RETIRING SOON or Restarting Your Re-tyred Life?

Hey!! Feeling young at 60? I know you are surprised at your retirement transpiring too early but in reality, it’s time for your exit paving the way for others to take charge now!! Just relax and feel the pulse of my heart reverberating wishes on your well-deserved retirement. Some of you must be feeling more relaxed and secured having accomplished all your life goals in a phased manner. Intrusive thoughts and nervousness must be creeping in the minds of a few others at the prospects of their retirement.

This post is dedicated to you guys who could not plan their retirement during the early part of life for reasons beyond comprehension. Hope the subject will be absorbing for you to comprehend and follow to spruce up your re-tyred life.

Globally, all Financial Consultants recommend starting the planning of personal finances at the age of 25 to 30 years. Ideally, this is the age group when you should have started saving and planning for all your financial goals. However, in our country where an average Indian starts planning for retirement only after crossing the age of 50, you might be late but the game is not over yet. Maybe the retirement planning escaped your attention due to other priorities, social obligations or, living with your current lifestyle? You can’t retrieve those lost moments but certainly, you can spruce up your future with some purpose even now.

Hopefully, your perquisites like, PF/Gratuity/Leave Encashment and some other entitlements have already been processed by your employer. Your savings and receivable funds put together may heap up into a healthy corpus. Please see that all your debts are cleared before starting planning further. Don’t carry forward any such liability with you to avoid any untoward situation.

Further, the value of your money subject to inflation is likely to depreciate every year. The average inflation rate in India hovers around 6.5%, you need to earn interest or generate income on your money at least a net of 7% to neutralise the effect of this invisible enemy. You must ensure that this money is allocated to diverse securities/investments so that they continue producing passive income for you. Restrain yourself from spending lavishly on avoidable expenses.

By natural instinct, you are going to feel financially insecure after retirement. You may be tempted to keep maximum balances in your bank savings account as an emergency fund. Interest earning on such deposits is being 3% only, you may not be able to grow your funds as per your needs. There is every possibility of any friends/relative suddenly seeking financial help which you may not resist. In both cases, your risk and potential loss of money can’t be ruled out.

I will discuss the allocation of the money in the latter part of this post. Let’s find out the opportunities available for you to keep busy and earning portfolio income to supplement the limited resources.

The possibility of getting hired after retirement has always been remote but the prevailing pandemic conditions have made the task more difficult. Social distancing norms as prescribed by the administration worldwide are more inconvenient and painful for the senior citizens. The virus is more threatening for elderly people aged 60 years and above due to their weakening immunity. The chances of getting a good break look bleak under the given circumstances.

Working from Home has come as a blessing in disguise for many companies and individuals. Wherever feasible, the companies have allowed their workforce to work from Home making it a win-win situation for all. Why don’t you try the undernoted resources for keeping yourself busy and earning a bit while sitting safely at home?

Freelancer Jobs: Friends, some of you must have acquired expertise in Financial Markets, IT and Software, Computing, Data entry, Tuition work, Legal, content writing skills, or any other specialization working for more than 30 years. You can explore opportunities for getting freelance jobs sitting at your home.

There are hundreds of websites offering you freelance jobs. Some of these are, Upwork, Freelancer, Fiverr, Toptal, and Guru. You can register with these companies and start earning right away. No formal education is required as the only pre-requisite qualification is your talent and expertise.

The payments are secured and guaranteed as these websites take a cut out of your income. Earning may range from 5$ to 100$ per hour depending upon your proficiency, efficiency, and competence.

Stock Market: If you have prior experience of conducting the business of share trading in the stock market or you have enough patience and perseverance, you can also look for trading in the stock markets. This will not only keep you busy for a few hours daily but also help in generating a passive income. Intraday trading is beyond your scope and should not be undertaken. This product has been devised for proficient investors with more risk appetite and possessing professional skills.

However, you can identify a few stocks by using due diligence/normal prudence and go for positional trading. Positional trading allows leverage of a few days and you can decide your trade accordingly. This is a high yield lucrative business space if you can invest wisely after thorough research. Stock markets are not open on Saturdays and Sundays that allows you to trade for 20 days in a month.

Coming back to the management of your funds and life after retirement, you need to sit down and jot down the income and expenditure details accruing every month. There is no need to create an emergency fund as most of the Bank FDR’s or other investments can be encashed prematurely these days. You need only two months of living expenses and Rs.100,000/- for any incidental expenditure required to be incurred during the odd hours.

Since life expectancy has increased by more than 20 years, you need to know that health care is going to be the biggest issue now. Most employers have a group insurance scheme in force for their employees. You need to confirm whether this will continue after retirement or not. Health insurance is not only costly after 60 years of age but comes with lots of strings attached to it.

In case the existing insurance cover provided by the employer can’t be taken forward, you must identify a good health policy for you under family floater. Go for the plan which has positive reviews from the customers about the hassle-free settlement of claim cases backed up with the best customer service. No frivolous condition laid down by the issuing company be accepted in the Policy lest a genuine claim is declined in future.

Let me list a road map for you to manage your money with an eye on preserving your capital by generating enough passive income for the living expenses regularly:

1. SCSS(Senior Citizens Saving Scheme): With a sovereign guarantee, this scheme looks attractive for those retiring from active service. The Senior citizen’s savings scheme is open only to senior citizens aged 60 years and above. You need to open this account within one month of your retirement. The upper limit of deposit in this scheme per account is 15 lac but you can open more than one account also. Initially, any deposit made under this scheme matures after five years However, it can be renewed further for three years. The interest rate is decided every quarter but once invested, you get a fixed return for five years. The present rate of interest is 8.6% per annum. The interest amount is taxable under the Income Tax Act. However, You can get premature payment also.
2. Mutual Funds: Ordinarily Mutual Funds in India provide 10 to 13% returns on various MF schemes. You can consider this option by investing a portion of your funds in Mutuals Fund schemes where fund allocation is 100% in equity. This is risky but the most rewarding portfolio for investments on longer horizons. There is no lock-in period and you can exit as and when you need the funds. Just a few clicks on your computer and the proceeds get credited to your Bank account within a week’s time. There is no capital gain tax on MF’s investing in equity only. However, the maximum permissible amount of capital gain is Rs.100,000 only
3. Bank FDR: Though interest rates have come down considerably, the Bank FD still remains a choice for many as you get a special interest for senior citizens also. These instruments can be encashed online at any time. Gone are the days when you had to visit the Bank branch for canceling and encashment of your FD prematurely. The payment gets credited to your Bank account immediately. Except for Tax saving FDR which has a lock-in period, all other FD’s are easily payable before maturity.
4. POMIS(Post Office Monthly Income Scheme): Maximum of three joint account holders with 4.5 lac each for individuals is permissible in this scheme. The maximum limit for minor accounts is Rs. 3 Lakh. The minimum amount which can be invested is Rs. 1,500 for any individual. Interest is revised regularly on a quarterly basis. However, presently the post office is paying an interest rate of 7.8% to their customers. Interest is fully taxable but no TDS is deducted at source. Interest is credited to your post office savings account every month.
5. Tax-Free Bonds: Another safe and better yielding option for retired people is an investment in Tax-Free Bonds issued by the Govt. of India. These are long term securities offering interest rates as high as 8% and no tax is deductible at source as interest earnings are completely tax-free. Maturity ranges from 10 to 20 years as such it is advisable for those investors who can spare money for longer periods. You can buy these bonds through your Demat account or in physical form as per your convenience. These are risk-free investments due to sovereign guarantee,

Besides, all retiring people will appreciate that Income Tax liabilities are going to remain the same except for a small exemption for senior citizens in the country. Each and every penny is going to be accounted for payment of income tax. Although, there is no penalty for late payment of income tax by senior citizens in India you must ensure paying advance income tax out of your pension or other resources. Filing of ITR is mandatory for all senior citizens and must be taken care of for timely submission every year.

Happy reading friends! Stay Safe Stay Connected

Disclaimer: The material and information contained on this website/Blog is for general purposes only. You should not rely upon the material or information on the website as a basis for making any business, legal or any other decisions. Any reliance you place on such material is strictly at your own risk and responsibility

Learn Investing. Stock Analysis and Be Your Own Advisor

Hi Friends, We all understand that a Retail INVESTOR can’t tabulate and analyze each and every relevant information about any company before opting to buy shares from the stock market. In fact, he is always prompted by his inner instinct to put his hard-earned money in the stock market after observing a few trading sessions or hearing some hot news about the company. Sometimes a tip from the so-called experts or friends may lure him to try his luck by investing in the recommended scrips. Statistics prove that such investors end up losing money which keeps them away from this most efficient high yielding investment avenue in the future.

The Truth:

(1)Less than 10% of investors earn money from the stock markets but those who do are long time investors earning big returns

(2) Most Demat accounts opened by customers turn inactive after carrying out a few transactions in India

(3) More than 75% of Demat accounts are inactive as per the SEBI guidelines in India. The only reason of these abnormal figures could be customers losing money during the early few trades forcing them to leave the market. Strange!!

THE FACT: Only those investors earn big who show resilience and continued confidence by remaining invested in the stock market for longer periods of time.

Extracting observations from the experiences of successful investors and utilising my personal sweet/sour/bitter encounters over the past few years, I have tried to come up with a visibly foolproof technique of venturing into the stock market by small-time investors. Hope this will not only mitigate the risk of losses but help in ensuring good returns by investing wisely. This is going to be a simple exercise that does not require any calculator or assistance from your financial advisor or experts. Great!!

Please grab a pen and a piece of paper to scribble down some personal information while sipping tea/coffee or a fresh lemon juice sitting in a cozy relaxed environment. Don’t worry!! It’s not that personal. Be comfortable!!

Can you take me through your day’s journey by writing down the products you have used today. I am sure the list of products will appear somewhat like below:

I have tried to reorganize the list of your daily use products from Breakfast to Dinner in four tables as exhibited above. Simple! There is nothing techincal about it. You will agree that these items are more or less the same which are used by everybody around you in your neighbourhood. Please have a close look at the names of companies manufacturing these products or providing services to their customers through a network of outlets spread across the country..

Now coming to the companies manufacturing these daily use products or providing services, you will appreciate that these are established brands and market leaders in their respective categories. They have established brand value, continued patronage from their customers, ever-increasing sales, persistent dividends, increase in value and, a great future. Don’t you feel safe and privileged to be associated with the names of these big market leaders?

I will prompt you to visit the screener.in website and see for yourself how encouraging the results must be about these companies over the past few years. Please click: https://www.screener.in/ to find out information about any listed company without spending even a penny.

Another look at the shareholding pattern will make you more enlightened with the following information: Yes! You can google this information easily:

1. Promoter’s Contribution
2. Contribution of MF/Financial Institutions
3. Pledge of Shares if any by the promoters

Promoter’s confidence in their own company can be gauged from the shareholding pattern. Companies with promoters contribution of 50% and above without any incident of pledging their shares are considered a good bet for investment.

Similarly, those companies where Mutual Funds/Financial Institutions have considerable stake stand to gain the confidence of retail investors. The Mutual Fund Companies and Financial Institutions consider buying shares of any company after thorough scrutiny and future potential by the highly paid and qualified analysts/fund managers. Your task is made easier by the professionals working with these Funds as they have the responsibilty for safety and regular growth of investments received from their investors.

Are you feeling confident now? Come on! have a deep breath and find out the crucial information about the companies as suggested in the foregoing para. Enlighten yourself by spending a few minutes on the data and come out with a glow on your face. I know you are feeling a lot more informed and convincing to take an informed decision.

I will not recommend for you to rush and grab these shares with whatever money you have in your Bank account. You need to plan your investments by identifying 5 companies initially. Start investing through SIP only. Set aside Rs10000/- every month and start investing through SIP at least for five years. However depending upon availability of funds, you can identify, a few more stocks for investment after a few months. The growth could be smaller as compared to the more risky portfolio of small and medium cap companies but the experience will make you richer and more assured to consider investing in these companies in the future also.

Friends! Please note that volatility is the inherent nature of stock markets all over the world. All securities being traded in the stock market tend to fluctuate many times during the day. In case you keep tracking the market movements every minute, there is every possibility of getting tempted to exit or enter the market at the wrong time. This habit can trap a retail investor in selling or buying shares accruing avoidable losses.

Proffer your investments a breathing space to grow!!!

Warning:: Don’t keep watching your portfolio every hour/every day

Friends, I have tried to be very honest and straight on the subject but there could be some information that you might have anticipated but left out inadvertently. Please let me know to cover it in my next effort.

Stay safe and keep reading

Demat Accounts- Passive Income Source by Investing/Trading in Stocks

Pandemic conditions not only brought scary moments worldwide but also happened to provide some thrilling vistas to the new generation in India. With a regular stream of income dropping in their Bank accounts and virtually no outlet to spend freely, these people found trading in stock markets a very exciting idea. First-quarter ended on 30/06/2020 saw more than 2.4 million Demat accounts opened in the various Banks/DP’s by these customers!!

As a matter of fact, the number of Demat accounts increased substantially during the current Financial Year in India. These figures have jumped from 35.9 million on 31/03/2019 to 40.8 million as of 30/11/20, an unprecedented increase of 4.9 millions accounts in 8 months. A great performance by any yardstick. This year has witnessed phenomenal growth in the stock market operations with participation from a new set of customers. Every millennial was confined to the four walls of his house due to lockdown conditions enforced by the authorities starting in the month of March 20 and these enterprising professionals found trading in stocks an engaging medium for a few hours during the day. I am sure some of them will turn out to be serious investors in stock markets.

Let’s try to comprehend the entire process of Demat account opening in India

Central Depository: In India, there are two depositories that hold your shares/NCD’s/other Financial securities safely in the electronic form for you. These are the CDSL (Central Depository Services Limited) and NSDL (National Securities Depository Limited. Their nature of business is the same but due to ever-increasing number of Demat accounts, CDSL came into being to share the workload of NSDL in 1999.

Depository Participants/Brokers: All Financial securities viz Shares/NCD/ etc are held in demat accounts opened by the customers in DP’s. The DP’s(Depository Participants) are a link between the customer and Depositories. These DP’s could be Banks and Financial Institutions as well.

Demat Account: Like we need a Bank account to keep our money safe, we need a demat account to keep our dematerialised Financial securites like shares/NCD’s safe

So, if you wish to trade in the Indian stock market i.e. buy and sell securities, firstly you need to have a Demat account.This demat account needs to be attached with your savings account for carrying out buy/sell transactions in the stock market.

Where to Open Demat Account:There are a large number of DP’s who are providing the job of a broker/DP efficiently in India. To quote a few; Zerodha,Angel Broking,5paisa, Upstock,IIFL are the leading DP’s right now. Most of the Private and Public Sector Banks are also functioning as Depository Participants/Brokers nowadays. I will recommend opening Demat account with your existing Bank only as they can easily provide complete package of services on a single platform

Eligibility:

1. Any Indian resident major/minor can open demat account in India. Though documents are required to be executed by the natural guardian in case of minor
2. NRI can also open demat account in India by producing his POA/POI/Bank documents but the passport must contain his birth place in India.

List of Documents required for opening Demat Accounts:

• Identity Proof: PAN card, voter id, Aadhar card, Passport etc.
• Address Proof: Aadhar card, bank statement, driving license, utility bills etc.
• Bank account details

Procedure::

Account Opening Form: You need to fill up and submit the Demat account opening form along with necessary details either in person or online.

KYC Compliance: Adhere to (KYC) norms and submit the copies of KYC documents to the Depository Participant.

Verification: A representative of DP shall conduct in-person or online verification to cross-check the information furnished by you in the Demat account opening form.

Account number/Unique ID: Once the verification is completed, the DP shall provide you a Unique Account number or ID and Password. It normally takes 5 to 7 working days to open a Demat account.

Access your Online Demat Account: Your unique ID is the key to access your online Demat account. You are good to go! You are prompted to change your password while loging into your Demat account for the first time.

Maintenance Charges(AMC): There are annual charges for maintenance of Demat accounts. It varies from Bank to Bank ranging from Rs.100 to 800 per year. However, some brokers waive off this cost subject to their own terms and conditions

Brokerage: For every transaction you are charged a certain percent as brokerage which can be negotiated and reduced depending upon the quantum of operations in your Demat account. Some Banks have recently started a fixed amount of Rs.20 per transaction for intraday trading to attract more customers.

As per the SEBI guidelines, any account which has not been operated for more than 1 year is treated as Inactive in India. Incidentally, the country has 75% of Demat accounts as INACTIVE as of date. Not an encouraging situation at all. We hope this generation of new customers would find interest in stock investments and continue maintaining their accounts in good health.

Hi Friends, Do you feel like venturing into the most volatile and high yield world of investments. You guessed it right; I am talking of The Stock Markets. We all understand that stock markets are the only investment avenues that offer returns of more than 14% with long-term perspectives. Despite turbulences and tremours caused in the global economy over the past fifty years, the long term returns have never been short of 14%. If you have risk appetite and temperament to remain invested for more than five years then this is the place you can put your money in. for unexpected returns.

What are you waiting for? Login to your Bank account and start filling up the prescribed form for opening your Demat account right now.

Happy reading and keep sending your feedback

Investments, Bonds, Stocks, Mutual Funds, Create Wealth

Investments are an important part of Financial Planning exercise for invesors who look for handsome returns to achieve their life goals in a well defined time frame. Taking average span of 40 years during which an individual works, only salary income and savings do not propagate enough Funds to achieve the identified milestones. You need to ensure growth of savings at a reasonable rates for accompalishing the cherished goals of good education for your children, spacious house to live in, all worldly comforts for your family and finally settling for a relaxed and peaceful retired life

There are a large number of Investment instruments available in the market but a few are being discussed for the benefit of retail investors to earn good returns. More Risk- More Returns or longer investment– better returns are the age old quotes which are relevant even in the present day context for investors:

1. Fixed Deposits in Bank
2. Recurring Deposits
3. NCD’s with leading companies
4. Mutual Funds
5. Stock Market(IPO or Secondary)
6. Gold ETF
7. Money Market Instruments lie CD(Certificate of Deposits)

Bank Fixed Deposit/RD: Coming to the first two, the interest rates have gone down substatially over the past few years and average return on these FDR’s doesnt go beyond 6% p.a which in other words is a depreciation of your money as inflation rate hovers around 7%.

For an FDR of Rs.100,000/-, likely interest will be approximately 6000/- for one year and you will receive a cumulative amount of Rs.106000/- in your account . However on the flip side, the value of your money after discounting the inflation rate factor @7% will come down to 99000/- Virtually any interest rate below the inflation rate will eat into your original investment.

However liquidity is the best value attached to this investment option as you can get your FDR’s encashed or raise a loan any time during the curency of the tenure of FDR. Insurance cover provided by DICGC upto Rs.500,000/- is another feature which makes Bank deposits attractive. Any loss due to failure of a particular Bank is covered by DICGC upto Rs.500,000/- w.e.f Feb.2020. Its advisable to maintain a part of your portfolio under this segment.

Bonds/NCD’s: Coming back on NCD’s/Bonds where average return is anything around 10%, the option looks good as compared to Bank FDR but the amount remains locked for a few years. Unlike Banks where you can encash your deposit receipt prematurely, the money remains stuck for a few years in Bonds as secondary market is still not mature. You can consider investing under this option by identifying top rated companies with a clean record of payments on time.

Stock Market/MF’s: Now coming to company shares in the Stock market and Mutual Funds, the historical figures prove that returns in these instruments is far more than the above referred instruments. During the past 10 years, the NIFTY 50 Index has grown more than 130% with a few sectors showing negative trends.However. Shares of good companies have shown tremendous increase in their value over the past few years and helped in wealth creation for those customers who remained invested for long periods.

Whereas risk is comparatively more for direct investments in Shares/stock markets,you can spare a portion of funds for direct investmnets in shares through secondary market if you are confident about past and future performance of the company with a proven track record of the management. It is advisable to start small investments initially through SIP(Systematic Investment Plan) for mitigating the risk of volatability in the market. You need to be Market literate with a thorough knowledge of reading various parameters based on Financial results.

IPO(Initial Public Offer): Other route of entering stock market is through IPO where the shares are issued to retail investors on a base price fixed by the company. The subscription is generally multiple times and you are lucky if the computer picks your application number in a random draw. Its like a Jackpot for you as the listing price is normally much more than the issued price. You can exit on the day of listing by booking handsome profit or build a separate portfolio to reap future benefits of dividends and price rise

Otherwise better option for entering stock market is through Mutual Funds. The Fund Manager has an expert team of professionals to study the market and companies with prudence. They have rich experience in identifying the right stock at best price. You are only left with chosing a well managed Equity Mutual Fund with excellent track record of managing the fund. You can decide the nature of fund depending on your risk appetite and future goals. I have seen a few ELSS funds giving you a return of more than 40% over the past few years

GOLD: Yellow metal has shown tremendous results over the last few decades and the investors have reaped a rich harvest by investing in Gold. Whenever there is doubt and volatality in the market due to conditons like COVID19, investors have rushed to invest in Gold. Looks the safest bet! Whereas investment in physical Gold except ornaments for personal use is inconvenient from the security and safety point of view, the ETF route looks attractive. Gold ETF’s are liquid and tradeable for value. Gold Prices in 2000 was Rs.4400 per 10 gam which increased to Rs.18500 in 2010 and today it is more than Rs.50000 per 10 gm

CD(Certificate of Deposits): Though started in the year 1989, one of the best investment options which remains ignored by the investors in India is CD(Certificate of Deposits). You can earn average return of 7% on Certificate of Deposits by investing for a period ranging from 7 days to 1 year in any authorised Bank/Financial Institution. Minimum investment starts from Rs.100,000/- and this instrument is easily transferable by endoresment and delivery. since the issuing Bank can not buy back its own CD, there is no Loan facility against this instrument.

We have seen in the past that wealth creation has been possible for those who showed confidence and remained invested for longer periods not less than 5 years. Switching of portfolios or discontinuing SIP investments during sluggish market conditions will only erase the gains expected from long term investments.

Retail Investors are small investors who dream of all worldly pleasures by accumulating every single penny. They must show more reselience and patience for creating wealth through high yielding safe investmnets gradually.

Keep saving and stay invested