investta.com . Discuss and Solve Your Financial Problems & Queries: However. If you want to give any kind of feedback (Positive & Negative) and suggestions about this eBook than you can directly contact me on my personal e-mail address asav4u@gmail.com Your suggestions & feedback is very important to improve the quality of this eBook.com I am full time available on Investta to discuss & solve your financial problems.

If you enjoyed this e-book. Download NOW . you might enjoy following FREE eBook also by Asav Patel: My Journey To Billionaire Club What Rich Teach their Kids about Money that Poor & Middle Class Don’t? This 162 page Diagram Rich eBook (PDF) contains the 6 Basic Lessons and 10 Commonest Myths about Money that Rich people teach their Kids but Poor & Middle Class Don’t.