How & Why Should you invest in Stock Markets Even After Your Retirement?

Inflation and Retirement

Most Retirees feel great getting a bulk sum as provident fund and gratuity, and wish they knew a magician, who could spin their money 2 to 3 times in just 5 years, in addition to ensuring a regular return for their day to day expenses. It is true we all want it to keep up with the inflation rate in the market. I know of no such magicians, and it is practically not possible to multiply your money 2 to 3 times in just 5 years. But I definitely know of smart investment planning and investment advisors that could help you to beat inflation.


A step by step look at your considerations to come out with smart calculated investment decisions:

• Post-retirement, you know that you would no longer earn a regular income and would have to stay on your savings, provident fund, gratuity, and other benefits that have been given to you. You would definitely want more good returns on your investments, but your appetite for risk is low, for you would not want to lose your precious savings. So you would prefer to shift your portfolio of investment from risky ones to safer ones like fixed deposits in banks and good rated companies.

• However your need for more income, capital gains to keep up with inflation, and rates of interest on fixed deposits decreasing each year may make you puzzled about coping up with the increased financial needs. You, as a senior citizen are lucky to be getting additional interest, however taxes leave you with not much more. However you are not prepared to subject your savings to the volatile bullish and bearish trends of the share market of over-confidence and pessimism.


• You retire at 60, considering 5% is the rate of inflation annually, with life span as 85, and spending Rs.20000 per month, you would require a retirement corpus of Rs.42,00,000 if the return rate was 8%, while you would require Rs.47,00,000 if the return rate was only 7%. I am sure you would invest smart, reducing your retirement corpus by 10.5% by just investing for 1% more return.

• It is true that stocks and shares gave an annual compounded return of 17 to 18% in the last 15 years, with long term stocks giving a compounded returns of about 15 to 18% annually. However you have not appetite for risky and volatile investments, and may want to play safe with low or moderate risk to capital and in not putting all your eggs in one basket or to divide your risk.

• After your retirement you would do best to follow the advice of financial experts and invest no more than 10 to 20% of your retirement corpus in shares and stocks. A novice to the share market, or lack of time, inclination or shrewdness may not prove right to deal in the share market, and most financial advisors advice senior citizens to invest in mutual funds. These companies have experienced fund managers and researchers with in-depth knowledge of various industries and valuation principles and also offer diversified investment options in shares in companies, debt instruments and government securities.

• The choice of retirees should be to invest in big cap funds, funds investing in huge paid-up capital companies, while mid cap funds suit those who do not mind medium risk-taking. However small cap funds, invested mostly in start-up companies are to be avoided, being highly volatile in nature.

• Time plays a vital role in investment in mutual funds, and a good investment advisor would advice you appropriately. The best option for senior citizens would be to first invest a lump sum in a debt based funds that promise good, safe and regular return. This could be followed up by a systematic investment/transfer plan of investing or transferring through ECS regularly a fixed amount for units of a mutual fund. This definitely proves beneficial to take advantage of the volatility of the market, as buying different number of units each month helps to spread the risk also.


A Final Thought:
However your smart calculated investment choice of mutual funds requires evaluating every 3 to 6 months. This would help switching between mutual funds at the right time. My last but most important advice again especially to senior citizens is never go in for stock trading in a big way without proper knowledge and inclination and lose due to volatility of stock and share market.
(The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in.

The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (http://www.holisticinvestment.in/) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in

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8 Family Budgeting Misconceptions demystified

Let’s put on our thinking cap:

Depositing our pay cheques in bank and using the credit and ATM card for spending seems easy. However keeping the track of your income and expenses, to get full value for your money is possible only with budgeting. Budgeting helps most of us to keep track of our income and spending and not overspend.

In practice 10 budgeting myths retard the savings of a lifetime. They are:


1) I earn a lot and need not budget:

This requires a change of perspective. Michel Jackson lived like a king but died awash in $400 million debt. Budgeting by watching your spending pattern helps trace unnecessary expenses on clothes or eating out, and help you save for a future or for a much wanted dream holiday. So how much you earn has got less relevance. What is more important is budgeting. Proper budgeting can make a low income earner to retire richer and overspending can make a high income earner a pauper.

2) I hold a secure job and see no reason to save:

This does not hold well today with large corporations going in for labor layoff to save costs during recession. Small corporations also put you at a risk with the death of the owner or the company going into losses.

This insecurity demands caution to save for spending during such periods when you are caught unaware, with an emergency fund coming handy.

3) I am poor in calculations and cannot budget:

With useful tools like spreadsheet that help account for expenses and income earned make the budgeting much easier. A look at the spending helps avoid unnecessary expenses to budget and save in future. If you are interested one can easily learn budgeting. So if you say ‘I don’t know how to make a budget’, it shows your level of interest and willingness to save for a secured future.

4) I am lucky; I will never be short of money:

However your ability in meeting high bills and other unpredictable expensive events like life threatening accidents, or a major surgery without experiencing shortage of money may not be always true.

So better save and be prepared to face unpredicted contingencies and then use the savings for something else that you may consider desirable.



5) I pay my bills promptly and do not need budgeting:

Congratulations I appreciate your credit worthiness, but going into negative balance is also quite easy. You may be self disciplined. It doesn’t mean that you need not make a budget. Preparing a budget makes you much more disciplined and spend consciously. So budgeting with saving helps avoid going into negative balance or overdraft.

6) Budgeting could lead to deprivation:

Budgeting is not frugal living and foregoing all pleasures like a movie a month and an eat out once a week, but it just not allowing your earnings to be not overtaken by your expense. Everyone is planning to save, planning to invest, but do we have a well thought out plan for spending. A smart spending plan only can lead you to save more.

There is no need to feel deprived with budgeting; it just means saving a percentage of your income spent unnecessarily to have a secured future.

7) I have small wants and find no need to save:

This need not be a stable attitude in human nature, with you wanting to take advantage of certain financial trends in the market like buying house or land at cheaper rates, or investing at higher rates towards building a bigger retirement corpus. Hence budgeting helps to save when you do not want money for a time when you could profitably use it.

Your wants may be small but basic needs like food, shelter, and clothing are becoming costlier with inflation. Also you need to take into account your health care needs of the future.


8) I get rises, bonus and tax refunds and find no need to budget:

I think you have been lucky all these years, however these benefits are highly unpredictable and placing ones hopes fully on them is futile. It is better to budget and save than depend on unpredictable benefits like bonus, raise and tax refunds. The recent recession has taught us a lesson to all of us which we should not forget easily.

Budgeting and your future

Take charge of your future now. Budgeting is the first step towards controlling your financial destiny. Don’t let your unconscious spending habits decide your financial destiny.





The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (http://www.holisticinvestment.in/) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in

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Follow these four rules to get rich!

Do you want to create wealth? Are you satisfied and happy as you are?

Most of us would answer the first question as Yes, and the second as No, and if you are one of them then you are at the right place at the right time. My Hearty Congratulations! to you. Wallace D. Wattles said, “Every person who gets rich by creation opens a way for thousands to follow - and inspires them to do so."

Wealth creation is not the privilege of a few, but as Ralph Waldo Emerson pointed, “Man was born to be rich, or inevitably to grow rich, through the use of his faculties."


Here come the 4 maxims to wealth creation as jacks out of the box:

1. When young be a youngster, when old be mature.

"Don't let the opinions of the average man sway you. Dream and he thinks you're crazy. Succeed, and he thinks you're lucky. Acquire wealth, and he thinks you're greedy. Pay no attention. He simply doesn't understand." By Robert Allen

Some youngsters are easily influenced by the ideas, advice and experiences of others, like Vijay, 27 years old, believed in safe and secure investments in fixed deposits in banks and companies, just because his father lost heavily in the share market. However Rahul invested in mutual funds and created more wealth.

Youngsters in their 20’s should invest in stocks and shares as they can afford to wait and benefit with compounding effect and lower taxes. Likewise an old person should play mature and responsible and invest in safe and secure investments like debt instruments and big cap mutual funds.

2) Know the depth of ocean before stepping in, and your investment risk:

Investment risk calculation of each portfolio helps judge risk. Your age, appetite for risk, and length of investment decides your investment portfolio. M.R. Kopmeyer said, The great road to wealth is to learn useful facts", how true it is that many investors had lost heavily in future stock selling in a bull market without much knowledge. A safer investment would have been multi cap mutual funds with wealth creation period of 10-15 years. However senior citizens should invest in big cap mutual funds with much lower allocation.

Wealth creation decisions should be long term, for it is futile to be swayed to sell units/shares in a rising market and miss on opportunities for further wealth creation. Follow the market trend and do as J. Paul Getty quotes, "Buy when everyone else is selling and hold until everyone else is buying"

3) Set an optimum leverage between debt for wealth creation and lifestyle assets.

"Abundance is not something we acquire. It is something we tune into." By Wayne Dyer

There is an urgent need for quick wealth creation to meet inflation demands, but we need lifestyle assets like car, TV, furniture and a house to live in. Unplanned debt can be a barrier to your wealth accumulation process. It is true with easy debt options available, there is a choice to borrow for lifestyle assets alone or for also for wealth creation investments like real estate. In addition, payment of EMI leaves youngsters with less capital to invest in wealth creation assets.

In addition, leverage requires not investing in same type of assets like land and house, as price fluctuations could adversely affect all in that type of asset. Also investing on lifestyle comforts pay nothing in the long run.

4) No one created wealth by laying all eggs in one basket.

Variety is the spice of investment decisions too, helping in diversifying risks, and making it possible to offset the fall in value of one asset by profits in another. So having a diversified portfolio of real estate, gold, shares, mutual funds and house, and avoiding investment just in one asset class helps. In addition, portfolio diversification proves effective in tax saving, and better wealth creation.

Now finally you too are on the path to being a high networth person. How do you view yourself?
Do you quote George Claso, "Wealth is power. With wealth many things are possible." and end on a final note, with John Emmerling, "Study well what the billionaire does. It may make you a millionaire."

The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (http://www.holisticinvestment.in/) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in

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Do’s and Don’ts in the Stock Market

Let’s introduce do’s and don’ts of investing:

Most of us have our own perception of investment based on our experiences, but also tend to be confused with the opinions given by others. Knowing the do’s and don’ts of the stock market would help us turn really as a smart investor.

The do’s and don’ts in the stock market are:

slow, steady, and boring wins the race:

It is best not to panic over information about stocks on the media. Being slow and steady with looking at the activities that your money is to be used for would ensure that you invest in ventures that are good, useful and profitable.

Reading good books on personal finance will help you in taking right financial and investment decision. In addition, finding good financial advisors would help you get advice regarding stocks and mutual funds, along with entrusting the custody and management of your funds to them.

All this may seem too boring and time consuming, but it is better to be cautious than bitten too hard.

Don’t give any weight to market forecasts. All opinion pro and con is already built into the price of equities today:

Market forecasts on the media has got good entertainment value but doesn’t have any investment value. It is just enough for long-term investors to invest in good stocks, and mutual funds that would appreciate in the long run.

It is best to understand that market forecasts only show you the expected direction in which the market is heading based on the available information. This forecast is only a forecast and need not become reality.

In addition, market fluctuations are the very nature of share markets and should mean nothing to long tem investors. Making accurate market forecasts is tough, as they are influenced by various factors like the outcome of political elections, the direction of the economy, interest rates and world events. It is also wise to know that these fluctuations are incorporated in the price of the share, stock or mutual fund.

Do make your own analysis of the stocks, shares and mutual funds:
It is unadvisable to place your full faith on analysis of others regarding stock, shares and mutual funds. No wise man would always tell you all about his market beating strategy. Making ones own analysis keeping your financial goals in view and framing a strategy would help.

This involves studying the performance of top performing stocks and mutual funds over 5 years and existing mutual funds over a period of 3 months to decide on which stock to maintain and which to dispose off. All this would ensure that you are investment smart.

Don’t think you can successfully engage in short-term market timing:
As a long- term investor you should never contemplate taking advantage of short-term market dealings and speculations. Playing with shares and mutual funds in the short-term market may give you a profit in a few transactions but will not give you profits forever. So you can’t have an investment strategy which gives profit inconsistently. We need a strategy which can bring profits consistently so as to be a successful investor in the long run.

It is true that playing in the share market is neither entertainment nor fun. It is also futile to borrow or work on short-term margins to make money.

Don’t assume that if anyone were genius enough to devise a market-beating strategy he would be stupid enough to share it with anyone:

Stock tips are good to learn, but not to act on for speculations. It could prove dangerous to act on speculation tips given by one and all, as they may not be correct. In addition, everyone has his or her own perception of investment, with other not having full knowledge or skills.

You need to take time to think over each tip and analyze if it contributes to your long-term objective of capital appreciation. Similarly it is not advisable to subject your money to risk with investing in investment fads that may or may not earn you huge profits.

The final advice:
You need to make a calculated decision considering the pros and cons whenever you make an investment. In addition abstain from trading often in the stock and mutual funds market. Always think in terms of long term investing.

The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Director and Chief Financial planner of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in.

The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (http://www.holisticinvestment.in/) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in

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Financially Plan & Make a Difference to Your Child’s Future

On a beautiful late spring afternoon, twenty five years ago, two young men graduated from the college. They were very much alike, these two young men. Both had been better than average students, both were smart and both were filled with ambitious dreams for the future. Recently, these men returned to their college for their 25th reunion. They were still very much alike. Both were happily married. Both had a kid. And both had gone to work for the same industry and held similar positions in different companies.

But there was a difference. One of the men’s kid has completed M.S from a reputed university in USA and the other kid has completed a graduation from a local university. What made the difference?

Have you ever wondered, as I have, what makes this kind of difference in our kid’s career? It is a carefully thought out long-term planning for kid’s future.

As a responsible parent, you would not like to compromise on your child’s career, regardless of rising cost of education. You need a well developed investment plan that will allow you to meet all expenses for your child’s future.

Provision of Medical Expenses

Health care for mother and child will be a potentially handsome expense for new parents. New babies require regular checkups and immunizations even though if your child is in good health. So you need to make provision for these expenses well in advance even before the arrival of the baby.

Adding the newborn to your Mediclaim Policy

If you have an individual mediclaim policy, add the newborn as a member in that policy and get coverage. Do you have an employer provided mediclaim policy? Then, check if the terms and conditions allow you to add the newborn for coverage. If it allows, then add the newborn to that policy. If it doesn’t allow then take an individual mediclaim policy for your kid.

Increasing your Term insurance coverage

You need to check whether the existing insurance coverage is sufficient to support your child’s future or not in case of any mishappening to you. If it is not sufficient then take term insurance policy for the gap.

Ongoing educational expenses
The educational expenses are skyrocketing year on year. What your father has spent for your college education, is now you need to spend for your kid’s primary school education. So adequate provision in your monthly budget and a projection for cash flow with reference to school education expenses will be an important exercise for you

Financial Planning for Higher Education

It is going to be a biggest financial shock for you, if you have not properly planned for your kid’s higher education. Don’t delay this plan, start this plan as soon as the arrival of the newborn. Then you will have time on your side.

Assume your kid has completed today his/her schooling. Imagine how much you may need to spend for higher education at today’s costs. This cost is going to go up year on year because of inflation. So project this cost with inflation rate for the future. Now you will know how much exactly you may need for higher education in future when you kid is actually completed its schooling.


Other dreams for your child

Apart from the higher education, you may have some other dreams like buying a home for your kid, corpus setup for your kid’s future profession or business or corpus creation for wedding expenses. You need to follow the similar steps as mentioned in ‘Financial Planning for Higher education’ for these dreams also.

In case you don’t have time or knowledge to do this financial planning you can seek assistance from professional financial planners. They will save your time and make sure that you are achieving these financial goals for your kid.

Savings account for your child

You can open a savings account in the name of the minor. Whatever gifts, the kid receives by way of cheque or cash on the occasions like birthday can be saved there. Also this account can be used to motivate the kid to save from its pocket money.

The other investments which you make for your children’s future like mutual funds or shares need not be invested in the kid’s name. Banks, generally, will not give loans against shares or mutual funds held in the name of a minor. So, it can be invested in your name. As and when required it can be encashed to meet the necessary expenses for the kid. Banks, generally, will not give loans against shares or mutual funds held in the name of a minor.

The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (http://www.holisticinvestment.in/) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in

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Rockstar

Director           Imtiaz Ali

Cast                 Ranbir Kapoor, Shammi Kapoor, Nargis Fakhri, Aditi Rao Hydari, Jaideep Ahlawat, Piyush Mishra, Shernaz Patel, Kumud Mishra, Moufid Aziz, Avantika Akerkar

Year                2011

Genre              Drama

Away…. Beyond all the concepts of wrong doing and right doing

There is a field….. I will meet you there – Rumi

The movie ends with this couplet.  And probably sums up the entire story quite aptly.  The story of Janardhan Jhankhad (Ranchhod Das Chanchad has started a trend with Bollywood which will be here for a long time to come) – JJ for short is a sadak chhap Dilli ka Chhokra (a roadside romeo) from Pitam Pura.  He has known only the guitar from the time that he was born probably.  But as the lyrics state is, “Jo Bhi Mein, Kehna Chahoon, Barbaad kare, Alfaaz Mere” (Whatever I would like to say are ruined by the words I use).  There is no X factor.  And as his mentor, Khatana (Kumud Mishra) tells him – he can never be a star because he has never seen tough times.  Never been hurt in love. Never fallen seriously ill.  Still has his parents and family.  So JJ decides to make an attempt to fall in love with Heer Koul (Nargis Fakhri) from St. Stephens.  Violent rejection followed by a slight softening of the stand followed by a friendship which never seems to turn into love for a long time. But after Heer gets married, JJ or Jordan as he is known now finds his groove and turns into a Rockstar.

Something missing in the story? Maybe I have summarized it in a matter of fact way.  But that’s not it.  There is that little something that has me a bit muddled in my head.  Because I left the hall feeling a little let down and yet reasonably satisfied with my experience.  Rockstar is definitely not giving Shaitan a race for the best movie of the year in my books.  But it is not that feeling that has me confused.  I will definitely pen it down in the future.

The editing is slick from Aarti Bajaj.  Just the right cuts at the right times and piecing it together to give a collage that just comes together very well.  Rahman’s music along with Irshad Kamil’s lyric is superb.  One of his better pieces of work.  Most importantly, fits very well with the movie and comes out as a blend of a soundtrack and typical Bollywood singing. The costumes are real and very appropriate.  Jordan’s costumes will definitely start a fresh trend in dressing and facial hair.  Some consistency errors but only if you have a good eye.  The camera work is solid again which ensures that Ranbir’s fingers on the guitar are not visible (mostly) when he may not be playing the right notes. 

Imtiaz Ali keeps getting better with his direction in each movie.  Rock Star is his 4^th movie and he experiments this time by varying the pace from the exceptionally fast moments to the snail paced sequences.  And just as you are about to give up, he ups the ante and gets you back into the movie.  Ranbir Kapoor continues to be intense and committed on screen (so what if he isn’t with his women).  And the support cast has performed really well with Kumud and Piyush Mishra bordering on outstanding. 

The only thing I could genuinely find fault with is the acting of the speculated next Kapoor Khandaan Ki Bahu (Daughter-in-law of the first family of Bollywood). It was Nargis Fakhri who probably single handedly took away the intensity of the movie and probably the only reason I will give Rock Star less than the 7 it could have got.  Nargis dear – New York calling back I guess LLL We will miss you at least for your gorgeous looks. But don’t worry – Ranbir will be with you where ever you decide to go – the chemistry between the 2 of you is so thick, you will need an axe to chop through.

All in all, RockStar is a well made movie and worth a dekko if not 2.  I give it 6.5 on 10.  Shaitan’s place as the best movie of the year from Bollywood is firmly secure. Don’t see anything else coming up in the next few weeks to displace it.

Watch the trailer at http://www.youtube.com/watch?v=cn1jx_JUpi0

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The Adventures of Tintin - The Secret of The Unicorn

Director           Steven Spielberg

Cast                 Daniel Craig, Jamie Bell, Andy Serkis, Simon Pegg, Nick Frost, Kim Stengel, Glad Elmaleh,

Year                2011

Genre              Animation

The ever revered and loved Herge (may his soul rest in peace) had once gone on record to state that if there was anyone who could have made Tintin into  a movie it would have been Steven Spielberg.  Now why would anyone else not dare to challenge this statement? To figure out the answer to this conundrum, you will not have a choice but to watch the movie.  It is only Spielberg who can do justice to an enigma that has regaled us for over 8 decades now.  A fantasy, that has transformed every child’s ambition at sometime or the other from wanting to become a pilot or a businessman or a doctor or an engineer to just that of an investigative journalist.  A cult classic that has been enjoyed by even those who have crossed the half century mark in terms of years walked on earth.  A phenomenon that took the world by storm in 1929 and has truly stood the test of time.  On a different note, only Tintin could have inspired Spielberg to make his first animation movie. Spielberg was meant for Tintin and Tintin (the movie) was meant to be made by Spielberg and no one else.

For those who have not had the good fortune of being Tintin slaves, I can only quote the term, “deprived children”.  Do take this opportunity to read The Secret of The Unicorn before you watch this movie because it personifies another term that expresses the desire of any book lover (comic or otherwise) – being true to the book.  Spielberg has turned every single window from the comic book into a frame and not left anything to chance.  Every single detail has been brought to life and that would hearten both the Tintin maniac or otherwise alike.

John Williams start to the movie with the jazzy tune does remind you a bit of “Catch Me If You Can” (DiCaprio, Walken) but I don’t think it could have been done better than what you hear.  The soundtrack is simply stunning and one track is aptly titled “Loch Lemond” (visit any of the Tintin fan sites to research this piece of trivia).  I could not resist smiling when I read this in the credits.

The casting is picture perfect.  Jamie Bell is superb with the voice of Tintin but the highlight to me was Andy Serkis as Captain Haddock and Daniel Craig as Red Rackham. 

What catches your eye immediately after the titling are the blue grey eyes of Tintin.  Herge would have been thrilled to bits (and I would be putting this mildly) with the idea of the simple dots being replaced with “eyes”.  The attention to detail is stunning – including the simplest of details like the anchor on Captain Haddocks jaded blue sweater.  And yes, one cannot help but wait for the “Billions of Blue Blistering Barnacles” and “Thousands of Thundering Typhoons”.  If it would get a tear to your eye – fear not my fellow Tintin Crazy Fan because it is indeed worth shedding a tear on. 

The trailer calls it - A Race against Evil.  A World Beyond Imagination. An Adventure beyond belief. I don’t think words would do this masterpiece any justice.  It hurts me to say this but my lead runner for this year’s Oscars in the animation category, Cars 2, has just found itself some really stiff competition.  It would break my heart to see Cars lose out yet again but Spielberg has given the jury enough to chew about.  I give this 8.5 on 10.  I leave the judgement to you as to which one was better.

Trailer on http://www.imdb.com/video/imdb/vi2415828505/

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Eight Simple Ways to Plan your Taxes.

You have got only a few more months to complete this financial year. Very soon you will get a call from your company to submit the proofs for tax saving investments. So why don’t you spend some time on organising your tax plan?

1) Proper Allocation of Annual compensation
Restructuring your salary with some additional components can reduce your tax liability. This restructuring doesn’t require any additional cash outflow. The following components can be efficiently used to reduce your income tax liability.

 Transport allowance to the extend of Rs.800 is exempt
 Medical expenses which are reimbursed by the employer are exempt to the tune of Rs.15000
 Food coupons like sodexo or ticket restaurant are exempt from tax up to Rs.60000
 Individuals who are all living in a rented accommodation can include House Rent Allowance ( HRA ) as a part of their salary
 Leave Travel Allowance (LTA) can be part of your salary as this can be claimed twice in a block of 4 years.

2) Effective Utilization of Tax Exemption
As far as possible utilize the maximum exemptions available under section 80 C, 80 CCF and 80 D. The maximum exemption available under section 80 C is Rs. 100000.

Under this section Rs.100000 investment or contribution can be made in PPF, NSC, Life insurance premium, 5 year FD with banks and Post offices, Mutual Fund ELSS, Principal Repayment of housing loan, and the tuition fees paid for children’s education.

Under Section 80 CCF, you can invest up to Rs.20000 in infrastructure bonds.

Under Sec 80 D, the premium paid towards the mediclaim policies are exempt. The maximum limit of exemption is Rs.15000 and for senior citizens the limit is Rs.20000 and for covering senior citizen parents there is an additional exemption to the extend of Rs.15000.


3) Properly Structure your Housing Loan
The Principal repayment of a housing loan is eligible for a deduction up to Rs.100000. The interest paid on a housing loan is eligible for a deduction up to Rs.150000. If the housing loan is for a sizeable amount, then it is possible that the principal repayment and interest may exceed the specified tax exemption limit. To utilise the maximum tax benefit, an individual can consider going for a joint home loan with his/her spouse or parent or sibling. This will make sure that both the co-owners can claim tax deductions in the proportion of their holding in the loan.

4) Tax Plan in Sync with Overall Financial Plan

You should not do your tax plan in isolation. You need to do it in sync with your overall financial plan. So a tax plan is not only to just save taxes and also it should assist you in achieving your other financial goals like children’s higher education, buying a home or retirement.


5) Avoid Last Minute Rush

In fact the right time to do the tax plan is the beginning of the financial year. If you postpone your tax planning even now and do it in the last minute, then you will not be able to choose the right investment. In the last minute rush, you will be forced to choose a scheme which gives the proof immediately. Is the investment sound and profitable? Is there any other better options? You will not be able to choose the best scheme and you may settle with a mediocre one.

6) Invest Some Quality Time
Before investing your money, you need to invest your time. You need to take some quality time to understand the various tax saving options and compare their benefits and limitations.


7) Check for Future Commitments
Some tax saving options like NSC or ELSS need only onetime investment. Some other tax saving options like PPF, Ulips need periodical investments year after year. You need to be careful in choosing a tax saving scheme where you need to commit for periodical future payments. You need to check on a few things like; do you need such a future commitment? Will you be able to meet the future commitments at ease? The law may change and you may not get any tax exemption for your future payments. Would you consider the scheme irrespective of tax benefit for the future payments?

8) Changed Your Job; Redo your Tax Plan
Did you switch your job in the middle of the financial year? Then you need to redo your tax plan with consolidating the income from both the companies. It is advisable to inform the new company about the income during the particular financial year from the old company. So that your new company will deduct the right amount of TDS. Otherwise you may need to pay extra tax at the end of the financial year.

Whenever you change your job, you need to have a sitting with your financial planner or tax advisor. So that the required changes in your tax plan can be done proactively.


With proper tax planning you can reduce your tax liability; save more; invest better and become wealthier.

The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (http://www.holisticinvestment.in/) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in

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MUTTAKOSE PATTANI THUVARAN (CABBAGE AND GREEN PEAS DRY CURRY)

MUTTAKOSE PATTANI THUVARAN (CABBAGE AND GREEN PEAS DRY CURRY)

As I mentioned in my earlier post, after Diwali I am looking to cook foods that are bland, not so colorful and light. So I decided to make cabbage and green peas thuvaran with some molaghu rasam. I love the combo of cabbage and green peas. Its absolutely delightful.

MUTTAKOSE PATTANI THUVARAN

Ingredients

Cabbage - 1 medium size

Green peas – 1 ½ cup (fresh or frozen)

Mustard seeds - 1 tsp

Udad dal - 1 tsp

Green chillies – 1-2

Grated ginger / ginger paste – 1 tsp

Asafetida (Hing) - a small pinch

Freshly grated Coconut – 1-2 tbsps

Cooking oil - 1 tbsp (Prefer coconut oil)

Salt as per taste.

CABBAGE AND GREEN PEAS DRY CURRY

Method

Chop the cabbage & rinse well under running water in a colander. Rinse the green peas as well and keep aside.

In a Kadhai (wok), Add 1 tbsp of coconut oil, when it is hot, Add the mustard seeds and udad dal, when it begins to crackle, when the udad dal becomes slightly pink, add the green chillies and grated ginger and fry well, Add the green peas and sauté for 2-3 minutes, after this add the chopped cabbage. Add asafetida and salt and stir well. Close with the lid and cook on low flame till it is cooked. Stir well, wait until the water drains completely and then add in the freshly grated coconut and stir fry till everything is mixed well. Serve hot with Rice and Rasam.

Tips :-

• You can add turmeric powder for some color, but after all the colors of Diwali I wanted it plain and bland.
• Instead  of green chilly you can add red chilly
• You can avoid coconut for health reasons.

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