Stick to your Financial Goals and Investment Plan, Make a Festival Budget

Now that the festival season is just around the corner and everyone in the family, let it be a child or a grown up or an old, has a long shopping list for the festive season. And there’s a very important question we need to ask ourselves, “Are we financially prepared for this festive season?”

The business houses come up with very attractive discounts to ensure the customers do not only buy which they have planned for but also the customers buy more than what they have planned. With the ease of plastic money and credit cards, people tend to spend more as they don’t have to pay upfront for their shopping and they get a credit period of 30-45 days. These special discount offers and credit card many a times lead to impulsive buying and once you start swapping your credit card, it becomes very difficult to resist the temptation of buying more and people end up buying even those things which are of little use to them.

The idea of writing this post comes with some experience, where our clients end up jumping beyond their Financial Goals and ultimately put themselves and their Investment Plans in jeopardy.  But it is completely human – we are all having our default systems in such way that the month of October makes our pockets easy and moods are all about Shopping. And then the beautiful marketing gimmicks add to our spending powers. Keeping the annual trend in mind, we thought to bring an Alert in the form of following Do’s &Don’t’s for this festival season.

So how can we plan our funds for the festive season? Here are some tips which will help you not only to plan your shopping this festive season but also help to utilize your funds in an efficient manner:


Be honest to yourself while creating a festive budget and stick to it. Dramatic changes in your spending patterns during festive season can have severe consequences on your financial health. Festive spending should not be more than 25-30% of your normal spending pattern.


Plan your shopping list keeping your budget in mind. Avoid impulsive buying those gifts you din’t plan for.  Distinguishing needs and wants is the key.


Start shopping early. The sooner you start the more information you will have on the products you are planning to buy. Shopping online is also a good idea as you can compare the prices of different online retailers and strike a good deal.


Pay in cash for, if not all then bulk of, your purchases. People who use credit cards for their purchases spend an average of 30% more than people who buy in cash. Don’t borrow to spend. Remember it costs money to borrow money as it’s not always free to borrow.


Instead of buying, make your gifts. It puts more heart to the gifts and such gifts are valued more than the expensive off the shelf gifts by the receivers. It also brings Personal touch and create better relationship bonds.


Sales are irresistible butsaving is irreplaceable. These days the sales are not only offered during the festival season but throughout the year ex., End of Season Sales, Year End Sale, Stock Clearance Sale, Independence/ Republic Day Sale etc. Visualize what you want to save and start saving more and invest what you save.

FESTIVALS are about SAVING- Remember that!

Don’t forget to buy an investment plan. Our ancestors had realized the importance of savings and investments long back and that’s the reason we celebrate ‘Dhanteras’ as a festival wherein people buy Diamond/Gold/Silver. These days we have so many other investment avenues. Buying an investment plan is a must.

I am sure these tips will help you take good financial decision this festive. Spend wisely, save more and invest prudently. Enjoy the Festive Season ahead.

How Much of Income you should invest?

Very often, I am being asked about – what part of income shall be invested. Some clients believe in expenses and savings, others believe in savings, expenses and buffer and their are also few- you say I never thought about investments. I earn, spend and rest is in my bank account. And let me confess – I love them all for their own kind of reasoning. Because as a financial advisor – I now know that we live in a country where Investments are not taught to kids and in most of the houses – it is not even advised.

And it is that reason that we decided to talk about it and set a limit to our income which must be invested on monthly basis.

There are two most fundamental questions when it comes to personal finance:

  • “How much of income you should invest?” and
  • “When is the best time to invest?”


In this article I’ll answer both the questions. The standard answer to the 1st question is, “As much as you can save”. Now different people interpret it differently. Someone in his 20s may be happy saving 10% and someone in his 30 may think that he can secure his future by saving 15-20% of his income and someone in his 40s and 50s may find 15-20% very less to secure his future and will try to save more. There’s no thumb/fixed rule when it comes to your personal finance and %age of income you should save and invest as a lot depends upon your personal financial plan, the age of your retirement and there could be a no. of other factors. Usually the general benchmark is 50/20/30 or 50/30/20 rule. Now the obvious question is what’s this 50/20/30 or 50/30/20 rule?

50/20/30 or 50/30/20 Rule:

50% of your Income- Fixed Costs

These are the fixed expenses you incur regardless of where you live and work. These include your house rent, insurance premium installment, loan installments, electricity bills, mobile phone expenses, transportation and other utility bills. These expenses are generally same and you can easily calculate the percentage of your monthly take home income and you need to ensure your fixed cost does not cross 50% of your monthly take home income.

20% of your income- Savings

You must save 20% of your monthly take home income for your financial security. Please note your savings towards your PF should not be figured in this as you need to save 20% of your monthly take home income and not your gross monthly income. You must build an emergency corpus equal to at least your six months gross income and should use it as an emergency fund only.

30% of your income- Variable Expenses

Don’t commit more than 30% of your monthly income for variable expenses. Variable expenses include your personal choices like eating out, petrol/diesel bills, mobile data bills, entertainment, shopping, groceries etc. You should keep a track of these bills as you will be able to figure out which are the expenses can be minimized or avoided eg if you are eating out on a regular basis it will surely hit your monthly budget and you can decide to prefer homemade food which is not only more nutritious than the outside food but also saves a lot of money.

I am sure now when you have understood the answer to the first question you must be waiting for the answer to 2nd question: A number of people think they have missed the train and they didn’t invest when the markets were low or when interest rates were high. But the right answer of this question is every time is the right time to invest and depending upon the time horizon and your risk appetite you may chose from the wide variety of the investment instruments and invest. Don’t miss the train now. This is the right time to invest. Don’t delay it further.

You can simply write to us or speak to our financial fitness expert or even schedule a call to understand your investment plan.

5 must have Investments in 2016-17

You sure are done with the taxation & returns for last year and most of you must have started executing your financial goals as planned for the year ahead. For all those, who are done with the annual financial plans and also those who are still wondering on where to invest and how to go about breaking your investment amount for the year ahead, here is a detailed explanation on the must have investments for the ongoing financial year.

Whether you are a working class corporate goer, a business person or managing a startup – these investments will surely help you plan better for the financial goals.

Public Provident Fund: The PPF scheme was launched to encourage savings across various income classes by Ministry of Finance in the year 1968. PPF is a long term debt instrument scheme which offers safety with attractive rate of interest. PPF falls under Exempt, Exempt, Exempt (EEE) and is one of the best tax saving instruments. The first E implies an exemption on the amount invested in the PPF, the second E implies an exemption on the interest on PPF and the third ‘E’ implies exemption on the total income earned from PPF. Following are key features of PPF scheme:

  • Individuals in their own names as well as on behalf of the minors can open a PPF account in any of the banks. The HUF is not allowed to open a PPF account.
  • Interest rates on PPF scheme are announced by Govt. of India annually. Interest earned is compounded annually. For current financial year of 2016-17 the interest rate is 8.1%
  • Tenure of PPF scheme is 15 years and one can chose to continue in multiples of 5 years, with or without making additional investments to the PPF account.
  • One can invest minimum Rs. 500/- to maximum Rs. 1,50,000/- in one financial year. The amount can be deposited in lump sum or in a maximum of 12 installments in a financial year.
  • Loans and withdrawals are permitted depending upon the tenure of the account. The loans can be availed from 3 rd financial year and the interest on the loan amount is charged at 2% per annum above the PPF interest rate. Partial withdrawal can be made every year after 7 th financial year but the complete withdrawal is possible at the maturity.

Equity Linked Saving Scheme: The ELSS is a diversified equity mutual fund which invests 65% in equity related instrument with a lock in period of 3 years hence it qualifies for tax exemption under section 80C of the income tax act. ELSS funds are one of the best avenues to save tax as along with tax deduction, though not assured, the investor gets potentially higher returns. Following are key features of ELSS schemes:

  • ELSS has the shortest lock in period of 3 years in comparison to other tax saving schemes.
  • One can invest a minimum of Rs. 500/- in ELSS and there’s no upper limit on investment though maximum Rs. 1,50,000/- per annum are eligible for deduction under section 80C. One can invest in lump sum or in installments using systematic installment plan.
  • Since these funds invest 65% in equity, there’s some element of risk with potentially high returns. Moderate to high risk investors can consider this option . The past performance is not a guarantee of the future.

Health Insurance: The medical costs are rising year on year and it’s not a secret that the inflation in medical care is much higher than the inflation in food and other articles. The inflation in medical care is in double digits and no decline in sight for years to come. Hence insurance companies has launched special insurance plans known as Health Insurance which covers the cost of an insured individual’s medical and surgical expenses. Depending upon the type of insurance coverage, either the insured pays costs out of his pocket at the time of medical care which is reimbursed later or the insurer makes payment to the hospital/medical care provider. One can claim tax benefits under section 80D for the health insurance premium paid for self and can claim tax benefits under Section 80DD for the health insurance premium paid for the health insurance of dependent/ disabled person. Following are advantages of Health Insurance Policy:

  • Peace of mind
  • Flexibility of choosing health insurance cover
  • Cashless treatments available in the hospital. No need to carry cash.
  • Tax benefits up to Rs. 30,000/- under Section 80D and Section 80DD
  • Health Insurance available up to old age

Term Insurance: Term insurance policies are increasingly used as a financial planning and risk management tools these days as these are pure protection plans and most basic form of life insurance plans. These plans ensure your family’s financial independence in your absence. These plans offer high insurance cover with relatively low premium as there is no maturity benefit available (Don’t be disappointed at the end of the policy term, you are alive after all). The purpose of this insurance policy is to hold you until you can become self –insured by your assets. One can buy term insurance for a period of 5, 10, 15, 20, 25 years or till the age of 70 years. Also if you take a home loan from a bank then you must buy term insurance of the corresponding value. In case of your demise your family will not lose the home as the insurance company will repay the outstanding loan amount.

National Pension System: Pension Plans provide financial security and financial freedom in your old age without compromising on your standards of living. NPS was launched on 1 st January 2004 by Govt. of India with the objective of providing retirement income to all the citizens. Initially it was introduced for new Govt. employees but from 1 st May’09, the NPS has been extended to all the citizens (age from 18 to 60) of India including NRI’s. It’s a voluntary, defined contribution retirement saving scheme and the saving of the individuals are pooled in a pension fund and these funds are invested by Pension Fund Regulatory and Development Authority (PFRDA) regulated professional fund managers. To avail good pension you should start investing in NPS at an early age so that the power of compounding can make your corpus big and help you with decent pension.

We are sure, the concrete description above helped you in understanding about the financial instruments. To understand the utility or to subscribe to one of these, feel free to write to us on or you can also speak to our financial fitness expert.