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Asset Class is a often used word in finance, especially investment & portfolio management. We also used the term many times in our articles. In this article a take a academic look at the various asset classes.

We all aim for success in our investments. But success in any investment is a play between returns & risks. You may not have any control on the returns or risks that your investment portfolio actually generates but you definitely have control on making a smart allocation that maximises returns and minimises risks. While planning your investments, ‘risks’ is often not properly understood and even less planned. This article introduces you to this aspect of planning in your investments.

Planning for investment risks or “Risk Management” is nothing but the identification and assessment of risks followed by smart allocation of money in such a manner that the chances of an unfavourable outcome and/or the losses because of same is minimised. Risk management also involves regular monitoring and rebalancing your portfolio to control such risks.

The steps in any risk management exercise, including investments, would be as follows:

• Know the risks faced – identify, characterize and assess threats
• Understand the risk involved – determining the extent of risks & probability of occurrence
• Identify ways to reduce risks
• Prioritize & act on risk reduction measures
• Regularly monitor & control risk

The third step involves identifying different ways to reduce risk. A smart person knows that ‘not taking any risk’ is also risky and that deciding to not take any action is also an action in itself. Risks management strategies can be broadly classified in the following 4 ways:

• Avoidance – eliminate or withdraw the source of risk or in other words, do not take exposure to risks
• Reduction – mitigate the risks faced by smart strategies
• Sharing – transfer or share the risks, i.e., insure yourself from same, if possible
• Retention – accept and budget for risks

An investor can adopt any combination of the the risk management strategies while managing his investments. While strategies of Avoidance, Sharing & Retention are largely self explanatory, we take a closer look at the strategy of Reduction, which we believe is much more relevant and meaningful to investors. Risk Reduction would entail strategies whereby you can reduce the overall risks in your portfolio while not compromising on your returns potential. A few of the smart strategies for the same are listed below for your consideration…

• • Diversification: Even as a child we learnt that we should not keep all our eggs in one basket. This same principle also applies to investments. To reduce risks, we must diversify our portfolio / investments into appropriate mixture of different asset classes, products and companies / sectors, etc. To begin with, we must take a complete picture of our entire portfolio before we start with diversification. As earlier said, diversification can be in various types and ways. For example you may well diversify your portfolio into equity / debt / commodities / real estate, etc. at the higher level then say within equities, you may diversify into direct equities, mutual fund equity schemes, etc. and further even diversify into large-cap or mid-cap, sectoral or theme companies or funds. Diversification must be such that the portfolio is easy to manage and monitor. One of the good ways to diversify, if you are investing directly into equities or debt products, is to invest in mutual fund schemes which may be equity, debt or cash oriented.

• • Asset Allocation: While the diversification principle tells you to spread your investments into different asset classes, products, etc., Asset Allocation provides the tool which you can use to properly balance your portfolio to get the best risk-return trade-off suited to your risk appetite. Every asset class has a peculiar returns expectation, risk in terms of volatility of returns and an ideal time horizon for investment. Further, different types of investment instruments respond differently to the changing market conditions, varying political and economic scenario.
    Asset allocation is allocating your investment into different class of assets which usually have no correlation with one another. One can thus be assured, upto an extent, that even if one type of investment doesn’t perform, the portfolio will he hedged due to the investment in another type of instrument which may fare well.
    For example, in a booming market, one can increase allocation to the stocks as the strong corporate earnings and relative stability will increase the value of stock holdings. On the contrary, in a rising interest rate scenario; investors would wish to increase their allocation in bonds, reduce allocation in equities and keep a crtain position in cash. Hence, modifying one’s asset allocation from time to time will help minimize losses in different economic situations depending on which asset class looks favourable or otherwise.

• • Rupee Cost Averaging: The Guru of value investing, Benjamin Graham, trusted dollar (or rupee) cost averaging as the most effective way for investors to reduce the risk of fluctuation in asset prices. More relevant to investing in equities, rupee cost averaging is nothing but the practice of investing a fixed amount every period (month, quarter, or any period) in an asset. This strategy ensures that you are investing small amounts at all prices reducing the price risk involved to a large extend. Further, as studies show, the periodic investment averages the purchase price of the asset such that the average purchase price is often lower than the market price. SIP or Systematic Investment Plan in a mutual fund equity scheme is one very popular way of investing based on this strategy of risk reduction.

• • Portfolio Management: The strategy simply requires that your portfolio must be very professionally managed and monitored at regular intervals and that investment decisions must be driven by proper research and analysis. This would keep risks controlled on your portfolio. However, doing this on a sustained basis is not easy for common investors. The investors can however take assistance of experts and professionals like ‘wealth managers’, ‘financial planners’ or ‘portfolio managers’ for managing their portfolios and guiding investment decisions. Often such professionals/ experts have relevant experience in the field and have more knowledge and resources dedicated to this work which cannot be matched by common investors. Investors would be advised to even pay fees such professionals / experts for services in order to get unbiased and high quality services. Over time, one can surely reap many times profits in terms of better investment decisions and reduced risks through professional portfolio management services.

• Hedging: Hedging is another strategy of reducing risks suited and used by more advanced investors. Under this strategy, the investor exposed to risk in one asset class or product would take an opposition position or exposure in say future & option contracts. The idea is that if the investor suffers losses in one investment, it will be offset by a profit in the other. Hedging is very commonly done with derivative products of futures & options.

Risk and return is inseparable so to earn a good return, having a proper risk management system in place is very crucial. Therefore, assessing one’s risk tolerance and time horizon is the starting point to following a proper investment plan and supporting it with risk management techniques. As investors, we must also understand that the risk that we seek to control is similar to everyone but the impact of same on us is subjective in nature and will be unique to our own peculiar situation. In other words, the ‘risk’ tolerance level for each of us is different and is dependent on one’s age, income levels, assets, investment dependency, risk attitude, life-stage, etc. Risk attitude is something that shows how much comfortable are you in investing in products of different risk-return levels. You may like investing in equities and commodities for higher return while others may be interested in minimizing risk and earning a satisfactory return at the same time. In the end, the person who best understands and controls risks will never be on a loosing side. After all, successful investing is more about not making big mistakes rather than choosing winners…

New financial year, new beginning. By the time you will have this issue of newsletter, we all would be talking about planning for new financial year. Salaried class would be waiting for their annual bonus and increments while business class would be busy planning their business targets for FY15-16. More often than not, we tend to keep all personal finance related matters pending, mostly to be done at the 11th hour and end up taking inappropriate decisions, harmful to our personal finance health. Beginning of the year is in fact the most appropriate time to take stock of one’s financial situation. Where does one stand at the end of financial year with regards to his investment, insurance and other needs. It is that time of the year to align your portfolio with changes happening in your personal life as well as regulatory changes.

New Budgetary Changes at a glance:

See what you can make most out of the new budgetary announcements made in Union Budget 15-16.

• Personal Income Tax: No change in rates and exemptions to individual tax payers to continue. Individual tax payer to get tax benefits of Rs. 4,44,200 taking into account the tax concessions in this & last Budget.
• Wealth-tax replaced with additional surcharge of 2 per cent on super rich with a taxable income of over Rs.1 cr. Annually.
• Deduction limit of health insurance premium increased from Rs.15000 to Rs. 25000, for senior citizens limit increased from Rs.20000 to Rs.30000.
• Senior citizens above the age of 80 years, uncovered by health insurance, to be allowed deduction of Rs. 30000 towards medical expenditures.
• Deduction limit of Rs.60,000 w.r.t. specified decease of serious nature enhanced to Rs. 80,000 in case of senior citizen.
• Additional deduction of Rs.25,000 allowed for differently abled persons.
• Limit on deduction on account of contribution to a pension fund and the New Pension Scheme (NPS) increased from Rs. 1 lakh to Rs.1.5 lakh.
• Additional deduction of Rs. 50,000 for contribution to the New Pension Scheme u/s 80CCD.
• Exemption of transport allowance at Rs. 19,200, up from 800 p.m. to Rs.1,600 p.m.

Review Your Asset Allocation:
Beginning of new financial year means lumpsum gain in form of year end bonus and incentives for salaried individuals. Review current asset allocation of your portfolio against decided allocation and make necessary changes in consultation with your advisor. This is the perfect time of the year to review portfolio and decide on allocation of fresh investments with deployment of onetime bonus/incentive amount. Also consider if any material changes have happened in your personal life like addition or deletion of any family member, or if there Is any windfall gain. It’s always better to get in touch with your advisor and plan accordingly for the coming year.

Tax Aspect:
We always start thinking about tax planning either towards beginning of 3rd quarter of the financial year (Oct-Dec) as many employers ask for tax investment details by the end of December or in worst case towards end of the financial year in March. When we know about our tax liability, why not to plan in advance and start doing tax planning at the beginning of the year. This will also allow you take informed investment decisions and take advantage of full year return on your investment.

Review your Insurance Need:
We will not repeat here the increasing cost of health care or importance of term insurance, as readers of our communication must have read about these aspects often. At the beginning of the year, what is required is to review your insurance portfolio. Discuss openly with your advisor and study your insurance need. It might be possible that health insurance taken few years back may not be relevant in value terms and require increase in coverage. If there is a new member in the family don’t forget to add his/her name in the policy document.

Keeping Things in Order:
With every passing year you might have added either new insurance policy taken from a friend or relative to fill Rs. 1.50 lac investment limit under section 80C or added new ELSS from mutual funds for the same purpose. You might also have PPF account active or Bank FD to provide security and stability to your portfolio. What we fail in our busy working schedule is to keep the documents in order, which make life difficult at the end of the year at the time of filling tax return. Store all acknowledgments, premium receipts, ELSS statements at one place and create a backup system. Store all relevant details in your computer and take a backup, so that even if you misplace original receipt or document, these back up data can come in handy to ask for duplicate from service provider. Beginning of the year is surely the time to relax after hectic work of financial year closing and meeting business targets. You must have burnt midnight oil in an attempt to meet your year-end business/revenue targets.Surely beginning of the year is time to relax and plan for summer holidays with your family but little caution can make coming financial year hassle free and can prove a step ahead in your family’s financial well being.

It may just take luck for a person to acquire or make wealth. However, it would take a lot more to keep holding on to that wealth. At the bottom of the things we do and the way we live life is money. Protecting wealth over a period of time, especially across generations is not easy. There are just too many factors that pose a risk to your wealth and one must be very well protected from all sides. In this article we take a birds eye view at picture of protecting wealth and explore a few strategies or ideas that you can apply in your lives.

Wealth Protection: The True Meaning
Wealth Protection may come with the question: What is wealth? The dictionary definition says it is an abundance of worldly possessions. With the uncertainties prevailing in our lives, it is very important to protect your wealth. Most people focus on growing their wealth but protecting your wealth is just as important. While you can’t always predict life’s changes, you can plan ahead to help protect your finances from being diminished. Without adequate protection, you will be vulnerable to the nasty effects of a chance misfortune which may cause financial losses. Hence protecting wealth must assume a very critical part. Below of the few simple connotations that we can derive for term ‘protection’:

Types of protection:

• Protection of ownership:
• Protection of value:

Risks to Wealth:

• Protection from risks / uncertainty:
• Protection from usage:

Protection of ownership:
Ownership protection means ensuring that you and/or your loved ones continue to own the wealth that belongs to you. Often protection of ownership is required to protect against the following risks:

• risks that arise on ownership issues specially in case of property transfers and inheritance
• risks to ownership of business assets and capital if legal fool-proof work is not done
• risks to unattached / personal wealth in case you are suffering from huge losses or claims

The following are few ideas by which we can protect the ownership of our wealth & assets

1. Legal Documentation: Proper legal documentation and ownership records of all family / personal assets. All the records / documents must be safeguarded and stored at a place which is known & accessible to you and your lawyers/ spouse, etc. in case of any eventuality. Due diligence and audit of title / ownership documents must be done in case of any purchase of assets or business stakes, especially property.
2. Estate Planning: It is about declaring successors to your wealth and the proportion of distribution through proper estate planning and making your ‘will’. One may also look at formation of trusts to oversee large properties or businesses. A non-existent or outdated will may mean passage of assets to unwanted persons and undue financial burdens to loved ones.
3. Court Attachments: One might do well to keeping business entity distinct from self. This means protecting personal assets safe from payments due to creditors and other claims on business. One idea is limiting your civil liability through formation of Private Limited Company, subject to extant laws. In proprietorship & partnership firms, the personal wealth is not treated distinct from that of the owners or partners. Also from an individual’s perspective, retirement benefits like pension, PPF, EPF and gratuity cannot be attached by authorities or under any decree of court.

Protection of value:
Protection of value means the protection of the purchasing value or worth of money. Due to inflation or price rise, the value of money decreases over time and the thus, in order to retain its purchasing power, the amount money has to rise. Thus, one must always keep in mind the ‘real returns’ or value of money while committing to any investment or other avenue. In addition to this, the following points should also be kept in mind.

• Post Tax Real Returns: After having appreciated the concept of real returns, the next step is to look at post tax real returns, i.e., looking at the returns after tax, and then adjusting for inflation effect. Thus, if an instrument giving 8% returns, taxable at say 30%, the post tax returns will be (8%-2.4%) 5.6%. In an environment with an average inflation of say 7%, the real post tax returns would then be a negative of 1.4%.
• Idle Money: In the above above case, if your money is kept idle, you will be depreciating your money at the rate of inflation. One should minimise idle money and put aside money into avenues that preserve capital. Though savings bank accounts with deregulated interest rates are a bit attractive, mutual fund liquid funds and other debt products are options that one should explore.

Protection from usage:
This is a very broader & general idea that highlights the need to have proper management and usage of wealth, especially the business ventures and investments.

1. Avoiding Personal assets as collateral: Taking up business or other loans by putting your home or other personal property as collateral must be avoided as far as possible. A basic minimum wealth should be kept intact at all times and should strictly be used only as the last resort after exploiting every other opportunity.
2. Unprofitable expenditures: Unwarranted spending on assets, businesses which is not required. Further spending money on assets that depreciate rather than appreciate over time or incur expenses to maintain rather than generate income are to be avoided. Excess spending on shopping, life-style, etc. is highly undesirable and further, buying unrequired assets on loan is a strict no.
3. Avoiding aggressive risks, fictitious business venture, get-rich-quick schemes: There are no free lunches and never an easy money. It would be better if we can avoid shortcuts to creating wealth as almost certainly they can be disastrous. Never invest if you do not fully understand how the scheme/business works or if you are not sure of the management’s credibility and expertise.
4. Diversification of risks: The idea is to optimally spread your business risks and investment risks such that your capital and/or income is not jeopardised. It should work towards having investments in and earnings from multiple sources.
5. Hedging against risks: Business risks or risks of exposure to say commodities, currency, metal prices, etc. can be safeguarded by hedging
6. Investing in right asset classes for right duration: When it comes to investing, selecting the right asset class is a most important. An overexposure or underexposure to say equities can both be harmful for creating wealth. Matching the right asset class with the right desired duration of investment and your risk profile is what is required.

Protection from risks / uncertainties
After having taken all precautions and necessary planning in management of wealth, still life may throw up surprises or situations wherein all planning may come to fail. There are a lot of uncertainties in life and we should best avoid or reduce taking exposure to such risks and at the same time prepare ourselves for the worst, in case anything goes wrong.

1. Risks to life & health: An unfortunate event can happen anytime and anywhere to anyone. Specifically, there can be death, disease or illness, disablement, etc. which can put severe financial pressure at the worst of the times. Taking ‘adequate’ insurance thus becomes very critical for continued financial security of your family. Life Insurance, Health Insurance, Personal Accident cover for self & family members are few very critical covers that one should take after consulting your advisors.
2. Risks to property / assets: Similarly, protection of business property/ assets, factory, shop, home & home contents, goods in transit, etc. becomes very important and the loss therein may result in liability and financial losses. There are many general insurance products that can be explored. However, as a practice, we should take adequate safe precautions in construction, maintenance & storage of such property.
3. Risks to reputation / profession / : Apart from the tangible risks, there are also other risks that businessmen and professionals or officers are exposed. Again products like Professional Indemnity, Directors & Officer’s Liability, Public Liability, Commercial General Liability, Money Insurance, where one is protected against losses, suits, damages, claims, loss to customers, third parties, any many other risks.

Protection of wealth is a very vast subject. The idea cannot be justified in couple of pages, though a fair understanding can be built up. Wealth protection goes beyond protecting your investment and it extends to protection from the happenings in your lives and the risks that you are exposed to. After all, almost everything, directly or indirectly generally ends up in rupee terms. And when we realise this, our approach to life and everything that we may do will have an element of protection somewhere. Wealth protection is not an act or event but an attitude and philosophy to follow.

The coming of a child in any familly is an occasion of great happiness and rejoice. After the initial euphoria, invariably the thoughts of securing the child’s future and providing for the future needs arise. In the hearts & minds of the parents, a lot many dreams and aspirations also start taking shape. These dreams and aspirations perhaps carry the highest priority for any parent.

The above is a common phenomenon for any new parent. Even for existing parents, the growing need for child’s future planning is increasingly felt as the child matures. Gone are the days when a parent could relax and think that good upbringing and focus on studies would ensure a good future for the child. The fact is that child planning has become very critical for every parent and it can no longer be ignored or delayed.

Goals for child’s future:

Need for strong educational background:
The need for a very strong and quality education is increasingly felt in today’s competitive world. With India’s burgeoning young population, the excellence in education is a determining factor in the race for better careers today and it will be even more so in future.

However education, especially quality education doesn’t come cheap and it is also something that parents hate compromising on. A child’s school costs alone have reached sizeable amount. For higher education in reputed institutions can easily cost upwards of Rs.10 lacs in today’s value. Similarly education in foreign institutions can easily cost upwards of Rs.20 lacs. Arranging such amounts for education is a big financial goal that needs planning before hand if one wishes to give a good start to the child’s future.

Planning for marriage of Child:
In India, marriage is a gala event where money is spent more lavishly. Every parent dreams of organising the ceremony as best as one could provide given the status and social standing of the family. Marriage, especially for girl child is still considered as a big responsibility in many parts of the country where the family often feels obligated to provide for the entire wedding expenses in addition to gifts to the groom’s family. With rising prices of gold & jewels and wedding costs, which are increasingly becoming more stylish, the future marriage costs are most likely to be beyond what you plan today. It is thus only logical that parents feel marriage planning for child to be a big financial goal and thus should plan for it today.

Planning for home and/or business capital:
In addition to education and marriage, many parents would also like to provide for a separate homes for their child. There are some distinct reasons behind this like the growing trend of nuclear families, rising prices of real estate and homes becoming smaller to accommodate large families. Parents, especially for the male child, feel the need to have distinct homes that would provide for a great sense of security & a big asset for the child in future. Similarly, there are also parents, especially from the business communities, that may think of planning business capital or seed money for their child own business venture when the right time comes.

Planning for home or business capital for child is one lesser importance than to arrange for education or marriage. Nonetheless, it is something that many parents feel important to provide for and thus requires proper planning by the parents.

One area of that we feel left is that of accomodating for expenses on child’s education and upbringing on general terms. One can easily see that after the arrival of child in family, the monthly household expenses easily rise by upto 15-30%. Rise in such regular expenses are in nature of school/college/tuition/hostel fees, pocket money, shopping, gifts & small assets, etc. Though one can plan this as financial goal, often these expenses are adjusted in the normal cash flows of the family.

Nature of the goals for child’s future:
The goals related to your child’s future are slightly different from the other goals. Let us look at some of the unique features that go along with such goals.

Inflation or rate of rise in costs: In goals like education, marriage, etc., one cannot estimate the percentage rise in costs. Neither pure inflation figures can be assumed for such goals. The reason being such expenses are a lot subjective. For eg., while planning for education, one cannot strictly decide upon the nature of course, the institution or the level/years of education today. Further, the rise in prices for such education courses are not driven by inflation but more by the rise in quality of programme, facilities & instructors. Similarly while planning for marriage, one can easily see the sea change in how marriages are being conducted in past and current generation. There is also the angle of rise in social stature which we may not account today. Again inflation is only an indicative figure here and one needs to consider other factors too.

Thus, one needs to play very safe while planning for education and marriage. The best thing to do would be to consider the costs of the best education and marraige that can be provided and assume a rate appropriately higher than inflation while planning for such goals.

Maturity time: In case of education, the maturity of the gyouoal is generally fixed and one knows that higher education will be pursued after graduation. However, in case of marriage, it again cannot be fixed in advance though a likely marriage age can be fixed. The better idea would be to fix the marriage age on the lower side for planning purpose so that you have the corpus ready should you need it sooner.

Security: Another unique perspective while planning for child’ future goals is that of security. By security we mean that the goals of education and marriage need to be secured in the unfortunate event of death or disability of the parent. These goals are such that they are destined to mature, irrespective of anything happens to the parent.

Planning tips:
There are no special tips for child future planning. The tips applicable here are the same one that is universily applicable to all goals and most likely that you would have heard of.

Start as early as possible: One may start planning for such goals even if you are not a parent. For existing parents, one strongly advisese to start as early as possible for such goals.

Invest in right asset class: We already have talked a lot on the importance of choosing the right asset class according the risk appetite and investment horizon. Equities are the best option for long term goal planning since they are expected to deliver better returns, especially in a growing economy like India.

Save Regularly: Making regular savings a habit is probably the best thing of financial prudence. Small regular investments can greatly help for goal planning and is a better option than waiting for big sums of money to be accumulated for investments.

Insuring future: A special case for insuring future of the child through products like insurance and other similar products is an important need for child planning.

Investment options: There are plenty of investment options available in the markets. The investment options can be pure investment options in different asset classes and can also be in nature of customised products for child goals, as available in insurance products. What is really important for parents is to inquire about the options available in the markets while making the decisions. While selecting any scheme or plan, do not just look at the name which may contain the word ‘child’ but look at the actual features offered by them.

The main purpose of this article is to highlight the importance of planning for child goals. In an increasingly competitive and uncertain world, as a parent securing the future of child assumes great significance. It is something that should not be delayed and never avoided. The best way to begin is to start assessing the needs and goals for your child’s better future today.

Mr. and Mrs. Arora recently moved to their 3 BHK luxurious apartment in greater Noida. Although it is a premium property spread across 100 acre township (like a small city within a city, with school, hospital, super markets along with other amenities within the gated township property) but distance to office for Mr. Arora increased manifold as now he has to travel every day from Greater Noida to Noida through express highway.

With property prices going through the roof within the prime city areas, many new townships are coming up in peripheral areas, giving birth to new satellite towns, or corporates are shifting their offices to new suburbs due to modern facilities and lower rental. This is the story in almost every city, be it Delhi/NCR, Mumbai, Ahmedabad, Bangalore, Chennai or Pune. Although these new property developments give all the luxuries, commuting becomes a headache and increases the risk. Below are key findings about accidental deaths and injuries:

• 4,00,517 people died of accidental deaths in 2013, an increase of 1.4% over the year 2014
• About 1.2 million Indians were killed in car accidents over the past decade
• On average one every four minutes, while 5.5 million were seriously injured
  (Source: National Crime Records Bureau (NCRB) for 2013, Media reports published in the year 2014.)

Above statistics says all about accidental risks. Now the Life insurance gives protection against death, both natural or accidental, but does not provide cover for accidental injuries & medical bills as well as any kind of financial loss suffered due to permanent or partial disability.

What is personal accident policy and what does it cover? As the name suggests, it covers accidental

As the name suggests, it covers accidental death and also provides for financial loss due to disability. It may so happen that even after hospitalization, an individual has to go through medical treatment and rest at home, losing on regular monthly income. Personal accident policy comes in handy in such cases, where policy holder gets reimbursed for the loss of income due to permanent or partial disability.

Lets say a person fractures his leg in an accident. A PA policy cannot get your leg back in the same healthy state, but it can cover your financial losses that you might suffer as a result of losing your mobility, suffering a disability that affects your earning capacity or even loss of work arising from your accident.

So the basic objective of personal accident policy is to support policyholder in case of financial loss due to permanent or partial disability apart from death. It’s important to understand the terms and conditions clearly before you buy a policy. For example, hospitalization benefit can be availed of only if the policyholder is admitted within seven days of the accident, and is hospitalized for at least 24 hours. A fractured leg is a temporary disability, and if you have taken a cover against it, your policy will pay a weekly sum of 5,000 for up to two years. However, this weekly cash benefit is paid only if you are unable to go to work and the payment starts only 60 days after the accident. One also has to submit proof, including a doctor’s certificate for the disability that prevents one from attending work.

Personal accident cover can be bought either as a rider to your life cover or as a standalone policy. it is always sensible to buy a separate personal accident policy rather than taking accident rider. It is beneficial on the aspect of more features at may be lesser cost. With annual premium of around Rs. 1500 one can buy basic PA cover of around Rs. 10 lakhs. For any PA policy it is imperative that it covers basic eventualities like death, permanent total disability, permanent partial disability.

Critical Illness Cover:

Medical bills are rising. Medical inflation in India is as high as 15-17%. Even a single day hospitalization can be a burden on your wallet. Imagine the cost of medical treatment for any critical illness like cancer, stroke or bypass surgery.

Critical illness cover provides you shield against any such eventualities. Basic difference between a health plan and critical illness cover is that normal medical insurance is an indemnity plan, whereas critical illness is a benefit plan. In a sense, medical insurance cover reimburses actual expenses incurred on medical treatment, while critical illness gives entire amount of cover on diagnosis of a particular critical illness.

There is a standard list of critical illnesses, which are covered under each policy. So it is advisable to check the list of critical illnesses covered, & other terms and conditions. Amount of insurance to be taken depends on individual’s age, profession and family history among other things, but coverage of at least Rs. 5 lakh is recommended.

The above graph shows the ladder approach to your insurance portfolio, where basic term plan and health insurance become pillar of any insurance planning. One should think about adding personal accident cover and critical illness only after these two types of insurance needs have been fulfilled.

Always remember that these products are for specific purpose and can not substitute basic health insurance. An individual can look at these plans once basic health cover is in place, just as one uses toppings on a pizza to make it fulfilling.

The finance ministry has allowed retirement fund body Employees’ Provident Fund Organisation (EPFO) to become a member of a stock exchange although its trustees oppose parking even a part of its over Rs5 lakh crore corpus in equities.

This means Rs 90,000 crore of the EPFO’s corpus could find its way to equity markets. Currently, the EPFO doesn’t invest in equity and equity-related instruments.

The department of economic affairs has issued a notification under the Securities Contracts (Regulation) Rules Act 1957, permitting the EPFO to become a member of a recognised stock exchange, according to a release.

Market regulator Securities and Exchange Board of India (Sebi) had suggested that the government facilitate the flow of EPFO funds to equity-linked mutual funds to boost the market. The main recognised exchanges in the country are the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).

The finance ministry has been pitching for EPFO funds to be invested in the equity markets to maximise their yields. However, following strong opposition from unions in view of the volatile nature of stocks, the EPFO did not opt for equity investment.

The finance ministry had allowed the EPFO to invest up to 5% of its funds in equity in 2005 and enhanced the limit to 15% in 2008. A recent notification by the labour ministry allows the EPFO to invest up to 5% of its funds in money market instruments, including units of mutual funds and equity-linked schemes regulated by the Sebi.

The EPFO has more than 5 crore subscribers across the country. It provided interest of 8.5% on PF deposits in 2012-13. The EPFO trustees have decided to pay interest of 8.75% in this financial year.

Managing personal finance for most business owners is inseparable from their business finances, especially in case of small and medium sized business owners. This alliance between personal and business finance is usually formed in the initial or the startup ages itself, and continues long after extensive diversification.

This unique situation results in some unique challenges in business owner’s personal financial management, though, many other challenges are much similar to those of professionals earning a regular salary. Some of the major challenges unique to business owners include:

• Lifestyle changes in correlation with business cycles
• Lack of thought on retirement
• No thought over succession of business
• Stability and continuity of family support in case of losses in business

While, many proprietary business owners have thought of flexibility in their lifestyle and maintain it as such, ask them of their retirement plans and their answers would be somewhat like these:

• Who says I’ll retire?
• My son will handle the business, and I’ll be simply less involved.
• The family HUF runs the business, it’s a going concern or
• “…Blank…” as they never thought of it.

In our country, where most established businesses are family owned, it is easily and obviously assumed that children will take over the business slowly and will look after if the owner retires.

All these issues including the common personal money management challenges can be looked upon and tackled differently based on the stage of business. These three stages are:

1. Startup Stage
2. Growth Stage &
3. Established Business Stage

Personal Finance Management at the Startup Stage
This is a perfect stage to start on the path of personal financial management along with the business. Incorporating the business in a way so that the risk and liabilities remain harmless for your family’s financial situation is the first step. Though, starting a business in the early age would be the make it a perfect combination of business and personal lifecycle, the same may not always be the case, so what if you happen to start a business in one of the later stages of your life? The first rule of startup applies – incorporate your business keeping in mind the business cycle and the type of risks involved.

For example, a retail store started at a later stage in one’s life can simply follow the proprietary ownership, but for those in the early stage would likely want to see their business grow and expand. One retail store may not have lot of risk but expansion will certainly bring more risk and income along with it, in such case it is better to start it as a private ltd. venture rather than a self-proprietary one.

How does it help in personal money management? Here’s your answer:

Later Stage of Life: Financial situation in later stage of your life is likely to be much better than those in an early stage:

• You probably have built some assets and have acquired a net-worth even if not substantial.
• You are likely to be the biggest investor in your venture.
• Sole proprietorship will give you much needed tax relief by treating you as an individual tax payer.
• Variations in your income will not affect your family’s lifestyle much due to the presence of other financial assets.
• Finally your dependents are most likely to be in the final stages of being settled in their lives, therefore, leaving your financial responsibilities back at home relaxed.

Early stage of Life: At this stage, most of the money you invest in the business is borrowed, and with very little equity of your own you have little coming out of it at this stage:

• Partnership or Private limited company comes as a best choice.
• As you may choose to derive a steady income from your company
• Employ some of your closest family members to help you take the establishment further and at the same time enhance the take home without being taxed at high rates
• Such structure allows you to expand your business the way you want and still retain much of the control over it.

For the businesses running in the growth stage or the established stage (inherited businesses and or business started earlier in your lifetime), the challenges are similar to those faced by salaried people climbing corporate ladder in their early stage of career:

• Increasing family responsibilities
• Pressing requirements at work
• Time is mostly spent in planning and executing business needs
• Less or no time to tend to personal financial matters

For those hitting this stage of business early in their personal lives problems will be multifold and with today’s fast paced environment, financial mistakes are more likely in spontaneous decisions. Therefore, involving a professional financial planner / wealth manager would be the best idea to work with for your personal financial management.

Personal Financial Management at Growth or Established Stage
Further for all business owners following golden rules will help in building their personal wealth without the aftereffects of the business cycle:

1. Keep Business and Personal Accounts Separate:
Being organized and disciplined may be tough, but business is one area where it really pays off well. Being organized is the first step towards it, and having separate business and personal checking accounts is a huge advantage in this case.

2. Minimize your tax liability: 
Decide the most tax efficient compensation method in case of a limited company ownership. Get professional assistance for tax planning for business and start early each year for personal tax savings. Keeping your account books clean and advance planning will assist your transaction decisions in business. Advance planning for your personal tax savings will provide you enough time to save while your business inflows are higher and avoid last minute rush, including some bad decision making. Remember that early decision have exponential effect on your future financial position.

3. Build a contingency fund
We all want to be happily indulging in merrymaking during the good times, and during the bad ones we try to save even on the daily veggie purchases. As a business owner you would want to avoid this and decide on a contingency fund for your household expenses, including one for your business. Just keep them separate as discussed in the first suggestion.

4. Think and start saving for Retirement / Succession of Business:
It’d be great if your business can become your best retirement saving as it happens in the west, or more developed economies, in India it might still be a big turn off. The best thing to do is to start saving for your retirement while your business is running and growing. In case your plans are to ensure continued growth and function of business through succession, you need to start grooming the next person you would want to take charge of the business. Your children could be the best option but in case they have other plans there is no harm in grooming another key person for the job, while you maintain your shareholding (best for limited ownership companies).

5. Insure Yourself and Family Adequately:
Finally, the most important of it all Insurance, Life, health, accident and critical illness like contingencies can take a toll on your dreams and your dependents future by straining your finances. Best is to cover yourself and other key family members adequately though insurance policies for these risks.

6. Plan For Your Family’s Goals: Planning is an integral part of any business, especially at the startup age, but it is equally important for personal goals and aspirations regardless of the stage of business. This will provide you real sense of responsibility and will give a roadmap to achieve your goals objectively. The greatest benefit of planning is you will always know:

• How much you must save?
• What is your spending limit?
• Whether a short term aspiration hampers one of your responsibilities?
• How much you should target for in your business?

These six steps are not the limit of it but surely this will give your personal financial management a boost while you focus on running and growing your business.

The following is an excerpt from Warren Buffett’s latest annual letter to shareholders where he shares his thoughts on investing by narrating his experiences related to property purchases made by him in 1986 & 1993:

This tale begins in Nebraska. From 1973 to 1981, the Midwest experienced an explosion in farm prices, caused by a widespread belief that runaway inflation was coming and fueled by the lending policies of small rural banks. Then the bubble burst, bringing price declines of 50% or more that devastated both leveraged farmers and their lenders. Five times as many Iowa and Nebraska banks failed in that bubble’s aftermath than in our recent Great Recession. In 1986, I purchased a 400-acre farm, located 50 miles north of Omaha, from the FDIC. It cost me $280,000, considerably less than what a failed bank had lent against the farm a few years earlier. I knew nothing about operating a farm. But I have a son who loves farming and I learned from him both how many bushels of corn and soybeans the farm would produce and what the operating expenses would be. From these estimates, I calculated the normalized return from the farm to then be about 10%. I also thought it was likely that productivity would improve over time and that crop prices would move higher as well. Both expectations proved out.

I needed no unusual knowledge or intelligence to conclude that the investment had no downside and potentially had substantial upside. There would, of course, be the occasional bad crop and prices would sometimes disappoint. But so what? There would be some unusually good years as well, and I would never be under any pressure to sell the property. Now, 28 years later, the farm has tripled its earnings and is worth five times or more what I paid. I still know nothing about farming and recently made just my second visit to the farm.

In 1993, I made another small investment. Larry Silverstein, Salomon’s landlord when I was the company’s CEO, told me about a New York retail property adjacent to NYU that the Resolution Trust Corp. was selling. Again, a bubble had popped – this one involving commercial real estate – and the RTC had been created to dispose of the assets of failed savings institutions whose optimistic lending practices had fueled the folly.

Here, too, the analysis was simple. As had been the case with the farm, the unleveraged current yield from the property was about 10%. But the property had been undermanaged by the RTC, and its income would increase when several vacant stores were leased. Even more important, the largest tenant – who occupied around 20% of the project’s space – was paying rent of about $5 per foot, whereas other tenants averaged $70. The expiration of this bargain lease in nine years was certain to provide a major boost to earnings. The property’s location was also superb: NYU wasn’t going anywhere.

I joined a small group, including Larry and my friend Fred Rose, that purchased the parcel. Fred was an experienced, high-grade real estate investor who, with his family, would manage the property. And manage it they did. As old leases expired, earnings tripled.

Annual distributions now exceed 35% of our original equity investment. Moreover, our original mortgage was refinanced in 1996 and again in 1999, moves that allowed several special distributions totaling more than 150% of what we had invested. I’ve yet to view the property. Income from both the farm and the NYU real estate will probably increase in the decades to come. Though the gains won’t be dramatic, the two investments will be solid and satisfactory holdings for my lifetime and, subsequently, for my children and grandchildren. I tell these tales to illustrate certain fundamentals of investing:

• You don’t need to be an expert in order to achieve satisfactory investment returns. But if you aren’t, you must recognize your limitations and follow a course certain to work reasonably well. Keep things simple and don’t swing for the fences. When promised quick profits, respond with a quick “no.”
• Focus on the future productivity of the asset you are considering. If you don’t feel comfortable making a rough estimate of the asset’s future earnings, just forget it and move on. No one has the ability to evaluate every investment possibility. But omniscience isn’t necessary; you only need to understand the actions you undertake.
• If you instead focus on the prospective price change of a contemplated purchase, you are speculating. There is nothing improper about that. I know, however, that I am unable to speculate successfully, and I am skeptical of those who claim sustained success at doing so. Half of all coin-flippers will win their first toss; none of those winners has an expectation of profit if he continues to play the game. And the fact that a given asset has appreciated in the recent past is never a reason to buy it.
• With my two small investments, I thought only of what the properties would produce and cared not at all about their daily valuations. Games are won by players who focus on the playing field – not by those whose eyes are glued to the scoreboard. If you can enjoy Saturdays and Sundays without looking at stock prices, give it a try on weekdays.
• Forming macro opinions or listening to the macro or market predictions of others is a waste of time. Indeed, it is dangerous because it may blur your vision of the facts that are truly important. (When I hear TV commentators glibly opine on what the market will do next, I am reminded of Mickey Mantle’s scathing comment: “You don’t know how easy this game is until you get into that broadcasting booth.”)
• My two purchases were made in 1986 and 1993. What the economy, interest rates, or the stock market might do in the years immediately following – 1987 and 1994 – was of no importance to me in making those investments. I can’t remember what the headlines or pundits were saying at the time. Whatever the chatter, corn would keep growing in Nebraska and students would flock to NYU.

There is one major difference between my two small investments and an investment in stocks. Stocks provide you minute-to-minute valuations for your holdings whereas I have yet to see a quotation for either my farm or the New York real estate.”

KEY TAKEAWAYS:
Equity investors, on the whole, buy equities with a longer term perspective but tend to get influenced by the following factors resulting in them behaving irrationally:

• Irrational behavior of other equity investors in the market
• Vast amount of information available about the markets, economy, interest rates, price movement of stocks etc.
• Market ‘gyan’ shared by stock experts in leading newspapers and TV channels. The implied message being delivered to so-called rational investors is “don’t just sit there, do something.”

A lot of times, just remaining passive and not doing something is the most sensible and beneficial (in the long run) course of action.

Warren Buffett’s latest newsletter is available on the Berkshire Hathaway’s website at the following link:
http://www.berkshirehathaway.com/letters/letters.html

Word ‘ DINK ‘ has become very famous in 21st century urban India. This defines ‘Double Income No Kids’ generation. Generation of people born just before India started it’s economic liberalization process in 1991. These are young just married couple, aspirational, living in modern India, spending weekend at swanky shopping malls, using latest gadgets, driving a four wheeler and may be planning to buy a house, which their previous generation would have never thought of so early in their life. This is surely encouraging and gives a strong foundation to domestic consumption based India growth story, but there is other side of this aspect which is mostly ignored : And that is keeping check on spending and start investing early in life.

Most common phenomenon is living or relying too much on credit and finding it really difficult to set aside even a small amount of money for investment at the end of the month because monthly commitments towards EMI for car, home and even the latest smartphone or LED TV take majority part of monthly income. Ever wondered how our parents with only one earning member in the family and mostly larger family size, used to manage all expenses with limited and fixed source of income. Surely inflation has taken its toll and prices have gone up but so has our income level. Today, all luxuries have become necessities and stressful professional life requires higher spending on discretionary spending. What is missing in this generation is the practice to prepare and follow a strict budget.

Sir Benjamin Franklin has said, “ A Penny Saved Is A Penny Earned” and exercise of penny saving starts with a properly defined budget. Budgeting is nothing but to list down all your expenses and source of income on a monthly basis and write it down on a piece of paper or in excel sheet.

Lets look at the typical sample budget of an Indian middle class family:
Sample Budget
	Amount in Rupees
Particular	Monthly	Yearly
Income:
Salary	60000	720000
Rent	Nil	Nil
Interest/Dividend	3000	36000
Other Source	Nil	Nil
Total Income	63000	756000
Fixed Expenses:
Home Loan EMI	20000	240000
Car EMI	4000	48000
Maintenance	1500	18000
Insurance Premium	2500	30000
Housemaid/Cook Salary	2000	24000
School Fees	2000	24000
Any Other	Nil	Nil
Total Fixed Expense	32000	384000
Variable Expense:
Grocery	20000	240000
Electricity	2000	24000
Phone Bill	1500	18000
Conveyance Exp	4000	48000
Eating Out	1500	18000
Entertainment	1500	18000
Medical	1000	12000
Miscellaneous	2000	24000
Total Variable Exp	33500	402000
Total Expense	65500	786000
Saving/Deficit	-2500	-30000

As can be seen from above sample budget, even after earning decent income of 63000 per month, this family is not able to save anything at the end of the month. In fact their total expense (both fixed and variable combined) crosses their monthly income and result in deficit of 2500 per month. This requires them to cut down on their variable expenses to bring their monthly budget in balance. List down your entire monthly income across various sources. Divide your monthly expenses in fixed and variable categories. There will be some fixed expenses like EMI payment, Insurance premium, kids school fees and variable expenses like grocery bills, utility bill payment, conveyance etc. There will be certain discretionary spending like eating out, movie, shopping etc. Clear listing down of income and expenses will help you in two ways: 1. To arrive at monthly surplus/deficit amount which you can set aside for investment and 2. Kind of expenses which you can avoid or expenses which need to be cut down. Initially when you start with, you will face problems as many items will be missed out. Therefore it is suggested to carry out this exercise on a monthly basis to make it a habit.

Income – Saving = Expenses :
Another method of inculcating savings habit is to estimate your monthly investment requirement first in consultation with your financial adviser to achieve basic goals in life like creating investment kitty for kids’ higher education, marriage, medical emergency and retirement. Invest this amount at the beginning of every month and leave only balance amount in your account for monthly expenses. It is easier said than done but slowly and gradually as you try to follow this, you will be able to put control on your expenses and start investing for your future betterment.

Preparing budget can broadly help you :

• To list down all your expenses and source of income under various heads.
• To analyze type of expenses and where to cut expenses if need be.
• To realise the exact amount of savings/deficit at the end of the month.

Prevention Is Better Than Cure:
Emergency can strike anyone at anytime. Don’t forget to create an emergency kitty. How much one should have as emergency fund is a topic in itself for discussion but if you are a salaried individual then funds equivalent to at least 6 months expense and for a businessman funds equivalent to at least 12 months expense should be saved as emergency funds. As you are not going to use this money unless an emergency strikes, you can put this money in liquid/money market funds to earn return better than your savings account.

Some Important Points to Consider:
Try to minimize usage of credit card If used, make sure to make full payment of credit card bill by due date to avoid any penalty/interest charges as late payment charges are on a very higher side in credit card bills. Do not fall into ‘Debt Trap’ Try to pay off unproductive, high interest bearing loans like personal loan, credit card bill and even car loan as these are the loans which are not used to create any asset. Always remember, no matter how small the amount of savings is, every amount saved and invested can multiply and add to your wealth due to compounding effect.

You may find budgeting boring to start with, but once it becomes a habit, this activity will bring immense benefits in the form of good savings and investments for your future goals. Take inspiration from our mothers who did a commendable job in budgeting and managing our family’s expenses. After all it is for you and your family’s financial betterment.

India had been an attractive investment destination for many years post liberalization of economy in 1990, and most of the times have remained true to the expectations as well. Though, the sentiments started turning negative by the end of second five year tenure of UPA, 2009 – 2014, due to multiple reasons including lack of reforms and policy impediments, and as you can see in figure 2, gap between the inflation and GDP growth had been very high in 2012-13 period.

This started to change with the democracy getting back on the strong governance formula and selecting a government with a clear mandate in a strong message to the polity of what the people really want.

Result, economy started picking up the pieces and with definite measures slowly but surely coming India is once more an outperforming destination for investment.

The amount of investment a country attracts is also a factor in the growth story of that country. In case of our country more than 25 million strong NRI community forms a large investor base of foreign currency investment in the country. The rules of investments however, are much different for NRIs than those for resident individuals.

Our country has been among the world’s greatest beneficiaries of non-resident fund remittances to the country surpassing even the FDI flow.

Figure 1: BSE Sensex Performance

Figure 2: The Indian Growth Story 2007 – 2015

With such huge investments already flowing in, it becomes imperative for the investment advisors to understand the avenues available to NRI investors to safely invest their money and also what their needs could be.

Factors to Account For While Investing
For a resident individual investing in domestic market is simply a decision based on domestic factors like growth prospects and taxability, for an NRI on the other hand more than that should be accounted for:

• NRI status
• Investment Avenue
• Taxability
• Exchange Rate Factors
• Repatriation Needs

NRI Status
Knowing your NRI status is important, because of the different investment choices available to you as an NRI. While many times NRIs stay in a foreign country for many years before striking any change in their status, but if this status is supposed to change quickly, as in the case of a work visa, which may require you to stay on foreign soil at infrequent intervals.

Following conditions define your NRI status:

Figure 3: Determining Your Residential Status

INVESTMENT AVENUES FOR NRIS
NRIs may have multiple investment options to gain from Indian growth story in the way of India focused mutual funds, but many of these investments are regulated by the home country rules, and can only take a limited number of nonresident applications.

Direct investment in Indian instruments and markets are therefore, a preferable option for NRIs. For such investments RBI guidelines provide for two kinds of investment avenues for Nonresident Indians:

1. Investments with repatriation option
2. Investments without repatriation option

Investment on Repatriation Basis
Allowable investments with repatriation basis provide the NRIs avenues to invest earn and remit the earnings to their respective resident countries. List of the kind of securities is as follows:

• Government dated securities / Treasury bills
• Units of mutual funds operating in India
• Bonds issued by a public sector undertaking (PSU) in India
• Non-convertible debentures of a company incorporated in India
• Perpetual debt instruments and debt capital instruments issued by banks in India
• Shares in Public Sector Enterprises being dis-invested by the Government of India
• Shares and convertible debentures of Indian companies under the FDI scheme (including automatic route & FIPB)
• Shares and convertible debentures of Indian companies through stock exchange under Portfolio Investment Scheme.

There is no limit on the amount of money an NRI can put in these instruments, and repatriation means money invested in these instruments can be remitted to the foreign country in which the person is residing, thus making such investments attractive choice from the liquidity point of view.

Investment on Non-repatriation Basis
Money invested in these investment instruments cannot be taken back, and thus may prove to be a one shot investment and can be used only for investments in other Indian instruments. Such investments are:

• Government dated securities / Treasury bills
• Units of domestic mutual funds
• Units of Money Market Mutual Funds
• National Plan/Savings Certificates
• Non-convertible debentures of a company incorporated in India
• Shares and convertible debentures of Indian companies through stock exchange under Portfolio Investment Scheme,
• Exchange traded derivative contracts approved by the SEBI, from time to time, out of INR funds held in India on non-repatriable basis.

NRIs are not permitted to invest in small savings schemes and Provident Funds. Therefore, if one had been a resident and have invested in any such investments, after becoming NRI such investments once matured cannot be continued or repatriated.

Other Investment Avenues
Other than the instruments listed above, NRIs can also invest in immovable properties in India. By immovable property we generally mean the real estate sector. This sector has been one of the most attractive destinations for NRIs for long, mainly due to good value of returns and low volatility in prices. More than that, NRIs are allowed to repatriate the sale proceeds as well, unlike the debt instruments listed above.

TAXABILITY OF INVESTMENTS
Taxability of invested amounts is another factor which NRIs should account for while investing money. Tax issues for the top three investment choices can be explained as given below:

Debt Instruments
Investment in Debt can be made through Non Resident Ordinary (NRO), Non Resident External (NRE) accounts and Foreign Currency Non-Resident (FCNR) deposits. Taxability under these deposits and other eligible debt instruments is as follows:

Investment Type TDS Dividend Recvd FCNR Deposit NIL N.A. NRE Accounts NIL N.A. NRO Accounts 30.90% N.A. Debt Mutual Funds (Listed) LTCG: 20% (Indexation) STCG: 30% NIL. Debt Mutual Funds (Non-Listed) LTCG: 10% (No Indexation) STCG: 30% 20% (if DDT not paid). Notified Infrastructure Debt Fund 5% N.A. FCCB & FCEB 10% N.A. GDRs STCG & LTCG if sold to Indian Resident 10%.

Figure 4: Taxability of Debt Investment by NRIs

Equity Instruments
Equity investments can be made in three ways by NRIs, either through FDI, through Equity Funds or through direct broking account for equity markets. These investments are routed through Portfolio Investment Schemes or Mutual Funds. Such investments will be taxed as following:

Investment Type TDS Dividend Recvd Equity Oriented Funds LTCG: Nil STCG: 15% Nil (DDT Paid). Dividends from unlisted shares NA 20% (DDT not paid) Tax Rates Income on Shares in a Pvt. Ltd. Co. LTCG: 20% (with Indexation) / 10% STCG: 30% Nil (if DDT paid) / 20% Shares sold without STT payment LTCG: 20% (with Indexation) / 10% STCG: Progressive slab Nil (if DDT paid) / 20%

Figure 5: Taxability of Equity Investments by NRIs

Real Estate Investments
NRIs can invest without restrictions in residential, commercial or other properties with the following exceptions:

• Agricultural Land
• Farm Houses &
• Plantations

Although, investing in residential or commercial properties in the country is easy remittances and repatriation does require some attention. Some of the rules are simply explained below:

• Property Purchased by FCNR Funds: The repatriation cannot exceed the amount paid through this account.
• Property Purchased by NRE A/C Funds: The repatriation cannot exceed the foreign exchange equivalent of the amount in the NRE account.
• Property Purchased using NRO A/C Funds: The sale proceeds must be credited to your NRO account and you can repatriate to the extent of USD 1 million only.

Thus, participating in the great Indian growth story is going to be a lucrative option for NRI investors but unlike resident individuals, there are more rules and regulations to follow for non-residents. Also while investing in a foreign market exchange rates can play a crucial role in maximizing or minimizing the return from country’s growth. Looking at the current scenario Dollar is still trailing at above Rs. 60 levels which in itself are the one of the lowest levels in past three years. Therefore, this can be the best time to enter the market and benefit from both Indian economy and currency Exchange rate.