Annual Bonuses Is The Time For Wise Money Management

The month of annual bonuses seems like paradise when we start planning in advance on how to spend it. This excitement will get us into impulses of spending on things that give momentary pleasure only. This leaves us regretting for our decisions later. Wise money management and productively using annual bonuses will help us to take care of not just present needs but also of future needs and contingencies.

My idea of being a financially prudent and smart person would involve wise money management of bonus according to the life’s priorities and expenses. It is true worldwide that living in uncertain economic times after the global economic turndown, we all need to learn powerful lessons on wise money management. Every individual has his/her own peculiar set of priorities, but I believe that some suggestions would be well appreciated by all.


Ways that have helped in wise money management of annual bonuses include:

 Tax planning has and will always play a role in saving taxes and making meaningful investments for the future such as investing in mutual funds, fixed deposits and insurance related investments to save taxes under Section 80C. However I would suggest investing in mutual funds is best done through Systematic Investment Plans (SIP) or Systematic Transfer Plans (STP) that is best accomplished with opting for systematic transfer of funds kept in a savings bank account spread over a year. This helps to take advantage of market fluctuations and get good returns.

 I am sure we all realize the great benefit of living a life free of debt, than having to worry about expensive loans taken like credit card debts, personal loans, and low priced loans like education loans, home loans and vehicle loans. The priority should be on utilizing annual bonuses to first pay off loans carrying a high rate of interest, with it giving the advantage of saving on higher amount of money being paid towards interest on such loans.

 Life has never been certain and it is futile to expect it to be certain at any time, so wise money management needs to take care of unexpected and expected contingencies that could arise at any time. Being financial smart requires every person to set aside at least 3 to 4 months of one’s monthly income for contingencies like loss of job, illness, and accidents that could leave you in a financial crunch for a few months. This is best accomplished with setting aside some portion of the annual productivity bonus towards the maintenance of a contingency fund in the form of liquid and semi liquid funds like mutual funds and bank deposits.

 “Live in the present” is what many psychologists would tell you, but I would say it is best to take lessons from our past mistakes and set the stage to meet some of our future expenses and financial goals. The past is gone and would never come back again, but it is never too late to start saving for future goals like retirement, higher education of children, their marriage or maybe your goal to start a consultancy business based on your experiences. This requires carefully planning the period that you would not need the money and setting aside a portion of your annual productivity bonus in bonds and mutual funds with the correct allocation between equity and debt to meet your needs.

However I do not mean to say that enjoying life or luxuries like a dream vacation, an LCD TV or home theater should not be your cup of tea, because all of us earn and perform well at work to live life and not just to exist as some suppose. Enjoy your annual bonus king size with planning your financial priorities with the advice of your financial planner.

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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Know All About Form 16 – Be An Informed TaxPayer.

Most of us are aware of Form 16 given by our employers before April 30th each year that give details of the income earned, and tax deducted at source and paid to the government. This certificate proves useful in filing income tax returns. In addition banks also issuing Form 16 and Form16A to pension holders and those that earn interest income, with no Form 16 required when TDS is not deducted from salary. Knowing about Form 16 helps us to be a well-informed taxpayer and do better tax planning.
The 13 components of Form 16 are:
1) PAN that stands for Permanent Account Number, a 10 digit alpha-numeric code that is generated by the Income Tax Department of India. It is mandatory for everyone- NRI, PIO & companies that wishes to conduct business, file and pay taxes, invest, buy and sell property, open a demat or bank account to have this number in India. The need

2) TAN is best known as Tax Deduction and Collection Account Number is another mandatory 10 digit alpha-numeric number that is very necessary for all persons and companies that are responsible for collecting taxes. It proves useful to note that this number is unique in case of different companies.
3) Gross salary, the common term used in practice includes all regular incomes in an employee’s remuneration. It would include allowances, overtime pay, commissions, and bonuses, with all other amounts before the deductions are made.

4) It is best to know that perquisites are just additional benefits in addition to the fixed salaries. Known popularly as perks this term could include rent free accommodation, loans at subsidized rates and others.

5) Profits in lieu of salary are just payments given instead of salary that is given by at or in connection with retrenchment or termination of employment. This item forms a part of taxable income and includes gratuity, commuted value of pension, retrenchment compensation. However the contribution made by the employee or interest thereon is not taxed.
6) Next allowances in Form 16 are certain payments made or allotted to employees for bearing of certain expenses. It could include allowances like medical allowances, and travel allowances that are generally taxable in the hands of the employees.

7) House rent allowance or HRA In Form 16 refers to a special allowance paid to employees to meet the cost of housing. There is tax exemption on HRA and it is limited to the least of either the HRA received from employer, or rent paid in excess of 10% of the salary, or 50% of salary in metropolitan cities and 40% in other cities. The term salary here includes basic, dearness allowance and other commissions put together, this exemption not available to those that do not pay rent.

8) It is best to understand conveyance allowance as an allowance paid to an employee to meet commuting expenses between his/her home and place of work. There is a maximum exemption of Rs.800, with a special provision for an orthopedically handicapped employee until Rs.1600.

9) The term medical allowance paid for medical treatments and medicines is fully taxable. However reimbursement of medical expenses against submission of bills could get you a maximum exemption of Rs.15000 annually.

10) The allowance received to employees for entertainment services or entertainment allowance is allowed as a deduction for government employees. However in other cases one can avail of deduction as a least of actual allowance received, or 1/5th of salary excluding all other allowances and perquisites or Rs.5000.

11) Deductions as in Form 16 is given as an incentive given by the government to invest in certain long term savings schemes. This includes long term savings for retirement, insurance schemes and others that give tax breaks.

12) All taxes in India are subject to an education cess that is 3% of total tax payable. This contribution is made towards the Secondary and Higher Education development in the Indian economy.

13) It is lastly important to understand the relief granted to employees when salary is paid in arrears in a lump sum best known as Relief u/s 89. This includes salaries received in arrears/advance, family pension received in arrears, retirement benefits such as gratuity, commuted pension, VRS and retrenchment compensation.

Understanding your form 16 helps you in many ways like planning for taxes, filing your income tax and so on.

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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Have You Taken These Financial Steps Before Becoming An NRI?

Are you planning to go abroad and become am NRI? Today you are a Resident Indian. Tomorrow you may become an NRI if your employer provides an opportunity. When an opportunity like this knocks at our door, are we ready to face the change? Are we prepared?

Creating a Checklist or ‘to-do list’ helps to ensure consistency and completeness in carrying out a task. Becoming an NRI is a major transition which definitely needs a checklist. Here is a personal finance check list to be taken care before departing from India.

NRO & NRE ACCOUNT:

The first thing to do is to convert your savings bank account to an NRO or NRE account. An NRO or non-resident ordinary account is like an ordinary savings bank account that gives a domestic rate of interest. This account can be used for depositting your domestic earnings like rent, interest and dividends and remittances from abroad into this account. Cheques can be issued for EMI and investment, but there are restrictions for transferring money to the country of residence. Money in this account is non-repatriable.

You can transfer current income earned in India, but transfer of sales proceeds of property and investments can be only to the extent of 1 million $’s a year. A certificate from a chartered accountant, declaring that all taxes have been paid has to be furnished. It is important noting that an NRO account invites a tax of about 30.9% at source.

An NRE or non-resident external account can be opened with foreign currency when you wish to transfer substantial money to the country of your residence. There is neither restriction to remittance nor any taxes in this account, but you would only get a low rate of interest. This account offers no facility to receive incomes in the shape of rent, interest and dividends, but you can make local payment in rupees, invest money and receive proceeds from sale of investments and property.

It is much easier to open both these accounts in India, with you requiring giving 2 passport size photographs along with a copy of your passport and visa. In case you are already abroad, it is mandatory to get an attestation from the Indian Embassy or Notary before sending it to the bank branch.


DEMAT ACCOUNT

The next step is to close your domestic demat account and open a non-resident ordinary (NRO) demat account under the Portfolio Investment Scheme (PINS). This is mandatory, as there are restrictions to the amount of investment that an NRI can make in the shares and stocks in Indian companies; it should not exceed 5% of the paid–up capital of any Indian company. You need to transfer your existing share holdings also into this account.

You have the option of 2 types of separate demat accounts namely for repatriable and non-repatriable shares and this account is to be separate from other bank accounts. Your demat service provider would help you on submission of copies of passport and visa. Once you return back to your country you can close the PINS demat account.

Power Of Attorney:

The third step is to give the power of attorney to someone you trust in India to manage financial transactions in bank accounts, buying and selling real estate, renting out property and signing up tax forms. The power of attorney could be general, where the authority entrusted holds good for banking as well as real estate transactions or could be specific, where the authority is restrictive to only certain transactions. Consulting a lawyer and submitting attested copies to the concerned people like banks and mutual funds proves essential.

Update your NRI status in Various KYCs:

The last step is inform the mutual fund, bank and insurance companies by submitting the updated Know Your Customer forms stating your change of status as a non-resident Indian. Your Financial Planner and Iagent and bank branch could help you best regarding the different formalities that are required.

Now you are all set to assume your NRI status.

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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Newspaper Map : The newspaper keeper - Newseum

Just put your mouse on a city anywhere in the world and the newspaper headlines pop up...

Double click and the page gets larger...you can read the entire paper on some if you click on the right place.

You can spend forever here.

  http://www.newseum.org/todaysfrontpages/flash/

Also, if you look at the European papers, the far left side of Germany will pop up as The Stars & Stripes (European edition, of course). AND, this site changes every day with the publication of new editions of the paper.

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Have You Taken These Financial Steps Before Becoming An NRI?

Are you planning to go abroad and become am NRI? Today you are a Resident Indian. Tomorrow you may become an NRI if your employer provides an opportunity. When an opportunity like this knocks at our door, are we ready to face the change? Are we prepared?

Creating a Checklist or ‘to-do list’ helps to ensure consistency and completeness in carrying out a task. Becoming an NRI is a major transition which definitely needs a checklist. Here is a personal finance check list to be taken care before departing from India.

NRO & NRE ACCOUNT:

The first thing to do is to convert your savings bank account to an NRO or NRE account. An NRO or non-resident ordinary account is like an ordinary savings bank account that gives a domestic rate of interest. This account can be used for depositting your domestic earnings like rent, interest and dividends and remittances from abroad into this account. Cheques can be issued for EMI and investment, but there are restrictions for transferring money to the country of residence. Money in this account is non-repatriable.

You can transfer current income earned in India, but transfer of sales proceeds of property and investments can be only to the extent of 1 million $’s a year. A certificate from a chartered accountant, declaring that all taxes have been paid has to be furnished. It is important noting that an NRO account invites a tax of about 30.9% at source.

An NRE or non-resident external account can be opened with foreign currency when you wish to transfer substantial money to the country of your residence. There is neither restriction to remittance nor any taxes in this account, but you would only get a low rate of interest. This account offers no facility to receive incomes in the shape of rent, interest and dividends, but you can make local payment in rupees, invest money and receive proceeds from sale of investments and property.

It is much easier to open both these accounts in India, with you requiring giving 2 passport size photographs along with a copy of your passport and visa. In case you are already abroad, it is mandatory to get an attestation from the Indian Embassy or Notary before sending it to the bank branch.


DEMAT ACCOUNT

The next step is to close your domestic demat account and open a non-resident ordinary (NRO) demat account under the Portfolio Investment Scheme (PINS). This is mandatory, as there are restrictions to the amount of investment that an NRI can make in the shares and stocks in Indian companies; it should not exceed 5% of the paid–up capital of any Indian company. You need to transfer your existing share holdings also into this account.

You have the option of 2 types of separate demat accounts namely for repatriable and non-repatriable shares and this account is to be separate from other bank accounts. Your demat service provider would help you on submission of copies of passport and visa. Once you return back to your country you can close the PINS demat account.

Power Of Attorney:

The third step is to give the power of attorney to someone you trust in India to manage financial transactions in bank accounts, buying and selling real estate, renting out property and signing up tax forms. The power of attorney could be general, where the authority entrusted holds good for banking as well as real estate transactions or could be specific, where the authority is restrictive to only certain transactions. Consulting a lawyer and submitting attested copies to the concerned people like banks and mutual funds proves essential.

Update your NRI status in Various KYCs:

The last step is inform the mutual fund, bank and insurance companies by submitting the updated Know Your Customer forms stating your change of status as a non-resident Indian. Your Financial Planner and Iagent and bank branch could help you best regarding the different formalities that are required.

Now you are all set to assume your NRI status.

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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Rajapattai Movie Review

National Award winning actor Vikram in combination with a director who made heads turn with his unique style of narrating stories brings in high expectations in a project. However, this film which was touted to be an entertaining action thriller turns out to be an amateurish product from experienced men. The story which revolves around the infamous land grabbing mafia normally has more sting which is left to sway badly off track by director Suseendran by virtue of an unconvincing screenplay.

The film revolves around Murugan (Vikram) who works as a gym boy in the extras department of film acting. His aim though is to become a villain in films. Things tend to take a different turn when Dhakshinamurthy (K Vishwanath) an old man is being chased by a group of men wanting to grab his property.

Murugan then takes care of Dhakshinamurthy and in the mean time his love interest in Darshini (Deeksha Seth) also comes into the scheme of things. The twist in the tale though doesn't come ripping through the roof but just crawls its way slowly into the main storyline. The main villain in the film happens to a political bigwig nick named "Akka" (Sana) who is hell bent on getting hold of Dhakshinmurthy's property.

The duel then turns to be between Murugan and Akka and what happens in the end is anyone's guess. As mentioned earlier, the weak link in the film happens to be its screenplay. In terms of acting, none of the actors except for Sana have done a decent job. Very sad state of affairs to note that actors with enormous caliber don't make apt use of it.

The movie has a running time of 130 minutes and as a viewer one is sure to doze off at some point of time in the film. Yuvan Shankar Raja should rate this movie as his least liked / performed film.

"Rajapattai" is no King's path, instead it can be said as no one's path.

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Is it necessary to have Insurance For Home Makers?

It has always been a question of common belief that the male member or the bread winner of the family only needs to be insured. This belief has emerged due to the fact that the financial interests of the other dependent family memebers had to be protected in case of death of the bread winner. However changes of lifestyles and with more women being employed in lucrative professions both in big cities and towns the perception of insurance has changed.
In addition the entry of many MNC-Indian insurance joint ventures, and their bringing out unique solutions and products, it is time that we all looked into taking insurance policies for home makers too. Home mekaers have been neglected all these years with regard to insurance.
It would be interesting to study why home makers too need insurance:
 It is significant to note that in a country like India, homemakers contribute to households in the form of cooking, education of children and other menial work. But their importance and value of services evaluated in monetary terms is greatly neglected. It is true that the absence of these services on the death of the homemaker a big financial impact on lower and middle income families.
 Another noteworthy factor that places a value on insurance of homemakers is that they provide great counsel to their spouse and children. So losing them would mean that lots of money would have to be spent on counseling services proving that loss of love and companionship is priceless.

 It is also true that no one could replace a home maker mother and her loss could make it difficult to get competent and loving people to look after the family and children. It is also significant to note that the cost of competent daycare centers could be high and the cost of not insuring a home maker in lower and middle income families could be pretty high.
 There is a money value behind each and every household work performed by the home maker. In case of any eventuality to the home maker, one need to shell out more money to upkeep the house in order.

Considering various aspects like paying expenses out of the pocket, remarriage and insurance, insurance proves to be the most reliable and safest solution. The insurance cover should be proportional to the amount of financial loss that would be suffered or through a need based cost replacement analysis.

In addition to insurance to guard against financial liabilities in case of death of a home maker it is vital to also plan for a dream retirement home and college education funds through various insurance linked plans.

Health insurance:

It is also true that insurance needs to be taken for critical illness, prolonged illness, accident or a major hospitalisation for all family members. It would also be beneficial to take health insurance policies early in life to gain benefits like full cover of all ailments and lower premium.

However each family could have their own unique insurance needs, so taking the advice of a trusted financial planner in the form of an insurance advisor or trusted bank would help. They would render you correct information, best skills and advice based on your family’s financial circumatances, priorities and risk profile.

Insurance for the whole family also requires that all the adult family members be fully aware of all the insurance policies taken, their benefits and exclusions and where they are kept. Having an open discussion about long term savings and insurance plans both for the bread earner and home maker and for children build a better family understanding and bond. They also convey the message that proper life insurance coverage should form an integral part of financial planning in families.

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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Critial Illness: What a Disaster?

Ursula K. LeGuin quotes “The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next.”

I agree with Ursula K. LeGuin for critical illness could strike anyone at anytime and in any place with the modern trend of rise in lifestyle diseases that call for prompt and costly medical care. The necessity of critical insurance or health insurance with critical illness riders was strengthened with my friend Mr. Karthik being diagnosed with multiple blocks in his heart that involved a treatment of 3lac. Then one more friend told us all about the necessity of critical illness insurance and health insurance with critical illness.

Understanding all about critical insurance and health insurance with critical insurance riders would tell us that most such health insurance policies would cover 12 critical illness besides others. They could include heart attack, coronary artery bypass surgery (CABG), cancer, kidney failure, stroke, coma, liver failure, primary pulmonary arterial hypertension, multiple sclerosis, major organ transplant, aorta graft surgery and total blindness.

These diseases and surgical procedures could be wanted by anyone, at any time and anywhere and hence cannot be neglected at all. Health insurance companies generally undertake to pay a lump sum for the treatment of these diseases irrespective of the amount spent. Some companies may include such coverage on payment of additional premium every year. This could vary from company to company and also between companies dealing in life and general insurance.

Features of Critical Illness Insurance

 It is quite possible to take up critical insurance policies or health insurance with critical insurance riders. When a critical insurance policy is taken the entire amount of the sum assured is paid on treatment of the critical insurance irrespective of the amount actually spent. Such a policy is a benefit plan.

 The benefit payment under the Policy will generally be paid to you on survival for more than 30 days on post diagnosis of the critical illness.

 However critical illness insurance will not cover ordinary hospitalization and medical expenses. While health insurance policies with critical illness riders would offer extra protection against critical illnesses with payment of additional premium. They would also pay the lump sum on the treatment of the critical illness.

 However one needs to understand that critical illness insurance does not have any maturity value and just offer cover in case of critical illness. Such amounts may lapse on their not occurring. Life insurance policies offering critical insurance riders have a maturity value but no maturity value is allotted for riders. Riders merely cover the risk of critical insurance. However this need not deter one from taking up critical illness insurance, as it is well worth to cover risk of high expenses with critical illness.

 Having a look into the premium on these policies would give us information that the amount of premium on critical illness insurance and riders for critical illness would vary depending on the age of the insured and the illnesses that are covered.
 Critical illness insurance could have exclusive coverage for all critical diseases or for only some, the terms and conditions varying from company to company. A check would prove useful before taking up a critical illness insurance or life insurance with critical illness riders.
 Tax benefits under Sec 80D or Sec 80C of the Income Tax Act are available.
Get critical insurance today
“Caution is a most valuable asset in fishing, especially if you are the fish.”
I am sure you would not prefer to be the fish that is not cautious, for life is so sweet and short. Mr. Karthik and his family are now out to advice families like them, for they believe their experience could educate others too.
What are you waiting for to take protection today? Information is nothing more than mental garbage if it doesn’t transfer an individual. Unimplemented knowledge is a burden. Our problem is not ignorance; but inaction. Don’t fall into this trap.
One of these days is none of these days; today is the day to start the big job. Just browse the net, discuss with financial planners for better understanding of the coverage required and product clarity, and get quotes and rest in peace with the best critical illness insurance for you.

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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Child Plan: Is that REALLY worth for your kids?

I am reminded of a Tamil saying, “Experience what it is to build a house, and get a child married”, probably that is the reason why wise parents invest to meet the long term financial obligations like education and marriage cost of their children. In addition the rising inflation rate also calls for starting savings early in a child’s life. However it would be advisable to know, evaluate and compare various means of savings. This could also enlighten you about how “child plans” need not be the only method.

Disadvantages of a Readymade “Child Plan”

 “Child plans” with insurance resemble unit linked insurance plans, starting early in a child’s life and ending only when the child attains maturity. The amount of money invested in these plans is insignificant considering an in-built insurance component, and other charges like premium allocation charges that are the commission paid to distributors. This could lead to low return in the initial stages and additional losses on leaving before completion of the tenure.

 Most of the “Child plans” in the industry comes with a catchy name to capitalize the “Child sentiment” in us.

 We need a different medicine for a kid and adult. But do we necessarily need a different type of investment options for securing a kid’s future. Think.

Alternatives for Child Plan:

 It is to be noted that other investment products like Public Provident Fund, National Savings Certificate, National Savings Scheme, RBI bonds, post office deposits and instruments and mutual funds that serve the purpose of savings and increasing of capital value apply equally well to investment for a child’s future.

 Mutual funds are available in a wide range to satisfy all appetites for risks. In addition there are mutual funds that are designed for meeting long term financial obligations of children. One could also invest in funds with a right balance between debt and equity that promise better capital growth than child plans. It is also possible to go in for systematic investment plan that offers the opportunities of taking advantages of price differences and gaining in the long run.

 It is true that systematic investment plans or SIP help save entry cost and build a habit of regular savings for capital growth to meet children’s financial obligations. It is also possible to avail of tax benefits as such funds are taxed only on maturity and a major child’s income would be taxed separately. I am sure you would agree that this would help saving unnecessary expenses and cuts in investing in child plans.

 PPF or Public Provident Fund is also good as mutual funds, with opening a PPF account for a 20-year period in a child’s name helping to meet long time financial obligations of children. It has been stipulated that an annual investment of just Rs.70000 would leave you with almost Rs.32lac as a result of the compounding effect. It is difficult for a “child plan” with insurance component and upfront charges to offer you such a great return without taking much of risk.

An Ideal Mix:

• Instead of going for a “Readymade Child Plan”, one can customize their Investment Plan for their child with a combination of Term insurance, PPF and equity diversified funds.
• If tax saving is your motive one can consider ELSS funds instead of a regular equity fund.
• It gives you similar tax benefit like a child plan. You get 80 C benefits for your investments. Also the returns are also tax free.
• At the same time, the charges are very very minimum and negligible when compared to “readymade child plans”.
• You can increase or decrease your contribution every year depending upon your financial situation.

So whenever, you think of child plan think of a customized investment plan for your kid’s future with a mix of 2 or 3 investment options instead of readymade product with a tag “Child Plan”. I am sure you would agree that readymade child plans prove to be not ideal instruments to save. The wisest line of thought would be a mix of diversified investments that gives good return with low charges.

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 You Do Your Regular Financial Check-ups?

Just start the financial check-up:

Noel Whittaker said, “Life is full of uncertainties. Future investment earnings and interest and inflation rates are not known to anybody. However, I can guarantee you one thing.. those who put an investment program in place will have a lot more money when they come to retire than those who never get around to it”.

This meaningful quotation made me realize that we need to make regular financial check-ups to ensure that we have enough to meet our financial goals in life. Planning for financial goals require taking into consideration the present rates of earnings on investments, future earnings and rate of inflation that would affect our lifestyle and financial goals. It is vital that we all realize that regular reviewing our finances according to our changing dreams, needs and aspirations and making necessary changes would help meet our financial goals.

Marriage and a merger of personal finance:

Marriage could be the first circumstance that calls for reviewing financial needs. Getting married means not just end of bachelorhood/spinsterhood, but additional expenses of managing household and financial needs of one’s spouse. Likewise 2-paypackets calls for necessity to review the fruitful investment of excess income. I would say that marriage brings along with it future goals like buying a house, planning for children and so on and additional expenses involved in this planning.

Kids and their Future:
The innocent face of kids brings joys to the couple’s life, with the added responsibility to plan for additional finances required for their upbringing, education, medical expenses and marriage. In addition, don’t we as parents feel that we have to leave behind an inheritance that our children would love to treasure?
Health is Wealth:
Regular financial check-ups is required not just after marriage and kids, but God forbid, death, long term sickness and accidents are eventualities that can change everything for a family; these unforeseen contingencies can lead to major turmoil and depletion in finances.
Switching your job or transition to a business:
Regular financial check-ups are also required considering the change of employment or business activity. Regular jobs bring regular income and regular investments, while increases would mean more of investments. Also irregular and cyclical income means saving and investing more in times of high income; as in surgeons, artists, consultants investment and insurance advisors for times of income crisis.
In addition, can anyone of us afford to miss on the effects that inflation plays on our financial planning? Periodic financial check-ups ensure we are self-sufficient in old age. Other factors like windfall gains could also make differences in our finances. So it is very true to say that regular financial check-ups or reviews would help make adjustments in financial plans in the most optimum way.
What do regular financial check-ups give me?
Expecting the Unexpected:
Deepak Chopra aptly said, “Even when you think you have your life all mapped out, things happen that shape your destiny in ways you might never have imagined”.
It is right that budgeting regularly would help all of us to pin-point where we are overspending and need to economize to fulfill goals. It is true that this would help increase savings for investments. It would be right to say here that regular financial check-ups help to review financial needs and also set up sufficient contingent or emergency fund that come in handy in emergencies; sickness, accident and unemployment. Ideally it should be 3 to 6 months of your family expenses. This would come in handy in case of emergency.
How very true it is that insurance forms an important part of financial planning as it provides for not just financial protection on death, but also for illness and future needs. Constant and regular financial check-ups is necessary here also to provide for increased insurance needs, with planning early in life helping reduce premium costs and refusal for insurance.
Net worth Tracking:
It has been well said by Noel Whittaker, “Becoming wealthy is not a matter of how much you earn, who your parents are, or what you do, it is a matter of managing your money properly”. We would be smart in preparing a balance sheet of our family finances. Like a business balance sheet, this could enlist assets like contingency fund, various investments, interest earnings, pension, provident fund, insurance and other immovable assets we have and also enlist the liabilities like expenditure on children’s education, marriage, medical expenses, retirement expenses and cost of inflation on financial reserves. Constant updating would not only give an idea of your exact financial standing, but would also help to make appropriate financial planning changes.
Other Review Triggers:
 A special mention needs to be made regarding regular financial check-up with regard to mutual funds; the change of fund manager and other changes in investment portfolio need to be considered.
 How very true it is that regular financial check-ups help in maintaining excellent financial health. Budgets need to be reviewed every month, with financial consultants advising their clients to review their investments every 3 months and make the necessary changes.
 There may however not be a need to make changes if the portfolio is as planned, though in certain cases like big change in financial goals or with new guidelines of investment necessary changes may have to be made in the investment plans.
To conclude how very true it is that uncertainty is an important ingredient of life, but managing your money properly could give you the stability and peace of mind to face your financial goals confidently.

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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10 commandments of personal finance

We all work and earn money. Do we manage our hard earned money effectively and efficiently? New Year is the time to take resolutions. Why don’t you take a resolution to prioritize and organize your personal finance? Here are the 10 commandments of personal finance that can help you in managing your personal finance better.

1. Create a budget
Most of us hesitate to make a budget because we think it is about cutting all the fun in life. Budgeting is not about cutting all the fun; it is about conscious allocation of funds. Once we start spending consciously, our mind will find out a whole new way of having fun within the budget. You need to create a workable budget that gives you extra money and life.

2. Spend smarter and save more
Spending less and saving more are lifelong living skills that need time to develop. Unless and otherwise, you have a clear written budget, you will lose your focus and go after consumerism and materialism.

To save more, obviously you need to spend smarter. To spend smarter, you need to understand your own spending patterns. Consciously you need to track all your expenses on a daily or weekly basis. So that you can find out what influences your spending pattern and you can stay away from those influencers.

3. Family protection
As a bread winner, you provide a lifestyle to your family. This life style need to be protected with sufficient life insurance cover. Otherwise your family may not be able to continue the same lifestyle in case of any mishappening to you. A word of caution here, don't fall prey to ULIP schemes. Opt instead for a pure term insurance policy. These policies give you high coverage with low premium.
Also cover yourself and your family members with adequate health insurance coverage. The coverage amount of the health insurance policy needs to be decided based on your health consciousness, your family health history, and the class of hospital you choose for treatments.
4. Asset protection
Before starting to build fresh wealth, it is our duty to protect our existing assets. Assets like house, flat, or car can be insured against accident and natural perils. The event of earthquake or terrorist attack to our flat/house seems to be remote. But the impact of such things could change our financial stability upside down. So protect your house and other major assets with proper insurance.
5. Emergency reserve
You need to accrue savings for some surprise situations like loss of job, break in job or sudden expenses like a major repair to your car or house. Generally, the emergency fund needs to be in the range of three to six months' family expenses. If you have created this contingency fund, in the event of an emergency you need not pre-close your other investments and thus you avoid paying penalty or booking losses.

6. Debt payoff plan
If you are in debt, you need to create a debt payoff plan with different scenarios. So that you can find out how some more savings or a different repayment order will help you get out of debt faster. When creating a plan, you need to choose one which fits your attitude.
7. Setout goals & layout plan
If you don’t know where you are going, you may end up somewhere you don’t want to be. Decide your financial goals first. It may be buying a home, buying a car, or children’s higher education. To get where you want to go in life, it is important to decide in advance how you will get there. What you need is a roadmap, a financial plan to achieve your financial goals.

So create a financial plan for you and your family.


8. Retirement plan
In spite of the world wide pension crisis and a growing acceptance that we must plan and save for our retirement, the harsh reality is we are actually not saving enough. Research reports reveal that only 15% of the individuals are saving sufficiently for their retired life. Don't put off today what you can't afford to do tomorrow. Do your retirement plan TODAY to have a comfortable and enjoyable retired life.
9. Review
You need to check up your financial plan and investments semi-annually so that when there is any deviation from our original plan, you can take corrective measures to control the deviation.
10. Work together with a professional financial planner
There is a lot of help available for you online to create a financial plan in various websites with financial calculators. But if you want to create a complete, comprehensive, customized and workable financial plan, you may seek assistance from professional financial planners.
You really need a professional assistance when you want to review your financial plan and investments, when you want to add a new goal, or when you want to pre pone or postpone one of your goals.
If you follow these simple but authentic 10 commandments, by next year you will be richer than what you are this year. Celebrate the New Year with much more confidence and peace of mind by following these simple steps for financial success.

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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5 Bad Choices that could damage Your Retirement Goals

The start:
As I grow older, the number of people I meet who are near, or close to retirement continues to grow. Certainly they’re all mentally prepared for leisurely rounds of golf, time spent watching the grandkids, and languid walks on the beach, BUT very few of them are financially prepared to realize their cherished dreams.
I also have many younger friends, people still in their prime and just starting their careers. They’re many decades away from retirement, and they’ve fallen victim to the mindset of those with whose career horizon stretches out far into the distance. Although they “Talk” about investing for the long term, their actions…lavish spending…living paycheque to paycheque, ignores the future that will soon become their reality.

Here are “5 what not to dos” on retirement planning that could seriously damage your retired life.

The 5 bad choices that I have observed are:

1) I can start saving later:

The decision to postpone savings and investment can’t be a good decision as time will not wait for you to start saving to become a millionaire and have a comfortable retired life.

Savings and investments should start when young, giving you enough time to reach the goal you have set for yourself. It is interesting to note that the value of money saved in earlier years appreciates much more than what is saved in later years just before retirement due to accumulation of interest and the compounding effect. In addition, starting to save bigger amounts in middle age poses problems with other family responsibilities.

2) I am too old to save and plan retirement goals:

I do not agree with you. It is never late to start saving and plan your retirement. “It is too late and I can’t do my retirement plan now. I will try to face my retirement as and when it comes” is not the right attitude.

Anyway you need to face your retirement. You can’t skip or escape. So why don’t you prepare yourself now itself. However just procrastinating only further complicates your retired life and you may need to meet a lot of disappointments.
Professional Financial Planners will be of immense help to you in this regard with financial computations for the amount of money required for retirement and how you can cut on unnecessary expenses to build the retirement corpus.

3) Need for medical aid after retirement overlooked:

This could be an overlooked fact, as old age meant more medical expenses and expenses on annual check-ups. In addition, there could be a need for long term care in hospitals and homes that could drain off a huge sum from your retirement corpus. A family history of disorders like diabetes, hypertension and cancer could increase your risk for these disorders further.

Your employer may not provide medical aid after retirement. So instead of relying only on your employer provided mediclaim policy, it is advisable to take an independent mediclaim policy when you are young and healthy.


4) Lack of balance in spending after retirement:

I would always consider extremes in spending habits as unadvisable; being neither frugal in expenses after retirement nor too lavish to deplete all your savings within the first few years is advised. You have a right to enjoy a relaxed and comfortable time after retirement, but spending lavishly would only upset the amount of retirement corpus making you give up on even necessities in later years. It seems sensible thinking that old age could deter ones health to enjoy in later years and so enjoying in the first few years is sensible.
Careful financial planning with projected living expenses and other considerations like savings, other social security benefits and pension would help.

5) Missing on opportunities to save on taxes and other benefits:

Your retirement corpus and retirement income need to be tax efficient. Suppose of you are choosing Fixed deposit as an investment vehicle for accumulating your retirement corpus, then, you need to pay taxes as and when the fixed deposits matures irrespective of that you withdraw interest or reinvest under a cumulative option. But you need to pay tax only when you withdraw from the mutual funds. Careful selection of investment vehicle can reduce your tax during the accumulation phase as well as during your retired life.

Be careful to avail of all these opportunities and invest the saved amount to build up your retirement corpus.
The final note:

I am sure you have already started giving a deep thought to avoid the 5 bad choices that can ruin meeting your retirement corpus and having a relaxed retirement.

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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9 Ways to Be Credit Card Smart

Credit cards have turned into an integral part of modern living as they facilitating making purchases and paying bills without carrying cash. They make life easy and help maintain a record of our expenses and help us dispute charges for undelivered and defective things. In addition they enable us to earn reward points. However credit cards could make you overspend and get into debt. There are 9 ways that could help you to be credit card smart.

One can be very smart in playing a game only when he knows the rules of the game very well and follows the same diligently. Similarly to be smart with your credit card you need to know the rules of the credit card usage. Let me unbundle the same for you.

9 ways to be credit card smart:

1) Do not have many credit cards:

It is true that credit cards definitely help in emergencies and facilitate payments. But having too many credit cards could tempt us to overspend and get into credit card debt that could be difficult to recover from. In addition it is best to avail of reward points on one credit card, so that you could encash the points more quickly.

2) Cultivate and maintain an emergency fund:

Most of us believe that credit cards can definitely help in medical and unexpected emergencies, but it is unwise to consider it as a general rule. A much better alternative would be regular setting aside money as an emergency fund for such unexpected emergencies. This will prevent getting into credit card debt.

3) Repayment capacity should determine credit card spending:

It is right that using credit cards in place of cash helps. But this applies to purchases that we can afford only and also repay immediately. Spending more than what you can repay is highly undesirable and could get you into credit card debt.

4) Avoid cash advance withdrawals:

It is best to live within your means and avoid making cash advance withdrawals even in emergencies. This is the worst thing you can do with a credit card. Having a smart spending plan will help you in not falling this trap

5) Avoid bank transfers without valid reasons:

Being credit card smart requires avoiding making balance transfers from one credit card to the other. This will avoid payment of balance transfer fees and getting into further credit card debt that could turn vicious. However transfer of bank transfers like taking advantage of lower interest rates could prove fruitful.

6) Make full payments in time:

Being credit card smart requires you arranging for payment within a month or next billing date. Delay in repayment and minimum payment could affect your credit standing and make you also liable to pay high rates of interest that you could not afford. Not carrying any balance forward would relieve you of stress of getting into credit card debt.

7) Understand the credit card agreement fully:

Being credit card smart requires understanding fully the agreement and other terms and conditions for use of the credit card. This includes understanding transaction fees levied, interest rates, and when increased rates for credit would be charged. This would help take precautions to avoid getting into increased debt on credit cards.

8) Recognize the signs of credit card debt:

Many consider a credit card a boon and fail to realize that they are getting into credit card debt. It is best to understand and recognize signs like skipping a credit bill to pay another, avoiding credit card payment statements, and charging more than your repayment capacity by purchasing luxuries. Failing to cultivate and maintain an emergency fund could also be a cause. Once you recognize these signs you can turn credit card smart.

9) Never lend your credit card:

Being credit smart requires not trusting others with your credit card even if they promise to pay back in time. It is unwise because you will be responsible for the debt and charges. It is quite possible that credit card companies did not allot them a credit card because of certain adverse circumstances.

The last word:

I am sure you will agree that credit cards can be a boon only when you are credit card smart.

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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Mission Impossible : Ghost Protocol Movie Review

Ethan Hunt is at a Russian prison and there is a team which from the outside successfully rescues him for a mission that is more spectacular and entertaining. The team now comprises of Ethan, Jane (Paula Patton) and the newly promoted field agent Benji (Simon Pegg). when Ethan makes his way into the Kremlin searching for some tapes which is of utmost importance in the context of national safety, things go bad when the Kremlin is bombed and as a result of which the IMF is shut down which leaves Ethan and his team on their own to take the mission in their own hands and at their will.

Ethan then travels to Dubai along with a new team member in the form of IMF analyst Brandt (Jeremy Renner) and this time they choose the world famous Burj Khalifa Tower for the action to kick start. The action sequences at Burj Khalifa is simply mind blowing to say the least. From there, they track the main villain nick named "Cobolt' who in reality is none other than a Russian Nuclear Strategist named Hendricks (Micheal Nyqvist).

Cobolt's main plan is to launch a nuclear war head and attack U.S. Ethan and his team then remove one link after another to make sure that Cobolt's dream remains a dream but when things don't go as planned for the team there is more excitement in store which keeps the viewers in awe throughout.

Director Brad Bird has done a commendable job in this fourth installment of the MI series. Tom Cruise as usual steals the show and the other actors make sure that their acting also belongs to the top draw. The movie has a running time of 120 minutes and is sure to rake in huge returns at the box-office.

MI - 4 is an absolute treat to watch.

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The 10 Financial Doctrines of Wise Retirement Planning

Let’s begin on planning finance for retirement:
It is usual for many of us to aspire for a financially secure and happy retired life. However being financially prepared to meet the demands of retired life by saving and investing requires considering and following the 10 doctrines of wise retirement planning.

A look at the 10 doctrines to wise retirement planning:

1) Provide for contingencies
Most of us tend to underestimate our retirement needs. Provision for medical emergencies with inadequacy of medical insurance in old age requires financial provision. Lack of government social security schemes and retirement benefits to self-employed and private sector employees creates requirement for more provision for contingencies after retirement.

2) Think that you will live long:
This is true with increased life expectancy. Now you will have more years of life after retirement. Thanks to medical advancements. So it is better to plan for the additional years and avoid living frugally in old age.

3) Plan that you will retire early:
It is wise to provide for contingencies arising that require you to retire early. You could suffer ill health, lose your job, or need to care for a sick or elderly member of the family. Women may have to opt voluntarily to look after the family needs. All this requires more savings for retirement needs.

4) Beat the inflation before it beats you:
Inflation affects the personal finance needs of the working class, but pay rises could help them resolve it to a certain extent. However the retired have to save more to reduce the impact of inflation. Investing in modes that give you extra returns could help greatly.
Investors come to me and say “I would like to accumulate 2 crores and retire”. But when we really work out the inflation adjusted retirement corpus, the 2 crores would not be sufficient for him to have comfortable retirement. 2 crores may feed you enough in the first year after your retirement. The returns from the same 2 crores will not be sufficient for you take care of all your needs on the 10th year after your retirement because of the skyrocketing inflation figures.

5) Provision for increased medical expenses after retirement:
Most of us underestimate medical expenses after retirement, with these expenses being inevitable in old age. Hence more provision for medical insurance helps. A consideration of your family’s general health, family history of certain genetic disorders, and the class of hospital you get treated would help in proper estimation for medical insurance.

6) Provide for your spouse and dependents who may outlive you:
It is inevitable that this need should not be overlooked. Your spouse and dependents need to live a secure financial life after your lifetime. Taking up insurance policies during your working life and well thought out retirement planning will take care of your dependents and spouse financially.

7) Realize you need to be vigilant about sources of retirement income:
Sometimes we may be ignorant of benefits on retirement like provident fund, gratuity and other benefits. In India the lack of social security schemes after retirement makes it necessary to invest more in good income generating sources for steady flow of retirement income. The advice of investment consultants, along with financial education and information contributes to good financial standing after retirement.

8) Educate yourself about retirement savings plan management:
When the majority is relying on the pension schemes in the form of ulips offered by various public and private insurance companies, as a smart investor you need to understand the hidden charges of these pension policies. These policies are all heavily front loaded.
So you need to evaluate various investment options available for retirement. You need to accumulate sufficient knowledge in this regard. In addition learning to keep track of them with professional help makes these saving plans work for you.
9) Plan for an income for life:
Your retirement plans need to be financial plans to make income last you a lifetime. Pensions or annuities providing best income need to be safeguarded, as withdrawing large sums from them could end you in financial insufficiency in the final years of your life.

10) Take professional investment advice that works:
Many do realize the importance of financial advice from professional financial advisors, but in practice seek it from family, friends and colleagues. A right financial advisor could give you good investment advice to have financially secured retirement ife.
A final note:
I am sure you want to emerge financially secure for your retired life and will follow these 10 financial tenets to wise retirement planning.

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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Which is the Best type of fund: Index Funds Vs Diversified Funds Vs Sectoral/Thematic Funds

If you are planning to invest your money in equity funds, there are plenty of options in front of you. Broadly the equity funds can be categorized into index funds, diversified funds and sectoral or thematic funds.

Your friend could have told you index funds are safe and cost effective. Your colleague could have told you, infrastructure is going to be the next big theme. So invest in infra funds. As an investor you are confused with the information overload and would like to choose the right type of fund for you. I will unveil this to you today.

Index funds Vs Diversified Funds

Index funds are just index trackers. They aim to replicate the movements of an index. Index funds will hold all of the securities in the index in the same proportion as the index. There is no research and analysis on which stock to invest. There is no human input. They just track and replicate the index. There is no active management and there is no fund manager. So they enjoy the low cost advantage.

On the other hand, diversified equity funds will invest in non-index stocks also. The fund manager and his team will do an in-depth research before investing in each and every share. The aim of the fund manager is to outperform the index. Most of the diversified funds have outperformed the index with a huge margin. You can see this below.


Index fund VS Diversified fund return as on 12.01.2011

Diversified funds


Scheme Absolute Returns Annualised Returns
Last
1 Month Last
6 Month Last
1year Last
3year Last
5year
HDFC Equity fund -0.92% 11.36% 22.78% 8.91% 21.62%
Franklin india bluechip fund -0.07% 9.83%1 17.49% 4.64% 19.14%



Index funds


Scheme Absolute Returns Annualised Returns
Last
1 Month Last
6 Month Last
1year Last
3year Last
5year
HDFC Index sensex -0.00% 9.06% 12.10% -4.17% 13.18%
Franklin india index bse sensex 0.13% 8.90% 12.52% -1.55% 15.62%



As these funds are actively managed, the expense ratio of these funds is relatively higher. But you are well compensated for the extra fees you pay. The returns you see in the above table are the net returns after adjusting all the expenses.


If that is so, then how come the concept of the index fund is so popular and accepted? In the developed countries, matured markets, grown up economy it is REALLY difficult to beat the index. So the extra expense on the active management will reduce the return. So index funds are better and popular there.

But in a country like India, where the economy is fast growing, market is still not matured and the country is in the transition phase of moving from a developing country to a developed country there are lot of better opportunities with the non-index stocks. That is why in all emerging markets including India, it is possible for the fund managers to outperform the index.

So, diversified equity funds in the long run (5 years and above) will outperform the index funds in all the emerging markets like India. That is why you need to choose diversified equity funds when compared to index funds.

Diversified Funds Vs Sectoral/Thematic Funds:

Sectoral fund invests in a particular sector. There could be a “Pharma Fund” which invests only in the pharmaceuticals sector. You can also see the funds like banking fund, IT sector fund, FMCG fund. The performances of these funds are restricted to the opportunities available in those particular sectors.

Thematic fund invests based on a particular theme. There could be an infrastructure fund which invests only in infrastructure based stocks. There are thematic funds available in the other themes like capex opportunities, energy opportunities, rural India, PSU opportunities. The performances of these funds are based on the success of those themes. Thematic funds can invest only in those sectors favoured by its theme.

On the other hand, the diversified equity funds can invest across various sectors and they can follow many themes. There is no restriction. The fund manager can invest a sizable portion in any particular sector or any theme if he thinks that sector/theme can do better in the future. Also he can move from one sector to the other sector and change his theme intermittently based on the changes in the market outlook.

This flexibility of moving from one sector/theme to the other sector/theme is not available with sectoral/thematic funds. Even if the fund manager of the sectoral/thematic fund thinks that, this particular sector/theme will not do well for the next couple of years, he is forced to remain invested in the same sector/theme. Whereas the diversified fund manager can change to another sector/theme if the outlook for a sector/theme changes.

Most often, the market creates hype on a particular sector or theme. Then investors get a feeling that this is going to be the next big sector/theme which is going to drive the market. This is only an illusion.

“Technology is the next big sector” – This is the hype created by the market in the year 1999. Everyone around you could have talked about technology stocks. Mutual funds have launched so many technology sector funds like ecom funds, internet opportunities funds. Most of the investors believed this illusion as real and invested their hard earned money in these funds. Technology sector as a whole has got crashed during the year 2000 and all the technology funds have taken years to recover from their losses. But the diversified equity funds which had sizable exposure in technology stocks have revived faster than the standalone technology funds.

“Infrastructure is the next big theme”- This is the hype created by the market in the year 2007. Everyone around you could have talked about infrastructure stocks. Most of the mutual fund houses launched schemes based on the infrastructure theme. Market crashed in 2008 and infrastructure stocks were the worst affected. Investors learned that, the prospect which they have perceived for infrastructure in 2007 was only an illusion.

Sectoral/thematic funds are potential to deliver superior returns, but it is almost impossible to predict when they will do so. Also there is an inherent danger of getting inferior returns. But market will play with your greed and make you believe the illusion as true and take action. Beware.

So it is better to leave the choice to the fund manager regarding in which sector/theme to invest. He knows when to invest in a particular sector /theme and when to move out of a particular sector or theme.

Therefore, east or west the diversified funds are safe and best.

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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The Dirty Picture

Director           Milan Luthria

Cast                Vidya Balan, Nasseeruddin Shah, Tusshar Kapoor, Emraan Hashmi, Anju Mahendroo, Rajesh Sharma, Mangal Kenkre

Year                2011

Genre              Drama

I must start this review with an anecdote from a few of days back. I was on my way back from the village (read Bangalore) and was taking the Indian Airlines flight.  My song of the day was “Oooh La La”.  Just kept humming it through the day.  En route to the airport we were having this conversation that The Dirty Picture will be one of the top 5 movies of the year and that Vidya Balan will clearly get 2 nominations for the year – The first movie of the year No One Killed Jessica and The Dirty Picture.  In fact, now that I think of it, she could win both awards – Best Supporting Actress for NOKJ and Best Actress for TDP. 

Anyways, as I was humming the song and boarding the flight, I was also chatting up with my colleague.  We did not say anything about Naseer Bhai – how can we say anything about one of the best actors of our time.  We were just intrigued about his role in the movie and how he would essay it.  We both agreed that Emraan Hashmi would have, by the end of the movie ticked off from his list another actress – only this time, it would be a genuine actress and not a random aspiring starlet.  And the unanimous agreement – actually question was – What the hell is Tusshar (now without the Kapoor) doing in the movie? And as I was saying this out aloud, I entered the flight only to be greeted with a vision that I will not forget for the rest of my life!!! There on Seat1D, and smiling right back at me (surely she heard my comment about Tusshar) was Vidya Balan in all her simplicity. And did she look gorgeous? Hell Yes!!!!

I must say, that most of our discussion was bang on.  Vidya Balan gives her 110% as always and generates an aura around Reshma aka Silk that will generate emotions starting from the rank depraved to the completely sympathetic thanks to the pitiful end that we know Silk Smitha had.  Some really good dialogues dot the otherwise slapstick ones.  But then it is The Dirty Picture.  So slapstick was to be expected and I give Milan Luthria full credit for the same.  Probably the best movie from the Luthria stable but it would not have been possible without the stunning performances of the cast.

I terms of other aspects, The Dirty Picture was probably below par.  Editing was quite below par and the movie was way too long – probably 2.5 hours which turned out to be nearly 3 thanks to the breaks and trailers.  While the songs were good, they were quite ill placed especially Ishq Sufiyana which kind of hits you out of the blue about 10 minutes from the end.  And Honeymoon Ki Raat was also kind of wasted.  I thought the movie could have easily finished in about 2 hours.  Kind of moved away from the basic concept so aptly captured by Reshma that the movie business is about 3 things – Entertainment, Entertainment & Entertainment.  7 on 10 and definitely makes it to the top 5 movies of the year for me.

Watch the trailer at http://www.youtube.com/watch?v=NM8m4_DLZtY

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