Here’s Where to Invest your Money in 2022 – Recommended by Certified Financial Planner

Here’s Where to Invest your Money in 2022 – Recommended by Certified Financial Planner

The year 2020 passed in a blur. While it started on a positive note, the Coronavirus pandemic and the subsequent lockdowns brought about an economic slowdown in the country.
Even the financial markets buckled under the global effect of the pandemic. The BSE and NSE, which were at their highest values at 42,273 and 12,362 in the first month of January, fell by 38% when the pandemic struck.
Though the markets are regaining their luster slowly, investors are confused about where to invest in 2022 for maximum gains. What do you think?
Though 2020 was a roller-coaster, investors are eyeing the year 2022 with hope. Investment in 2022 is primarily guided by the recovery of the financial markets after the pandemic as the industry is waking up and normalcy is being restored.
Certified financial planners have also pitched in their recommendations for investments in 2022. Here are, therefore, some of the lucrative investment opportunities for 2022

Here Where to Invest Your Money in 2022:

 

1) Invest in Direct Equity

For most risk-loving investors, stock trading and investing into direct equity always holds attraction. Even though the equity market suffered losses in the beginning half of 2020 on the pandemic fears, the market is correcting itself and as of the market closing time on 27th November 2020, the NSE and BSE are already at their pre-COVID levels of 12,968.95 and 44,149.72 respectively. (Source: https://www.financialexpress.com/market/stock-market/).

The boost in the stock exchange was largely due to the promise of the COVID vaccine which is almost in its ready stages. This has resulted in positive market sentiments globally and so, direct equity is once again looking good.

Moreover, history has been a witness that the stock market always bounces back even after a crash, whether it was the Harshad Mehta scam or the 2008 crash. If you invest over a long term period, direct equity is known to yield exponential returns.

 

Have a look at how the stock market has performed over the last 30 years –

Sensex in last 30 years

 

 

 

 

 

 

 

(Source: https://www.tradebrains.in/wp-content/uploads/2017/11/Sensex-in-last-30-years-of-performance.png)

The stock market is, therefore, a good avenue, if you are looking at where to invest money in 2022. If you have the appetite to undertake risks it can be a good start for your investments in 2022.

Here’s a FREE certification course on Stock Market

2) Invest in Mutual Funds

For investors who do not like direct exposure to equity but want to invest in a diversified portfolio, mutual funds are the best solution. Mutual funds are beneficial because –

  • They help you own a diversified portfolio
  • They come in different variants and you can choose a scheme that is relevant to your investment preference and risk appetite
  • ELSS funds allow you the benefit of tax savings on your investments
  • They are professionally managed to allow you to invest in the best stocks and instruments
  • You can invest in mutual fund schemes as low as Rs.500 making them ideal for small-time investors too who want market exposure with limited savings

Given these benefits, the mutual fund market is another avenue that you can explore. In fact, equity mutual funds are less risky compared to direct equity because of the diversification that they provide.

 

As far as returns are concerned, some equity funds have even outperformed the stock market in several instances. For example, Invesco India’s Growth Opportunities Fund, a large and mid-cap fund, has consistently outperformed the S & P BSE Index over the years. Have a look –

S & P BSE Index over the years

 

 

 

 

 

 

(Source: https://www.personalfn.com/fns/invesco-india-growth-opportunities-fund-rising-in-volatile-times).

So, as far as returns are concerned, you don’t have to worry. You can also choose SIPs to invest every month in a disciplined manner and build up a substantial corpus over a long-term horizon.

In fact, the mutual fund industry has become so popular, that investors are increasingly investing in the avenue to bank upon its returns. The AUM of the mutual fund industry has, therefore, consistently grown over the years –

mutual funds assets under management

 

 

 

 

 

 

 

(Source: https://www.relakhs.com/top-mutual-fund-schemes-2019/)

So, consider investing in different schemes of mutual funds to create a diversified portfolio that is liquid, tax-saving, and also return generating.

 

Take a FREE certification course on Mutual Funds

3) Invest in National Pension System (NPS)

Have you invested in the National Pension System introduced by the Government? If not, you can consider it in 2022. The reasons? Let’s see –

#1 – It helps you create an earmarked corpus for retirement

#2 – The scheme is market-linked promising inflation-adjusted returns

#3 – You get lifelong incomes in the form of pension after maturity

#4 – Investments into the scheme are tax-free under Section 80CCD (1B) up to Rs.1.5 lakhs

#5 – Additional investments, up to Rs.50, 000 can be claimed as a deduction under Section 80 CCD (1B)

Moreover, if you choose the new tax regime and if your employer contributes to the NPS scheme on your behalf, such contributions would be allowed as a deduction from your taxable income for up to 10% of your basic salary and dearness allowance under Section 80CCD (2).

Besides the market-linked returns, the additional tax benefit, both under the old tax regime and the new one, tilts the scales in favor of the NPS scheme.

You can invest in the scheme for long-term capital accumulation for your retirement. On maturity, you would be allowed to withdraw up to 60% of the accumulated corpus as tax-free income which would also be tax-free in your hands.

So, if tax-saving and retirement planning is your goal, you cannot go wrong with the NPS scheme.

 

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4) Invest in Fixed Deposits (FD)

This is the avenue for traditional investors who are averse to any kind of market risk and want secured and safe returns. Fixed deposits have been an Indian favorite for a long time and this favor is not going to end anytime soon.

Even though the interest rate on fixed-income instruments, including fixed deposits, has been slashed in recent times, fixed deposits continue to find investors for the safety that they promise.

The popularity of fixed deposit schemes, especially when volatility struck during the pandemic, increased and the trend is expected to continue in 2022.

So, if you want to be safe with your investments, you can choose fixed deposit schemes. However, do not dedicate a large portion of your investment to fixed deposit schemes.

Direct about 5% to 10% of your investment in fixed deposit schemes and the rest should be invested in other market-linked avenues. If you are choosing fixed deposits, here are some tips which you can follow –

  • Invest in 5-year fixed deposit schemes offered by banks and post offices. These schemes allow tax-saving on investment under Section 80C
  • If you want higher returns, opt for fixed deposit schemes offered by NBFCs (Non-Banking Financial Companies)
  • Compare the rate of fixed deposit schemes across institutions and choose the scheme which has the highest rate
  • Do not withdraw your deposits before the completion of the tenure. It would attract a withdrawal penalty which would reduce your interest earnings.

For risk-free returns, you can also choose debt mutual funds which would help you earn inflation-adjusted returns and also earn the benefit of indexation if you redeem your funds after 3 years.

 

5) Invest in Unit Linked Insurance Plans (ULIP)

While the primary objective of insurance plans is to offer financial protection against premature death, Unit Linked Insurance Plans (ULIPs) serve a dual purpose. Besides allowing insurance coverage, these plans also help you create wealth, a la mutual funds.

ULIPs work on the model of mutual funds. The premium that you pay is invested into different funds of your choice. Each of these funds invests in the capital market depending on the fund’s objective.

For example, equity funds invest in equity stocks while debt funds invest in debt instruments. Depending on the growth of the underlying assets, the NAV of the fund grows and you can earn returns on your investments.

In case of death during the policy tenure, you get higher of the sum assured or the fund value and on maturity, the fund value is paid. The distinct advantages of ULIPs are as follows –

  • Invested premiums qualify for tax deduction under Section 80C up to Rs.1.5 lakhs
  • A single policy gives you the option of different types of investment funds to choose from – equity, debt and hybrid. You can invest in one or more funds as you’re your investment preference. Moreover, you can switch between the chosen funds during the policy tenure depending on the market movements. This switching is completely tax-free and almost all ULIPs allow free switches up to a specific number of times
  • Partial withdrawals from the fund value can be made from the 6th policy year. These withdrawals are also completely tax-free in nature
  • The death benefit received is completely tax-free
  • If the premium paid is up to 10% of the sum assured, the maturity benefit received on maturity is also completely tax-free under Section 10 (10D) of the Income Tax Act, 1961

Moreover, the charges involved under ULIPs have also been reduced in recent times pitching them as a favorable product against mutual funds.

 

6) Invest in Real Estate

This avenue is for those investors who want to bank on the growth in the real estate market. In 2019 the real estate market was valued at Rs.12, 000 crores, and it is expected to reach Rs.65. 000 crores by 2040.

In 2019, real estate investments amounted to Rs.43, 780 crores, and the number is expected to increase in the coming years. (Source: https://www.ibef.org/industry/real-estate-india.aspx) The introduction of RERA, reduced interest rates on home loans, and the need to own a house are the major driving factors for the growth of the real estate industry.

Housing is one of the basic needs of individuals and if you want to create an asset, you can explore the real estate market as the pandemic has led to a reduction in the prices which would be good for you.

Moreover, if you avail a home loan to invest in a home, you would be able to avail of tax benefits under Sections 80C, 80EEA and 24 on the principal as well as on the interest payable on the loan.

The loan would also improve your credit score and allow you to own your dream house. So, if you have considerable funds at your disposal, opt for real estate either for owning your house or for the creation of an asset.

 

Here’s a complete guide on how to invest in real estate

7) Invest in Gold

Gold is another investment avenue that you can consider if you are looking to hedge against volatility and uncertainty. Gold holds a traditional value for Indian investors as festivities, weddings, and gifting is marked with physical gold ornaments and jewelry.

From an investment point of view, however, different avenues are in vogue in recent years with the availability of gold ETFs, gold mutual funds and, the all-new, digital gold.

These gold investment avenues are getting much attention because of their safety, liquidity and ease of investing in small amounts.

Here’s a complete guide on how to invest in gold SMARTLY!

 

When it comes to returns, gold is a safe haven, especially if you are looking for long-term savings. Gold gives cyclical returns and when the markets are volatile, gold is looked upon as a safe investment avenue and its prices surge.

The very recent example is the COVID pandemic wherein the prices of gold jumped in April and May when the pandemic struck India. Moreover, over the last few years, gold has outperformed Sensex in terms of returns. Have a look –

gold vs silver vs sensex

 

 

 

 

 

 

 

 

 

 

(Source: https://www.businesstoday.in/money/investment/gold-sensex-returns-years-bse-silver/story/392920.html)

So, you can consider gold as an investment avenue but invest in Gold ETFs or gold mutual funds for liquidity and safety of storage rather than physical gold. You can also trade in gold through these investment avenues and book returns when the price of gold climbs.

2022 is supposed to be a breath of fresh air for the Indian economy and the financial markets as the effect of the unprecedented COVID pandemic is expected to ebb.

Use the afore-mentioned 2022 investment opportunities and make wise investment choices to grow your wealth especially if the pandemic ate into your portfolio in 2020. Plan your investment strategy for 2022.

Understand the avenues before you choose them and then pick suitable options based on your investment need, financial planning in 2022, and, most importantly, risk profile. Also, monitor your portfolio regularly so that you can make changes to it as per your changing financial needs and market dynamics and keep your portfolio profitable in all seasons.

 

Have any questions related to Finances, you can ask an expert on Koppr Tribe. Download Koppr App Now!

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Personal Financial Planning – 5 Questions to Ask in 2022

Personal Financial Planning – 5 Questions to Ask in 2022

It is relatively easy to make money if you put your mind to it. What is difficult is keeping the money you earn, and even more difficult is making your money grow on its own and work for you when you need it to do so.

In the past two decades of working in banking and financial services industry, I have a strong observation that most people are not very focused on personal financial planning and wary about hiring or appointing a financial planner to help him/ her to do so.

In the name of financial planning for the future, most of the people in India hoard money in fixed deposits in banks and post offices, put some money in PPF (public provident fund) and buy one or two insurance policies.

For the younger lot, you may also find some money put into SIPs in mutual funds too. However irrespective of young or old, you are unlikely to get clarity on the reasons behind such choice of savings/ investments other than tax savings and growing money as objectives.

Questions on specific financial objectives, investment strategy, vehicles, time horizon, the quantum of money expected at maturity, etc. are likely to go unanswered.

All these require focused financial planning and a certified and experienced financial planner can help you plan your finances to ensure you meet your life goals seamlessly.

However choosing the right financial planner may prove to be challenging, unless you understand the importance of financial planning and ask them the right set of questions before contracting and trusting anyone with your hard-earned money.

++

Personal Financial Planning – 5 Questions to Ask in 2022:

 

In this article, our effort will be to give you the required insights on all these to help you make conscious decisions regarding your financial planning needs.

 

1) What is Financial Planning?:

 

In a normal course of life from the time a person gets into his/ her first job till he/ she chooses to retire, the following are the financial goals and milestones in life when people generally require lump-sum money –

 

  • Wealth creation –

    In the face of rising inflation, if people need to maintain or improve their standard-of-living they will have to build wealth over a period of time.

    One will need money to buy luxuries/comforts of life ranging from the first car and also change it thereafter, vacations, own new home and associated things.

    All these long term goals require careful financial planning and investments in mutual funds and equities to accumulate an adequate amount of wealth at different timelines.

 

  • Education of children –

    Even professional undergraduate courses and higher education thereafter are already expensive today in India and across the world.

    This makes it imperative for a parent to plan for the higher education of the child the moment it is born. One needs to take into account the current cost of education and inflation in the economy to calculate the quantum of money required when the child grows up.

    To build the required corpus wealth by the time the child is 18 years old the parent would need to choose investment tools that will not only combat inflation but also untoward exigencies to ensure that the child’s education happens at any cost.

 

Parents who wish to plan a dream wedding for their children too need to plan in a similar manner to full-fill their wish, come what may.

 

  • Retirement planning of self –

    Retirement per se, is no longer a set at 60 years of age. People are seen to retire even at 45 years and/ or even at 70 years of age depending on their wish, given the increased life expectancy across the globe.

    All set and done, people get at least 25 to 35 years to plan for their golden years from the day they set foot in their work lives.

    If proper financial planning is done at an early age, then they can start even with a small yet regular investment, in a long term investment vehicle to build a good retirement corpus by the time they retire.

 

  • Medical and other exigencies –

    Given the uncertainties of life and growing lifestyle diseases, it becomes an absolute must for all to plan for their medical requirements/ exigencies very early in life to get a big medical coverage against a small premium.

    All medical coverage tools are tax-efficient, thus tax benefits are enjoyed on the premium paid every year.

 

  • Tax- Savings –

    Moreover with an increase in income, tax liabilities to grow. There are an array of tax-efficient savings and investment tools that not only help people save tax on their hard-earned money, but also support them in their long-term wealth creation goals.

 

All of these expenses need to be carefully planned for in a step-by-step manner, in order to ensure all life goals stated above and more timely planned and accounted for, way in advance keeping in mind the financial capability and needs of the person.

This in short is referred to as financial planning.

Enroll for Finance Planning course on Relationships and Finances and learn how you can manage both efficiently.

2) Plan your finances today:

 

Leaving financial planning and your financial responsibilities to chance or on other family members in the face of inflation and uncertainties of life might not prove to be a prudent choice.

Here’s a guide to plan finance for your family.

An educated and the mature decision is to act timely with responsibility and plan for your financial/ life goals based on your life stage and its needs without delay.

One must remember that procrastination seldom works with financial planning as time available to life goals is finite.

 

One must also remember the following points –

 

  • Inflation is not your friend –

    You must have heard your elders say that everything was cheaper back in their hay days.

    Yes, of course, they were; a movie ticket would cost INR 5 to 20 that today costs INR 500, a chocolate bar would be INR 5 to 10 at the most and today they cost INR 60 to 150 at least, A bus ticket was about 50 paisa that is about INR 8 to 10, groceries and other daily necessities.

 

So with the increase in income levels of the people, inflation or cost of living too has become dearer so with the same saving that made life seamless then, one would never meet even their basic expenses today.

Simply because, money is losing its purchasing power – the INR 10 that could buy you a bar of chocolate in your childhood would fail to purchase any of them today. You will need INR 150 to make the same purchase as the price has gone up by 15 times!

Similarly, if you save INR 150 in your bank today at a rate of say, 5% also, you will receive only INR 157.50 which will not be able to purchase your favorite chocolate 1 year down the line.

 

  • Emergency fund requirement –

    As I have always said that the biggest ‘if’ is inbuilt in ‘l-IF-e’ itself. No one knows when uncertainties of life strike with death, disease or disability. All dreams crash when any of these strike life unaware.

 

Having spent a considerable number of years in the insurance industry, I have seen that many people shy away from buying medical insurance and term insurance because these two policies do not have any maturity benefits!

However, these same sets of people ensure that their cars and motorcycles have 100% insurance coverage on them to protect them from any damage caused by accidents. Knowing very well that your vehicle insurance has no maturity value – you still buy it to offset any damage that can be mitigated financially.

The same logic must be applied to human lives, as life is priceless.

Moreover, unwarranted job loss too can shake up your dreams and aspirations. The emergency fund made available from timely and judicious financial planning is required to ensure your expenses are taken care of even on rainy days.

Investments in debt instruments like fixed deposits and income funds may prove to be beneficial in meeting such needs.

 

  • Funding the Golden Years –

    Progress in medical science has ensured we live long and healthy retired lives. This is indeed a blessing. People can enjoy their golden years with their loved ones, pursuing passions and hobbies, travelling the world and more.

    However, an important consideration here is funding all of these expenses, not forgetting medical expenses that generally arise with old age.

    Only timely and proper financial planning for retirement will ensure a steady and stable monthly income during the retirement years.

 

Enroll for our a FREE course on financial planning

 

3) Financial Planner:

 

All that we have discussed till now clearly defines the need to appoint a financial planner to help you create a program and manage your personal finances to help you meet your long-term life goals.

Having said that, it is also to be noted that the market is flooded with financial planners; but choosing the right one who has the ‘best interest at heart is essential for your financial wellbeing and peace of mind.

This is because, unlike lawyers and doctors who have a defined designation per law, the financial planners can carry various titles like – financial planners, financial planning officers, wealth managers, wealth advisors, financial service consultants, investment advisors, investment manager, among other designations.

Here are top reasons why you should hire a financial planner right now!

 

 

4) Top 5 Questions you can ask in 2022 to your Financial Planner:

 

This makes it difficult to ascertain the right or most suitable financial planner for your needs. Asking the right set of questions is critical to meet your needs.

Here are 5 questions we feel are most relevant to for you to ask before making a choice about your financial planner.

 

 

1) How does the financial planner expect to be paid for his services? Is he disclosing it?

 

Mutual fund agents/ distributors are paid a commission by the fund house. It is calculated as a part of the invested amount, and on every new investment, you make in the same scheme.

The amount of commission can vary from fund house to fund house and from scheme to scheme as well. It can vary from –

  • About 4.5% to 1% in ELSS
  • About 0.5% to 2.5% in Equity Schemes to a low
  • About 0.2%% to 0.8% in Debt Funds

 

Certified Financial Planners registered with SEBI provide service to their clients against a fee-only and are expected to act only in your interest. But one may not be able to vouch for that.

 

Thus on the very first meeting, you must check and clarify how his/ her payments are to be calculated and paid. In case if anyone says that it is a free service or hesitates to disclose details, it should raise an alarm with you. There is no free service anywhere.

Here’s where you should invest your money in 2022, recommended by top financial planners

 

2) What is his/ her specialisation and how long has he been in this profession?

 

Majority of the times it has been seen that the financial planner(s) is representing a specific company or fund house and all his products/ schemes they suggest are from a specified set of companies.

There will be others who are selling various products, but their technique is to ‘push-sell’ the products drawing comparison on how other customers have benefitted from such investments.

Neither are they able to answer your questions satisfactorily. These may not be the right persons for you.

Also ask them the kind of client base they cater to, in terms of at least their age and occupation and the number of years the financial planner is servicing these clients (someone with at least 4 to 5 years of experience should serve you good).

This will give you a fair idea about whether the financial planner will suit your profile.

 

 

3) Where is the focus: on your need or the product?

 

A good financial planner will always spend time to understand your financial needs – both short term and long term ones, along with your current financial situation and income sources.

He/ she should ask you about your dependants and the reasons behind your investment requirements. He/ she must also check about your risk appetite and probable reactions in face of loss due to market downturn.

He/ she is also likely to educate your instruments in case if they feel that it might be suitable for your long-term needs.

Only then will they will be in a position to recommend suitable investments tools to meet your needs. They will also ensure that you have a diversified portfolio to ensure mitigate future loss if any.

However, any financial advisor/ planner who positions and pushes one specific product as a one-stop solution to many needs, should raise a flag with you and is unlikely to be the right one for you.

This is because it has been observed that these advisors push those products which earn them bigger commissions and/ or are required to meet their assigned targets.

 

4) Promising high returns? – Be aware

Is your financial planner promising you a guaranteed return of 12 to 15% annually or even on the overall investment? If yes, this should raise an alarm for you.

No market-linked investments, ranging from stocks to mutual funds to ULIPs, guarantee returns such high returns. Even if they show you any printed document with returns; remember they are merely illustrations based on either past performance of the funds/ plans.

Generally, a 7 to 8% compounded annual returns are expected over the long term; rest are inflated returns to attract retail investors like us.

Even in the case of government/ sovereign bonds, the return/ rate of interest guaranteed on the bond is subject to various terms of conditions.

To ensure you ask and get clarity and satisfaction with their answers before you choose to invest in such instruments.

 

 

5) Is your financial planner explaining and discussing the risks involved in an investment?

 

Most of the financial planners/ consultants talk about the bright side of the investments especially in terms of returns. However only a few make their clients aware of the risks involved in certain investments.

For example, unit-linked investment plans (ULIPs) are suitable for young people who have a 15 to 30 years time horizon to maturity at that will reap good returns because of the power of compounding.

However, for old and retired people in their 60s and 70s, ULIPs are not suitable at all, as mortality charges will be very high at these ages and secondly this is not the age to get exposed to market-related investments that expose this set of people to market volatility.

Moreover, there are investment planners who pursue old people in their 70s and 80s to propose insurance policies for their grandchildren or children – the latter being aware of such investments being made.

They do this because their lives are beyond insurable age and/ or they are likely to have old age health issues as well.

So to make an easy cut, they get the policies issued in the names of younger people in their families – not mentioning that the policies will lapse in case anything happens to the proposers.

Thus one must ask enough and more questions about risks involved in any investments an advisor proposes to them to clearly understand the pros and cons involved.

In case aged investors, if you think you need to involve a family member to understand the proposal(s) better, please do so to ensure no money is lost in the deal.

Never go by the level of knowledge, polished outlook, and smooth-talking of your advisor.

Instead, focus on whether he/ she is thinking solely about your needs and interests when strategizing and suggesting you various investment options.

It has been observed that financial planners sometimes suggest unregulated investment options like Alternate Investment Funds, Bitcoin to young affluent and progressive customers.

Be sure to read on your own and understand every detail of such products – given that they are very complex and risky investments to step into unless you are a millionaire and have spare money to get into such things.

It is never advisable to hurry investments in instruments like these.

You can even ask questions to our experts, they will answer them instantly on our App. Download Koppr App and Join the Koppr Tribe Now!

 

We have full  Step-by-Step video on Financial Planning

 

5) The Koppr Edge: How can Koppr help you with your financial planning:

 

We at Koppr are dedicated to serving our clients to understand their detailed needs with our specialised mechanism and plan their finances to help them achieve their financial goals. You may read the Financial Planning guide for your reference: https://in.koppr.com/financial-planning/

 

You can simply start your investing journey with Koppr by starting your own Financial Planning.

 

1) Step 1: Sign-in or Sign-Up your Koppr account with your own credentials:
https://www.koppr.com/

 

 

 

 

 

 

 

2) Step 2: After you log in, you can see your investment portfolio

 

 

 

 

 

 

 

 

 

3) Step 3: There is a list of your Financial Goals for you to choose from. You can choose any of the listed financial goals like home, car, marriage, child planning, higher education, family financial support, vacation, paying off your existing outstanding debts, home improvement, emergency planning, etc. or even custom your own plan as per your requirements.

Create your financial goals

 

 

 

 

 

 

 

4) Step 4: Suppose you wish to buy a house, you need to enter the approximate value of your house now that you wish to buy. So, say you wish to buy a house which is now priced at INR 50 lakhs

plan your dream home

 

 

 

 

 

 

 

 

5) Step 5: Then you need to answer the question: “When do you plan to buy the house?”
Say, you choose Apr-2023.

save money for your dream home

 

 

 

 

 

 

 

 

 

6) Step 6: Then, you need to enter how much loan you wish to take, in terms of %. So, suppose to wish to opt for a 60% loan

financial planning to buy your dream home

 

 

 

 

 

 

 

 

7) Step 7: The calculator simply calculates the amount of money you need in the mentioned timelines, which in our example is INR 22.05 lakhs in 2 years and 2 months

dream home financial planning

 

 

 

 

 

 

 

 

 

8) Step 8: It also specifies the amount of money you need to save on a monthly basis to achieve your dream home

buy your dream home with proper financial planning

 

 

 

 

 

 

 

 

 

 

9) Step 9: This can be added to your Financial Goals with “Create Goal”

create financial goals

 

 

 

 

 

 

 

10) Step 10: Likewise, you can add other goals as per your requirement and create your Financial Plan on the Koppr App.

 

11) Step 11: You can also like or unlink your current investments to your financial plan so that you can track the progress of the same.

 

Our mission is to provide you with the right tools and financial products and take care of your financial well-being.

 

Download the Koppr app and take care of your finances today!

Take care of your Finances with Koppr!

Personal Finance for Young Professionals

Personal Finance for Young Professionals

The young people in their early 20s – 30s with a ‘white-collared job/ profession is commonly referred to as Young Professionals. Do you belong to this bunch of young and ambitious youth?

Then you are likely to have just completed your studies and are filled with dreams and aspirations.

So what are you aiming at acquiring and possessing in life soon? Is it your first car or a home in your name? Or is marriage on the cards to fulfill your dream to start a family with your chosen one?

Or do you belong to that wise category of youngsters who are looking for know-how to gain insights into personal finance for working professionals before making any life-changing decisions?
 

Personal Finance for Young Professionals:

 

1) Is managing your finance difficult?

It has been commonly observed that young professionals like you find it difficult to manage or consider the thought of managing their personal finances at the onset of their careers.

That is primarily because –

  • You feel life has just started for you and you are too young to think of saving for the future as you have a lot of time at hand and can afford to think about financial planning and investments a few years later.
  • Do you lack knowledge of personal finance that could include but not limited to how to go about it? What it is all about? When to start saving/ investing? What is the right amount to invest – is my earning too little to consider? What is the right time to begin? What is the right place to invest to optimise return? etc.
  • You may be wondering who can guide you properly and not treat you as a ‘run-of-the-mill’ investor.
  • It takes time for a youngster like you to understand the importance of managing expenses responsibly early in life; at times till you have undergone real-life exigencies yourself.

 

If you find any of the reasons even somewhat matching your current mental state, then take a deep breath and read on, as this article will not only guide you on how to go about with personal finance for working professionals like you but also make you mindful of money-mistakes to avoid; thus saving you from guilt and repentance in future.

 

2) A thumb rule to remember:

Irrespective of whether you are married or not, you should follow the 50:30:20 rule that says you must –

  • Budget your living expenses within 50% of your monthly income at hand. ‘Living expenses’ can range from repayment of your education loan, rent to be paid in the city of your work if you had to relocate, your groceries and utility bills, medicine, local conveyance, insurance, etc.
  • You must try and save/ invest 30% of your monthly income to live your financial dreams in future.
  • 20% of your monthly income you can spend on your free will on partying with friends, dining out, buying gifts and accessories among other things for self and/ or loved ones.

 

This basic rule will ensure you have laid the foundation for your personal finance and move ahead with planning your investments to live your financial goals in life by following the steps detailed here.

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A step-by-step guide to managing your Personal Finance for young professionals

 

3) Step #1: Identify your basic needs

In order to optimise your living expenses, you must understand your basic needs as listed below to ensure you and your loved ones are financially safe and free from untoward financial burdens in future.

This is the first step to effectively plan personal finance for working professionals.

 

  • Education loan

    If you had availed education loan to complete your higher education, then your first priority should be to set it off at the earliest.

    This is because the interest paid on this loan is considerably high that can be fruitfully utilized to use to plan other investments towards wealth creation.

    So other than the EMI debited from your account; whenever you get some extra income like incentives or performance bonuses, you must direct a major part of that money towards setting off your loan.

    Same for your credit card bills and personal loans, if any. This is because you must remember that loans have never done good to anyone, but have eaten into your disposable income.

     

  • Health insurance

    Even before your start planning your finances, you must buy yourself health insurance coverage. Even if you are eligible for a medical insurance cover from the organisation you work for, still you must consider purchasing one on your own.

    That is because the younger you are, you are expected to maintain the best of health; and the cheaper your insurance would cost.

    If you are reading this article today, you are either a ‘Covid-Warrier’ or would have survived the wrath of the coronavirus pandemic and the exponential amount of job loss people suffered other than lives lost to the germ.

    Thus there is no guarantee about anything in life as we have witnessed in the past eighteen months and more.

 

If you live in a Tier I city, then the minimum health cover* should be INR 5 lakhs.

In case your parents do not have their health insurance in place, you may want to consider a family floater of the same amount.

However, if you are married, your ideal health insurance family floater should be INR 10 lakhs, which you should increase with top-ups with passing years.

 

  • Term life insurance

    The biggest ‘IF’ is built in the word ‘LIFE’ alone. To protect your family in the face of financial exigency resulting from any untoward incident; like disease, disability or death; it is strongly advised that you buy a term life insurance of at about 22 times of your annual compensation (as approved and recommended by IRDA for your age group).

    Given that you are in your 20s, a 50 lakh term cover would not cost you more than INR 6000 per annum – a cost of less than INR 16 a day. (source online applications on policybazaar.com)

 

Have you asked yourself few questions regarding Financial Planning. No? Read our article on Personal Financial Planning – 5 Questions to Ask in 2021

 

4) Step #2: Budget your finances:

Though it may apparently seem that living on a budget is mundane, it will actually help you live life king size by optimally utilizing your disposable income the way you want to.

Wondering how to budget? Just make an excel sheet with a detailed list of the monthly inflow of income and expenditures. That will help you allocate and reallocate expenditures and/ or cut down unnecessary expenses as well.

The 50:30:20 guideline will come in handy in this exercise.

In case you feel you are someone who fails to restrict your temptation to withdraw and overspend money; you may want to look at siphoning out a certain specified amount of money from your salary account to another account via an auto-debit mandate the moment your salary gets credited every month.

This way you may cheat your mind to an ‘out of sight, out of mind state and help you forget the urge to may unnecessary withdrawals.

 

5) Step #3: Build an emergency fund:

As the name suggests, this fund is aimed at helping you tied over unforeseen, unplanned, and uncalled for a financial crisis if and when it arises in life like the ongoing Covid-19 pandemic or any natural calamity like floods, earthquakes, etc.

These kinds of an emergency situation can result in job loss, pay cuts, death of family members, medical emergencies, and more, as we have been witnessing since early 2020 as well. This makes life and works completely uncertain.

Thus it is prudent to build a contingency fund as a part of your personal financial planning for the future.

As mentioned in step #2, you can start building this fund by setting aside a specified amount of money (via auto-debit mode) in a separate bank account and soon you will find a considerable corpus built to support you in days of emergency.

Other investment vehicles used to build emergency funds are fixed deposits, recurring deposits, liquid mutual funds too depending upon your need and risk appetite.

Experts say, ideally you should have 3 to 6 months of monthly expenses as your emergency fund.

Some are also of the opinion that you should better provision for 9 months of expenses in the face of very severe emergencies like the ongoing coronavirus pandemic.

 

6) Step #4: Define your financial goals:


Just as we know that it is important to know our destination in order to choose the right paths to set sail towards it; similarly you need to know and define your financial goals for effective management of personal finance for working professionals like you.

That will help you choose the various financial tools/ vehicles you can invest in to help you achieve your goals.

 

Financial goals can be defined broadly into 3 categories viz. –

  • Short term goals

    Those are likely to come up within 3 to 5 years time; like setting off your credit card bills and/ or education loans, down payment for your first car.=

     

  • Mid-term goals

    That has a timeline of about 7 years to maturity, like your own marriage, childbirth, etc.=

     

  • Long term goals

    They have a timeline of 10 years and beyond and can include, children’s education, your retirement planning, down payment for your second home, wealth creations for a family vacation to exotic locations or even upgrading your car among other financial goals and aspirations.=

     

To embark on your journey into personal finance management with proper knowledge and make conscious decisions for your future, we urge you to take a quick course on financial planning with Koppr

This has helped youngsters like you make wise decisions around their investments from a very young age and we believe it will be a value add to you as well. We are there to help you in case of further queries.

 

7) Step #5: Choice of investment vehicles:

  • For long term goals:

    Make equity your best friend towards wealth creation for achieving your long term goals.

    Since the subject may be new to you, begin with SIPs of Systematic Investment Plans in ETF (Exchange-traded fund) schemes and/ or mutual funds with maximum equity exposure.

    This involves a monthly debit of a specified amount of money on a particular date of the month for 5, 10, 15 or 20 years and more depending on your investment horizon and the time you have to see your dream mature.

    Given that you are only in your 20s, time is the magic potion that you have on your side that gives the power of compounding enough time to show its magic to create phenomenal wealth for you over a period of time as most of your long terms goals defined earlier are likely to surface at least a decade and beyond from now.

    This will allow your money to generate enough wealth for you while you can happily concentrate on your career development and in pursuit of other interests.

 

You must ideally have at least 4 SIPs on a specified date on every week of the month to reap the optimal benefits of rupee-cost averaging on your investments that happen all through the month.

Let us take a few examples here for a better understanding.
Refer to the table below that shows you the power of compounding on your wealth. Say you are 23 years old today and have invested INR 5000 in an equity-based SIP for 7 years that have yielded you a corpus of INR 6,10,000 after 10 years at a modest return of 10%.

The same investment if continued for 10 years can get you a corpus of INR 10, 33,000.

However, if you keep that money into the account for 20 years without further feed, your yield increases to INR 27,96,000 without any further effort from your end.

And say if you have been patiently feeding your SIP for 20 years and kept it for 10 years more, they can build a wealth of INR 1.04 crores against an investment of only INR 12 lakhs!

Such is the magic of compounding!

 

SIP in Equity Mutual Fund  SIP in Equity Mutual Fund SIP in Equity Mutual Fund SIP in Equity Mutual Fund
Age  Age 23 years Age 33 years Age 43 years Age 53 years
Instalment amount INR 5000 INR 5000 5000 5000
Term of investment 7 10 10 20
Term to maturity 7 10 20 30
Rate of interest/ Return 10% 10% 10% 10%
Total amount deposited INR 4,20,000 INR 6,00,000 INR 6,00,000 INR 12,00,000
Total return earned INR 1,90,000 INR 4,33,000 INR 21,96,000 INR 92,00,000
Maturity Amount INR 6,10,000 INR 10,33,000 INR 27,96,000 INR 1,04,00,000

 

The best part about these investments is that in case you are in need of money, you can always make partial withdrawals from the investments buying selling a bunch of units without having to liquidate/ break your investment.

SIPs have been known to help support the long term goals of youngsters like you in ways more than one.

As you grow in your professional life and your income increases, and you get your extra incentives/ bonuses, ensure that you buy more SIPs and also invest in a few fundamentally stocks/ equity shares, as they too are known to build wealth over a period of time.

You must also consider investment in ELSS (Equity Linked Savings Schemes) as they are tax-efficient U/S 80C and will help you create wealth and save tax as well.

And we all know, tax saved, is income earned! To know more about managing finances and monitoring your investments we urge you to download the Koppr app from the Playstore to gain further insights.

 

  • For short/ medium-term goals:

    If you are a risk-averse person, and your investment horizon is less than 10 or 7 years, you have an array of investments options to choose from for peace of mind. Most of these debt and equity-related instruments are tax-efficient as well to ensure you save tax and thus further make money that way.

     

    • Bank FD –

      If you choose a bank fix deposit for a term of 5 years, you can avail of tax benefit U/S 80C.
    • Public Provident Fund –

      This has been an all-time favourite and a must-have for all Indians as it helps create a retirement corpus with the best return in the debt market with a tax-free interest of 7.1%.You can maintain a PPF account with just INR 500 a year.The maximum annual contribution allowed is INR 1.5 lakhs. Principal invested gets a tax benefit U/S 80C too.
    • ELSS –
      It has a 3 years lock-in and maturity in 10 years. This is because this too gets you a tax break U/S 80C.
    • Debt mutual funds, liquid funds and bonds –
      Being inversely related to the stock market, they are known to yield better returns compared to bank FDs.

 

Here is the complete Guide on How to do Planning for Your Family’s Financial Future

 

8) The top #4 ways to be mindful of money mistakes:

Managing personal finance for working professionals for you needs some study and interest from your side as we by now understand.

However, there are many that land up making money mistakes that can have lasting consequences of guilt of the opportunity cost lost. Let us take look at a few common money mistakes young professionals must avoid.

 

1) Living beyond your means>

This is the most common mistake youngsters make early in their careers with newfound financial freedom.

If you keep spending more than your earnings for long; it can make it very difficult for you to gain back financial stability.

Thus ensure you budget your expense by the 50:30:20 rule from the very beginning to live and manages expenses effectively.

2) Beware of the debt trap –

Be mindful of your spending on your credit cards or borrowing money from people to meet your flamboyant living expenses in the early years of your career. This is because there is a huge opportunity cost lost in the process.

There are people who had to take personal loans to set off their debts that ran into lakhs of rupees.

This has an adverse effect on your morale and respect as a human being and might find it extremely difficult to get back on track. Thus as described earlier, pay off your debts/ loans at the earliest.

 

To learn more about personal finance for working professionals like you and to have your query resolved, download the Koppr app from the Playstoreand get in touch with your personal financial planner today!

Making purchases unscrupulously

Youngsters are found to find a high in picking up accessories, latest mobile phones and gizmos, bikes and clothing continuously. They swear by the associated exchange programs too.

However, these are all depreciating assets that become obsolete soon. Thus be mindful and limit your purchases in these segments.

Rather you should aim at picking up real assets like stocks/bonds, gold/ gold bonds or even land if you can afford them as all of these will always increase in value.

 

Delusions about financial goals in life

There are very many youngsters who live beyond their means and/or have no savings in their accounts even if they are earning a decent amount of income.

This is because they have not spent time to understand/ define their life purpose or define their life’s financial goals.

Thus planning for personal finance for working professionals like you eludes them, leaving them grappling with their finances till late in life.

Thus start today and get your personal financial planning in place with your personal financial planner from Koppr and start your journey into wealth creation and realise your financial dreams with élan!

20 Thumb Rules For Investing

20 Thumb Rules For Investing

In this world, there are rules for almost everything. Whether you are cooking some food or playing sports, everything has some rules binding it. However, whether you follow these rules or not, that is completely up to you.

While some people think that rules are limitations to someone’s ability others think rules protect them from falling apart.

Similarly, there is the rule of investing which are followed by some investors and some define their own rules.

However, in investing, especially when you are a beginner, following the thumb rules can mitigate a lot of losses and increase your chances of making money from the market.

Here in this article, you will be reading about 20 thumb rules which are beneficial for investors.
 

20 Thumb Rules For Investing:

 

1) Bulls and Bears make the money:

While everyone is afraid of the volatility in the markets, but this volatility can earn higher returns.

If the market is going up or down at a very slow pace, then it is highly difficult to amplify the investment. The returns are lower and also the time required is higher.

However, when there is volatility in the market and bull or bear is at its top pace, you can make money out of the market.

The terms bulls and bears describe how the markets are performing.

If the stock market is increasing, it is called a bull market and the economy is growing and is sound.

However, when the stock market sentiments are negative and the market falls with most stock prices decreasing, it is called a bear market.

For instance, the stock market index Nifty 50 at present is roaring and at an all-time high. It has reached almost INR 15900 and this indicates that the market is in a bull phase.

If you have shares of the companies that are going up, then you are bound to make a huge profit in this bull run.

However, most people invest when the market is bullish, i.e. it is rising and only a few people tend to invest when the market is falling.

 

Moral of the story: You need to invest when the market is volatile, irrespective of whether it is bullish or bearish. The volatile market fetches more return and a stable market.

 

2) Do not buy everything together:

It is the second thumb rule of investing that you must not buy everything together.

The market is going up and down all the time. So, if you buy every at once, and at the next moment, the market may go upside down and all your investment can go into vain.

Thus, you must analyse each market individually, each asset separately, and then invest.

Also, when you are buying in huge volume, there is no need to buy all at once.

You can buy the same instruments in multiple lots. This gives you the chance to wisely analyze and observe the market.

If anything goes wrong you can close your position and stop trading or investing in that instruments.

However, if you have bought in volume together, and then after some time, the market turns around, it can be sudden death as well.

Moral of the story: You can invest systematically. This would not only help you beat the odds of not investing everything together but also help you with rupee cost averaging.

It is always advisable to learn before you earn, You can enroll in many courses on the stock market, financial planning, mutual funds, and more. Check them here

 

3) Rule of 72 of investing:

The rule of 72 is really interesting. Who doesn’t want their money to get doubled up, isn’t it? However, the number of years for doubling the amount is not easy to anticipate.

This rule of 72 however, helps in finding out the number of years your investment would take to double itself. Only with the help of the rate of interest and the number 72, you can find out.

You need to divide 72 by the rate of interest. So, if the rate of interest is 8% and you have invested Rs. 2 lakhs then it would become Rs. 4 lakhs in 9 years.

Moral of the story: You can gauge the time you would need to double your entire investment portfolio (in a fixed return product) with the help of the interest rate.

This would give you a tentative value of the expected pre-tax portfolio (keeping other factors constant such as the associated risks).

 

4) Rule of 114 of investing:

Now as you know in how many years, your money gets doubled, aren’t you feeling the urge to know the number of years it would take to triple itself? So, you can find that out using the rule of 114.

Similar to the previous rule, here you have to divide 114 by the rate of interest.

So, given the example above, the Rs. 2 lakhs would be Rs. 6 lakhs in (114/8) years = 14.25 years or 14 years and 4 months.

Moral of the story: Again, you can find out the timeframe of when your entire pre-tax investment portfolio can be tripled. However, taxes can be a significant part of your portfolio if not planned properly.

 

5) Rule of 144 of investing:

Similarly, you can also find out in how many years, your invested amount can be 4 times.

For this, you need to use the rule of 144 which is similar to the previous two rules.

Here you need to divide the number 144 by the rate of interest which is 8% in the example above. So, your Rs. 2 lakhs will be Rs. 8 lakhs in 18 years.

Moral of the story: Similarly, the timelines for the pre-tax investment portfolio can be quadrupled can be calculated.

 

Learn more about different rules about investing, share your questions and get instant answers from our experts on Koppr App. Download Now!

 

6) Rule of 70:

You seem to be happy seeing all your money doubling, tripling but here is the catch.

The amount may increase but the value will not be the same as the amount due to inflation after time passes.

So, it can eventually get halved as well and that can be determined by the rule of 70. Here you have to divide the number 70 by the rate of inflation.

For instance, you have Rs. 20 lakhs and the current rate of inflation is 4%. So, your money will be Rs. 10 lakhs in the next 17.5 years.

Moral of the story: Inflation can really reduce the real value of your investment portfolio. So, if you need to grow your portfolio, you need to factor in inflation and then grow the portfolio to your desired returns to give you an inflation-proof return.

 

7) Emergency fund rule:

Life is uncertain, anything can happen within even a blink of an eye.

Even if you have a lot of investments, you may not be able to use them if they are not liquid enough.

Moreover, there are penalties for withdrawing money early from your investment instruments. However, the most important factor is, if you are using your investments in the first place to deal with emergencies, you can completely ruin your portfolio.

Obvious investments are for the financial security of the future, but for emergencies, you need to have a contingency fund. This will not only help you in smoothly handling emergencies but also help you safeguard your investments.

Moral of the story: Experts suggest at least 3 months of your monthly expenses be set aside for emergency in an easily accessible fund so that it can be seamlessly accessed even by your family members.

 

10) Insurance planning rule:

After emergency fund, another important part of investing in insurance planning.

You may be wondering how it is within the rules of investment, then you must understand that when there is some medical crisis, or natural disaster, or anything of that sort, your investments can go for a toss if you rely on them completely.

Especially for medical emergencies, it is important to have Mediclaim policies, health insurance policies, and other insurance policies to safeguard your life, assets as well as investments.

The insurance penetration in India is very low and it is still not bought, but sold. This is where most insurance plans are also ‘mis’ sold.

However, if the story changed, and everyone ’planned’ their insurances and bought them proactively, then the entire concept of mis-selling wouldn’t even exist!

Moral of the story: Insurance is your Plan B, i.e. your family’s safety net. This is why it is crucial to plan it ahead of time so that they are not in a fix in case anything happens to the primary breadwinner of the family!

 

8) The 4% Withdrawal rule:

For planning a financially secure future, you need to be very particular about the withdrawal rule.

Especially if you are planning for retirement, then you must follow this withdrawal rule of investing.

It says that you must not withdraw more than 4% of your retirement corpus in a year.

For instance, you have accumulated Rs. 2 crores for your retirement. Now, going by the 4% rule, you should only withdraw Rs. 8 lakhs which is Rs. 66666 per month.

Now, there is inflation which needs to be taken care of as well. Suppose, the inflation rate is 5%. So, in order to accommodate inflation, you can also increase the withdrawal by 5% every year.

So, in the first year, you withdraw Rs. 8 lakhs, and then in the second year you can withdraw Rs. 8.4 lakhs and so on so forth.

Moral of the story: The only aspect you need to consider while withdrawing from your Retirement Corpus is to ensure that the corpus grows at a higher rate than the expected rate of inflation in order.

 

9) 10% retirement rule:

When you are young, you would hardly think about retirement, isn’t it?

However, if you start investing early using the 10% rule of investing for retirement, you can save a huge corpus when you retire.

Suppose you started earning right after completing your graduation at 21 years and your starting salary is say Rs 21,000. Applying the 10% rule, you can save Rs 2000 every month.

This Rs. 2000 may seem a very negligible amount, but using the power of compounding, this small amount can grow like wonders. Here is a snapshot –

 

Calculating retirement corpus
Current age 21
Investment amount every month 2000
The average rate of return 10 per cent
Retirement age 60
Tenure of investment 39
Total Investment

Total retirement corpus

9.36 lakhs

1.15 crores

 

With just an investment of Rs. 9.36 lakhs, you can build a retirement corpus of Rs. 1.15 crores.

Moral of the story: The power of compounding is the 8th wonder of the world and the advantage of investing early manifests it to a humongous amount.

 

 

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11) Rule of diversification:

One of the most important things in investment is risk mitigation and the smartest way to mitigate risk is to diversify your portfolio. Rule of diversification tells you about the correlation between the asset classes.

The correlation between the asset classes you are investing in must be low or negative.

This means, if one asset class is getting affected or going down, the other must go up or remain unaffected.

For instance, when stock prices go down or there is a bear market, the gold price usually goes up. In fact, it is also considered a hedge investment.

 

If you compare the two charts above, you can understand that when the stock market was a little sluggish in 2020, the gold prices were at an all-time high.

Moral of the story: Each asset class reacts differently and thus you need to diversify using such assets that your risk of investment goes down.

 

12) Don’t buy damaged companies, but buy undervalued stocks:

A stock may be damaged which means it is undervalued but the company itself is damaged, which means the stocks are not worth buying. So, it is important to evaluate the company in the first place.

The stock prices can be anything in the market, you need to find out its real/ intrinsic value.

Moral of the story: If the intrinsic value is higher than the prevailing market price of the stock, buy the stock. However, if the company is damaged, the intrinsic value cannot be higher than the market price of the stock.

 

13) Pay taxes wisely:

There are multiple investment instruments that can help you save your taxes. Invest in ELSS, ULIP, FDs, and many others. When you are investing, you need to check the tax implications for each investment.

For instance, the profit from investment in stocks is taxed as per capital gain tax rules.

Moral of the story: Plan your investments keeping their taxes in mind, so that your real return, i.e. the post-tax income from it is high. Otherwise, your tax pay-out would wipe out a significant part of returns.

 

14) Make sure you do your homework:

Investing in any asset requires in-depth knowledge and analysis of the asset and the market. You can do your homework by analyzing multiple resources both fundamental and technical.

Moral of the story: You can also do your research by visiting the site of Koppr. Here you can get an abundance of information and data which can help you in your financial planning and analysis.

 

15) Book your profits:

Greed is not good for investors. If your anticipated or targeted price is achieved, then it is wise to sell the assets and book profit.

Moral of the story: The urge of earning more may end up in losing your capital investment as well. Hence, you need to weigh the pros and cons well before investing.

 

16) Expect corrections, make the most out of it:

Corrections are part and parcel of investment and the financial markets. There cannot be a continuous rise or fall in the prices. If there is an excess rise, it will eventually fall and vice versa.

So, you cannot be worried about corrections. Rather, you must understand how to use them in your favour.

For instance, if there is a correction for ABC stock price, and you hold 500 shares worth Rs. 1000 each.

You bought the shares at Rs. 700 each. So, you are already at a profit of Rs. 150000. However, after reaching Rs. 1000, it started falling. Wait, do not sell all your shares. Analyze whether it is a correction or momentary fluctuation.

If the prices decrease a little, no need to take any action. However, if the prices decrease drastically, then it is better to sell the shares and wait until the correction ends.

Moral of the story: Once the price is at the lowest and again starts climbing up, you can buy the shares back. This is a very tactical investing strategy which if followed properly can be very effective!

 

17) Keep your ears and eyes open while investing:

The prices go up and down within a blink of an eye. You missed the update, and the price becomes different the next moment. So, it is important to keep a constant check on the market.

Moral of the story: With the help of the Koppr app, you can monitor the market round the clock. You can find all news about the markets on this app.

 

18) Panicking leads to losses:

When you are investing in the financial markets, you need to stop being worried. If you do panic buying or selling, you would only end up in huge losses.

Moral of the story: Markets will be volatile and that is the basic nature of financial markets. However, if you start panic buying or panic selling often whenever the prices go up and down, then your investment would go for a toss.

 

19) Flexibility is the key:

If you are rigid about your investments, then it becomes difficult to mitigate risks.

When one asset price is tumbling, or a company is continuously running in losses, you need to sell them.

If you are rigid and do not alter your portfolio, then you will only end up in massive losses. You need to be flexible enough to alter your portfolio whenever necessary.

Moral of the story: Reallocation and rebalancing of portfolio is the key to profitable investment if done at the right time. You need to know your ideal asset allocation and then keep rebalancing your portfolio accordingly.

 

20) Listen, analyse and invest:

Finally, the most important rule of investment is to listen to everyone, then analyzing each point, and then acting according to your final findings.

Suppose, your financial advisor suggested one stock, your friend suggested another, and your colleague another one. You need to evaluate all three of them, also find your promising stocks.

Then analyse them all, check whether they are rightly valued or not.

Moral of the story: After thorough analysis, you need to pick the most suitable one for your portfolio. Listen to everyone, but do what you think is right and what you believe is best for you and your investment portfolio!

Rules of investing are pretty much interesting if you thoroughly read them. Following these rules are up to the investors and traders. You can choose which one to follow and which one not to.

However, these rules are for making your investments better and optimize your profits and reduce the risks.

All You Need to Know About Emergency Funds

All You Need to Know About Emergency Funds

Emergency funds as the name entail cater to sudden and unforeseen financial exigencies arising from a range of unexpected situations viz. job loss, accident, major illness, natural calamity, etc.

Thus the nature of these emergencies can be short-term or long term in nature, but the need for availability of such contingency funds is immediate when the need may arise.

An emergency fund not only helps you tide over your critical financial needs in your most difficult times; it also ensures that your investments for other long term financial goals remain undisturbed.

Such is the importance of building and/ or having a contingency fund at your disposal. But remember, an emergency fund is usually not meant to fund daily expenses of life unless emergent from unforeseen circumstances.

 

In this article, we will focus on all the things you need to know about emergency funds for you to plan and manage your finances prudently.

We aim to cover–

All You Need to Know About Emergency Funds:

 

1) The reasons why you may require an emergency fund:

For all of you who have witnessed and are still experiencing the wrath of the landscape scale Covid-19 pandemic for the past eighteen months, you are sure to have witnessed the worst emergencies so far in your life, either in the form of pay-cuts, job loss, death of a family member, natural calamity, etc.

Medical emergencies, job loss, and natural calamity if faced call for immediate requirement of money and here is where your emergency funds come to rescue.

You must keep in mind that your emergency fund is kept liquid in nature, such there if met with a financial crisis, you can avail of the money without delay.

Neither should withdrawal from the fund cost you an exit load or withdrawal penalty. This is the most critical feature of emergency funds that you must keep in mind when deciding on your investment vehicle to save for emergencies.

 

Do you have any questions related to Emergency Funds or finding difficult to manage? Koppr Tribe is here to answer all your questions. Join our Tribe Now. Download the Koppr App

 

2) Types of financial emergencies:

Emergency savings may be required to mitigate a range of financial emergencies that can be classified into –

  • Small/ Short-term emergencies
  • Big / Long-term emergencies

 

Small/ Short-term emergencies entail but are not limited to –

  1. Accident of personal vehicle on the roads or breakdown at home
  2. Unplanned and emergency family travel (inter-city) to give care to a sick parent/ elderly family member or attend a family funeral
  3. Home/ office repair work to be undertaken post a natural calamity like floods/ very severe cyclones
  4. Medication and/ or minor surgery required for unique illness not covered in medical insurance policies
  5. Major robbery or theft during the journey or at home
  6. Pet emergencies/ accidents that require professional vet care
  7. Business slowed down due to prolonged periods of lockdown owing to a pandemic situation where payments are also held up

 

Big/ Long-term emergencies may include but not limited to –

  1. Long periods post-job loss/lay-off
  2. The medical condition of an immediate family member that requires your 24×7 attention and care
  3. Medical condition for self that may require a sabbatical from your work
  4. Major damage to house due to a natural catastrophe
  5. Unforeseen and unplanned education fees for children to ensure ‘golden career opportunities are not lost

 

There will still be a section of people who may feel that while the concept of emergency funds is great, and is good for all others; but you do not need one just now as –

  • Maybe you do not need to shoulder any financial responsibilities at home at the moment
  • The family is financially stable as the father is still earning and has the family finance sorted

 

You may also think that just in case if at all, a financial emergency occurs, you will have the credit cards that you can swipe and meet your expenses and use your 45 days interest-free period to further plan balance transfer on other cards till you tide over the crisis.

Believe you in me, when crisis strikes, it is not easy to maintain such calm and composure to calculate and play with such high interest revolving credit. You might be putting too much at stake.

You might also be thinking that you are highly skilled in a niche job; demand for which is always high in the market.

That gives you a notion that in case there is still a chance of job loss, you will easily be able to find one.

In that case, I would urge you to consider the following before you choose not to invest in emergency funds.

  • What if the country faces a major economic downturn and/ or enters into a recession and your job is no longer in demand leading to a job loss?
  • What if your company gets merged or acquired by a larger company and the department you are a part of is now redundant resulting in your lay-off?
  • What if your parent in the home country gets paralysed or becomes immobile due to a major accident and you need to travel back as the caregiver and sole companion for your lonely parent?

 

Yes, sooner or later in life, everyone faces financial emergencies that need serious attention and makes emergency savings a critical part of financial planning.

To understand and get further clarity on the subject, we urge you to take a quick financial planning course from Koppr to make a conscious money decision.

 

3) What is not a financial emergency?:

I would also like to highlight here some of the situations that definitely do not consist of or should never be considered as a financial emergency and you must not lay your hands on the contingency fund you have created for them.

For example –

  1. You badly need to invest some money into your business for a deal you are looking forward to. This is because you should have had provisioned for future business opportunities from your earlier profits alone.
  2. You or your family member wants plastic surgery to enhance your facial beauty.
  3. Being an ardent football fan, you have got a great deal on vacation travel to watch the EURO CUP finals on 12 July 2021 and wish to avail of it.
  4. You have been invited to a destination wedding and you decide to fly at the last minute
  5. You have a sudden desire to change your home flooring to a complete wooden makeover
  6. Replace your HD TV with a high end large smart TV of the latest model to offset the inability to go to movie theatres, courtesy of the pandemic.

 

4) The right amount of fund to keep in your emergency fund account:

Emergencies as we saw can come in ways more than one and can range from a big one like a job loss to a small one like your family car breakdown.

In most cases, you may have noticed that misfortunes, when they strike; strike hard and in a series – so don’t be surprised if you can have a car breakdown when you don’t have a job too among other losses/ exigencies! Whatever the situation is, you will have to ensure that your living expenses are seamlessly met even when you don’t bring home an income for several months.

And, you will still have to pay your investment EMIs, loan EMIs along credit card dues without a worry.

You will find some extreme cases as well; where some people are seen to account for their luxuries like an annual vacation as well while planning to save for an emergency, while some others trim their budgets and stick to bare-bone living expenses budget to tide over the crisis times.

So to start with, make an exhaustive list of living expenses for any month and prioritize the key (must have/ need to) expenses that you must account for to seamlessly tide of the crisis period.

You would need to take a call whether to consider one or two small ‘to haves’ in the list depending on your current financial/ job status and affordability.

 

Though most of the financial advisors/ planners would suggest keeping aside 3 to 6 months of your living expenses in and as your emergency fund, it will be prudent to set aside and build an emergency corpus that consists of 6 to 9 months of your living expenses.

This suggestion stems from the widespread experiences we are witnessing courtesy of the Covid-19 pandemic since the beginning of 2020.

Even the Subprime Crisis during 2007 – 2008 had witnessed prolonged periods of job loss for the salaried class if you remember.

 

Watch our Video on How Should You Plan for Emergencies? Prepare a Family Emergency Plan

 

 

 

5)How to Build an Emergency Fund?:

Just as Rome was not built in a day, your emergency fund needs time to build gradually.

You will need to set aside a certain amount of money into a separate account every month, and soon in some time, you will find a considerable corpus built.

Wondering how much money to save for an emergency? Say, the modest monthly living expenses that you would like to maintain in the face of financial exigency is INR 15000 at any point in time.

So you will need a corpus of at least INR 90000 or INR 135000 if you aim to build a provision for 6 or 9 months respectively.

You can decide on the amount you want to set aside every month towards your emergency savings depending on your choice and intent – you may choose, say, for example, INR 5000 or INR 10000 a month to build your contingency corpus.

You may choose to cut down on your ancillary expenses or even small investments for a while, to build this all-important emergency fund.

 

Read how to can escape the world of being broke in just 4 Steps to Start Building your Wealth Now.

 

6) Different instruments available to build emergency funds in India:

Time is now to think about where to invest for emergency funds.

While deciding where to invest in emergency to build the desired corpus you must keep in mind a few things like;

  1. The fund must help you without hassle when you need it the most and must easily convertible into cash without any delay.
  2. While some emergencies give you a few hours and maybe a couple of days to get prepared, others can be ‘right here – right now’ kinds, so you must invest accordingly.
  3. Thus the investment options you decide on must be highly liquid to ensure you or even your representative/ chosen family member/ friend can access the money if and as required.
  4. The money must be easily accessible such that it gets transferred to your account preferably within the same working day.
  5. The investment avenue should get you decent returns as well.

 

a) A separate savings bank account:

The easiest option is to open a separate bank account in your chosen bank and keep depositing a specified sum of money into that account through auto-debit mode.

This will ensure forced saving without missing out on a monthly deposit you committed to making to save for an emergency.

Below is the list of banks offering the highest rate of interest on a savings account as of 24th Jun 2021.

 

Bank Name Saving Account Interest Rate
Jana Small Finance Bank 3.50% to 7.25%
ESAF Small Finance Bank 4.00% to 7.00%
AU Small Finance Bank 3.50% to 7.00%
Equitas Small Finance Bank 3.50% to 7.00%
Ujjivan Small Finance Bank 4.00% to 7.00%
Yes Bank 4.00% to 5.50%
South Indian Bank 2.35% to 4.50%
Kotak Bank 3.50% to 4.00%

Source: https://www.myloancare.in/savings-account/top-banks-with-highest-savings-account-interest-rate-online/

 

b) Cash in hand:

Though it is otherwise discouraged, along with emergency savings in a separate bank account, it is prudent for you to keep cash in hand in lieu of at least one-month expenses.

This is because some of the emergencies do not give time for you to go to your bank to withdraw the money or any other option.

Moreover, there can be other technical glitches like the following that can be best bypassed to a certain extent if you have some cash in hand.

    1. Failure of internet connection due to a severe storm or cyclone may not allow for digital payment/ transfer of cash
    2. System failure at the medical facility to not allow for online payments
    3. ATM machine does not work due to technical failure
    4. ATM can run out of cash at times
    5. Emergencies or hospitalisation in the middle of the night will also not allow you the scope to withdraw cash from the bank against a cheque.

Thus when considering where to invest in an emergency, you must also regard keeping some cash at home.

 

c) Sweep-in Fixed Deposits:

You can also look at siphoning off your emergency savings into a sweep-in FD if you do not want to open and maintain a separate account exclusively to invest in emergency fund. There are two benefits to this action of yours –

    1. Your money will earn better interest than lying in your savings account
    2. You still have 100% liquidity on the money as you can withdraw the money if and when required to mitigate financial emergencies by withdrawing the money with your bank debit card and/ or online transaction without delay on a bank working day or even on a bank holiday.

However, it is important to remember that only single holding accounts are entitled to have sweep-in FDs.

This is definitely a good security measure to protect the interest of the primary account holder.

 

d) Liquid mutual funds:

If your emergency corpus runs into a few lakhs of rupees, then you may also look at keeping a part of the fund in a liquid mutual fund of repute.

This is because, generally a liquid mutual fund gives more return compared to a fixed deposit, especially when the equity market is on the downturn.

However, as an investor, you must also know that liquidating the money from a liquid fund can take up to one to three working days.

A certain mutual fund allows for ATM card facility to allow the investor to pull out up to INR 50,000 a day from a scheme, Example – Nippon India Mutual Fund has their ‘Nippon India Any Time Money Card.’

 

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Caveat:

While a fixed deposit has a deposit insurance cover of INR 5,00,000 on it, there isn’t any such protection available on any liquid mutual fund investments.

Thus as an investor, it will be completely your call on choosing to invest in the various tools depending on your risk appetite and decide how to manage the emergency fund on your part.

 

7) Benefits of having an emergency fund:

There are several unsung benefits of an emergency fund as listed below.

 

a) It gives peace of mind:

Financial stress can be detrimental to health and life as the inability to provide for basic yet serious financial needs in the face of an emergency situation can be very depressing and disrespectful for the bread earner of the family.

It has been seen to create panic in people leading to loss of sense of balance and calm too.

The existence of an emergency fund gives peace of mind and psychological power to concentrate on other areas of life as you know you know you are protected against unforeseen expenses in case they arise.

 

b) No need for revolving credit and/ costly loans:

If you have your emergency funds in place to fall back on in the face of the short-term or long-term financial crisis, you know you will not need to swipe your credit card or take any loans to tide over the financial crisis in life.

This is because repayment of loans and interest on credit cards only adds to your mounting financial owes instead of lessening them.

 

c) It protects your long term financial goals –

This is because, in case of any financial emergency, you know your emergency savings will take care of your emerging financial needs.

You will not need to break any investments planned for your future dreams and aspirations.

 

d) Makes you a disciplined investor –

When you get into the habit of saving money in your emergency fund; you see the results in terms of building a corpus for a defined purpose on one hand and the tangible and intangible returns associated with it on the other.

This is bound to give you a sense of joy and accomplishment that will urge you to invest in bigger financial goals in life through disciplined investments.

So what are you waiting for? Download the Koppr app and start your financial planning today!

7 Things your millionaire friend isn’t telling you about money

7 Things your millionaire friend isn’t telling you about money

For most youngsters like you in your twenties; experiencing and enjoying new-found life with friends partying, splurging on food and wine, gifts, gadgets, late nights and lifestyle is where the ‘highs’ of life lay.

And why not! There is a different level of adrenaline and dopamine rush to go for it more and more.

Life’s motto for most in your 20s is to ‘work hard and party harder’. Years go by without a care in the world as the money keeps flowing in to feed your wish-list of instant gratification.

Financial planning is generally not on the list of priorities for you.

It is only when you get to know from your sources that one or two of your bum-chums have become millionaires by the time they are in their late 20s or early 30s, that makes you derisive as the news seems to be a ridiculous surprise.

That is perhaps when the alarm rings in your mind and you start thinking as to where you went wrong when all were hanging in there together till yesterday.

How is it that few peers and kins are now successful and wealthy youngsters when you are still stuck in a rut with a job you enjoy or perhaps don’t and have not progressed much in your career or in money matters?

The good news is that it is not too late and you still have time. Suggest you change your mindset from ‘being derisive to being curious’ to learn and understand what your kins or bum-chums did differently to become money-wise successful early in life.
 

7 Things your millionaire friend isn’t telling you about money:

 
In this article today, we will focus our efforts to detail the 7 money practices that help youngsters become millionaires earlier in life which millionaire friends do not speak about.


Practice #1:

 

1) They budget their expenses:

Most millionaires are known to live well below their actual affordability – to the extent that you might doubt their millionaire status.

There are a large number of them who live in their ancestral homes, drive their family car, shop at thrifty Kirana/ departmental stores – looking for best deals, watching out for online deals and eating out on special occasions only.

This makes sense. Doesn’t it? None of the first-generation millionaires you see today or from earlier days, have been heard to have grown rich by spending money.

They have learned their money lessons well ahead in life and saving and investments are things they would swear by.

These habits are worked on and developed for years and they would not barter it for any amount of luring towards anything on earth.

 

Mistakes Millennials make: 

While a millionaire saves first and then spends, youngsters like you do the opposite. They spend first and save whatever is leftover. If you too are making this mistake, know that you aren’t alone.

Most Millennials are found to push their budgets till they are broke. They exhaust their salaries by mid-month and use credit cards to see them through the remaining days.

Most are found to fall prey to revolving credit as they would have no clue on the interest charged on your cards, nor would you know your due dates!

 

Investment lesson learnt

Make a monthly budget. Draw an excel sheet with a detailed list of monthly earnings and expenditures for every month.

Your monthly expenses ideally should consist of repayment of education loan, living expenses including rent, groceries, utility bills, local conveyance, medicines, and miscellaneous expenses.

Ideally, your miscellaneous expenses must be restricted to a lower percentage of your living expenses, rent, and loan repayment combined.

However, if it is otherwise, you need to take a hard look at how you can make adjustments to cut costs as the first step to financial planning.

For example, some millennials love to begin their workday with a Cappuccino from Starbucks that costs INR 300. With 22 working days in a month, it adds up to INR 6,600 monthly expenses!

If you stick to this habit for 30 years, your opportunity cost lost will stand at INR 11.40 lakhs. Surprised? This is because just INR 500 rupees monthly investment in a systematic investment plan (SIP) for 30 years could earn you INR 11.40 lakhs return at a modest 10% compounded annual return.

Whereas you can make your favorite cappuccino at home for just about INR 7 a day!

In fact, if you are yet to get married and shoulder minimal financial responsibility at home, then you should follow the 50:30:20 rule on your take-home salary for effective money management.

Here is the breakdown for you –

  • 50% of the money should go into loan repayment, rent, utility bills
  • 30% into savings and investments
  • 20% on discretionary spending as desired

 

Here is the complete article on How you can invest using a Budget or with less money as well

Practice #2:

2) They pay off debts aggressively:

All young millionaires around you know that you pay as high as 40% interest on your credit cards in India.

No legal investment gives you this high return on your money!

Your educational loan too does not come cheap. The interest rate hovers around 10% and 14%.

Thus they pay off their debts aggressively. This is because money saved on interest is money made.

 

Mistake Millennials make: 

Most of you love flashing your credit and debit cards when partying with friends.

Middle of the month when your pockets run dry due to high lifestyle expenses, it is this plastic money that helps you fulfill your desires.

This leads you to live beyond your means and you like most of the youngsters get into the vicious debt trap laid by the banks.

And you keep wondering that though you are paying your ‘minimum amount due’ every month, why is the actual amount due not going down?

Maybe you are also borrowing money from your successful friends too – thus increasing your burden of debt.

All these and more eat into your disposable income which you could have fruitfully invested towards your wealth creation.

 

Investment lesson learnt:


Arrange to aggressively pay off your debts/ loans.

 

Few steps to follow –

  1. Take a stock of your total outstanding debt in the market.
  2. Check for the balance overdue and interest rate for each credit card
  3. Take a stock of outstanding loans in the market like educational and personal loans
    1. Check their interest rate and term
  4. If required use a Debt Pay-off Calculator freely available on the internet to see by when all your debts will end.
  5. Give the banks auto-debit mandate basis calculations on point no. 3 for clearing all possible debts at the earliest date stipulated by the calculator.
  6. Stop using the cards for the time being. Revisit your budget vs. expense sheet to check where you can cut your expenses without majorly harming your living for the month.
  7. As and when you receive and extra income in the form of gift money, incentives, bonus, extra income from some source, interest on the maturity of fixed deposits, etc., ensure you use the whole money to check for any outstanding debt anywhere and use it to pay it off for good and also divert some amount to create an emergency fund and other important goals.

 

Remember interest saved is equal to money made. This will increase your disposable income.

Also remember that outstanding credit or EMIs missed or failed to pay off debts, etc.; all add up to your bad ‘credit score’ which will act as a deterrent when/if you wish to avail of any loans, like a home loan, even years down the line.

Next steps:

  1. Keep a maximum of 1 or 2 credit cards. Use only 1 of them. Keep the other away for emergencies only.
  2. Set a reminder on your mobile phone/ desktop calendar for you to ensure you pay off the total outstanding for the month at one go on or before the due date.
  3. Use the credit card for payments only in an emergency or when on business travel.
  4. Use cash to make your payments most of the time. Hard cash going out of your hand has a psychological impact on making you cautious of the money spent.

This is one of the most important money lessons for any youngster like you.

 

What every Indian in their 20s should know about their money? Read complete article here

 

Practice #3:

 

3) They have done their financial planning:

All ‘financially successful’ youngsters in their 20s you see around you; know their financial needs and goals to ensure effective money management.

They have done this with the help of professionals who are adept at financial planning for beginners.

Once the financial planning is done; there are enough options of investment for beginners to choose from best suited to achieve their financial dreams.

Hence efficient allocation of funds following the 50:30:20 rule can easily be achieved to cater to all needs with élan. And they can peacefully devote their time and energy to work for career development and growth.

Mistake Millennials make: 

For the large number of youngsters in their 20s, financial planning seldom features in their priority list.

Realisation perhaps dawns only when they face untimely personal exigencies like death or disease of the earning parent(s) or in the face of their marriage when they suddenly realise they need to shoulder all financial responsibilities of the family going forward.

They are seen to grapple with things having lost their peace of mind.

 

Investment lesson learnt: 

Procrastinating financial planning leaves your dreams for the future compromised and you will not live enough to regret it. To complete your financial planning today.

To plan your finances best suited to your needs, you will need to assess and consider various parameters ranging from your age, financial dreams/ responsibilities, life stage, time to maturity,  investment capacity, risk appetite, etc.

Yes, we agree that financial planning for beginners can look confusing at the beginning.

Thus we urge you to take a quick financial planning course at Koppr to get empowered with the required knowledge on the subject.

In case you need further clarification, feel free to connect with our experienced team at Koppr.

Here’s a STEP by STEP process to create a financial plan for yourself

 

 

Practice #4:

 

4) They started investing early towards their financial goals:

Successful millennials make choices differently compared to their peers. Instead of spending mindlessly on things of little value, they choose to embark on their journey into investments for beginners early in life to become millionaires by the time they are in their 30s.

They learn about the financial planning for millennials and make equity and equity-related vehicles their best friends to invest in. This is simply because you have time on your side. And time is money.

Time has the power to compound money and make it grow exponentially in the long run.

 

Mistake Millennials make: 

Most youngsters like you are found to either be scared to invest, remain in two minds or invest too little.

Even if you manage to overcome the unreasonable fear of the equity market and have designed a nice investment portfolio, if you do not save/ invest enough; going along with your dream to become a millionaire will remain unfulfilled for sure.

After all, ‘a penny saved is worth more than a penny earned.’ There are many high earning people around who still struggle with their money and lack even a decent bank balance.

Again there are many who have been known to have accumulated a decent amount of wealth with just good income levels.

 

Investment lesson learnt: 

Procrastination has many perils you won’t live enough to regret. So start investing today.

Even if you begin with tiny amounts, you will be surprised by the substantial wealth you have created over a period of time.

This will any day be phenomenally greater than never to have started investment at all. Let us take an example for a better understanding.

Example: Say you wish to accumulate INR 2 crores by the time you are 60 years old; i.e. 35 years from now. You have 2 options with you.

 

Option 1:
Starting at 25 with a modest 10% compounded annual return you will need a monthly investment of only INR 5500 to achieve your dream INR 2.11 crores wealth in your account (with a total investment of INR 23, 10,000 over 35 years).

 

Option 2: But if you start saving say at 30, with the same 10% compounded annual return you will need a monthly commitment of INR 9500 for 30 years to achieve the same dream amount INR 2.17 crores (with a total investment of INR 34, 20,000).

 

Thus the cost of waiting for just 5 years will cost you INR 9, 10,000 (39% more) to achieve the same targeted wealth!

This is an example of the magic of the power of compounding when you have time on your side. Worried about your opportunity cost lost?

Get in touch with your personal financial planner by downloading the Koppr App and start your investments today to maximise your wealth too!

 

Watch the video on power of compounding

 

 

Practice #5:

 

5)They have secured their basic needs:

Even before you commence your financial planning, you must first secure your life for your family members with health insurance and a term life insurance cover.

Your successful friends are aware that any insurance policy; whether it is on health or life, comes really cheap when you are younger and enjoy sound health.

These assets get costlier with age and deteriorating health.

Ever rising costs of medical treatment and rising uncertainties of life in terms of death, disease and disability; make a health insurance policy for self/ family and an adequate life term over on self absolute must help to ease the financial burden in the face of exigencies.

 

Mistake Millennials make:

Most of the youngsters in their 20s feel that you are too young to consider a health and life cover for yourselves.

In fact, you realise the need very late in life when either you see a family member/ friend suffer financially for the want of money due to the untimely death of the bread earner, or when you face financial crisis in the face of medical exigencies for yourselves.

Worse case scenarios observed today are that realisation dawns when millennials in their mid-30s have become obese and/ or developed some lifestyle a disease that makes purchases of a health and life insurance policy really expensive in your pockets.

Sometimes insurance is also denied for diseases you harbour! Have you measured your opportunity cost of waiting too long?

Buy unbiased health insurance to secure you and your loved once from Koppr

 

Investment lesson learnt:

If you have realised the opportunity cost of not covering these basic needs, consult your financial planner today on Koppr App and get the best-suited plan for health and life insurance, without any further delay.

This would make you a responsible and respected youngster who stands tall to protect your loved ones financially in the face of health and life exigencies in future if any.

 

Practice #6:

 

6) They use tax-savers to the maximum limit:


Young millionaires are known to be prudent enough to understand and maximise usage of tax-saving instruments to the maximum limit to optimise their returns.

They understand that tax saved is money earned.

Hence you will see that their EPF, PPF and NPS accounts are optimally fed to build their long term retirement tax-free/ efficient corpus. These investment options are also known to yield the highest interest among debt instruments.

They also optimise their 80C and 80D tax benefits with investments in Equity Linked Saving Schemes and Health Insurance plans respectively, repayment of interest on Education loans gets them to benefit u/s 80E, and interest on home loans u/s 24, among others.

 

Mistake Millennials make:

Youngsters in their 20s like you are known to be impatient and mostly lack interest in learning about avenues to save maximum tax to optimise returns even on debt instruments and/ or assets they can invest in.

 

Investment lesson learnt: 

Talk to your HR and/ or your financial advisor and learn all the ways and means you can use in a financial year to save the maximum amount of tax and optimise your returns.

 

Practice #7:

 

7) They are always in search of avenues of extra income:

Your successful friends have an insatiable thirst for alternate sources of income to add to their earnings and wealth creation.

They pick up weekend consulting assignments, contractual projects, and/ or work gaining an audience in the areas of their expertise on social media by sharing knowledge/ skills. Yes, ‘Audience’ is the new currency today.

To be able to have a sizable audience on social media as an influencer by captivating people’s attention gives them the ability to generate sustainable income. This empowers them to even ‘make money while they sleep.’

 

Mistake Millennials make:

While most Millennials are energetic about the work they do, they may not be diligent or persevering in nature in most cases.

Most get swayed into ‘work hard-party harder mode’ – thus losing out on the opportunity or the willingness to put in the extra effort to use their knowledge and skills to generate extra income.

 

Investment lesson learnt:

Opportunities and scope are endless for the youngsters with the right attitude/ intent, knowledge and skillsets.

You just need to open your horizons and find out those avenues of making more money to help you fulfil your dream of becoming a millionaire too.

So what are you waiting for! Contact Koppr and start investing today.

 

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