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Here is a headline even a pessimist cannot doubt. Indian E-Commerce is on fire. The hottest e-commerce market in the world is not in US or China or but it’s in India. Experts predict that the industry is poised to grow at a phenomenal rate of at least 50% year on year for next four years. What is driving this change? We take a quick look at the underlying reasons for this change. We also explore how we can adopt our evolving online behaviour over our traditional way of investing.

E-COMMERCE IN INDIA
Today, technology is something that has the power to change history in a very short time and there are numerous industries which have changed their character. The most amazing transformation is being seen in how we shop. The e-commerce industry in India is expected to grow at 40% CAGR from US$ 5.9 billion in 2010 to US$ 34.2 billion in 2015E. One interesting observation is that the e-commerce wave has come after we became more comfortable with the social media sites. Today, the digital world has penetrated every aspect of our lives, from ordering grocery, booking hotels, making friends, buying homes, searching jobs, selling old items and of course finding your spouse. To make things even better, we now have mobile devices connected to internet so that we can do things at any time, anywhere. There are a number of factors behind e-commerce boom and here are some key enablers and trends that you would like to know…

• Rising household income and spending ability. Annual household income rising from $2632 in 2005 to estimated $3823 in 2015.
• The rise of the great Indian middle class. Estimates for 2015 predict the share of households under the bottom of the pyramid as 29% compared 64% in year 2006.
• Falling mobile & computing device prices, internet costs and the rise in internet speeds. Internet penetration is up from 5m in 2000 to 140m in 2012 and estimated at 400m in 2016.
• Credit and Debit Card penetration increasing along with the value of transactions. Together, they have risen from 4.5m cards in 1999 and expected to cross 420m in 2015.
• Phenomenal growth of mobile e-commerce. In 2016, mobile shopping likely to be 27 times of that in year 2012. Mobile shopping grew 800% in 2013 alone

THE CHALLENGES
However, there are also challenges that the industry faces. The above numbers may look very optimistic but the fact remains that in a huge country like India, the share of organised retail online was only 0.3% compared to 8.7% of organised retail off-line and 91% of unorganised retail. There are also challenges of internet broadband speed which is minuscule compared to the speeds in US, Japan or European countries. The infrastructure and logistics is also a big challenge for the players. There are also questions whether the ecosystem consisting of payment gateways, technology, skilled manpower, regulations, supply chains, etc. can match up with the opportunity. The good news is that 2014 also marked an inflection point in the Indian politics with the formation of the new government. Clearly there is new found optimism and confidence. The government is playing its’ cards well with initiatives like Jan Dhan Yojana, Digital India, projects like National Bill Payment System, National Optical Fiber Network, the focus on infrastructure coupled with policy & procedural revamp efforts. The initiatives are today laying foundation for a new, connected, efficient and digital India tomorrow.

UNLOCKING THE BEHAVIOURAL REASONS
There is no doubt a big sea change in how the Indian customer has evolved with time. Today he is not shy, afraid or illiterate to log on, create accounts, make posts, give orders and make payments. But what is driving this behavioral change? Here are some pointers that come to our mind…

1. Need for Convenience: Ease, comfort, efficiency and time savingsby going online.
2. Need for Choice: Availability is no longer an issue. Consumers can easily compare and choose from the many options available./li>
3. Need for Freedom: To be free from any dependence on physical stores, freedom from mobility, time and geographical restrictions. Any one can now transact any time and any where.
4. Need for Control: Being online is also about having a sense of control in your own hands at all times.
5. Increased Confidence: Much improved confidence in online brands and payment gateways.
6. Increased familiarity with technology: With almost everyone being a Facebook user, Indians are increasingly more comfortable with technology and are using same across different platforms.

EXPLORING POSSIBILITIES IN ONLINE INVESTING
Year 2014 saw the penetration of e-commerce to newer areas including health care, groceries, education, governance in India. However, there is one big area which is still relatively less penetrated – and its’ “investing” online. Though, among investment products, online investing or perhaps ‘trading’ in equities has been already there for some time, its’ suitability for retail investors has been in question.

Mutual funds, which is nothing but a vehicle to hold any asset class, is suitable for all kinds of investors. While India had very long ago shifted fully to the demat holding format for equities, mutual funds units are still being held by a vast majority in physical mode. Today one can hold mutual fund units in demat format just like shares. One can also very easily transact in mutual funds online. While we are very happy to benefit from ease of doing our transactions online and also fully understand the benefits of holding shares in demat form, a question must be asked – why are we reluctant to take the next step of transacting online in say, mutual funds?

No one can doubt the below list of the advantages that transacting & holding mutual funds and other financial products in online mode can offer…

1. Any Time, Any Where Investing: freedom from dependence on your financial advisor for processing transactions. With the advice, you can transact at your own convenience within matter of few seconds. There would be no time or geographical or mobility restrictions.
2. ncreased Accuracy & Efficiency: With freedom from paperwork, the chances of physical rejections, errors, etc. is almost eliminated and the overall system /data management gets much more efficient.
3. Know Your Holdings: your actual holdings in the demat account can be easily and accurately known at any time at just one place.This becomes a big challenge when the holdings are in physical format.
4. Better Information flow: With every online transaction, you can track the status of the transaction and also get instant alerts related to transactions requested. All information will be easily available on the online account.

WHAT YOU NEED TO DO?
It is high time that Indian investors truly adopt the online mode when in comes to managing their wealth. Today, in addition to equities, there are other products like mutual funds, Exchange Traded Funds (ETFs), Bonds, etc which are available in online mode. You can truly enjoy the benefits of freedom, convenience, control, choice and much more by taking the online route.

The journey of going online begins by opening of a Trading Account and Demat Account (NJ E-Wealth Account) with a registered distributor /broker. For this one time process, your financial advisor will help and guide you. After the opening of the Trading & Demat Accounts, you are good to begin transacting online in products of your choice. Your existing, physical mutual fund holdings can also be easily converted to the demat mode on submission of a simple request for mode conversion.

NJ E-Wealth Account with NJ 
NJ India Invest Pvt. Ltd. a member of BSE & NSE and a registered DP with CDSL, also offers the services of Trading Account & Demat account with many unique features and benefits as listed below.

• Single Window Multiple Products– currently live segments are Mutual Fund & Capital Market. Even bidding for IPOs can be done through NJ NJ E-Wealth Account.
• Multiple modes of transactions (Online, Call & Trade, Mobile App and even Offline)
• Single access point for multiple AMCs and mutual fund schemes
• Inter AMC switch & STP is possible.

SUMMARY
We have been making giant strides in how we are connecting and transacting in our lives and are skilled in the usage of internet and mobile. Time has now come to also go digital and online with our investments. As we all know, the advantages are enormous and it is a matter of time that until the day when we all will be investing and managing our wealth online. And going by the trends, it feels like that time will be sooner than later. Many have already logged on, have you?

As it is said, well begun is half done. We understand and apply that to almost all spheres of life except may be for investment. Investment decisions taken in early stage of life have potential to transform your financial future. As we all know compounding is the eighth wonder of the world and it works best as longer we stay invested. Also starting at young age allows you to take higher risk and invest in growth assets like equity and real estate. Lets try to highlight a few very important financial/investment decisions which one should take before he/she turns 35.

Buy Term Insurance:
This is perhaps the most basic and most important financial decision one needs to take as soon as he/she starts earning. Buy term insurance first at young age to provide yourself optimum life cover at the lowest premium.

The biggest advantage of buying term cover at young age is to avail higher cover at lower premium. Opt for tenure which covers you till 60 or 65 years of age. In these days many Life Insurance companies has started offering On-line Term Plan, you may look at that option also to avail Term Plan.

Next Step is Health Insurance:
Once you have insured your life with adequate term insurance, next in line is to insure any medical emergency. As it is said you should buy health insurance when you don’t need it because when you need it no-one will give you. One obvious advantage is low premium of medical insurance for young individual. This will also allow you to see through initial waiting period of 3 years without any fuzz. Delay buying the policy and you may get afflicted by medical conditions that usually crop up in the late 30s and 40s. Start with individual plan and then convert the same to family floater once you get married and expand the family. Do not rely solely on employer health benefit. In most cases this may not be adequate and remember this will not be available once you retire, the time when the need for health cover will be highest.

Create Emergency Fund:
Even though you are adequately insured there are certain emergencies which insurance does not cover e.g. job loss. Always maintain your 7 to 8 months monthly expense as emergency fund and park the same either in short duration bank F.D. or invest the same in liquid/money market mutual funds or opt for sweep in savings account. This fund will come handy in case you decide to take career break for higher studies or lose your job or prolonged medical treatment.

Start SIP:
Once you are adequately insured and have created an emergency fund, its time to hit the investment highway. Remember compounding works best in longer time duration. Start investing in growth asset like equity through mutual funds SIP route. Always remember, no matter how small the contribution is, compounding works wonders for your portfolio. Just consider this. An amount of Rs. 5000 invested per month, growing at 12% can create corpus of Rs. 1.54 cr in 30 years. The beauty here is your capital investment is only Rs. 18 lakhs and your money is multiplying by 8.5 times. If you delay starting of SIP by just 4 years and give your investment 26 years instead of 30 years, you end up loosing Rs. 54 lakhs as your corpus after 26 years will be only Rs. 96 lakhs. Even small amount of Rs. 2000 invested per month will give you Rs. 62 lakhs at the end of 30 years. So don’t hold back and start investing with whatever small amount you can because remember even Rome was not built in a day.

Create Appreciating Asset:
Leveraging is not recommended in the investment world which but one can leverage to create appreciating asset like residential property. Borrowing at early stage of your life to buy house can help you paying off housing loan early which allows you to buy second home for investment which can provide annuity in form of rent for your retirement years. e.g. typically home loans are of long tenure, 15 to 20 years. So if a 30 year old is taking a home loan for 15 years he can pay it off by the time he will turn 45. Remember for a working professional, decade in his 40’s is the peak of his career in terms of professional growth and income. This can allow him to buy another property and even if he takes another home loan he can easily pay it off by the time he retires.

In India fortunately we get tax deductions on home loans. For self occupied homes, the borrower gets tax deductions under section 80C for principal repayment of up to Rs. 1 lakh and for interest repayment upto Rs. 1.5 lakh under section 24. Even for second home purchased as investment one gets tax deduction on the entire amount of interest paid. These tax advantages make home loans very attractive particularly for borrowers falling in 20% or 30% tax brackets. But remember that your monthly EMI should not exceed around 30% to 35% of your take home salary.

The 5 point agenda which we discussed is simple to understand and implement. There is no rocket science involved in this. But many of us fail to implement these simple steps to provide headstart to being financially secure. Being secured against risk through adequate insurance and having started SIP at early stage of life will allow you to take higher risk as you go along and reach financial ‘nirvana’ by the time you retire. So without waiting for a next minute lets make this resolution of taking right and important investment decisions to give your financial journey a headstart.

Our fast paced and sedentary lifestyle takes a toll on you and your family’s health . Children tend to choose unhealthy and take away snacks over home made nutritious food. Free time is utilized watching cartoons on TV or playing games on mobile/tablet rather than physical activities with parents or other kids. As a responsible parent, you need to step back, take stock and make a conscious effort to steer your family towards a healthy and disciplined lifestyle.

Let us briefly review some golden rules for healthy living:

1. GET UP AND MOVING !

Children require regular physical activity for their overall growth,development and well-being. This also applies to parents as kids look upto to them as their role-model and source of inspiration. Parents who are lazy and unhealthy can expect their children to be fit and active.

2. NO TV !!

Watching TV, surfing the net or playing games on the tablet is leading to a sedentary lifestyle. Kids are becoming overweight and lazy. Screen time should be restricted to max. 2 hours a day. Encourage the child to take part in physical activities or games, either indoor or outdoor.

3. HAVE MORE LIQUIDS !!

Water is the best liquid you can have as it satisfies our thirst and does not have any additives or preservatives which are more harmful to the body in the long run. Similarly, low fat milk is a good source of calcium for kids. Coconut water, which is high in potassium and antioxidants, is an excellent alternative to fruit juices which have a high sugar content.

4. CONSUME MORE VEGETABLES AND FRUITS

They boost immunity and reduce the risk of may chronic diseases. Each meal that your child eats should contain some servings of vegetables and fruits. Fresh fruits can also serve as a healthy snack option rather than wafers and chips. Low fat dairy products and whole grains are also healthy choices for kids. Avoid chips, cakes and chocolate as they contain a lot of fat and and are high in sugar.

Key Takeaway:
An Apple a day keeps the doctor away. A Healthy Family is a Happy Family.

Ever wondered how a wealthy person might be thinking and organising hislife? Well, while the question may sound very subjective, it certainly does evoke some curiosity in us. Most of us see ourselves as not ‘rich’ enough and are desirous of becoming very rich. Well, the good news is that this article is just for you. It carries 10 ways /ideas, screened from few studies & books, on the characteristics of the rich people. While adopting them may not guarantee you wealth, but it certainly would make you a tad wealthier some day than what will be the destiny by ignoring them…

Be Persistent & Focused:
Being persistent is a personality trait that can be converted into a habit if put to regular practice over time. Rich people are not the ones who will easily give up on something which they believe in. They are much more likely to fight, find solutions, work harder, get smarter in face of adversities. They are also very focussed on one thing at a time.

Have Respect For Time:
If it is one resource which is valued the most than others, it is time. In fact the rich are very likely to think of what they earn on an hourly basis rather than on a monthly or yearly basis. They then compare on an hourly basis how much they are making money or loosing money by not doing any productive work. Also the rich are much less likely to procrastinate and would most likely finish the job or take the decision in the least possible time required.

Setting Challengeable But Attainable Goals All The Time:
A challenge is a big motivation and opportunity to excel and to grow. The rich often set goals, in all matters from work to play. They even set goals to become rich. The act of setting goal itself is a rewarding exercise and it helps one to visualise and feel what is to achieve it.

Having A Mentor In Life:
Most rich people have some mentor or ideal who they listen to, read about, consult or follow. They can be even heroes in their chosen industry who would inspire, motive and help avoid mistakes. They are however careful in not following the mentor blindly and adapting any advice to their own situations and beliefs.

Staying Positive And Confident:
It is very rare to find a rich person who has self doubts and has a negative approach to things. The rich have a positive approach to life, they are happy, upbeat and are also grateful for the things they have in life. Very often you find that the rich are happily married, they love their chosen job, are healthy, they avoid taking negative or gossiping and lastly they believe in great possibilities and opportunities. Because of their self belief, positivity and a habit of achieving goals, they are also much more confident.

Keep Learning And Growing:
The rich are more likely to be masters in their business /jobs and on top of the things. To remain so, they keep interacting, observing and engaged in things of their interest. Most are also very avid readers often reading books on biographies, self-help books, money and those related to their own trade and business. After reading, they take be of actionable points to implement in real life thus helping they grow personally.

Tracking Progress And Making Improvements:
If we walk without knowing where we are headed and what change we need to make, we are sure to end up nowhere. For eg., if you do not know how much savings you need for your retirement, you will never safely retire. The rich make it a habit to measure their goals after making them. Thus, most rich people will also likely balance their bank accounts on a monthly basis and follow a to-do list on a daily basis. Some may be obsessive and even measure how much kilos they lost, miles they ran and calories they ate during a month!

Surrounding Self With Successful Persons:
One becomes the company he keeps. Of course we are often surrounded by the people like us. But the real difference is in the company you want to keep. The rich aspire to keep a company of more success oriented, positive, knowledgeable, networked and powerful people. They intuitively understand the importance of these relationships and are intentional in nurturing these positive relationships by investing the required time, money and energy. It can be said that relationships are the currency of the rich and the successful.

Take Calculated Risks:
The rich people like taking calculated risks in their endeavours. The idea is not to experiment but to grow, excel and exploit opportunities before anyone else. This personality trait makes them appear bold and courageous. The risks are well calculated, often the result of proper research, consulting or brainstorming. At the same time, the costs of failure are known and the risks are well spread out; never putting all the eggs in one basket.

Spend Much Less Than What You Earn:
It may sound very simple, but the secret to becoming rich is by spending much less than you earn and making the money saved to work hard for you. The problem with most poor people is that when the income rises, they also increase their expenses, often buying better gadgets, cars, etc. There are many rich people around us who would never appear rich to us, often living within means much below than they can actually afford to. Spending less, starting to invest early, saving regularly, saving increasingly more and investing in the right asset classes are some of the timeless principles of wealth creation we should all adopt in our lives to become rich. This method is the most practical one which literally guarantees you wealth in future.

Albert Einstein had once called power of compounding as the eighth wonder of the world.This is one investment principle which makes money making simple. There are two facets of power of compounding which if you follow as an investor, creating wealth becomes easy. First is to start investing early and giving time to your investment and second stay invested, do not withdraw money in between and let it grow.

In simple terms compounding is nothing but reinvestment of interest/income earned at the same rate so that interest/income earned also generates additional return at the same rate in future. Let me explain this with simple example :
If you invested Rs. 1,000/- in an instrument giving 10% return in a year. At the end of year 1, value will go to Rs. 1,100 and in year 2 you will earn return on Rs. 1,100 and not on original investment of Rs. 1,000/-.

But why is it so important in world of investment and how can it create wealth for investors ?
Let’s try to understand this with simple story of chess & grain. Chess was invented by Grand Vizier Sissa and then he gave it to a king in India. The king offered anything in return; Vizier said that he would be happy merely to have some wheat: one grain for the first square of the chessboard, two grains for the second square, four for the third, eight for fourth and so on. The king was amused by the ‘small thinking’ of Vizier but the king could not fulfill the desire of the inventor of chess. Why? The number of grains for the whole board = 18,446,744,073,709,551,615. This is more wheat than in the entire world; in fact, it would fill a building 40 km long, 40 km wide, and 300 meters tall. So, the moral is if one uses the ‘Power of compounding’ smartly, then becoming rich is not a dream.

Let me explain the same concept in investment parlance. Let us understand a story of a tortoise and hare. The hare saves Rs. 10,000 every year for the first 10 years. After that he saves nothing. However, he compounds his money at the rate of 15% for 30 years. The tortoise starts at the year 11 and keeps saving Rs. 20,000 every year (double of what hare saved) for the next 20 years. Like the hare, he too compounds his savings at 15% every year. So hare invests only Rs. 1 lakh and tortoise invests Rs. 4 lakhs. Let’s tally the score at the end of 30 years. Tortoise makes a respectable Rs. 23,56,202 whereas the hare makes Rs. 38,21,468! This is nothing but power of compounding for hare and cost of s15.5 lakh for starting late for tortoise.

So there are two simple logic of generating compounding impact on your portfolio:

1. Start investing early in life. No matter how small that investment is but start investing whatever small amount you can save. Ideally starting point should be 1st month of pay cheque of your life. So as soon as one starts earning, he/she should start investing.

2. Let your investment grow consistently without doing unnecessary withdrawals in between.

The same logic of compounding applies to retail investors approach. No matter how small you start with, important is to start investing early so that your money gets time to compound over a period of time. As investor starts early and has time on his side, he can look at higher return potential asset class like equity to generate positive real return and create wealth over a period of time. Important is not how much you invest, more important is for how long you stay invested.

Rule of 72 might help you in understanding this concept. Rule of 72 gives you doubling period. In short it explains how long your investment will take to double. This rule says that to know doubling period you divide compound rate of return into 72 and you get doubling period in number of years. e.g. if your investment generates 12% return then 72/12 = 6 is the number of years require to double your money.

So if you park your money in fixed deposit giving 9% return you will require 72/9 = 8 years to double your money whereas if you park your money in mutual funds generating 15% return you can double your money in 4.8 years.

(Initial investment of Rs. 1 lakh)

Year End Value @ 9% Value @ 15% 1 Rs. 109,000 Rs. 115,000 2 Rs. 118,810 Rs. 132,250 3 Rs. 129,205 Rs. 152,088 4 Rs. 141,158 Rs. 174,901 5 Rs. 153,862 Rs. 201,136 6 Rs. 167,710 Rs. 231,306 7 Rs. 182,804 Rs. 266,002 8 Rs. 199,256 Rs. 305902 9 Rs. 217,189 Rs. 351,788 10 Rs. 236,736 Rs. 404,556

As you can see from the above graph, investment of Rs. 1 lakh will grow above Rs. 2 lakh by 5th year at 15% compounding while it takes 8 years in compounding at 9%.

As Albert Einstein said, ‘compounding is something one who understands earns it and one who doesn’t understand pays it’. Remember compounding works best with equity asset. That may be the reason why world’s richest men list include people who have created wealth by taking advantage of compounding with their equity investment.

We are now well into the new financial year. Most of us would have now got their salaries revised, business plans worked out and bonuses received. It is now then time for revisiting your own personal finances. The start of the year is the best time to do a thorough analysis and reworking our financial plans. In this article, we will take a look at the things that you need to do in order to reset all your finances and plans for the new year.

Assess Your Finances:
As an important exercise, we have to work out all our finances in the new year. Things like school fees, salary to your driver, society dues, fees to your CA, etc. would have all changed in addition to changes in your and your spouse’s salary. It is thus high time that you sketch out the estimated monthly cash inflow and cash outflow to know your budget. It is also time to take stock of your investments, especially those lying in bank and small savings. Try and arrive of a proper balance sheet of all your assets and liabilities at this moment. Keeping ready with the cash-flows and your balance sheet would give the knowledge of your net-worth and your financial capabilities for making the upcoming decisions.

Make a Budget:
After an assessment of your financial situation, it is time to take the first step of reconstructing your finances by planning your budget. Most of us do not have fixed budgets defined for our expenses and do not consider them as important. However, this is far from truth. Having a budget not only helps you in better knowing and planning your finances, it also helps you to save more and control the unwanted expenses. At a more philosophical level, it helps us become more organised and thoughtful in spending our money. Put together all these things, repeated over the years, can make a considerable impact on your wealth. One may not realise this impact today but it can only be experienced when applied in its’ true sense over time.

Review your financial plan:
In layman terms, financial plan is nothing but a statement of your financial goals and the investment plans to achieve them. It is mandatory that you prepare a financial plan for yourself at the first possible instance with the help of the experts. And if you already have one, its’ time to revisit the same, given the financial changes that may have already happened. You may consider making the following changes in your plans…

Adding of any new financial goals Removing any financial goals which are no longer needed Adjusting the financial goals by changing the amount required and/or the period remaining Accounting and allocating the existing investments already made towards goals Lastly, making changes in the planned investments towards achieving different goals

Though these exercises are not simple and assistance may be needed to do them, a basic level of reworking of finances is not an impossible task. Engaging yourself in this exercise will also help you to understand your financial plan better and make you more committed to your plans.

Rebalance your Portfolio:
Once your financial plans are reworked, as a next step, you would be required to rebalance and/or make changes in your investment plans. This would mean understanding your present asset allocation (share of different asset classes like equity, debt, cash, etc. in the portfolio) and changing same by shifting money and/or making new investments. It is also recommended that you make changes (read increase) in your monthly investments (SIPs) with the given increase in your inflows. Your advisors would help you effectively rebalance your portfolio in accordance with your financial plans and your risk appetite.

Review your insurance policies:
This is something we don’t often do. As a matter of fact, insurance is not a one time thing but an evolving need. With changes in your finances, family and your life stages, your insurance needs would also change and it is important that we reflect these changes in the insurance cover that we take. Note here that while a typical life insurance policy would be for a long-term period, general insurance policies are generally of a one year period. Thus, your personal accident, critical illness, health insurance, motor insurance and home insurance, all would be up for renewal /reconsideration. At this moment you would do well to assess all your and your family member’s insurance needs – both in terms of the risks and the amount of coverage, and make the right decisions to comprehensively account for them.

Plan for next year’s tax savings:
After planning for your budget, financial goals, insurance policies and portfolio, it is now time for the tax planning to be done. Your tax planning would consider your assessment of your tax slabs, the estimated income in different heads and the amount of tax savings already committed. These committed tax savings would be related to your provident fund, insurance policies, home loan, etc. After considering these expenses, you can arrive at some figure that you may need to save for tax saving purpose. Knowing this figure at the year beginning would be a great thing to know since now you can smartly plan your savings in the year ahead.

Implementing Your Plans:
After all the planning, comes the crucial implementation part. Doing this without any procrastination or delay would be no less than some feat. To ensure this, let us put on paper all the decisions that we have taken till now and also put a target date to these decisions. Remember that with every day of delay, there is some monetary cost attached to it which you cannot see. Also there is the risk of your plan itself loosing relevance with you forgetting and/or later avoiding any commitments. Your financial plans are like packed foods that come with a manufacturing and an expiry date. It is best for use (read implementation) only for a limited time and a delayed plan is like a stale plan which will need to be revised later.

Get ready to file Income Tax returns:
After completion of the financial year, it is important that you file your returns, if required, within the due date. July 31st is the important date to remember as this is the date by which the annual returns of income for the financial year 2014-15 will have to be filled. Just to point out, there is no restriction on filling returns before this date. We can thus file the returns, properly and at our leisure, while avoiding the last minute rush. Other than you, there will be one more person who would be happy when you do this – your accountant.

Conclusion:
Well, there is a very thin dividing line between financial well-being and financial stress. The reason it is thin is that we can easily walk away and wander from the right path. If you are not on top of your finances and are doing things, making financial decisions without proper awareness of your goals and limits, you are most likely to fall to the wrong side of that dividing line. And as Suze Orman once said “The only way you will ever permanently take control of your financial life is to dig deep and fix the root problem.” The beginning of the financial year is an opportunity for you to get back onto this thin line and get in control of your finances. Let us not miss this opportunity. Its just an first quarter completed.

Ever wondered how much should you invest in equities? In what time will your money double? Most of our money related questions often have complex answers which are boring and beyond comprehension for most of us. Well, now you can take a break from the calculators and take a look at a few quick thumb rules, often used by financial planners /advisors, to answer our questions. These thumb rules are interesting, easy calculation tips which we can use in our daily lives. But we also have to be careful as the results are often approximate and may not be ‘exact’ answers we are looking for. It will be up to you and your financial planner /advisor to help you take the right wealth management decisions.

When Will Your Money Multiply? The Compounding Rules Of 72 And 114.
The Rule of 72 tells us in how much time will our money double given a rate of return or interest. Simply divide 72 with your annualised returns to arrive at the number of years. For eg., if the interest rate is 8%, then it will take approximately (72/8 = 9) nine years to double your money. Turn the corner and it can also help you know the required rate of return to double your money in a given time. For eg., if the time available is 6 years, the returns required to double the money will be (72/6 = 12) 12% yearly. Likewise, there is also a Rule of 114 where 114 is used in place of 72 to triple (3x) the money.

How Much Will My Money Worth In Future? The Rule Of 70. 
Inflation is one important thing to keep in mind when planning for future. But calculating the effect of inflation is not easy for most of us. This rule can be an useful tool for predicting your future buying power. Simply divide 70 by the current inflation rate to find the approximate time your money will take to reduce to half its’ present value. For eg., inflation of 7% will reduce the ‘value’ of your money to ‘half’ in (70/7 = 10) 10 years.

How Much Should You Invest In Equities? 100 Minus Your Age Rule. 
One of the basic ideas while investing in equities is to reduce the exposure as you grow older. But, apart from age, there are also many other factors affecting your asset allocation which makes risk profiling an important exercise. For the rest of us, this rule easily gives an idea on the extent of equity exposure, considering the age. For eg., if your age is 40, your equity exposure should be at (100-40 = 60) 60%. The balance would be invested in debt and other safer asset classes. Note that this old rule is contested by many experts today who argue that 100 be replaced by 110 or 120 or even higher considering the need for wealth creation, longer life expectancy and low debt returns.

Can I Afford That New Car? The 20/4/10 Rule Of Buying Vehicle.
This rule is used especially at the time of buying vehicles or similar assets. The rule says that while getting a loan for a vehicle, you should first put down at least 20% as the down-payment, the loan term should not be for more than 4 years and that your total monthly transportation costs (including EMIs) should not be over 10% of your income. This rule can thus also help you know whether you can trully afford to buy the vehicle of your choice.

How Much Should I Withdraw To Keep My Principal Intact? The Four Percent Rule.
This rule is used very often in retirement planning where the idea is to arrive at a withdrawal figure every year that will keep the retirement kitty intact while you are not generating any other income. The rule says that we can withdraw 4% annually from the outstanding balance amount to keep the absolute value of the retirement kitty (or any principal) intact. While there are many faults and misses in this assumption, like the rate of return, inflation, life expectancy, etc., the underlying idea is not entirely lost. Some experts say that the actual figure should be less than 4%, preferably 3%. The lesser the figure the better it is as it can ensure you do not run out of your retirement kitty any time soon.

How Much Should I Earn After Retirement? The 80% Replacement Income Rule:
Many experts believe that we should aim for replacement of 80% of our income after retirement to live comfortably. This presumably takes care of the reduced expenses on one hand while maintaining the living standards on the other hand. This income would be generated from retirement kitty investments and/or through income earning activities. Some experts believe that this figure can be bit lower, say at 75%. Note that having a big retirement kitty would increasingly help in reducing the need for non-investment income after retirement.

Pay Yourself First Rule: 
This is a simple yet very important rule used in financial planning, especially retirement planning. The rule requires us to save for our own future (read retirement) first before anything else. The idea is to make an automatic arrangement from your bank account every month so that, the money is auto-deducted first every month after your receive your cash inflow, like salary. The process of automatic routing is said to be like ‘paying yourself first’ since money is deducted before other expenses are incurred.

Other Common Rules:

• The 10% Savings Rule: Most experts believe that the savings rate should be a minimum of 10% of your gross household income. A better goal is to aim higher. Another popular rule is to start saving 10% for meeting basic needs, 15% for comfort and 20% for freedom when you are young.
• The 3 Month Emergency Fund Rule: The idea is to have at least 3 months and going up to 6 months, of living expenses as emergency fund in addition to your savings for other goals. This of course depends on the nature of our work, risks and possibilities of finding new source of income soon.
• The 6 Times Life Cover Rule: This rule simply says that your life insurance policy should be at least 6 times of your total household income. If the 6 times would seems inadequate, note that we are well advised to have a higher cover.
• The 20% Down-payment, Two Times Home Loan Rule: This rule says that while buying a home, we should put down 20% as down-payment and avoid taking a loan over 2 times of our total household income. If we cannot afford the 20% down-payment rule, it probably means that we cannot afford that home itself.
• 20 times Income Rule For Retirement Kitty: How much retirement kitty you will need is a big question. There are many calculations available but this simple rule says that it is 20x of your gross total income at the time of retirement.
• Pay Highest Interest Rate Debt first: This rule points out which loan has to be repaid on priority first – it is the one that carries the highest rate of interest. Usually, the order would be credit card first, then bank overdraft, personal loan, vehicle loan and lastly home loans.
• Don’t Take An Education Loan More Than The Expected First Year Salary: With rising education costs, this one rule can help decide whether to pursue an education course on loan or not. Following this rule will help avoid the struggle to repay loan after the education is completed. Ever wondered how a wealthy person.

There is something about women and money that doesn’t seem to quite fit together in minds of most of us. We all generally have a tendency to stereotype people and make generalisations about a person,community, geography and gender. When it comes to finances too, we hold may notions and myths. In this article, we would be revisiting few of the long-held myths about women and money or finances. Going beyond the title, the article also attempts to look at the bigger picture behind these myths and the need for us all to change…

The myths about women and money…

Myth: Women are impulsive spenders and they spend a lot
Fact: Women are wise & careful spenders
We believe that those who purchase something on impulse do not have the self control to follow a budget and spend in an organised way. We also generalise women as more like to indulge in shopping on impulse.

The fact is women have regular spendings on small inexpensive things, mostly for utility or purpose. There is logic to assume that small impulsive spending within the overall budget means a person lacks discipline & control on financial matters. On spendings, a US Bureau of Labor Statistics report concluded that there is equal spending by both genders and the main difference is that single men spend more on electronics, entertainment, while single women spend more on apparel and services.

The clear this myth further, there are also studies that concludes that women share more feedback on ‘what’ and ‘where’ to shop within their circle. We also know that they more loyal and bank on trusted shopkeepers & portals and demonstrate eagerness to search for discounts & deals and also bargain harder than men. One interesting study found that 72% of women had reduced their retail spending in the recession compared to only 62% of men*1. All these observations and opinions point to the direction contrary to our myth…

Myth: Women are too emotional for financial decisions
Fact: Women have the ‘right’ emotions needed for financial decisions
Studies have found that emotions of men generally tend to be around ‘greed’, ‘fear’, ‘chance’ and ‘certainty’. The emotions of women generally revolves around ‘security’ of investments, and some ‘uncertainty’ of their own decision as being unwise or risky. Hence, women are more likely to seek financial advice just like they are more likely to seek road directions compared to men. Men, in comparison, feel and act more confident in financial matters, whatever may be the reality! Being careful and seeking opinion is much better than being confident & not seeking advice when needed.

Myth: Women want men to manage finances while they focus non-financial household roles
Fact: Women are capable & want to participate & contribute in all household matters
This myth has roots in the ancient premise of the division of household responsibilities in a patriarchal society, which we are even today. We expect women to manage the household while men are to earn and provide for the necessities & safety of all. Well, the times have changed a lot and today more women are equally educated to their male spouses and are often also earning independently. The fact is, whether earning or not, women do have substantial responsibility for family finances. Most of the consumption decisions are driven and influenced by women. As household managers they have to handle the expenses to the budgeted money and needless to say, there is a very long list of expenses in any normal family. They are much more aware of inflation and market prices then men are.

Being more informed & educated, more women today desire to participate actively and contribute in financial matters of the family. If women can participate in financial decisions, it more likely that the outcomes would be more balanced and informed. It can also be very crucial at challenging times.

Myth: Women are not good with maths & financial skills
Fact: Women and men have equal ability to learn and apply maths & financial skills
Let me begin by recalling the most famous name in mathematics in recent history. Shakuntala Devi, was known as ‘human computer’ and was famous for mental calculations. She made to the The Guinness Book of World Records in 1982. The MD at International Monetary Fund (IMF) today is Christine Lagarde, a women. In India too, women hold top positions in many financial institutions like Chanda Kochhar – MD & CEO at ICICI Bank, Shikha Sharma – MD & CEO of Axis Bank, Vinita Bali – MD of Britani Industries, Naina Lal Kidwai – Group General Manager and Country Head of HSBC India, Renu Karnad – Director at HDFC, Chitra Ramkrishna – MD & CEO of National Stock Exchange (NSE), Roopa Kudva – MD and CEO and CRISIL and so on.

The list is unending and we can easily see that women hold key positions in some of the biggest names in the financial industry alone. Even in area of financial planning there is growing number of women advisers. As per the U.S. Bureau of Labor, in 2010 that over 30% of personal financial advisers were women. There are more than enough examples to dispel this myth. A study by University of California researchers, on two rural tribes (one with equal land & education & one male dominated) in India and concluded that environment, not gender, determines a person’s math abilities*4. But on a different thought, we can even question the need for financial skills or maths in financial decisions. Isn’t successful investing more about common sense and managing emotions rather than display of any technical expertise?

Looking at the bigger picture: State of women in India
Despite rapid economic growth, women have not been able to play a larger role in the Indian economy and the inequalities & prejudices remain as deep as ever. The 2011 United Nations Gender Inequality Index (GII), which considered factors like labour force participation, reproductive health and education, ranked India a depressing 134th out of 187 countries, behind countries like Saudi Arabia, Iran and Iraq.

There are strong cultural prejudices in India for women empowerment and financial independence. Women in India have always worked but there is undervalued. However, things have started changing and today more girls are getting higher education and we can see more women working in cities away from home. The government of India has also worked towards women rights and empowerment through various programmes & legislations.

Need for change in us:
The women in our lives are very special – mother, sister, daughter and wife. Unfortunately, these special persons do not often enjoy the same importance & participation in decision making, be it financial or otherwise. We all need to get out of our stereotyped image of women and work towards their financial literacy, empowerment and freedom. We need to shed our prejudices, and bust our myths. By opening our minds, we will not only bring a change in our lives but a change in the entire family, community and also for the entire country. Women are half of India’s demographic dividend. If they are given the financial independence and the respect they deserve, it could boost the growth engines of our country.

It may be expected from the blogs at this place, regardless of the topic, that it’ll revolve around the financial aspect of life. But when it comes to the growth of kids, and their financial security, with sufficient experience and observation, you will figure that no matter how strongly you secure your kids’ future financial position, stability and growth only happens by developing requisite skills and understanding of the world around.

Therefore, I’ll start with essential financial measures you must take as a parent to ensure a safe financial journey for your kids, but will extend the text to include ways to ensure that your kid’s future is secure even without your money. First we start with the steps to provide for the minimum required financial security to your kids and any other dependents:

1. Life Insurance
Life insurance is the most basic of the tools, to start with once you have any dependent. Since for first 20 – 25 years of life your kids are going to be financially dependent on you, it is important that this dependency is safeguarded and provided for even if you are not there to provide for it. Your next question may be about how much is needed, so there is a detailed analysis of future requirements that can be done by your wealth manager/ financial planner.

In case you are yet to consult an advisor, and want some cover immediately, you may go for a term cover of 10 times of your annual income; i.e. if your income is Rs. 10,00,000 p.a. your life cover will be of Rs. 1 cr. for which annual premium can range from Rs. 9,600 to Rs. 15,000 depending on the insurer services.

2. Health/ Disability/ Critical Illness (C.I.) Insurance
Health insurance or disability insurance is more important than life insurance for you, as one must have a health insurance even if he/she does not have any dependents. Main reason being, disability or bad health may curtail your earning capacity and badly damage your long term financial scopes by digging into your existing savings.

When you have kids to look after as well, their health also becomes an important factor. Starting FY 2014-15 you can also get a deduction of Rs. 5000 on preventive health care expenses, but given the rising cost of medical expenses that may not be enough. The way out is to look for a health insurance policy that gives you both hospitalization cover and reimbursement for health checkup expenses.

A reasonable amount for individual health policy given the future level of costs is Rs. 500,000, but again if you can afford you may go for higher Sum Assured (S.A.). For Critical Illness, expenses may be even higher and thus usually at least 4 times of S.A. is recommended for C.I. policies of that of health cover. E.g. if you have a health cover of Rs. 5 Lakh you can go for a Rs. 20 Lakh C.I. cover.

3. Emergency Fund
Emergency Fund is that money, which fills the gap between insured costs and regular expenses, for example job loss, or any other financial emergency, not covered by any insurance policy. Also sometimes you may have to bear some amount of expenses out of your pocket before you can get the insurer to cover the costs. Emergency fund comes in handy in such situations.

Most of the money for emergency fund is kept in fairly liquid investments like, Super Saver accounts, easily accessible fixed deposits or Money Market Funds. The amount of emergency fund depends on your monthly expenses. Though, it’s better to let a qualified financial advisor give you this estimate after a thorough study, in general you may follow the rule of 4 – 6 months of expenses as emergency fund.

Another major benefit of emergency fund is that even when your financial situation becomes tight, your long term financial goals will not be harmed by sudden and temporary setback.

4. Regular Goal Based Saving
After you have completed the contingency planning, time is to pack your bags and start moving towards the long term goals with peace of mind. Again it’s recommended that you take assistance of an advisor to plan your goals thoroughly, but just in case you are not, this is how you go about them:

Step 1: Write all your goals.
Step 2: Put them in a priority order
Step 3: Estimate current cost of these goals
Step 4: Multiply this cost by the multiplier given in the table below, depending on the number of years to the goal:

Year Multiplier 5 1.5 10 2 15 2.5 20 3.5 25 5 30 7.5

So, for example, current total cost of your kid’s marriage can be Rs. 10,00,000, but his/her marriage is due in about 20 years from now, therefore approximate cost of it will be around Rs. 35 Lakh (10,00,000 x 3.5). Though, remember that this table only provides an approximation actual expenses may vary widely if there is high inflation.

Step 5: Determine the monthly saving required for the goal by dividing the future cost calculated above with the number of months available to that goal.

E.g. in the above example: Marriage expense comes out to be Rs. 35 Lakh, but it is 20 years or 240 (20 x 12) months away. Thus, if you save Rs. 35,00,000 ÷ 240 = Rs. 14,583 per month, you can achieve this goal.

Again, however, this kind of calculation does not provide for interest earned on saving so you may simply reduce the monthly investment amount to some extent.

Step 6: Start investing in the following manner:

Time Investment Less than 5 Years RD / FD / Guilt Funds / FMPs 5 to 10 years Balanced Funds / Diversified Debt Funds More than 10 years Equity Shares / Equity Funds / Gold / Real Estate

Important Things to do Other Than Investment and Insurance
Now that, you have financially prepared yourself to tackle almost every need of your kid, you need to think ahead and prepare your child for the challenges of the future. Following steps can be taken to allow kids to develop their skills and understanding:

1. Confidence Building in Kids
You may have seen that, confidence in people define their financial success. Confidence itself on the other hand comes from certain external and internal factors, such as beliefs, values and small successes. The internal level of confidence may exist in kids but it also requires nurturing and external support to grow and become strong. This can be done by two very small acts:

1. Freedom to experiment: Teach kids how to handle failures, and learn from their mistakes, rectify them and try again.
2. Measure success: Success if measured simply in mind can be overrated or underrated, generating unreasonable emotional exhilaration or anxiety. Both are dangerous for long term success and confidence. Thus, teaching kids about measuring their successes on practical parameters is a good way to build their internal confidence and self-belief.

5. Help them identify issues and overcome obstacles in life In today’s world no one can claim to know everything or have seen everything, but we can always try to know what went wrong or what is being a roadblock in our success. With your experience of handling some of the issues you faced in your life you can help your kid to develop that intelligence and wisdom to look ahead and tackle small and big obstacles in their lives. Important thing is to develop that methodical thinking which divulges and explores the details rather than simply skimming the surface and getting emotionally bogged down by the issues.

The richest people in the world look for and build networks; everyone else looks for work. – Robert Kiyosaki

6. Making them financially literate
Financial awareness is another important aspect of life, you can look at it in the way that when you had been a kid only formula for money was to keep your expenses as low as possible and save money. But with time saving alone is not enough, knowing true nature of money and how it can be multiplied is also required. Moreover, this step sets up the right expectation in your kids’ mind about money.

7. Giving them exposure to face the world
Since, world is made up of lots and lots of people, it is important to know as many people as possible and know how to deal with them, in short ‘how the world works?’ Motivating your kids to participate in community projects, speak up their minds on issues even if they are among quite senior and serious people, will give them confidence and courage to hold their point and participate on the stage, rather than just sit among the audience and clap.

8. Helping Kids to work on their dreams
Finally, with all the internal qualities and confidence, the last straw that makes any one successful is his/her vision for life. Kids, you will find are good at developing and harboring their own very unique vision of their world, need is to help them shape it so that they can go out and live those dreams and be successful in the way they want to be successful. After all, each individual has a different definition of success, but the result for each is almost the same level of gratification and prosperity.

Most of us, if not all, are in a journey from scarcity or deprivation towards financial well-being and ultimately financial freedom. A big part of financial freedom, to me, is having your heart and your mind free from the worries for the needs & necessities in life. Most, like me, may have traveled many years in search of this elusive freedom but are yet to reach a point where anyone of us can jump and say, “Hurray! I have made it!!”. Worse still, we do not know for sure if we would say that line even once in our lifetime. This uncertainty was disturbing. What is the point then in slogging for decades in our work if we could not be financially free? What was that I was doing wrong? Was I on the wrong path? The questions where simple but profound and had to be answered. But sooner than later, the realisation was thankfully clear to me.

We have all perhaps, spent too much criticizing all factors external for what we do not have today. Whether it be business, salary, markets, friends, family, our advisors and so on. Rarely do we realise that it is only our decisions and actions in our past that has led us to what we are and what we have today. That’s the only true fact. It is our own experience, our own mistakes and the lessons from our past hold that now hold the key for our future. Understanding these lessons, some from our own and some from other’s lives, can help us take control of our journey towards financial freedom. So let us pause for a moment and recall our own important lessons of life. Here are a few lessons that I could recall,

TIME NEVER COMES BACK:

Time is the most important resource that we have in our hands. One could always make and loose money and again make some money but time once gone cannot be bought back. To know, that we have only limited productive years of our lives remaining before us, is humbling.

Worse, what’s the point of financial freedom at an age when you are too old to do anything exciting? The lesson was that we had to make the most of whatever time we have and we have spend and plan time as our most valuable resource. The time we have now is more precious than it was at any time in past or will be in future.

IT IS EASIER TO AVOID DEBT THAN PAYING A DEBT:

Ajay, a friend, had a decent job with good salary. But even after years of working, had no wealth created. It turned out that he had three loans – home, personal and vehicle loans that he was repaying apart from the fat credit card bills that hit his salary account regularly. It was clear, Ajay was not investing in his future but was still paying for his past. Ajay still continues to toil in his old job when he could have done so much more! Apart from the financial hit, being in debt often makes us feel suffocating, discouraging and makes us avoid taking any risk in our lives. And that perhaps costs a lot lot more. The lesson learnt was to avoid getting into debt and spending only on what we needed rather than what we desired or wanted. Even if debt could not be avoided, it was better to reduce to the maximum extent possible, especially when it came to depreciating assets.

NOT BELIEVING IN THE POWER OF COMPOUNDING:

Long back I remember hearing the stories of wealth creation by investing in equities over 15-20 years in time. I also distinctly remember reading about SIP and mutual funds and the power of compounding over long time. Today, when I look at the returns for the past 10-15 years given by some equity mutual fund schemes, I often think of the great wealth that I had missed creating all this time. It is amusing that neither me nor my bank balance remember where I saved or spent the money that I had during all these years. The one regret I now have is that I should have invested more and more to the extent I could have in equities and had the patience to hold the investments all this time. I could very easily have been an example of wealth creation myself. The lesson learnt, and the hard reality is that, the power of compounding in equities is true and it is only me that stopped it becoming a reality in my own life.

QUICK MONEY IS LIKE A MIRAGE:

Vijay, another friend, I remember invited me to join a plantation scheme of some company in north India. But Vijay was not alone and I often got to hear of many other schemes to invest into and get high returns. Some networking schemes promised to make me millionaire faster than any else could. Mind you, these schemes were very popular and some are even today. While I was fortunate to have not invested heavily into these schemes, my friend Vijay and a distant relative did loose a lot. Last heard, a panwala in my locality who had recently closed shop; was running a chit fund and he disappeared overnight with over s2.5 crores! The lesson that I fortunately learnt very early in my life, at a small price, was that promises of quick money making schemes are seldom true. It is always better to trust and invest in legal and governed financial products, even if the promise is not too high rather than to invest in dreams and unsolicited avenues. What puzzles me more now is why people like Vijay and that distant relative had so easily trusted these schemes while shying away from equities all the while?

I HAVE TO TAKE CONTROL:

Looking at the past, I also realise that I have procrastinated many decisions and never took control at the right time I should have. The reasons that I can find and justify today are only of lethargy, indecisiveness and the general lack of a vision or a goal in future as a compelling force to take timely action. Fear, lack of knowledge or resources or operational issues turns out to be the least important reasons today even though they might have resulted into many decisions being not taken. On procrastination, I find that many decisions that I chose to procrastinate, even for few days, ended up being extended into months and some were even never taken. Lack of vision or financial goals in life is another big reason why most of us find ourselves still looking for answers to fund those goals. The lessons learnt are many here but they all boil down to one thing. We need to take control of things NOW else everything else will take control of us, day by day, each day.

CONCLUSION:

Life is the best teacher if we want to learn, be it financial matters or otherwise. Peeking into my past experiences has only made me realise this and made me more humble. Today, when I look back, I believe it was not the right decisions or the intelligent ones that I made but the wrong ones and those decisions that I did not make which are more responsible for my present. The timeless principles of investing – start early, save regularly and save in right asset class instantly come to my time. They sound very grounded and appear golden today; somewhat matching the shade of hair colour on my forehead. Perhaps, had I trully believed in them long before I started colouring my hair, I could have afforded my own hair stylist today.