Sample Financial Planning

9/1/2015
Chauhansneedtostreamlineinvestments,increaseequityexposureTheEconomicTimes
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Chauhansneedtostreamline
investments,increaseequityexposure
ByRijuDave,ETBureau | 31Aug,2015,08.23AMIST
The saving habit is engrained so deeply in Indian

investors that most do it instinctively and, often,
blindly. They save as and when the funds are
available,inanyinstrumenttheylikeorissuggested
to them, irrespective of the terms of their goals or
the amount required. As a result, the investments
and goals are often mismatched, and in some
TheChauhansnotonlyneedto
cases, the financial milestones are not achieved.
realigntheirportfolio,butalsomake
This is where planning comes in. It not only helps
freshinvestmentstomeettheirprimary
connect with reality by defining the exact amount
goalswithease.
required in a given time, but also the path that can

take one there. Gujaratbased Kiran Chauhan is
undertaking this exercise a bit late in life, but given his disciplined savings, financial
planner Pankaaj Maalde will be able to chart out a course that can help him achieve
mostofhisgoals.
Existingfinancialstatus
Chauhan is 38 years old and works in a public sector
companyatBhuj,Madhapar,inGujarat.Hestaysinhis
ownhousewithwifeChetna,37,andtwochildrenaged
13 and eight. While Chetna is a homemaker, Kiran
earns Rs 50,000 a month. Of this amount, Rs 21,250
goes in household expenses, Rs 3,283 as insurance
premium, Rs 3,000 for children's education, and Rs
13,847 as EMIs for home and car loans. Of the
http://economictimes.indiatimes.com/chauhansneedtostreamlineinvestmentsincreaseequityexposure/articleshowsp2/48722492.cms?type=wealth
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13,847 as EMIs for home and car loans. Of the
remaining amount, Chauhan invests Rs 8,000, and is

leftwithasurplusofRs620amonth."Iwanttoknow
how and where I should invest to meet all my goals,"
says Chauhan. The goals include building an
emergencycorpus,savingforthechildren'seducation
andweddings,andfortheirownretirement.
Chauhan'sexistingportfoliocomprises14%realestate,
includingaselfoccupiedhouseandaplotofland58%
indebt,intheformofEPFandPPF,fixeddepositsand
debtfundsandtheremaining28%inequityintheform
of stocks and mutual funds. However, before Maalde
suggests changes in Chauhan's portfolio, he will
assessthefamily'sinsuranceneeds.
Insuranceportfolio
Chauhancurrentlyhasfourtraditionalplansandtwotermplans,forwhichhepaysan
annualpremiumofRs39,400.Sincethetraditionalplansarelikelytoyieldreturnsthat
canbeatinflation,Chauhanisadvisedtoretaintheseasadebtpartofhisportfolio.As
forlifeinsurance,hewillrequireanadditionalcoverofRs75lakh,forwhichheshould
buyanonlinetermplanfor25yearsatacostofRs15,000perannum.Chetnadoesn't
requireanylifecoverbecausesheisnotemployed.
Since Chauhan is employed in government service, his and his family's medical
insuranceneedsaretakencareof.However,Maaldesuggestshetakeanindependent
familyfloatercoverworthRs10lakh,whichwillcosthimRs22,000ayear.Heshould
also pick up a critical illness plan and an accident disability cover worth Rs 25 lakh
each, and these will come for a premium of Rs 12,000 a year. The fresh insurance
plans will cost Chauhan an additional Rs 4,092 as premium, which can be sourced
fromtheinvestiblesurplus.
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Chauhansneedto
streamlineinvestments,
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Roadmapforthefuture
Before suggesting a course of action,
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Maalde suggests that Chauhan repay

hisoutstandingcarloanofRs4lakhso
EarlystartwillhelpShastris
securefinancialfuture
as to boost his investible surplus. To

do so, he can use his fixed deposit
partially.ItwillhelphimsavetheEMIof
Rs 7,143 and increase his surplus to
Rs15,763.
After this, Chauhan should consider
keeping a contingency corpus of Rs
2.28 lakh, which is equal to his six
months'expenses.Forthis,hecanrely
on his cash holding of Rs 50,000 and
debt mutual fund of Rs 1.5 lakh. Now,
BACKTOTOP
HyderabadbasedMadhavs
needtochangeinvesting
patterntomeetfinancialgoals
Howaggressiveinvestingwill
standtheBarmansingood
stead
Howastaggeredplanwillhelp
theAmbaselkarsachievetheir
goals
Highmonthlysavingtohelp
Kumars'meetgoals
Chauhancanconsiderplanningforhis
othergoals,thefirstofwhichissaving
Howabalancedportfoliowill
forhischildren'seducation.
His son is 13 years old and, for his higher
education in five years, Chauhan has
estimated a need of Rs 14.5 lakh. To
amass this sum in the short period that is
availabletoChauhan,hecandependonhis
existing resources. He should assign his
remaining fixed deposit amount and plot of
landworthRs5lakhtomeetthisgoal.The
FD amount should be deposited in a
balancedfund,whiletheplotshouldbesold
atleasttwoyearsbeforethegoal.
As for his daughter's education, Chauhan
willneedRs21.5lakhin10years.Forthis,
he can utilise his stock and mutual fund
investments, which will yield the desired
suminthespecifiedperiod.Heshould,however,exitthestocksandinvestinanequity
diversifiedfundtoensuresafetyofinvestment.
Next,Chauhanwantstosaveforhisdaughter'swedding,forwhichhewillneedRs37
lakhin17years.Toachievethisgoal,hewillneedtostartafreshinvestmentofRs
4,000 in an equity fund and Rs 1,000 in a gold fund through SIPs. For his son's
wedding, Chauhan will need Rs 12.6 lakh in 12 years. For this, he should invest Rs
4,000 in an equity fund via an SIP, but since he doesn't have enough surplus, he
shoulddoitafteranincreaseinsalary.
Finally,forretirement,thecouplewillrequireRs3.28crorein22years.Toachievethis
goal,ChauhanwillhavetoallocatehisPPFandEPFcorpuses,besideshistraditional
insuranceplansandpartialmutualfundinvestment.
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These instruments will yield a sum of Rs 2.33 crore in the given time, and for the
balance amount, Chauhan should continue with his existing SIP of Rs 6,500 in two
equityfunds.HeisalsoadvisedtostoptheadditionalVPFcontributionofRs4,500a
monthandinvestitinanELSSfund.
(FinancialplanbyPankaajMaalde,CertifiedFinancialPlanner)
READMORE: stocks|SIP|savings|realestate|lifeinsurance|investments|Gold
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EarlystartwillhelpShastrissecure
financialfuture
As with most things, the best place to start with

financial planning is at the start. Saving and
investingimmediatelyafteryoubeginearningwillgo
a long way in ensuring financial security for you in
later years. If, however, you don't have either the
timeorknowledgetounderstandhowtoinvestand
secure your risks, it's a good idea to seek
ManishShastriwillbeabletoachieve
6
Comments
professionaladvice.
hislongtermgoalsifheincreaseshis
exposuretoequityandsecuresallhis
risks.
Manish Shastri from Vadodara, Gujarat, has done

just that. Acknowledging his inability to chart out a
course,hehassoughtexpertopinion.Itwillhelphim
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course,hehassoughtexpertopinion.Itwillhelphim
streamline his finances before he gets married and takes up other financial
responsibilities. The financial planning team of Fincart will help him in this endeavour
andprovideaframeworktonudgehimintherightdirection.
ManishShastriis28andworksasanengineerinVadodara,Gujarat.Hestayswithhis
parents,whoare50and56yearsold.ShastriearnsamonthlysalaryofRs52,000,of
which he currently spends only Rs 10,000 as household expenses. However, in
October,hewillstartpayingahomeloanEMIofRs10,000.Thismeansheisleftwitha
surplusofRs42,000nowand,hence,hisplancanbesplitintwophases.
ShastricurrentlyhastotalassetsamountingtoRs16.25lakh,withRs10lakhworthof
property,Rs4lakhinstocks,Rs1.4lakhintheEPF,Rs60,000worthofgold,andRs
25,000incash.However,sincehehastakenahomeloanofRs9lakh,hisnetworthis
Rs7.25lakh.Hewillalsoneedtoincreasetheequitycomponentinhisportfolio.
His goals include building an emergency corpus, funding his wedding in two years,
saving for his future child's education and wedding, as well as his own retirement. "I
alsowanttoknowhowmuchlifeandhealthinsuranceIneed,besidescriticalillness
andpersonalaccidentcovers,"saysShastri.So,beforesuggestingaplanforhim,the
Fincartteamwillassesshisinsuranceneedsandadvisehimaccordingly.
Roadmapforthefuture
ShastricurrentlyhasnolifecoverandisadvisedtobuyatermplanworthRs80lakh,
whichwillcosthimRs7,928perannum.Asforamedicalplan,heisrecommendeda
basehealthcoverofRs3lakh,whichwillcomeforanannualpremiumofRs4,578.He
isalsoadvisedtopurchaseaRs3lakhfamilyfloaterplanforhisparents,whichwill
result in a premium of Rs 17,500 a year. All these plans will add up to a monthly
premium of Rs 2,501, which can be sourced from his investible surplus. Though
Shastrishouldalsobuycriticalillnessandpersonalaccidentcovers,hedoesn'thave
enoughfundsasofnowandshouldconsiderpickinguptheseafterariseinhisincome
inthefuture.
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Roadmapforthefuture
Now, Shastri can consider planning for his goals, the first of which is building a
contingencycorpus.Heshouldideallyhavefundsequaltosixmonths'expenses,but
considering the constraint of surplus, he should build a kitty worth three months'
expenses.ThiswillamounttoRs60,000andcanbebuiltbyallocatingthecashholding
ofRs25,000andputtingasideRs17,322forthreemonths.Thismoneyshouldthenbe
investedinaliquidfund.
Aftersecuringtherisks,Shastrishouldconsiderhisothergoals,beginningwithhisown
weddingintwoyears.Forthis,hehasestimatedaneedofRs5lakh.Toachieveit,the
Fincart team recommends allocating his gold (Rs 60,000) and stock holding (Rs 4
lakh). Shastri should, however, shift his stock investment to a safer instrument like
mutualfundssincehedoesn'thavetheexpertiseandtimetodealwithstocks.Forthe
remaining amount, he should start an SIP of Rs 1,593 in an arbitrage fund for two
years.Thiswillhelpbuildtherequiredcorpusinthegiventime.
ThenextgoalforShastriissavingforthefuturechild'seducationandwedding.Forthe
former goal, Shastri wants to accumulate Rs 75.5 lakh in 21 years, but no existing
resourcehasbeenallocated.ShastrishouldstartanSIPofRs7,239inanequityfund
for the specified time to build the fund. However, since he won't have the required
surplustillthetimeheisbuildingthecontingencycorpus,hecannotstartinvestingfor
thisgoalandshouldstartdoingsoinNovemberthisyear.Asforthechild'sweddingin
26years,ShastriwantstoamassasumofRs59.1lakh.Again,theFincartteamhas
notallocatedanyexistingresourceforthisgoalandhassuggestedthathestartanSIP
ofRs3,083inanequityfundforthegivenperiod,whichwillyieldthedesiredcorpus.
Finally,Shastriwantstosaveforhisretirement,forwhichhewillrequireasumofRs
7.72crorein32years,whenhequitsworkingat60.Forthisgoal,hecanassignhis
EPF corpus of Rs 1.4 lakh and this will yield Rs 96.29 lakh in the specified time
horizon.HeshouldalsocontinuetocontributeRs4,000intheEPFtillheretires.For
theremainingkitty,ShastriwillhavetostartanSIPofRs17,363inanequityfundfor
theentireduration.Itwillhelphimbuildasufficientcorpustobeabletoretireincomfort.
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Besides these goals, Shastri will also start paying the home loan EMI of Rs 10,000
fromOctoberthisyearanditwillcontinueforthenext15years.Thismeansthathewill
be left with a surplus of only Rs 221. Any rise in income can be used to buy the
suggested insurance plans and, after that, either repay the home loan earlier, or
increasetheinvestmentforexistinggoals,orinvestforsomenewgoalsthatthecouple
setsaftertheweddingintwoyears.
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FinancialplanningbyFINCART
READMORE: VadodaraGujarat|stocks|SIP|mutualfunds|Homeloan|Gold|financialplanning
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HyderabadbasedMadhavsneedto
changeinvestingpatterntomeet
financialgoals
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Despite the Indian market outperforming its peers

thisyearandequityoutshiningotherassetclasses,
some investors are not convinced that they should
optforit.Eitherduetolowriskappetiteorignorance,
they fail to invest in equity even though they have
longterm goals. Since market investments yield
high returns with a longer time horizon, younger
3
Comments
TheHyderabadbasedcouplewill
people should take advantage of it and allow their
needtoincreaseequityexposureand
moneytoworkharder.
aligninvestmentstoensurethey
achievealltheirfinancialmilestones.
However,HyderbadbasedMadhavhasreposedhis
faith in gold and debt, with 77% of his portfolio in
thesetwoassetclasses,andonly18%inequity.Sinceheis35,Madhavstillhastime
toreversehisinvestingpatternandmeethisgoals.TohelphimdosowillbeAshish
ShankerofMotilalOswalPrivateWealthManagement.
Madhav works as software professional and stays with his 27yearold wife,
Prashanthi, and twoyearold son, Vedh Karthik, in a rented accommodation in
Hyderabad. While Prashanthi is a homemaker, Madhav brings in a monthly salary of
Rs 76,000. As for their financial outgo, the couple spends Rs 22,000 as household
expenses,Rs7,500asrent,Rs5,000asEMIforaRs3lakhpersonalloanMadhav
took,andRs5,066asinsurancepremium.ThisbringsthetotalexpensetoRs39,566a
month,leavingthemwithasurplusofRs36,434.Thisamount,alongwiththeexisting
resources,willhavetobeutilisedjudiciouslytomaximisethereturns.
Madhav'sexistinginvestmentsincludethoseinequityanddebtmutualfunds,PPFand
EPF, fixed deposit and gold. He will have to alter his investing priority if he wants to
make sure he reaches his goals. The goals include building an emergency corpus,
buyingacarandahouse,preparingfortheirson'seducationandwedding,andfortheir
ownretirement.ShankerwillbeginbyassessingMadhav'sinsuranceportfolio.
Insuranceportfolio
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MadhavhasboughtatermplanworthRs30lakhandhasanotherpensionplanthat
covershimforRs25lakh.However,heneedsahighercoverandShankersuggests
hebuyaRs1croretermplanthatwillcosthimRs15,000ayear.SincePrashanthiis
notearning,shedoesnotneedlifeinsurance.
As for health insurance, Madhav has been slightly more aware and has bought a
criticalillnessplanthatcovershimandhiswifeforRs7.5lakh.Heisalsocoveredby
hisemployer,butstillneedstobuyabasicindemnityplan.Shankersuggestshebuya
familyfloaterplanworthRs5lakh,whichcovershiswifeandchildaswell.Itwillcost
him Rs 15,000 a year. The additional premium for life and health insurance can be
easilysourcedfromtheinvestiblesurplus.
Roadmapforthefuture
After taking care of the family's insurance needs, Madhav can start planning for his
goals.Tobeginwith,heneedstohaveanemergencyfundtodealwitheventualities.
ShankerhascalculatedthathewillneedRs2.4lakh,whichisequaltohissixmonths'
expenses.Hecanbuildthisbyallocatingsomeofhisexistingresources,whichinclude
cashofRs50,000,fixeddepositworthRs1lakh,goldworthRs77,000andamutual
fundinvestmentofRs13,000.Thisamountshouldbeinvestedinaliquidfund.
Next, Madhav wants to save for his son's education when he is 18 years old and
ShankerhasestimatedaneedofRs82.7lakhin15yearstakingintoaccountinflation
of7%.Forthisgoal,noexistingresourcehasbeenallocatedandMadhavisadvisedto
startanSIPofRs15,634inadiversifiedequityfundforthespecifiedtimeperiod.
After this, Madhav wants to build a corpus for his son's wedding. For this goal, he
wantstoamassasumofRs54.27lakhin25years.Again,noexistingresourcehas
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wantstoamassasumofRs54.27lakhin25years.Again,noexistingresourcehas
beenallocatedandMadhavcanbuilditbystartinganSIPofRs2,615inadiversified
equity The Hyderabadbased couple will need to increase the equity exposure, align
investments to goals and push off early retirement to ensure they achieve all their
financialmilestones.fundforthegiventimeperiod.
ThecouplealsowantstopreparefortheirretirementbybuildingakittyofRs2.07crore
in20yearssinceMadhavwantstoretireat55years.Toachievethisgoal,Shanker
suggestsheallocatehisPPFandEPFcorpusofRs3lakh,besidesthemutualfund
investment of Rs 2 lakh and the remaining gold worth Rs 4.23 lakh. These will
combinedlyyieldRs1.2croreinthespecifiedperiod.Forthedeficitamount,Madhav
willhavetostartanSIPofRs8,097inadiversifiedequityfund.However,ifMadhav
decidestoworktill60insteadof55,hecanbuildabiggercorpusforretirementorfulfil
othergoals.
MadhavisnowleftwithasurplusofRs7,588andhastwogoals:buyingacaranda
house. However, before he starts investing for these, he should try to close his
personalloanofRs3lakh,forwhichheispayinganEMIofRs5,000.Heshoulduse
Rs 7,588 and any increase in income to raise the EMI and repay the loan in 1.52
years.Afterthis,hecanusethesurplusamount,includingariseinincomeof5%,to
saveforhisgoalofbuyingacarworthRs5lakhinthenexttwoyears.Hecandoso
byinvestingthesuminadebtfund.
AsforhisgoalofbuyingahouseworthRs2530lakh,hecanstartinvestingforitafter
four years when he has repaid the loan and bought the car. This amount, along with
anybonusandhikeinincome,canbeusedtosaveforthehouse.Heshould,however,
review the situation after four years and calculate how much he can save as down
paymentandhowmuchloanhewillbeabletotaketillheretires.Itisadvisablethathe
continuetoworktill60yearsifhewantstoachieveallhisgoalscomfortably.
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Howaggressiveinvestingwillstand
theBarmansingoodstead
It's good to question your decisions, especially

when it comes to your finances. The exercise not
only helps explore better avenues to make your
moneyworkharder,butalsoseekexpertadviceto
point you in the right direction. Faridabadbased
Barmans have handled their finances better than
mostandhaveanetworthofRs1.14crore,butare
"Ineedadviceonmatchingmycurrent
3
Comments
stillworriedabouttheirabilitytomeettheirgoals.
investmentswithmygoals,says
RahulBarman.
This is why they have sought professional advice.

To help the young couple streamline their portfolio
andplugthegaps,financialplannerPankaajMaaldewillprepareablueprinttoserveas
aguideline.
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Rahul Barman is 30 and works for a telecom company, while his 26yearold wife,
Deepanjali, is an HR professional employed with a software firm. The couple lives in
Faridabadintheirownhouseandareplanningachildbynextyear,whileRahul's62
yearoldmotherisadependant.ThecouplebringsinacombinedmonthlyincomeofRs
72,000, of which Rs 32,500 is spent in household expenses, Rs 8,042 as insurance
premium,whileRs28,083isinvested,leavingthemwithasurplusofRs3,375.
The Barmans have a high saving and investing ratio, which will stand them in good
stead. They have taken several other good decisions, including the purchase of a
house and another property for investment, exposure to equity through mutual funds
andnoliabilities.Ontheflipside,theyhavefailedtosecuretheirrisksandhavelaida
greater emphasis on debt though they could have taken a higher exposure to equity
since their goals are longterm in nature. The goals include building an emergency
corpus, buying a car, saving for their future child's education and wedding, and their
retirement.
Their portfolio comprises 45% debt, which includes debt funds, PPF and EPF, while
17%equityisformedbyequityfundsandETFs.Realestatecomprises33%andgold
makesuptheremaining5%.Maaldeexplainshowtoassigntheirexistingresourcesto
goalssothattheycanbeachievedinatimeboundmanner.Tobeginwith,however,he
shallassesstheirinsuranceportfolio.
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Insuranceportfolio
The Barmans currently have three traditional plans for which they are paying a high
premium,butMaaldesuggeststhattheyretainallthreeasadebtcomponentoftheir
portfoliosincethereturnsarelikelytobeatinflation.ThisalsomeansthatRahulisnot
insuredadequatelyforlifeandshouldbuyanonlinetermplanworthRs50lakhfor30
years. It will cost him Rs 6,500 in annual premium. Deepanjali doesn't need to be
insuredasofnow.
As for health insurance, the couple is relying only on the cover provided by the
employers. Hence, Maalde suggests that they buy a family floater plan worth Rs 10
lakh,whichwillcostthemRs16,000ayear.RahulshouldalsobuyaRs5lakhpolicy
forhismother,whichwillcomeforRs20,000ayear.Besidesthese,Rahulshouldpick
upcriticalillnessandaccidentdisabilityplansworthRs25lakheach,atacostofRs
10,000perannum.ThiswillresultinanadditionalpremiumcostofRs4,375amonth
andcanbesourcedfromthesurplusaftertherealignmentofinvestments.
Roadmapforthefuture
Before planning for their goals, Maalde suggests that the couple revamp their mutual
fundportfolio.Theyhaveinvestedintoomanyfundsandshouldreducetheseto45so
thattheportfoliobecomesmoremanageable.Theyhavealsoinvestedheavilyindebt
fundsandthisamountshouldbeshiftedgraduallytoequityplansthroughsystematic
transfer plans (STPs). They are also advised to review their real estate investment
periodically.
Now, the Barmans can start planning for their goals, beginning with the contingency
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corpus, which amounts to Rs 2.7 lakh considering their six months' expenses. They
should also keep a buffer amount of Rs 5 lakh for their mother's medical needs,
bringing the total corpus to Rs 7.7 lakh. They can source this from their existing
investmentofRs7.37lakhinoneofthemutualfundsandinvestitinanultrashortterm
debtfund.
Next,theywanttobuyacarworthRs7lakhbynextyear.Forthis,theycanusethe
Rs7lakhintheirMIPfundandareadvisednottotakealoan.Thecouplealsowantsto
savefortheirfuturechild'seducation,forwhichtheyhaveestimatedaneedofRs93
lakhin19years,andanotherRs1.17crorein22yearsforhighereducation.Forthe
former,MaaldehasallocatedafundinvestmentworthRs2.8lakhandthecontinuation
of an SIP of Rs 5,500 in an existing equity scheme. For higher education, they can
allocate an existing equity scheme worth Rs 2.75 lakh. Besides this, they should
continuewiththeSIPofRs5,500inanexistingequityfund.
Forthechild'swedding,thecouplecanallocatetheirgoldinvestmentandanexisting
schemeworthRs2.9lakh.TheyalsoneedtocontinueinvestingRs2,000inanequity
fundthroughSIPs.ThiswillyieldthedesiredcorpusofRs1.6crorein26years.
Finally, for their retirement, they need a sum of Rs 10.2 crore in 30 years. For this,
Maalde has allocated their PPF and EPF funds, cash holding, and debt funds. They
should,however,transferthedebtinvestmenttoadiversifiedequityfundviaSTPs,as
suggested.TheyalsoneedtocontinueinvestingRs7,000inanequityfundviaSIPs.
Thesewillprovidetherequiredcorpusforretirementinthespecifiedtime.
ThecouplewillbeleftwithasurplusofRs7,083,whichcanbeinvestedforanyother
goal. Besides, the LIC maturity value and the second property can act as cushion if
Deepanjalidecidestoquitherjob.
READMORE: realestate|RahulBarman|invest|insurance|ETWealth|Barmans|aggressive
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Howastaggeredplanwillhelpthe
15/93
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Howastaggeredplanwillhelpthe
Ambaselkarsachievetheirgoals
It'sgoodtobeambitious.However,mostpeoplefail
tofactorinrealitywhilethinkingabouttheirlongterm
goals. Unless you take into account the rise in
income,inflationandreturns,youarelikelytomake
erroneous calculations. Similarly, what you would
ideallyliketospendforthemilestoneeventsinyour
life may not be in conjunction with your financial
"Idesperatelyneedhelpbecause
1
Comments
reality.
givenmycurrentincomeand
investment,itdoesntseemIllbeable
toachievemygoals,saysSaurabh
Ambaselkar.
Hence, framing goals is a critical exercise, which

dictates the quantum, length and pattern of
investment.
This
is
why
Mumbaibased
Ambaselkarsneedtoconductthistaskwithalacrity
andensurethattheyareabletoachievealltheirfinancialobjectiveswithoutdifficulty.It
helpsthattheyareyoungandjuststartingoutwiththeirfinancialplanningand,hence,
havealotoftimetoironoutanyirritants.FerozeAzeezofAnandRathiPrivateWealth
Managementwillhelpthemdosoandformulateaplanforthecouple.
SaurabhAmbaselkaris28yearsoldandworksinthefinancialservicessector,while
his wife, Prutha, 25, is employed with an ecommerce startup. Together, the couple
brings in a monthly salary of Rs 79,294. Of this, Rs 20,000 is spent in household
expenses,whileanotherRs20,000goesashouserent.Besidesthis,thecoupleshells
out Rs 15,000 as EMI for a Rs 4 lakh education loan, and Rs 1,165 on insurance
premium. This leaves them with a surplus of Rs 23,129 a month, which needs to be
investedintherightavenuesformaximisingreturns.
Currently,thecouple'sportfolioismeagre,withRs2.5lakhinstocksandRs80,000as
cash in bank. The education loan means that their net worth is in the negative, but
sincetheyareatthestartoftheirfinanciallives,there'senoughtimeforthemtobuildit
andachievealltheirgoals.Thegoalsincludehavingacontingencycorpus,buyinga
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carandahouse,takingaforeignvacation,savingfortheirfuturechild'seducationand
wedding,andfortheirretirement.Thecouplehasbeenslightlyambitiousandmayneed
todownsizeafewgoalstoensurethattheyachieveallofthem.First,however,Azeez
willassesstheirinsuranceneeds.
Insuranceportfolio
TheAmbaselkarshavedisplayedadegreeofawarenessintakingcareoftheirbasic
insuranceneeds.TheyhavetwotermplansworthRs60lakh,whichissufficientfor
nowbutshouldbeincreasedtoRs1croreoncetheyhaveachildintwoyears'time.
Asforhealthinsurance,theyhaveafamilyfloaterplanworthRs5lakh,whichcanbe
increasedtoRs10lakhoncetheyhavethechild.Atthattime,theycanalsoconsider
purchasingaccidentdisabilityandcriticalillnessplansworthRs25lakheach.Hence,
theydon'thavetobuyanyadditionalinsuranceimmediately.
Roadmapforthefuture
After taking care of their insurance needs, the family can begin with goal planning.
However, they will need to stagger their plan in three phases due to the surplus
constraint.Inthefirstphase,theyshouldbuildtheemergencycorpus,forwhichthey
willneedasumofRs1.65lakhthatisequaltotheirthreemonths'expenses.Forthis,
theycanallocatetheircashholdingandaccumulatethesurplusofRs23,129forfour
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theycanallocatetheircashholdingandaccumulatethesurplusofRs23,129forfour
months.Thisamountshouldbedepositedinanultrashorttermdebtfund.
Inthenextphase,whichwillbeginafterfourmonthswhenthecontingencycorpusis
built,thecouplecanstartinvestingfortheirgoalsofbuyingahouseandretirement.The
couplewantstobuyahouseworthRs2crore,forwhichtheywanttoamassadown
paymentamountofRs40lakhinsevenyears.However,theywillneedtopushback
thegoalby10yearsandreducethegoalamounttoRs1crore.
Forthisgoal,theycanallocatetheirstockvalueofRs2.5lakh,whichwillyieldRs7.76
lakhinthegivenperiod.However,itisadvisabletoshifttheamounttomutualfunds.
TheywillalsohavetostartinvestingRs15,000throughanSIPinanequityfundand,
after two years, increase this amount to Rs 22,000 when they have repaid the
educationloan.ThiswillhelpthembuildacorpusofnearlyRs53lakh.
For the remaining amount, they can take a loan, and the EMI can be paid with the
increaseinincome.Forthegoalofretirement,theyhaveestimatedaneedofRs4.5
crorein30yearsandcanbuilditbyinvestingRs8,000viaanSIPinanequityfund
afterfourmonths.Thiswillhelpthembuildtherequiredamountinthespecifiedperiod.
Thefinalphaseoftheplanwillbeginafter2.2yearswhentheeducationloanhasbeen
repaidandleavesthecouplewithanadditionalinvestiblesurplusofRs15,000.They
cancontinuetoinvestforretirementandincreasetheSIPstoRs22,000forthehouse.
Besides these goals, Ambaselkars can start planning for their child's education and
wedding.Fortheeducationexpenses,theyhaveestimatedaneedofRs2crorein20
years.However,thissumistoohighandtheyshouldbringitdowntoRs80lakh.They
can achieve this by investing Rs 5,800 through SIPs in an equity fund for the given
period.
Asforthechild'swedding,theyshouldagainbringdownthegoalvalueofRs2croreto
Rs1crorein30years.ThisgoalcanbeachievedbystartinganSIPofRs1,900inan
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equityfundforthespecifiedtime.Anyincreaseinincomecanbeusedtoachievethe
other goals of buying a car and foreign vacation. They can also increase the
investmentforexistinggoalsandshouldreviewtheirfinancialsituationaftertwoyears
whentheyhavethechild.
(Financial plan by Feroze Azeez, Executive Director, Investment Products, Anand

RathiPrivateWealthManagement)
READMORE: financialgoals|familyfinances|ETWealth|Ambaselkar
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CaitlynJennernotsureif
shewantstodatemenor
women
Saifisa"luckyman"to
havemeinhislife:
KareenaKapoor
Turnsout,womenare
biggergrammarNazis
thanmen
HighmonthlysavingtohelpKumars'
meetgoals
ByRijuDave,ETBureau | 27Jul,2015,08.00AMIST
The rising awareness about financial planning has

seen many of our readers start with it at an early
age.Moreimportantly,theydonothesitatetoseek
professional advice if they believe they are ill
equippedtohandletheirfinances.Onesuchreader
isNoidabasedMohitKumar,whoisunsureifhewill
be able to meet all his goals. Though he is just 30
3
Comments
TheKumarfamilyisunlikelytoface
yearsold,hehasahighnetworthofnearlyRs67
majorhurdlesintheirfinancialjourney
lakhandhasalreadypurchasedahouse.
iftheyinvestcorrectlyandcovertheir
However, his portfolio is heavily skewed towards
risksadequately.
real estate and he has a high cash holding. The

biggest mistake, however, is not investing his
savingsandlettingthemoneyidleinhisbankaccount.Inlaterlife,suchdecisionscan
costheavilyintermsoflostopportunity,butKumarcanrectifyitbystartinginvesting
immediately.FinancialadviserPankaajMaaldewillhelpMohitprepareaplanthatwill
tellhimhowmuchtoinvestinwhichavenuesothathecanmaximisehisreturns.
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MohitKumarisanITprofessionalandismarriedto28
yearoldIshita,whoisabanker.Thecoupledoesnot
haveanychildrenasofnowbut"weareplanningone
in a couple of years," says Mohit. "This is also the
reason I want to know how to manage my finances
and meet all my goals, especially after my wife quits
workingwhenwehavethebaby,"headds.
While Mohit brings in a monthly salary of Rs 75,000,
IshitagetsRs25,000.OfthecombinedincomeofRs1
lakh,Rs38,333goesinmonthlyhouseholdexpenses.
AnotherRs30,061isallocatedtotheEMIforaRs29
lakhhomeloanthatKumarhastaken.ThehousetheyhaveboughtisworthRs65lakh
andMohitisexpectinganotherRs20lakhasashareinparentalproperty.Thisleaves
thecouplewithasurplusofRs31,606,whichneedstobeinvestedjudiciouslyforthe
goals.
Thegoalsincludebuildinganemergencycorpus,buyingacar,planningfortheirfuture
child'seducationandtheirownretirement.Asfortheirportfolio,theyhave76%in
real estate, while the 20% debt comprises the EPF corpus of Rs 3 lakh and a fixed
deposit of Rs 25,000. The small equity component includes stocks worth Rs 15,000
andmutualfundsworthRs78,000.
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BeforeMaaldepreparesablueprintforthem,hewillassesstheir
insuranceneedsandanalysetheirportfolio.
Insuranceportfolio
The couple has not taken any measure when it comes to
securing their risk. They are covered for life and health by
employers,butneedtobuyindependentinsurance,especiallyif
Ishita quits working after the baby and Mohit changes jobs.
Hence,MaaldesuggeststhatMohitbuyanonlinetermplanfor
Rs 1 crore and Ishita for Rs 30 lakh, which will cost them Rs
16,000ayear.
Asforhealthinsurance,thecoupleisadvisedtopickupafamily
floaterplanworthRs10lakh,whichwillcostRs15,000annually
andRs3lakhpolicyforMohit'smotheratanannualpremiumof
Rs 12,500. Maalde also suggests Mohit pick up accidental
disability and critical illness plans worth Rs 25 lakh each at a
costofRs10,000ayear.ThetotalmonthlypremiumwillcometoRs4,458andcanbe
sourcedfromthesurplus.
Roadmapforthefuture
Afterinsuranceplanning,thecouplecanmovetowardstheirgoals.Tostartwith,they
needanemergencycorpusequaltothreemonths'expenses,whichamountsto`2.37
lakh.Forthis,theycanfallbackontheirexistingresources,includingRs2lakhcashin
their savings bank account and the fixed deposit of Rs 25,000. This amount should
sufficefornowandshouldbeparkedinanultrashorttermfund.
Beforeplanningforothergoals,Maaldesuggeststhat
they reschedule their home loan in order to increase
the surplus. They can extend the tenure from the
existing 16 years to 25 years, which will reduce their
EMI from Rs 30,061 to Rs 26,000, creating an
additionalamountofRs4,061andraisingthesurplus
toRs35,667.
Thecouple'sfirstgoalisbuyingacarworthRs6lakh
inoneyear.Forthis,Maaldesuggeststhattheytakea
loanforsevenyears,whichwillresultinanEMIofRs
10,000 at a rate of Rs 10.25%. This amount can be
sourcedfromtheincreasedsurplus.
Next, Kumars want to save for their daughter's education, for which they have
estimatedaneedofRs43lakhwhensheis18yearsold.Toachievethisgoal,theywill
havetostartanSIPofRs4,500inanequitydiversifiedfund.Forherhighereducation
when she is 21 years old, they will need nearly Rs 81 lakh. To meet this goal, they
need to invest `5,500 through an SIP, again in an equity diversified fund. These
investmentswillhelpcobbletogethertherequiredamountinthespecifiedtimeframe.
Finally, for their goal of retirement, Maalde has estimated that they will need Rs 10.5
crore.Mohitwantedtoretireat40andstarthisownbusiness,butthisisnotfeasible
given his financial status. Hence, he should consider continuing to work till 60 and
assign his existing resources to the goal. These include stocks and mutual fund
investments,EPFcorpus,andthepropertyworthRs20lakh.Thesewillhelpmuster
Rs 5.58 crore in 30 years. For the remaining amount, he should start an SIP of Rs
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Rs 5.58 crore in 30 years. For the remaining amount, he should start an SIP of Rs
11,000inanequitydiversifiedfund.
ToretaintheincomelevelandmakeupforthedeficitwhenIshitastopsworkingina
coupleofyears,Mohitplanstoswitchtoabetterpayingjob.Thiswillensurethathe
continuestoinvestforallhisgoals.
READMORE: professionals|financialplanning|ETWealth|EPFcorpus|emis
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Turnsout,womenare
biggergrammarNazis
thanmen
Womenthinkmorelike
menaftertestosterone
treatment:Study
Newvideogamebattles
tuberculosis
Howabalancedportfoliowillhelpthe
Nandismeettheirfinancialtargets
Balanceinlifealmostalwaysleadstostability.The
same holds true for financial planning. A well
balanced portfolio, steady investments, sufficient
riskcoverageandatimelystartareboundtostand
in good stead for the Mumbaibased Nandis. Their
portfolioincludes48%allocationtodebtintheform
of the PPF, EPF, fixed deposits and debt funds,
3
Comments
"Iwanttoknowhowtoassessand
23% to equity in the form of mutual funds and
planmyfinancessothatIcanachieve
stocks,and29%torealestate.
mygoalscomfortably",saysSamrat
Nandi.
However, they need a little shove in the right
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direction to enable proper alignment of investments

with goals. To help them do so, financial planner Pankaaj Maalde will prepare a plan
thatenablesthemtoachievealltheirgoalswithoutimpactingtheirlifestyleorstretching
theirfinances.
Samrat Nandi is 36 years old and stays in Mumbai with his wife, Keya, 33, and
threeyearold son, Om. While Samrat is in banking, Keya is an IT professional.
TogethertheybringinamonthlyincomeofRs1.55lakh.ThisissupplementedbyRs
5,000amonththatSamratearnsthroughlecturership,bringingthetotalincometoRs
1.6lakh.
Ofthis,nearlyRs50,000goesinhouseholdexpenses,andanotherRs20,000ispaid
todependantsinthefamily.ThecouplealsospendsRs2,000ontheirchild'seducation
andRs4,363asinsurancepremium.TheyarepayingEMIsofRs30,000fortwohome
loansofRs36lakhthattheyhavetakenfortwopropertiesworthRs90lakhandRs
12.5lakh.
While one has been taken from the bank, the other has been taken from Samrat's
employer. The Nandis are also making investments worth Rs 22,334 every month,
includingthoseinmutualfundsviaSIPs,thePPFandNPS.Afteraccountingforthis
outgo, they are left with a surplus of Rs 31,304, which they want to invest for their
goals.
Thefamily'sgoalsincludesettingupanemergencyfund,takingavacation,savingfor
theirchild'seducationandwedding,andfortheirownretirement.Beforeproposingthe
courseofaction,MaaldelooksatNandis'insuranceportfolio.
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Insuranceportfolio
Thefamilyhasbeenveryastuteinassessingtheirinsuranceneedsandtakingaction.
While Samrat has a life cover of Rs 1.3 crore, Keya is insured for Rs 75 lakh.
According to Maalde, the couple is adequately insured and should not buy any more
cover.Theyalsohaveatraditionalcoverandareadvisedtocontinuewithalltheplans.
Asforhealthinsurance,theNandishaveboughtafamilyfloaterhealthplanworthRs5
lakh and Maalde suggests that they raise this amount to Rs 10,000. In terms of
premiumitwillcostthemRs20,000perannum.
Healsorecommendsthepurchaseofaccidentdisabilityinsuranceandcriticalillness
plan worth Rs 50 lakh each for Samrat, and Rs 25 lakh each for Keya. These will
combinedlycostRs28,000ayear.Thisincreasestheirtotalinsurancepremiumliability
byRs2,970amonthandcanbesourcedfromtheirsurplus.
Roadmapforthefuture
Before the Nandis start planning for their goals, they should reschedule their loan
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Before the Nandis start planning for their goals, they should reschedule their loan
portfoliotoincreasetheirinvestiblesurplus.Theyarecurrentlypayinganinterestrate
of8%ontheloanfromtheemployerand11.5%fortheonefromthebank.Theyare
advisedtosellthepropertyworthRs12.5lakhandrepaytheentirehomeloanfromthe
bank. This will reduce their EMI by Rs 10,000, which can be added to the investible
surplus.
Now, the Nandis can plan for their goals, starting with the building of a contingency
corpusthatisequaltotheirsixmonths'expenses.ThisamountstoRs6lakhandcan
besourcedfromtheirfixeddepositofRs5lakhandRs1lakhfromtheircashholding
inbank.
ThenextgoalforthefamilyistakingavacationthatwillcostthemRs7.35lakhinfive
years' time. To achieve this, they will have to start an SIP of Rs 12,500 in an equity
incomefundforfouryearsandwithdrawtheamountafterfiveyears.
ThenextgoalissavingforOm'seducationintwotranches.Thisincludesacorpusfor
hiseducationwhenheis18,andforhishighereducationwhenheis21yearsold.For
the former, they have estimated a need of Rs 32 lakh in 15 years, and for the latter,
theywillrequireRs80lakhin18years.
Toachievethefirstgoal,theNandiswillhavetostartanSIPofRs6,000inanequity
fundforthespecifiedperiod,whileforthesecondone,theywillhavetoinvestRs9,500
inasimilarfund.Noexistingresourcehasbeenallocatedtothesegoals.
Forthegoaloftheirchild'swedding,thefamilywantstohaveacorpusofRs81.5lakh
in 22 years. To meet this, the couple will have to start investing a sum of Rs 7,000
throughSIPs.Ofthisamount,theyshouldputRs5,000inanequityfundandtherestin
agoldfund.
Finally,fortheirretirement,thefamilywillneedakittyofRs8.5crorein24years.For
this,MaalderecommendsallocatingtheirEPFandPPFsavingsofRs8.5lakh.They
shouldcontinuetoinvestRs1,000inthePPFannually.
Besidesthis,thestockholdingworthRs4lakhandmutualfundsavingsofRs11lakh
are assigned to this goal. They should also continue to put in Rs 9,000 in the NPS
accountthattheyhavestartedrecentlytillthetimetheyretire.Alltheseinvestmentswill
yield Rs 5.2 crore in the given time period. To make up for the shortfall, the couple
shouldstartanSIPofRs16,500inanequityfundtobuildtherequiredcorpus.
READMORE: Nandis|financialplanning|financialgoals|ETWealth|balancedportfolio
25/93
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READMORE: Nandis|financialplanning|financialgoals|ETWealth|balancedportfolio
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KareenaKapoorcloses
LakmeFashionWeekin
GauravGupta'screation
BenedictCumberbatch
namesbabyboy
ChristopherCarlton
RanaDaggubatitoplay
navalofficerinhisnext
HowastaggeredplanwillhelpAakash
Singhmeethismonetarytargets
Aakash Vinod Singh is clueless about financial

planning. At 28, this can be perceived as both a
shortcoming and advantage. The drawback is that
he has a bare portfolio, with a neglible corpus to
show in terms of savings, investments and net
worth. He doesn't know where to invest or how to
reachhisgoals.Thegoodthingisthatatthisearly
3
Comments
AakashSinghneedstocoverhisrisks
stage, it has made him seek professsional advice.
andwillhavetopushbacksomeofhis
Another positive is that he is clear about his goals
goalstobeabletoaccumulatefunds
and wants to be prepared to meet them. "I want to
forallhisprimaryobjectivesinlater
life.
know how one can start financial planning from

scratch,especiallyifonehasn'ttakenanystepstill
now," says Singh. The Fincart team has taken up
thetaskofhisfinancialeducationandansweringhisquery.Itwillformulateaplanthat
willnotonlyactasaguidelineforhimbutalsohelphimsecurehisfinancialfuture.
SinghissalariedandstaysinMumbaiwithhisparents,aged55and60years.Heis
single and has no immediate plan of marrying. In fact, he is planning to study further
after a year to boost his career prospects. He is currently bringing in a salary of Rs
60,000 per month and is saving barely Rs 15,000. A big chunk of his expenses, Rs
25,000,goesintorepayinganeducationloanofRs3lakhthathehastaken.Besides
this,Rs20,000isusedforhouseholdexpenses.
As for his portfolio, he has Rs 11,000 in his bank
account,Rs25,000investedinstocksandanother
Rs68,000intheEPF.However,giventheloan,his
networthiscurrentlyinthenegative.Nevertheless,
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9/1/2015
networthiscurrentlyinthenegative.Nevertheless,
Singh wants to start planning for his goals, which

includeamassingfundsforhigherstudiesnextyear,
savingforhisfuturechild'seducationandwedding,
as well as his own retirement. However, to begin
with, the Fincart team will assess his family's
insuranceneedsandrecommendchanges.
Insuranceportfolio
Singhhasnotsecuredeitherhislifeorhealththough
he has been planning to buy a term plan. Hence,
FincartsuggeststhathepurchaseaRs1croreterm
plan immediately, and it will cost him Rs 10,056 a
yearintermsofpremium.
As for a medical policy, he should consider buying
healthinsuranceworthRs3lakhforhimselfandhis
father,whichwillinviteapremiumofRs16,949per
annum.Heshouldalsooptforadiabeticplanworth
Rs4lakhforhismother,whosuffersfromdiabetes,
andthiswillcomeatahigherpriceofRs27,668a
year. This will result in a total premium of Rs 4,556 a month. Since he won't have
enoughfundstobuyalltheseimmediately,heshouldconsiderthehealthplansaftera
yearwhenhehasrepaidhiseducationloan.
Roadmapforthefuture
BeforeSinghcanstartplanningforhisgoals,heshouldgetridofhiseducationloanby
prepayingitinninemonths.HecandosobyincreasinghisEMIfromtheexistingRs
25,000toRs35,000.Thismeansthattilltheloanisrepaid,hewillbeleftwithasurplus
of only Rs 4,162 after accounting for the term plan premium. Hence, he will have to
deferallhisgoalsbyoneyear.
Considering the fact that he has absolutely no buffer for emergencies, Singh should
focusoncobblingtogetheracontingencyfundattheearliest.AccordingtoFincart,he
shouldhaveacorpusequaltosixmonths'expenses,whichwillamounttoRs2.7lakh.
Forthis,heshouldassignhiscashholdingofRs11,000andstockvalueofRs25,000.
Besidesthis,heshouldstartinvestingthesurplusofRs4,162inashorttermdebtfund
tobuildtheemergencycorpus.
Tomakeupfortheshortfall,hewillhavetoinvestanotherRs10,000for16monthsin
thesamefund.
Next,Singhwantstodoatwoyearcourse,startingnextyear,toboosthiscareer.He
willpursuethiswhilecontinuingwithhisjob.Forthis,hewantstoaccumulateRs1lakh
foreachyear.However,Fincartadvisesthatheputoffthisgoalbyanotheryeartillhe
repayshisloan.HewillthenhaveasurplusofRs39,000.HecanstartanSIPofRs
7,971inanarbitragefundandwillbeabletoamasstherequiredamountinoneyear.
FortheadditionalRs1lakhherequiresinthesubsequentyear,heshouldstartanother
SIPofRs3,823inthesamefund.Thiswillhelphimsaveforthecourse.
Singh plans to get married after he finishes the course and is settled in his career.
Whenhedoes,hewantstosaveforhisfuturechild'seducationandwedding.Forthe
former,hehasestimatedaneedofRs46.6lakhin20years,andforthelatter,Rs1.36
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crorein25years.However,thesegoalsarelikelytobepushedbackbyacoupleof
years. To meet the education goal, he will need to start an SIP of Rs 6,549 in a
diversifiedequityfund,whileforthewedding,heshouldstartanSIPofRs10,905inthe
sametypeoffund.Hecanstartmakingtheseinvestmentsaftertwoyears,whenhe
hasbuiltthecontingencyfundandamassedthecorpusforfirstyear'sstudy.
Finally, he wants to save for retirement in 28 years. For this, he will require Rs 9.25
crore,andwillhavetostartanSIPofRs42,027inadiversifiedequityfund.However,
hedoesn'thavetherequiredfundsand,hence,shouldstartwithasumofRs13,650
from next year onwards. To this, he can continue to add the increase in income and
anyfundsthatarefreedupafterthecompletionofhisgoals.Heshouldalsoconsider
reviewing his financial position after he completes his course, which can result in an
increaseinincome,andtakerequiredactionatthattime.
READMORE: stocks|SIP|savings|investments|invest|insurance|financialplanning
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28/93
9/1/2015
RanaDaggubatitoplay
navalofficerinhisnext
IleanaofferedRs1.5
croreforitemnumber?
MTVVMA:Memorable
momentsfromKanye
WesttoMileyCyrus
FamilyFinances:Highincome,savings
toeaseKumars'financialjourney
TheKumarsareapostercoupleforthebenefitsof
earlyfinancialplanning.Atimelystartgivesyouthe
advantageofcompounding,thelibertytocorrectany
investing mistakes, a long horizon to save without
stretching your finances, and investing in avenues
that can help your money grow faster. At 32, Anuj
Kumar has a creditable net worth of Rs 65.47 lakh
TheKumarsneedtoincreaseand
thankstoaggressivesavingandinvestingsincehe
realigntheirequityinvestmentstobe
Comments
startedworking.
abletocorrecttheheavydebtskewin
theirportfolioandreachalltheirgoals
withease.
Thoughhisportfolioisheavilyskewedtowardsdebt
(88percent)andonly12percentisinequity,this
canbeeasilyrectifiedandthefamilywillbeableto
achievealltheirgoalswitheasebyallocatingtheexistingresourcesandmakingfresh
investments. Financial planner Pankaaj Maalde will help them do so by preparing a
blueprintwhichtheycanfollow.
Existing financial status

Anuj Kumar is a 32year
old software professional,
who lives in Greater Noida
with his wife and daughter.
While29yearoldSimaisa
homemaker, the daughter
SparshAashi,isfouryears
old. Kumar brings in a
salary of Rs 1.25 lakh and
gets another Rs 20,000 as
rent, bringing the total
incometoRs1.45lakh.Of
this amount, Rs 55,500 is
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9/1/2015
this amount, Rs 55,500 is
spent
on
household
expenses,whichincludesa
house rent of Rs 18,000.
AnotherRs35,000goesas
EMI for a home loan of Rs
34 lakh that he has taken
for his property worth Rs
70lakh.
Besidesthese,hedolesout
Rs 13,792 on insurance
premium and Rs 8,000 on
his daughter's education.
He makes investments
worth Rs 18,250, mostly in
recurring deposits, leaving
him with a surplus of Rs
14,458. This, along with a
realignment of his current
investments,
will
help
Kumar work towards his goals. The goals include building an emergency corpus,
saving for child's education and wedding, as well as for their own retirement. First,
however,MaaldewillconsiderKumar'sinsuranceportfolioandsuggestsomechanges.
InsuranceportfolioKumarcurrentlyhasthreeinsuranceplansatermplanworthRs
50lakh,apensionplanwhichprovidesRs21lakhofinsuranceandaUlipwithRs8
lakh worth of cover. For these plans, he pays an annual premium of Rs 1.55 lakh.
SincethisisahighamountandthereturnsfromthepensionplanandUlipareunlikely
tobeatinflation,Kumarisadvisedtoreviewtheseafterthelockinperiodoffiveyears.
Heshould,however,continuewithhistermplanthoughtheamountisinadequate.So,
heneedstopurchaseanothertermplanworthRs1.25crorefor30years,whichwill
costRs12,000annually.
Since Sima is not working, she will not require any life insurance. As for health
insurance, Kumar is covered by his employer and also has an independent family
floaterplanworthRs4lakh.Thishasbeenagoodmoveonhispart,butKumarshould
increasethisamounttoRs10lakhanditwillcosthimRs20,000perannum.Maalde
alsosuggeststhathebuyaRs50lakhaccidentdisabilityinsuranceandRs50lakh
criticalillnessonlineplan,whichwillcostRs18,000ayear.Thenewinsuranceplans
willnotincuranyadditionalcostand,infact,helpsaveRs3,291,whichcanbeusedfor
investingforhisgoals.
RoadmapforthefutureAftertakingcareofthefamily'sinsuranceneeds,Kumarcan
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RoadmapforthefutureAftertakingcareofthefamily'sinsuranceneeds,Kumarcan
startplanningforhisgoals,thefirstbeingthesettingupofacontingencycorpusthatis
equaltosixmonths'expenses.ThiswillamounttoRs6.93lakhandcanbesourced
fromhisfixeddepositofRs5.5lakhandrecurringdepositofRs1.5lakh.Thesesums
shouldbeinvestedinanultrashorttermfund.Kumarisalsoadvisedtodiscontinuehis
investment in the recurring deposit. Next, Kumar can focus on his other life goals,
includingtheeducationandweddingofhisdaughter.Fortheformer,hehasestimateda
needofRs59lakhin14yearsafterconsideringaninflationof8percent.Maaldehas
notallocatedanyexistingresourcetothisgoalandsuggestsanSIPofRs12,500inan
equitymutualfund.
Asforthedaughter'swedding,theKumarswanttosaveRs30lakhintoday'svalue,
which will increase to Rs 1.5 crore in 21 years after adjusting for inflation. Again,
MaaldehasnotallocatedanyexistingresourceandKumarwillneedtostartanSIPof
Rs11,500Rs10,000inanequityfundandRs1,500inagoldfundtoaccumulate
thedesiredamountinthespecifiedperiod.
Finally, Kumar wants to amass Rs 9.7 crore in 28 years to ensure a comfortable

retirement.Forthis,hewillhavetoassignseveralofhisexistingresources,including
theEPF,PPF,cashholdinginbank,stockvalue,thepostalmonthlyincomefunds,and
boththepensionplanandUlip.ThesewillyieldacorpusofRs7.93croreinthegiven
timeframe.Fortheremainingamount,KumarwillhavetostartanSIPofRs5,000ina
diversifiedequityfund.
Kumar is also advised to invest the existing savings bank balance and reinvest the
postalmonthlyincomeschemefundsinadiversifiedequityfund.Heshouldalsoinvest
aminimumofRs1,000inthePPFeveryyear.
Besides,hecanshifttheentirebond
fund to an equity fund. Maalde also
recommends that he quit stock
investment as it requires indepth
research and analysis and, instead,
investinadiversifiedequityfund.All
these measures will ensure that he
reaches all goals without much
difficulty. Any increase in income
can be used to raise the ongoing
investmentandfundanyothergoals
thattheKumarsmighthave.
FinancialplanbyPankaajMaalde,
CertifiedFinancialPlanner
(Looking for a professional to
analyse your investment portfolio?
Write
us
at
etwealth@timesgroup.com
to
with
'Family Finances' as the subject.

Our experts will study your portfolio
and offer objective advice on where
andhowmuchyouneedtoinvestto
reachyourgoals.)
31/93
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reachyourgoals.)
READMORE: SIP|savings|invest|insurance|Inflation|Gold|financialplanner
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leadtoslowermeltingice
cream
MTVVMA:JustinBieber
criesafterperformance
Trailerof'DowntonAbbey'
finalseasonarrives
WhytheKumarsneedafocused
approachtomeettheirfinancialgoals
ByRijuDave,ETBureau | 29Jun,2015,08.00AMIST
Oneofthemanyadvantagesoffinancialplanningis
thatitprovidesaneffectiverealitycheck.Ambitious
goals are tempered by financial facts and ground
realities. This is why Noidabased Kumars have
takentherightstepintreatingtheirfinancialplanning
seriously and approaching a professional adviser.
Theyareintheinitialstagesofplanningandhavea
0
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Anincreaseinequityexposure,
net worth of nearly Rs 14 lakh. Though they have
aligninginvestmentswithgoals,
tried to diversify, their portfolio is skewed heavily
revampinginsuranceportfolioand
towards debt. At this age and given their longterm
pushingbackretirementwillhelpthe
Kumars.
goals, they need a much higher equity exposure.

Though their goals are typical of an average
investor,theymayhavetopostponesomeandpush
back the retirement age in view of their existing financial status. To help Kumars
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constructanefficientportfolioandfulfiltheiressentialfinancialgoals,theFincartteam
willprepareaplan.
RajnishKumaris31yearsoldandisemployedinaprivatecompany.SmitaVatsa,his
wife,is29andthoughshehastaughtinacollegeearlier,currentlysheisnotworking.
ThecouplelivesinNoidaanddon'thavechildrenthoughtheyareplanningonesoon.
Rajnishisbringinginamonthly
salary of Rs 73,000 and after
taking
into
account
their
expenses, he is left with a

surplus of Rs 10,545. The
other
expenses
include
household spending of Rs
23,000, house rent of Rs
20,500, insurance premium of
Rs 8,955, PPF investment of
Rs 4,000 and mutual funds
SIPsofRs6,000everymonth.
The other assets in the
portfolio include Rs 5 lakh in
gold, Rs 2.6 lakh in fixed
deposits,Rs2.4lakhintheEPF,Rs1.25lakhinthePPF,Rs1.15lakhinstocks,Rs
68,685inmutualfundsandRs10,000ascash.Theywillneedalltheseresourcesto
meet their goals. The goals include building an emergency corpus, buying a car and
house, saving for their future child's education and wedding, as well as for their own
retirement. The Fincart team begins by assessing their insurance needs and
suggestingsomechanges.
Insuranceportfolio
KumarcurrentlyhasatermplanofRs65lakh,anendowmentplan,aUlipandahealth
insurance policy. He is advised to surrender the term plan since he can purchase a
higher cover of Rs 1.2 crore at a lower premium and for a longer tenure. He is also
advisedtosurrenderhisothertwoplanssincetheirreturnsareunlikelytobeatinflation.
Thesurrendervalueof`95,000fromtheendowmentplancanbeusedtofundoneof
his goals. As for the health insurance plan worth Rs 5 lakh, this is sufficient for the
coupleandtheydon'tneedtobuyanymorecover.Thismeansthatthetotalinsurance
premiumwillcomedowntoRs2,050,savingthemRs6,905,whichcanbeaddedto
theinvestiblesurplus.
Roadmapforthefuture
After taking care of the family's insurance needs, Kumar can start planning for his
goals, the first being the setting up of a contingency corpus that is equal to three
months' expenses. This will amount to Rs 1.3 lakh and can be sourced from his
existingcashholdingofRs10,000andRs1.2lakhofhisfixeddepositcorpus.
Afterthis,hecanfocusonthetargetofbuyingahouseworthRs50lakhineightyears.
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ThecouplewantstobuildacorpusofRs15lakhasdownpaymentandtakealoanfor
therestoftheamount.However,Fincartsuggeststhatsincetheywon'tbeabletobuild
therequiredsuminthegiventimeframe,theyshouldpushbackthegoalbyanother
twoyears.Factoringininflationof8%,thecostofthehousewillgouptoRs92.5lakh
andthedownpaymentsumtoRs32lakh.Toamassthissum,theywillhavetostart
anEMIofRs14,359inanequityfundandincreaseitby9%everyyear.In2025,they
willthenhavetotakealoanofRs64lakhat10%,whichwillresultinanEMIofRs
65,000.Consideringthe9%riseinKumar'sincome,thecoupleshouldbeabletoafford
theEMIbythen,butshouldstillreviewthesituationatthattime.
The next goal for the couple is funding their child's education. For this, they want to
have a sum of Rs 1.2 lakh every year from 2018 onwards. According to the Fincart
team,thiscanbeeasilyfundedfromtheircashflowafterKumar'sriseinsalary.
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team,thiscanbeeasilyfundedfromtheircashflowafterKumar'sriseinsalary.
Asforthegoalofthechild'sweddingin25years,theyhaveestimatedaneedofRs
1.37 crore . To achieve this, they can assign their gold holding of Rs 5 lakh and the
remaining fixed deposit corpus of Rs 1.4 lakh. To make up for the shortfall, they will
havetostartanSIPofRs2,358inanequityfundandincreaseitby9%everyyear.
Thiswillyieldthedesiredamountinthespecifiedtimeperiod.Finally,thecouplewants
tosaveRs9.7crorein29yearsfortheirretirement.
ThoughKumarwantedtoretireat51,hewillhavetoletgoofthisaspirationsincehe
will not be able to amass enough corpus to build a comfortable retirement kitty. To
achievethegoal,heshouldassignhisEPFandPPFsavings,stockvalue,mutualfund
corpus and insurance surrender value. This will help muster Rs 3.48 crore, and to
amassthetheremainingamount,hewillhavetostartSIPsofRs4,000andRs6,682in
equityfunds.HeshouldalsoredeemhisexistingSIPsnextyeartoavoidexitloadand
investitinanequityfundthatwilloptimisethereturns.
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Theinsurancesurrendervalueshouldalsobeinvestedinthesamefund.Asforbuying
acarnextyear,thecoupledoesn'thaveenoughsurplustofundit.Theyshouldeither
waitforincometoriseorputoffthechild'sweddinggoalforafewyearsandusethe
resourcesallocatedtoittopurchasethecar.Thiswillalsomeanthattheywillhaveto
investahighersumtoreachthegoalinthereducedtimeframe.
READMORE: Kumars|investments|insuranceportfolio|financialgoals|ETWealth
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finalseasonarrives
ChrisMartincaughtupin
lovefeud
LastTitaniclunchmenu,
savedbysurvivor,upfor
auction
Lowsavings,poorplansactas
deterrentsforPanigrahitoachieve
36/93
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deterrentsforPanigrahitoachieve
financialgoals
ByRijuMehta,ETBureau | 22Jun,2015,08.39AMIST
Unmet goals can be as much a result of poor

financial planning as low salary or inadequate
surplus. For Delhibased Swagat Panigrahi, this is
likely to be the stumbling block to achieving goals
unless he finds a way to supplement his income.
The 30yearold has done well to start financial
2
Comments
planning early, but he will have to put in effort and

PanigrahiisanHRprofessionalliving
initiatechangestogethisfinancesontrack.Tohelp
withhisfatherinarented
himdothisisFerozeAzeezofAnandRathiPrivate
accommodationinDelhi.Hebelongs
Wealth Management, who will analyse his financial
toOdishaandhasparentalproperty
there.
status and prepare a plan that can serve as a

guidelineforthefuture.
Unmet goals can be as much a result of poor financial planning as low salary or
inadequatesurplus.ForDelhibasedSwagatPanigrahi,thisislikelytobethestumbling
blocktoachievinggoalsunlesshefindsawaytosupplementhisincome.The30year
oldhasdonewelltostartfinancialplanningearly,buthewillhavetoputineffortand
initiate changes to get his finances on track. To help him do this is Feroze Azeez of
Anand Rathi Private Wealth Management, who will analyse his financial status and
prepareaplanthatcanserveasaguidelineforthefuture.
Panigrahi is an HR professional in a private firm living with his father in a rented

accommodation in Delhi. He belongs to Odisha and has parental property there.
PanigrahidrawsamonthlysalaryofRs30,000,andafterregularexpenses,heisleft
withameagreinvestiblesurplusofonlyRs1,450.Giventhelowincome,hehasbeen
unable to save or invest well and, hence, has a net worth that is currently in the
negative.ThisisbecausehehastakenapersonalloanofRs2lakhatahighinterest
rate,whichheiscurrentlyrepayingthroughanEMIofRs11,000.Thereareotherflaws
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in his portfolio, including a 100% debt investment, low prioritisation of goals, no

contigency corpus, and no risk coverage. In many ways, Panigrahi is ignorant about
the basics of finance, which is why he has made the right decision in approaching a
professionaltoseekdirection.
Thoughheinsiststhatretirementistheonlygoalhewantstoworktowards,Azeezhas
correctly pointed out the need to repay his personal loan and be prepared for other
crucialgoals.Theseincludebuildingacontingencycorpus,savingforhisfuturechild's
educationandwedding,andbuildingahouse.SaysPanigrahi:"Iplantogetmarriedby
nextyearandneedguidancetoputmyfinancesinorder."Tohelphimdoso,Azeez
beginsbyassessinghisinsuranceneeds.
Insuranceportfolio
Panigrahicurrentlyhasonlyonetraditionalinsurancepolicy,amoneybackplanbought
twoyearsago.ThisprovideshimwithacoverofRs2lakhandheispayinganannual
premiumofRs12,600.Azeezrecommendsthatheconvertitintoapaidupplanaftera
yearsincethereturnsareunlikelytobeatinflationinthelongterm.Instead,heshould
buy an online term plan of Rs 1 crore, which will cost him Rs 10,000 annually.
Panigrahialsohasnohealthinsuranceandshouldconsiderbuyingafamilyfloaterplan
worthRs3lakh,whichwillcostRs6,760ayear.Thismeansthetotalannualpremium
willbeRs1,396andtheadditionalcostofinsuranceafterdiscontinuingthemoneyback
planwillbeRs346amonth.Thiscanbefundedfromhissurplus.
Ideally, Panigrahi should consider buying a personal accident disability cover as well
asacriticalillnessplan,butsincehedoesn'thavesufficientsurplus,heshoulddoitas
soonasthereisariseinincome.
Roadmapforthefuture
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Roadmapforthefuture
Before planning for his goals, Panigrahi should try to prepay his expensive personal
loanifitdoesnotincuranyprepaymentpenalty.HeshouldhavehisloanEMIraisedto
Rs 13,000 and prepay it in oneandahalf years. He is advised to stop further
investmentintherecurringdeposit,whichwillraisehissurplustoRs3,104aftertaking
into account the additional insurance cost. This means he can start investing for his
othergoalsonlyafterthisperiod,whenhewillhaveasurplusofRs17,000,including
theriseinincome.
Tobeginwith,heshouldbuildanemergencycorpusequaltothreemonths'expenses,
which will amount to Rs 85,650. To do this, he can allocate his cash holding of Rs
5,000andrecurringdepositofRs75,000,whichshouldsufficefornow.
Panigrahi is also planning to get married next year, but is unlikely to incur any cost
sincehisparentswillbefundingtheevent.Theothergoalshewantstosaveforarehis
child's education and retirement. For the child, likely after a couple of years, he has
estimatedaneedofRs35lakhinaperiodof18years.Sincehewillstartinvestingfor
thegoalafter1.5years,hewillhavetostartanSIP of Rs 4,600 in an equity mutual
fundtobuildtherequiredcorpus.Thisisassuminganannualreturnof12%fromequity
funds.
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Asforhisretirement,hehasestimatedarequirementofnearlyRs7crorebythetime
heretiresat60.ThoughPanigrahiwantedtoquitworkingat45,thiswillnotbefeasible
given his low income and inability to save adequately for his goals. Hence, he is
advised to continue working till 60. To reach the goal, he can allocate his EPF sum,
whichislikelytoyieldRs1.6crorein28years.Hecanalsoallocatethematurityvalue
ofhisinsurancepolicytowardsthisgoal.Fortheremainingamounthewillhavetostart
anSIPofRs20,000inanequityfundtogeneratethecorpus.However,sincehewon't
havesufficientfunds,hecanstartwithwhateversumisavailabletohim.
Asforbuyingahouse,hedoesn'thaveenoughmoneytodosonowandcanrelyon
hisparentalpropertytofundthegoallater.Heshouldalsoreviewhisfinancialsituation
aftertwoyears,whenheismarriedandhasrepaidtheloan.Ifhisspouseisearning,it
willhelpeasethefinancialpressure.Anyriseinincomecanthenbedirectedtowards
retirementorothergoals.Ifhiswifeisnotemployed,anyriseinincomewillgotowards
theincreasedlivingexpenses.Hence,heshouldassessthesituationafteracoupleof
yearsandtaketherequiredsteps.
FinancialplanbyFerozeAzeez,ExecutiveDirector,InvestmentProducts,AnandRathi
PrivateWealthManagement.
READMORE: SIP|savings|interestrate|insurance|Funding|financialplanning|ETWealth
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PawandeepRajanwins
'TheVoiceIndia'
'Awakenings'author,
neurologistOliverSacks
passesawayat82
Listofwinnersof2015
MTVVideoMusicAwards
Kumarsneedtoincreasetheirequity
exposure,covertheirrisksadequately
ByRijuDave,ETBureau | 15Jun,2015,08.00AMIST
Mostpeopleareblindinvestors.Theydon'tworkto
aplan,neverlinkinvestmentstofinancialgoalsand
put in money randomly in any avenue that takes
theirfancy.Amongthemanydrawbacksofthistrait
isthatoneneverknowsifthegoaliswithinreachor
ifoneismakingthemoneyworkashardasitcan.
40/93
9/1/2015
4
Comments
Kumaris34yearsoldandstaysin
Much like the average Indian investor, Chennai
Chennaiwithhishomemaker
based Veerendra Kumar has made this mistake.
wifeSujana,31,andtwochildren,
Despitesavingandinvestingdiligentlyforyears,he
agedfiveandone.Amonghisother
financialdependantsarehisparents,
doesn't know how and, whether, he will meet his
whoare61and58yearsold,andhis
goals.Soapproachingafinancialadviserisagood
brother.
step to take a reality check and execute course

corrections, if required. To assist him in this
endeavourisfinancialplannerPankaajMaalde,whowilldefinethecourseandprepare
aplanfortheKumars.
Kumaris34yearsoldandstaysinChennaiwithhishomemakerwifeSujana,31,and
twochildren,agedfiveandone.Amonghisotherfinancialdependantsarehisparents,
whoare61and58yearsold,andhisbrother.KumarbringsinamonthlysalaryofRs
85,000andhisfinancialoutgoisRs70,100,leavinghimwithasurplusofRs14,900
each month. Kumar spends Rs 28,000 on household expenses and Rs 10,000 on
house rent, while Rs 7,000 goes for kids' education, Rs 16,700 as premium for
insurancepoliciesandRs8,400asEMIforthecarloanhehastaken.
AsforKumar'sfinancialportfolio,hehassplititalmost
evenlybetweendebt(48%)andrealestate(46%),with
a minuscule 6% in equity. If he wants to achieve his
goals,hewillneedtoincreasehisequityexposureand
reducerealestate.Thegoalsaresimpleenough:build
an emergency corpus, construct a house, save for
children's education and weddings, and plan for
retirement. Before Maalde formulates a plan for them,
he will assess their insurance portfolio and suggest
changes,ifrequired.
Insuranceportfolio
Kumar has three traditional plans and two Ulips, but
theseofferalowcoveratahighpremium.Kumarhas
paidallthepremiumsforthefirstplan,butheisadvised
tosurrenderthesecondoneandcancontinuewiththe
third one as it is likely to give returns that can beat
inflationinthefuture.AsfortheUlips,heisadvisedto
surrender one and stop paying the premium for the
otherone.However,sincehedoesn'thavesufficientlife
insurance,heshouldbuyatermplanofRs1.25crore
for25years,whichwillcosthimRs12,000peryear.
Asforhealthinsurance,Kumariscurrentlyrelyingonlyonthecoverprovidedbyhis
employer.Hence,heshouldbuyafamilyfloaterplanworth`10lakh,whichwillresultin
an annual premium of Rs 20,000. He has, however, taken the right decision about
purchasing a medical plan for his parents and should continue with it. Kumar should
also consider buying a personal accident disability cover of Rs 50 lakh as well as a
criticalillnessplanofthesameamount.ThesewillcosthimanadditionalRs18,000a
year.
Despitepurchasingfreshcovers,Kumar'spremiumoutgowillreducebyRs5,667,
whichwillhelpincreasetheinvestiblesurplustoRs20,567amonth.
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Roadmapforthefuture
Now,Kumarcanstartplanningforhisgoals,thefirstofwhichisbuildingacontingency
corpusequaltosixmonthsofhisexpenses.ThisamountstoRs3.86lakhandcanbe
sourced from his existing resources. He can deploy his cash of Rs 50,000, fixed
deposit of Rs 1 lakh, and debt investment of Rs 2.25 lakh. These will amount to Rs
3.75lakhandwillsufficeasanemergencycorpus.
Next,Kumarwantstobuildahouseononeofhisplotsoflandinayear'stime.Thiswill
costhimRs10lakhandhecangetthefundsbysellinghissecondplotworthRs6
lakhandusinghisfixeddepositofRs4lakh.Hedoesn'tneedtomakeanyfresh
investmentsforthisgoal.
Kumaralsowantstoplanfortheeducationexpensesof
his children in 13 and 17 years. For his son's higher
studies,hehasestimatedaneedofRs41lakh,andto
meetthisgoal,hewillhavetostartanSIPofRs10,000
in an equity mutual fund. Similarly, for his daughter, he
wantstoamassRs56lakhandwillagainhavetostart
anSIPofRs7,500inanequityfund.Thiswillhelphim
accumulatethedesiredamountinthespecifiedperiod.
RetirementisanotherimportantgoalforKumar,andfor
this he wants to acquire Rs 7 crore in 26 years to be
abletomaintainhiscurrentlifestyle.Tobeabletomeet
this, he will have to assign his EPF savings worth Rs
7.32 lakh, stocks (Rs 56,000), debt investment of Rs
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1.6lakh,surrendervalueofUlipandthematurityvalue
oftwoofhisinsurancepolicies.Combinedly,theseare
likelytoyieldRs4.95croreinthegiventime.Tomake
up for the shortfall, he will have to start an SIP of Rs
8,500inadiversifiedequityplan.However,sincehewill
beleftwithasurplusofonlyRs3,000afterinvestingfor
othergoals,hecanstartwiththisamountandincreaseit
nextyearwhenheshiftsintohisownhouseandstops
payingtherentofRs10,000.
Kumar also wants to save for his children's weddings
whentheyturn25andhasestimatedthathewillrequire
Rs47lakhforhissonandRs63lakhforhisdaughter.
Toachievethesegoals,hewillneedtoinvestRs4,000
andRs3,500,respectively,inequityfundsthroughSIPs.However,sincehedoesn't
have the required surplus now, he will have to put these off till next year, when he
savesonrentandgetsasalaryincrement.
READMORE: Ulips|savings|financialplanning|financialplanner|ETWealth|EMI
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ZaynMalik'smitten'with
IndianBurberrymodel
NeelamGill
Womentakingleadin
divorcecases,say
lawyers
DineshKarthiksues
sportscardesignerDilip
Chhabria
MaheshMacwanneedstooptimise
returnswithhigherequityexposure
ETBureau | 8Jun,2015,08.19AMIST
Mahesh Macwan is 43 and his portfolio is rife with

mistakes.HisnetworthislowatRs22.34lakh,as
is his income he has a negligible equity exposure
has a very high debt holding and excess liquidity
(Rs6lakhinbankaccount)andhisriskcoverage
isnotadequate.
Despitebeingsingleandhaving
Macwan'sportfoliocomprisesnearly70%indebtin
simplegoals,MaheshMacwanmay
theformoffixeddeposits,EPFandPPF,while27%
43/93
9/1/2015
Comments
notbeabletofullyachievehisgoals.
But,hecanredirecthisinvestmentsto
maximisehisreturns.
isheldascash,resultinginameagre2%inequity
and 1% in gold. Given the fact that he has not
employedthegrowthpotentialofequityinvestments
in his earlier years, he may not be able to save
sufficiently for his retirement. Yet, he
willnothavemuchofaproblemwithhis
other
goals
and
securing
his
investments with adequate insurance.

For this, he will have to alter his
investmentpatternandmakehismoney
work harder, as well as align his
investmentswithgoals.
ThefinancialplanningteamatPrincipal
Retirement Advisors will help him do
thisbypreparingaplanforhim.Existing
financial status Macwan is single and
livesatBharuchinGujarat.
He is employed as an executive
assistant in a multinational company.
He brings in a monthly salary of Rs
35,300, but his expenses are low
becausehiscompanysubsidisesmost
bigticketexpenditureslikefoodandlodging.Thismeansthathepaysanominalrentof
Rs2,000forhisaccommodationandhishouseholdexpensesrunuptoonlyRs5,000
amonth.
He,alongwithhisbrother,alsosharesthefinancialresponsibilityforhismother,who
staysatKaramsad,inAnand.
Besidestheseexpenses,MacwanpaysapremiumofnearlyRs3,000amonthforhis
insurance policies. After accounting for this outgo, Macwan is left with Rs 25,300 a
month. This can be used to partly achieve his goals. These include setting up an
emergency corpus, purchasing a house and saving for his retirement in about 17
years.
Before the Principal Retirement Advisors team charts out a course for him, it will
analysehisinsuranceporfolioandneeds.
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9/1/2015
Insuranceportfolio:
MacwancurrentlyhastwolifeinsurancepoliciesfromLIC,whichcoverhimforRs5
lakh,amedicalinsuranceplanworthRs1.5lakh,andapersonalaccidentcoverofRs
3lakh.
He is provided life, health and accident covers by his company. However, these are
inadequateandhewillneedtobuymorecovertosecurehisinvestments.
ThePrincipalteamsuggeststhathebuyatermplanofRs30lakh,whichwillcosthim
Rs6,475.Besidesthis,heneedstobuyatopupmedicalplanworthRs10lakhanda
criticalillnesscoverofRs15lakh,whichwillresultinapremiumcostofRs5,208and
Rs16,971,respectively.
HeshouldalsoconsiderapeRsonalaccidentcoverofRs50lakh,whichwillcosthim
only Rs 5,730. Besides this risk cover, he also needs to provide a buffer for his
mother's medical needs. So he should purchase a health insurance of Rs 5 lakh for
her, which will result in a premium of Rs 31,000, given her age. All these additional
insurancepolicieswillresultinamonthlypremiumofRs5,450.
MacwanisalsoadvisedtocontinuewithhistwoLICpolicies,whichcanserveasthe
debtcomponentofhisportfolioandcanbeallocatedtothegoalofretirement.
Roadmapforthefuture:
Aftertakingcareofhisandhismother'sinsuranceneeds,Macwancanstartplanning
forhisothergoals.Thefirstoftheseisbuildinganemergencycorpus,totakecareof
any exigencies. He can form a corpus that is equal to four months' expenses and
amounttoRs61,000.
This can be easily culled from the high cash holding of Rs 6 lakh in his savings
account.
Next,MacwanwantstopurchaseahouseworthRs25lakhinaboutsevenmonths.To
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achieve this goal, he can fund it partly (Rs 15.43 lakh) by dipping into his existing
resources. He can allocate his fixed deposit of Rs 10 lakh and the remaining cash
holdingafterbuildingtheemergencycorpus.ThiswillamounttoRs15.14lakh.
Tomakeupfortheshortfall,hecanstartanSIPofRs4,550inabalancedfund.Forthe
remainingamount,hecantakealoanofRs10.29lakhfor10years,whichwillresultin
an EMI of Rs 13,596 at 10% rate of interest. This can be easily sourced from his
investiblesurplus.
Finally,Macwanisleftwithhisgoalofretirementinnearly17yeaRs.Consideringhis
current lifestyle and expenses, Macwan will require a retirement corpus of Rs 2.66
crore.
HecanagainfallbackonhisexistingresourcesofEPFandPPF(Rs5.57lakh),gold
(Rs25,000),stocks(Rs52,092)andmaturityvalueoftwoinsurancepolicies.
Aftercombiningalltheseinvestments,heislikelytoaccumulateacorpusofRs46.66
lakhinthespecifiedperiod.FortheremainingamountofRs2.19crore,hewillneedto
startinvestinginequitymutualfundsthroughamonthlySIPofRs47,660.
However,Macwanwillnothavesufficientinvestiblesurplustobeabletodososince
hewillbeleftwithonlyabout9,254afterstartingthehomeloanEMIaftersevenmonths
andafteraccountingfortheadditionalinsurancecostofRs2,450.Therefore,hecan
startinvestingtheamountthatheisleftwithanddirectanyincreaseinincometowards
hisretirementgoal.
He can also review his financial situation after a few years and either find ways to
supplementhisincomethroughalternateavenuesofemploymentafterretirement,cut
down his expenses, or put up his house for reverse mortgage.Financial planning by
PrincipalRetirementAdvisors.
FinancialplanningbyPrincipalRetirementAdvisors
READMORE: stocks|SIP|savings|PrincipalRetirementAdvisors|mutualfunds|MaheshMacwan|
lifeinsurance
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OprahWinfrey,Eddie
MurphytostarinRichard
Pryorbiopic
Mandelarapeaccused
grandsoninfreshtrouble
Thestorybehindthe
incompleteKannadafilm
'Thithi'thatwon
internationalacclaim
46/93
9/1/2015
Howsmartsavingsandhighearnings
willhelpBalstomeettheirgoals
1Jun,2015,07.36AMIST
ByFincart
Anearlystarttoplanningcanbeagoodpreventive
for most financial ills. Not only can one save
aggressively during this period because of fewer
responsibilities,butmostinvestingmistakescanbe
rectifiedoverthelongperiodofachievinggoals.This
0
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TheBalshavemadeanearlystartwith
is probably the reason why Thanebased Bals are
aggressivesavingandareontrackto
likely to meet their goals despite several flaws in
reachingtheirgoals.However,they
their portfolio. The 29yearold couple has a
willhavetorealigntheirinvestments
andtakeahigherexposuretoequity.
creditablenetworthofRs1.39crore,ahighincome
and a good savings ratio. So, despite going
overboardonrealestate,andnottakinganyequity
exposure or securing their risks adequately, they shall be able to ensure a smooth
financialjourneyforthemselves.ThefinancialplanningteamofFincartwillhelpthemin
thistask.
Supriya is 29 and lives with her husband, Saurabh, who is also 29, and their six
monthold son, Mihir, in Thane. Both husband and wife are in private service and
togetherbringinamonthlyincomeofRs1.55lakh.TheirtotalexpensesareworthRs
52,583, which means they have an existing investible surplus of Rs 1.02 lakh. The
family'sfinancialoutgoincludeshouseholdexpensesofRs27,000,insurancepremium
ofRs3,583andloanEMIsofRs22,000.
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Theyhaveinvestedheavilyinrealestate,whichhasan80%holdingintheirportfolio.
While they are living in their family house worth Rs 50 lakh, they also have a plot of
landworthRs11lakhandtwopropertiesworthRs35lakhandRs76lakh.Forthese,
theyhavetakenthreeloansofRs63.74lakh.TheyarecurrentlypayingEMIsofRs
22,000fortwoloans,butoneoftheseisscheduledtoendinMarchnextyear,whilethe
EMIofRs49,000forthethirdonewillstartinFebruary2016.
They have the standard set of goals, which include building a contingency corpus,
buyingacar,payingthestampdutyandpossessionamountfortheirhouse,savingfor
theirson'seducationandwedding,andfortheirownretirement.Giventhehighsurplus,
they should not have a problem saving for their goals, but need to align their
investments with these. To begin with, the Fincart team considers their insurance
needs.
Insuranceportfolio
The Bals have not been very watchful about buying independent life and health
insurancesincetheyarecoveredbytheircompaniesTheydohavetwoindependent
planswhichofferalowcoveratahighpremium.Hence,thecoupleneedstobuymore
insurance. While Saurabh is advised to purchase a term plan of Rs 1 crore, Supriya
shouldbuyaRs1.5crorecover.BoththesepolicieswillcostRs1,910amonth.
Asforhealthinsurance,theyshouldpickaRs3lakhfamilyfloaterplanandatopup
planofRs15lakhwithaRs5lakhdeductible,whichwillcostRs924.Thismeansthat
the family will not bear any additional premium cost. The Bals are also advised to
surrenderboththeirexistinginsuranceplans,whichwillnotonlyfreeupthepremium
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butalsoresultinasurrendervalueofRs2.36lakhthatcanbeinvestedfortheirgoals.
Roadmapforthefuture
Now, the Bals can start planning for their goals, the first being the setting up of an
emergency corpus. Considering their six months' expenses, they will need Rs 5.22
lakh.Tobuildthis,theycanusetheirexistingresources,includingRs48,000cashin
their bank account, Rs 1.59 lakh of their fixed deposit, and Rs 3.15 lakh worth of
stocks.Sincetheyarenotwellversedinstockinvesting,theyareadvisedtoselltheir
sharesaftersixmonthstoavoidcapitalgainsandkeepthemoneyinaliquidfund.
Next, the couple needs Rs 3.75 lakh for stamp duty and registration charges for the
housetheyarebuying.Thiscanbeeasilysourcedfromtheirfixeddeposit.Theyalso
requireRs3.1lakhin14monthswhiletakingpossessionoftheirnewhouse.Forthis,
they can allocate the insurance surrender value of Rs 2.36 lakh and invest it in an
arbitrage fund. For the remaining amount, they can start an SIP of Rs 3,391 in an
arbitragefundforthegivenperiod.Thiswillhelpthemaccumulatetherequiredamount.
Next,theBalswanttobuyacarworthRs7lakhinoneandahalfyears.Toachieve
thisgoal,theycanallocatetheremainingamountofRs1.16lakhinthefixeddeposit,
whichislikelytoyield1.31lakhinthespecifiedperiod.Forthebalanceamount,they
canstartanSIPofRs30,098inanarbitragefund,anditwillfetchtherequiredfundsfor
thegoal.
TheBalsalsowanttoplanfortheirson'seducationandwedding.Theyhaveestimated
aneedofRs1croreforMihir'sstudiesin18years,andRs82.18lakhforhiswedding
in 25 years. To meet these goals, they will have to start SIPs of Rs 14,036 and Rs
4,828, respectively, in equity funds. They can also allocate their gold holding worth
nearlyRs10lakhforthechild'swedding.
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Finally,thecouplewantstoplanfortheirretirement,whichis31yearsaway.Forthis,
theywillrequireRs7.1croreinkeepingwiththeircurrentlifestyleandexpenses.To
achieve this goal, they can allocate their EPF and PPF savings, which are likely to
fetch Rs 5.08 crore. For the shortfall, they will have to start investing in an equity
mutualfundthroughanSIPofRs5,953.Thiswillhelpcreatetherequiredkitty.
As for the home loan EMI of Rs 49,000 that begins in February next year, they can
utilise the existing surplus of Rs 42,945, and the balance from the EMI of Rs 11,000
thattheywillsavefromMarch2016whenthehomeloancloses.Theirsavingwillalso
riseafterbuyingthecarandthissurplusamountcaneitherbeusedforothergoalsor
aspertheirrequirementatthegiventime.
READMORE: SIP|savings|realestate|journey|investments|invest|Homeloan
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AuthorFrederickForsyth
saysheworkedforBritish
intelligenceMI6
TaylorSwiftleadswinners
butMileyCyrusrulesat
MTVVideoMusicAwards
KanyeWestrantsat
VMAs:Hegothigh,is
runningforpresident
Rangacharisareunlikelytofaceany
challengesduetosavvyinvestments
ETBureau | 25May,2015,07.46AMIST
ByPankaajMaalde
A conscientious investor may not necessarily be
prudent because aggressive investments don't
always translate to optimum returns. Yet,
Vijayaraghavan Rangachari is likely to turn this
conventionalwisdomonitshead.Hedoesnothave
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Comments
Aconscientiousinvestormaynot
therightmixofassetsinhisportfolio82%inreal
necessarilybeprudentbecause
estateandaminuscule5%inequity.However,the
aggressiveinvestmentsdontalways
diligent and disciplined investments over the years

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translatetooptimumreturns.
diligent and disciplined investments over the years
meanthathewillfacelittleprobleminachievinghis
financial targets. There are, of course, flaws but
thesecanbeeasilyrectified.TohelpRangacharirealignhisexistingresourceswithhis
goalsandsuggestacourseofactionforthefuture,financialadviserPankaajMaalde
willprepareaplanforhim.
Rangachari is 41 and a senior infotech manager living in Chennai with his wife,
Vidhyalakshmi,whois35andahomemaker.ThecouplehastwochildrenSreeram,
10, and Sreenidhi, 6. Rangachari's 72yearold father also lives with them and is
dependent on him. The family lives on rent, but has three properties worth Rs 2.02
crore. One of these provides a rent of Rs 18,000 a month, while another has been
boughtthroughaloanofRs25lakh,whichresultsinanEMIofRs26,500.Thecouple
hasalsotakenapersonalloanworthRs2.5lakh,forwhichtheyarepayinganEMIof
Rs5,750.
Rangachari draws a monthly salary of Rs 1.25 lakh, and combined with the rental
earning, the total income comes to Rs 1.43 lakh. As for their expenses, Rs 35,000
goesashouseholdexpenses,whichincludesarentofRs15,000.Besidesthis,they
doleoutRs10,000forinsurancepremium,Rs15,000forchildren'seducation,andRs
22,000 for Rangachari's ailing father's medical expenses. The loan EMIs take up
another Rs 32,250. This leaves them with Rs 28,750, of which Rs 28,000 is being
currently invested. "I want to know if my actual and planned investments are correct
andwhetherIhavechosengoodmutualfunds,"saysRangachari.
Maalde will analyse these investments and suggest changes to meet the goals. The
family's targets include building a contingency corpus, saving for their children's
educationandwedding,andfortheirownretirement.Maaldebeginsbyassessingthe
family'sinsuranceportfolio.
Insuranceportfolio
Rangacharihasshownahighdegreeofawarenesswhenitcomestoinsuranceand
hasboughtadequatelifeandhealthcovers.
HecurrentlyhasanonlinetermplanworthRs1crore.Besidesthis,hehastwoUlips,
for which he is paying a high premium but should consider reviewing these after the
lockinperiodoffiveyears.Heisadvisednottobuyanymoreinsurance.Ashiswife
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lockinperiodoffiveyears.Heisadvisednottobuyanymoreinsurance.Ashiswife
doesn'tearn,shedoesn'trequireanylifeinsurance.
Asforhealthinsurance,hiscompanyprovidesacoverofRs10lakhandhealsohas
an independent family floater plan of Rs 5 lakh. So he is adequately covered and
doesn'tneedanymoremedicalinsurance.Rangacharialsohasanaccidentdisability
insurance of Rs 20 lakh, which is again adequate. He should, however, consider
buyingacriticalillnessplanasandwhenhiscashflowimproves.
Roadmapforthefuture
Beforepreparingaplantoachievethegoals,MaaldesuggeststhatRangacharirepay
bothhisloans,asitwillfreeupRs32,250forinvestment.
He can do this by reducing his real estate portfolio and selling one of his properties
worthRs32lakh.Itwilltakeawayhisrentalincome,buthelprepayboththeloans.It
willalsoleavehimwithenoughfundstoformacontingencycorpus.
He needs to build an emergency corpus equal to six months' expenses, which will
amounttoRs4.9lakh.ItcanbeformedbyallocatinghisfixeddepositworthRs15,000
andRs4.5lakhthathewillbeleftwithafterthesaleofproperty.Thisshouldsufficefor
contingencies.
Now Rangachari can start planning for the other goals, starting with his children's
education.Forhisson'seducationexpensesineightyears,hehasestimatedaneedof
Rs18.5lakh.Toaccumulatethis,heshouldallocatebothhisUlipsandreviewafterfive
years.
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Simultaneously,heneedstostartanSIPofRs5,500inabalancedfundtoachievethe
amountinthegivenperiod.Forhisdaughter'shigherstudies,RangachariwantsRs25
lakhin12years.
To get this sum, he is again advised to allocate one of his Ulips to the goal and,
additionally, start an SIP of Rs 2,500 in an equity diversified fund. This will help him
buildtherequiredcorpus.
Nextarethegoalsofhischildren'swedding,forwhichhewillrequireRs16lakhand
Rs86lakhin15and19years,respectively,forSreeramandSreenidhi.
Maaldehasnotassignedanyexistingresourceforthesegoals.
Toachievetheformer,RangachariwillhavetostartanSIPofRs3,000inanequity
fund,whileforthelatter,hewillhavetostartinvestingRs7,000inanequityfundand
Rs2,000inagoldfundviaSIPs.
Thisshouldensuretheamassingofrequiredamountinthespecifiedperiod.
Finally,Rangachariisleftwiththegoalofbuildinghisretirementkitty,forwhichheshall
requireRs4crorein19years,assuminganinflationrateof8%.
For this, Maalde has assigned the EPF and PPF funds, which are likely to yield Rs
1.52croreinthegiventime.
For the remaining amount, Rangachari will have to start a fresh investment of Rs
23,000amonth.HeneedstobeginanSIPofRs18,000inanequityfundandanother
Rs5,000intheNPS.
Thesewillhelphimamasstherequiredamountin19years.
AsforhisPPF,hecanstartdepositingtheminimumamountofRs500,andcontinueto
makecontributionsintheEPFaccounttilltheageof60years.
PankaajMaaldeisaCertifiedFinancialPlanner
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READMORE: VijayaraghavanRangachari|Vidhyalakshmi|Ulips|realestate|mutualfunds|
investments|insurance
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KanyeWestrantsat
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landing!
HorrorfilmlegendWes
Cravendiesat76
Dontgetluredbydiscountedofferson
carinsuranceHere'swhyyouneedto
becautious
13Aug,2015,06.40PMIST
ByNehaPandeyDeoras,ETBureau
Ourinstincttogetthemaximumbangfromthebuck
is particularly visible when it comes to buying car
insurance, because if one does not make a claim,
onedoesnotgetanyvalueforthepremiumpaid.By
0
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negotiating a policy with a lower premium, one can

cut losses. Fortunately, discounts on motor
insurance are easy to come by. According to industry officials, in addition to the no
claimbonus(NCB),onecanget5060%discountonthebasicvehiclepremium.
Naturally, we negotiate hard. However, motor insurance buyers need to be cautious,
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Naturally, we negotiate hard. However, motor insurance buyers need to be cautious,
particularlywhentheinsureragreestothediscountyouareseeking."Missellingofthe
insuranceproductandmiscommunicationaboutitaremostlikelytohappenwhenyou
aregivenhugediscounts,"saysYashishDahiyaofpolicybazaar.com.
Hasyourcar'svaluebeenlowered?
Misselling happens when you buy a policy via an insurance agent. "If you negotiate
hard with an agent, he may lower the value of your car, hence lower your insured
declaredvalue(IDV),"saysDeepakYohannanofMyInsuranceclub.com.Sayyourcar
isvaluedatRs7lakhandyouareaskedtopayapremiumofRs22,000.Ifyoupush
for a bargain, the agent might value your car at Rs 6.50 lakh, thus bringing your
premiumdownbysomeRs2,000.Unfortunately,youwilldiscoverthisonlywhenyou
make a claim, and get a low payout. "At the time of the claim, you will get a lower
amountasyourcarwasgivenalessercover(inaccordancewiththeIDV)whenitwas
insured,"explainsYohannan.Docheckwithyouragentaboutyourcar'sIDV.
Hasvoluntarydeductiblebeenincreased?
When monetary loss is borne by the insured, it is called deductible. It can be
compulsoryorvoluntary.Forapolicywhereacar'sIDVisaroundRs6.50lakhandan
insurer offers a lower premium of Rs 18,930, you are also offered a voluntary
deductible component of around Rs 5,000. If you increase the voluntary deductible
componentto,say,Rs7,500,thepremiumgetsloweredtoRs18,480.Ifyouincreaseit
toRs15,000yourpremiumcouldfalltoRs18,000.
Oftenagentslowerthepremiumquotebyincreasingthevoluntarydeductible.Whena
loss occurs, you have to cough up a good amountvoluntary and compulsory
deductiblefromyourpocket.
Incorrectclaimhistory?
If you want to shift to another insurer, and you do not disclose that you had made a
claim with your previous insurer, you may get a discounted premium from your new
insurer.Theproblemariseswhenyoumakeaclaimwithyournewinsurer.
The company will contact your previous insurer to verify your claim history. "If
nondisclosureormisrepresentationonthepartofapolicyholderisfoundoutatthetime
ofaclaim,theinsurancecompanyhastherighttorejecttheclaim,"saysDahiya.While
agents are quick to suggest such tricks to policy buyerswho often agreeit is the
buyerwhosufferswhenhisclaimgetsrejected.
Haveaddoncoversbeenremoved?
"Attimes,premiumsareloweredafterremovingaddoncoversfromthebasepolicy,"
saysDivyaGandhi,Head,GeneralInsuranceandPrincipalOfficer,EmkayInsurance
Brokers.So,firsttheagentwillshowaquotewiththecostofaddoncoversfactoredin.
Andwhenyoubargain,theagentwillremovethecostofaddoncoverstoofferalower
quote. "A typical thirdparty motor policy has inbuilt covers for drivers and
copassengers.
Thesearedetachable,andsooftenpeoplechoosenottotakethesecoversinorderto
lowerthepremiumpayout,"saysSanjayDatta,ChiefUnderwritingandClaims,ICICI
LombardGeneralInsurance.Addoncovercanbeimportant,don'tgetswayedbythe
lowerpremium.
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Standardcoverpitchedasspecialoffer?
Oftenagentssellapolicybybloatingitspriceandthenofferingyoua2030%discount
on the premium and project it as a special deal for you. Or, they include an addon
cover and say that despite an additional benefitthey have been able to keep the
premiumunchanged.Andeventhoughthepremiumwouldhaveincreased,youwould
notknowthepremiumstrippedoftheaddoncovers.So,ifyoucandoalittleresearch
ofyourownbeforeyoubuythepolicy,itwillbehelpful.
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NanaPatekar,John
AbrahamandAnilKapoor
gearupfor'Welcome
Back'
Ninewaystobecomea
moreinterestingperson
Bonobecomesworld's
richestpopstar
Qualityofservicesandpastexperience
drivingpurchasebehaviorof
customers:SanjayDatta,ICICI
LombardGIC
12Aug,2015,03.42PMIST
Customers today see a lot of value in insurance

products which not only provide financial cover for
their risks but also put forward solutions to reduce
thoserisks,saysSanjayDatta,Chief,Underwriting,
Reinsurance & Claim, ICICI Lombard GIC Ltd. In
an exclusive interview with Sanjeev Sinha, Datta
Comments
shares his views on the impact of the economic

slowdownonIndia'sgeneralinsuranceindustryand
talks about changing customer behavior and preferences. He also discusses his
businessoutlook.Excerpts:
What has been the impact of the economic slowdown on India's general
insuranceindustry?Howistheindustrycopingwithit?
Thegeneralinsuranceindustrydidwitnesssomeimpactoftheeconomicslowdownas
growth slowed to single digits in FY 2015. However, the recent quarter has seen a
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growth slowed to single digits in FY 2015. However, the recent quarter has seen a
revival with growth returning to the double digit trajectory. Given the low penetration
across segments, including health, home etc, the industry is set to maintain a robust
growth rate as awareness and realization of the need for risk mitigation increases
amongstIndia'saspiringandyoungpopulation.
The industry is also said to be burdened with widening underwriting losses
because of the claim ratios being well above international benchmarks. Your
comments?
Insurancerequiresahealthymixofcustomerstoavoidproblemsofantiselection.With
the current levels of penetration, the industry is facing an underwriting loss issue.
However,asdemandgrows,onewouldseecompaniesbeingabletobuildlargerrisk
poolswhichwouldbeabletoservetheneedsoftheoverallpoolinaneffectivemanner.
Despitetimesbeingturbulent,retaillineshaveseenstronggrowthintherecent
past.Whatarethereasons?
The Indian general insurance industry has evolved beyond merely offering financial
protection against risks to life and personal assets. Today, it plays a far more
comprehensive role of managing risks through preventive and proactive measures.
For example, a health insurance cover is not limited to hospitalisation expenses. It
offersahostofvalueaddedserviceslikefreehealthcheckups,wellnessprograms,
consultationwithdoctors,OPDetc.Similarly,variousadditionalservicesandsolutions
arealsoofferedwithothergeneralinsuranceproductslikemotorandtravelinsurance.
Customerstodayseealotofvalueinthoseproductswhichnotonlyprovidefinancial
cover for their risks, but also put forward solutions to reduce those risks. Along with
this,awarenessdrivesandincreasedtaxincentivesprovidedbythegovernmenthave
givenafilliptotheoverallpurchaseofinsurancethroughretaillines.
Haveyoualsonoticedanychangesinthecustomerbehaviorandpreferences?
Today's customers are more perceptive and aware of their needs. They are not
persuaded by the ageold productdriven attitude of companies. Be it fastmoving
consumergoods,electronicequipmentorfinancialservices,customerstodaylookfor
an integrated approach in all products they intend to purchase. When it comes to
generalinsuranceproducts,qualityofservicesandpastexperiencespecificallyinthe
area of claim settlement have emerged as the two most critical factors driving
purchasebehavioroftoday'scustomers.
Hasyourcompanycomeoutwithanynewproductinrecenttimestomeetthe
changingcustomerrequirement?
Risk faced by every individual is different. A customer today prefers customised
options catering to his or her distinctive requirements. Keeping the unique needs in
mind,ICICILombardhasalreadydevelopedacomprehensivebasketofriskinsurance
products that can be customised to the requirements of customers. ICICI Lombard's
completehealthinsuranceplansofferarangeofsuminsuredandaddoncoverswhich
can be added to a basic health insurance policy to tailor it to the specific needs of a
customer. Similarly, a customer can choose from a host of travel insurance plans
providedbythecompanywhichsuithisorhertravelrequirements.Wealsoprovidea
lot of addon covers, such as a road side assistance cover in motor insurance, to
reachouttothecustomerinhis/hermomentofneed.
Insurers these days are fast increasing their online presence. What are the
reasons?Isthismovealsogoingtobenefitcustomersgoingahead?
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Inarapidlychangingworld,customersrequireinstantsolutions.Theylookforproducts
wherethedeliveryofbenefitsisfast,convenientandconsistentfromendtoend.Given
thefastrateofadoptionoftheonlinemediumanditscapabilities,insurersarefocusing
on strengthening their online presence to reach out to and service customers faster.
This costeffective platform is in fact being harnessed for multiple stakeholders,
includingcustomers,agentsandemployees.
Forcustomersaswellitisawinwinsituationsincetheycancoverthemselvesagainst
various risks on the go and at the click of a button. Insurers have ensured that the
online facility is available across devices, including PCs, mobiles and tablets. For
example, ICICI Lombard offers a mobile app (Insure) to enable customers to
purchase/renewtheirhealth/travel/motorinsurancepolicy,intimateandtrackclaims,
locatethenearestgarage/hospitaletc.
HowdoyouseethefutureofthegeneralinsuranceindustryinIndia?
The Indian general insurance industry has witnessed GDPI (Gross Direct Premium
Income)growthataCAGRof17.5%inthelast5years.Whileitcontinuestogrowat
this robust pace, low penetration levels offer enormous opportunity and scope to
expand. To augment further development of the industry and increase customer
interest,theregulatorhasbeenfacilitatingintroductionofnewsegmentssuchaslong
durationproductsaswellasintroducingcustomerorientedregulations.FDIrelaxation
is another positive step by the government to help the insurance industry increase
penetration and strengthen capabilities to bring more people under the umbrella of
insurance.
Whatareyourplanstobeatthegrowingcompetition?
The general insurance sector in India is still at a nascent stage. There is immense
scopetogrowinthishugelyunderpenetratedmarket.Totreadthegrowthpath,ICICI
Lombard has been focusing on better understanding customer needs and thereby
offeringinnovativeservicesandsolutionorientedproducts.Thecompanyalsobelieves
thatsimplificationoftheproductdeliveryanddistributionmodelisimportanttoreachout
tocustomersandincreaseproductpenetration.
ICICI Lombard has been using technology as a business enabler to set up robust
processes and thus ensure enhanced customer experience. To provide insurance
solutionstomore,thecompanyhasbeenreachingouttocustomersthroughalternate
distribution channels and has intensively used analytics to improve mapping of
customerneedsandexperiences.
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59/93
9/1/2015
My'MakingIndia
Awesome'isthepillIndia
needs:ChetanBhagat
20somethingssaythey'd
giveupahighsalaryfora
jobthatgetsthem
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morning
Smartphonesensortotell
howwellyousleep
Recentstockmarketcrash:Whatyou
shoulddonow
ByNarendraNathan,ETBureau | 31Aug,2015,08.25AMIST
TheSensexhasrecovered650ofthe1,625pointsit
loston24August,buttheferocityofthecrashhas
badly damaged investor sentiment. The weakness
inthestockmarkethadstartedinthepreviousweek
itself,whentheSensexlost324pointson20August
and 242 points on 21 August. But the 5.94% fall in
the Sensex on Manic Monday has raised a big
Recentcrashdoesn'tsignalatstarting
questioninthemindsofinvestors:wasthismerelya
ofabearmarket.Bullmarketisintact
Comments
correction in the bull market or the beginning of a
andinvestorsshouldnotgetworried
bearphase?
overvolatility.
ADDTO
RELATEDCOMPANIES
Portfolio
Watchlist
OUTLOOK?
+ve
ve
ICICIBankLtd.
ICICIbank
AxisBankLtd.
AxisBank
EXPANDTOVIEWALL
Wereachedouttomarketexpertstoknowtheanswers.Mostofthemfeelthatthebull
60/93
9/1/2015
Wereachedouttomarketexpertstoknowtheanswers.Mostofthemfeelthatthebull
market is intact and investors should not get worried by the volatility. "This is a bull
market correction and not starting of a bear market," says Krishna Kumar, CIO,
Sundaram Mutual Fund. Others don't see a significant downside from the current
levels."Sincethemarkethasalreadycorrectedsignificantly,thedownsideislimited,"
contendsA.Balasubrahmanian,CEO,BirlaSunlifeMutualFund.
Most experts agree that Indian equities will generate good returns in the long term.
However, some of them expect things to get worse before they get better. "We are
negativeintheshorttermandexpectafurtherdropofabout5%.7,400onNiftywillbe
abetterleveltogetin,"saysJaspreetSinghArora,SeniorVP,SystematixShares &
Stocks.So,itwillbeawhilebeforethemarketsareabletocrosstheirprevioushighs.
"The upside to the market in the next six months is severely limited, so there is no
hurrytobuy,"saysAnandTandon,marketexpert.
Citicaleventslinedup
Investors should be mindful of some critical events that are lined up in the coming
month.TheUSFedwilldecideoninterestratesinSeptember.TheRBIwillalsohave
itsreviewmeetinginthefirstweekofthemonth.Theindustryisclamouringforarate
cutandtheRBImayfinallygivein."OurbeliefisthattheUSFedmaygetintotherate
hikecycleonlyinNovember.TheRBImaycutinterestratesby25bpsinSeptember
andanother25bpsinDecember,"saysBalasubrahmanian.
Despite these positive expectations, FIIs are feeling disillusioned. FII outflows have
beenquiteheavyinthepastonemonthandthistrendmaycontinueintheshorttermtill
thereissomeclarityatthegloballevel."WeexpectcapitalflowstoIndiatostalltillthe
globalmarketsseesignsofstability,"saysRiteshJain,CIO,TataMutualFund.
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ThoughthefundamentalsoftheIndianmarketaremuchbettercomparedto2013,FIIs
are not enthused. Since FIIs count their profits in dollar terms, the continued rupee
weaknesshasdampenedtheirsentiment.Thedollarhasappreciated44%againstthe
Indianrupeeinthepastfiveyears(seechart).Thismeansgainstheymadeinrupee
termshavebeennegatedbytheriseinthedollar.
Even after the recent cut, the Sensex is still up by around 7,500 points compared to
five years back, an absolute gain of 44% for domestic investors. However, foreign
investorshavenotbeensolucky.TheDollex30wasat3,275on28Augustcompared
to3,194fiveyearsback.WhyshouldFIIspumpinmoremoneywhentheyarenotable
togenerateanyreturnsevenafterfiveyears?"ForFIIsthisisnotabullmarket,buta
bearmarketrally,"saysShankarSharma,ViceChairmanandJointManagingDirector,
FirstGlobal.
The Dollex 30 is now at 3,275, 25% lower than its alltime peak of 4,365 in January
2007. However, the domestic institutions are slowly emerging as a counter force.
Indianinvestorshavestartedputtinginmoneyinafallingmarket,whichhasprovided
stability to the market. "Equity mutual funds collected around `2,200 crore on 2425
August.
This shows the resilience of the Indian market. The situation used to be completely
differentwhenmarketscrashedearlier,"saysBalasubrahmanian.
Will the rupee continue to depreciate against the greenback? "Since all fundamental
factorsareingoodshapenowcomparedto2013,wearemaintainingourMarch2016
target of Rs 65.5 per dollar. Though the rupee may weaken in the middle due to
sentimental factors, the movement will be restricted to the Rs 6667 range," says
SuvodeepRakshit,Economist,KotakInstitutionalEquities.
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However,allexpertsdon'tsharethisview.CorporateearningsdisappointThebiggest
risk to the equity markets, however, comes from the slowdown in the corporate
earnings. Though the equity market zoomed after the 2014 election results on the
hopes of acche din, the corporate results have not kept pace, creating a mismatch
betweenthevaluationsandearningsgrowth.Theaggregatenetprofitgrewbyonly3%
in the June quarter (see table). "The present correction is also due to the mismatch
between the valuation and the earnings growth. The March quarter was bad and the
growth in the June quarter was also meagre. Big earnings growth may not happen
during201516,"saysVetriSubramaniam,CIO,ReligareInvescoMutualFund.
TheonlysavinggraceisthattheSensexPEisnowonly10%higherthanits10year
averageof19.17comparedtoaround25%inthefirstquarter.Infact,thecrashon24
AugusthadbroughtdowntheSensexPEto20.37(lessthan7%higherthanthelong
term average). But the subsequent recovery saw the index PE rise to 21.14 (see
chart).
Largecapsormidcaps?
VeryfewstocksescapedthemaulingonManicMonday.Evenso,somemidcapand
smallcapcounterswitnessedbiggercutsthantheirlargecappeers.
However,expertscontendthatthetimehasnotyetcomeforinvestorstogetinthese
scrips. The recent correction is very small compared to the rally these stocks have
witnessedinthepasttwoyears.WhiletheBSEMidcapindexhasalmostdoubledin
thepasttwoyears,theSensexhasrisenonly42%.Thoughthevaluationpremiumof
themidcapsegmenthascomedownaftertherecentcrash,itcontinuestoquoteata
premium. This is against the historical pattern of midcaps quoting at a discount to
largecapstocks.Soinvestorsneedtobeextracarefulhere.
For small investors, the mutual fund route is the best way to invest in stocks. They
shouldnotletvolatilitycomeinthewayoftheirlongterminvestmentplans.Ifanything,
acrashshouldbeseenasanopportunitytobuymoreunitsatlowerprices.
But don't let this greed for more extend to stocks. Some stocks might have become
penny stocks after the crash, but don't be tempted to buy. It doesn't take long for a
stocktotouchatwoyearloworevenafiveyearlow.
Sectorstobeton
Withafreefallinprice,theentirecommoditysegmentisinareallybadshapenow.The
BloombergCommodityIndexhasgonebelowits2003bottomandisalreadyplacedat
the 16year low (see chart). Though this kind of crash is good for commodity
consumers, it is a red flag for stock investors. A downturn in commodities hints at a
globaleconomicrecession.
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globaleconomicrecession.
Mostofthecompaniesinthecommoditiessectorshadtakenhugedebtstoincrease
capacityintheheydays.Theyarenowpayingthepriceforbeingtooambitious.
"The obvious vulnerable spots in the market are commodity owners, specifically
metals, with bloated balance sheets, specifically those with foreign currency debt,"
saysRiteshJain,CIO,TataMutualFund.
Theexpectedeconomicrevivalalongwiththefallininterestratesshouldhelptherate
sensitivesectors.However,mostofthebankshavehighexposuretotroubledsectors
likemetals.Sincemostpublicsectorbankshavehighexposuretometals,itisbetterto
avoid them for the time being. "We like retail focussed private sector banks," says
BalasubrahmanianofBirlaSunlifeMutualFund.
Somecompaniesthatwerequotingathighervaluationshavebecomeinvestibleafter
the recent corrections. "Value has emerged in several stocks in private banks and
automobile sectors. We like Axis Bank, ICICI Bank and Bajaj Auto after the recent
sharpcorrectionintheirstockprices,"saysSanjeevPrasad,SeniorExecutiveDirector
&CoHead,KotakInstitutionalEquities.
ITstocksunscathed
OnlyafewsectorshavecomeunscathedfromtherecentcrisisandITisoneofthem.
"Inadditiontotherecentrupeedepreciation,theUSeconomicrevivalshouldalsohelp
ITsectorcompanies,"saysSaravanaKumar,ChiefInvestmentOfficerEquity&Debt,
LIC Nomura Mutual Fund. Investors can continue to bet on frontline IT stocks like
InfosysandTCS.Pharmaisanothersectorthatwillbenefitforthesamereasons.And
then there are several small export oriented sectors like textiles, leather, etc that will
benefit from the currency depreciation. "We like Mayur Uniquoters from the leather
sector,"saysAroraofSystematixShares&Stocks.
SectorslikeFMCGshouldbenefitfromthefallincommodityprices.Buttheyarestill
quoting at high valuation even after the recent mayhem. "Stocks in the consumer
sectorarestilltradingatexpensivevaluationsevenaftertherecentcorrection,"says
PrasadofKotakInstitutionalEquities.Someofthese'consumptiontheme'stockswill
alsotakeahitduetothefallinruralconsumptiondemandandfalteringmonsoon.
READMORE: SystematixShares|stocks|sharp|ShankarSharma|Sensex|Rupee|nifty
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9/1/2015
Middaynapsmaylower
yourbloodpressure
IcopySatyajitRay:Shoojit
Sircar
Singlecocainedose
affectsperceptionof
sadness,anger:Study
RBIclears11paymentbanks:Howyou
standtogain
ByPreetiKulkarni ,ETBureau | 31Aug,2015,08.24AMIST
As the banking space welcomes payment banks

into its fold, customers can look forward to better
servicesandlowertransactioncosts.
Lastweek,theRBIgaveinprincipleapprovalto11
applicants to establish payment banks. These
banks will provide products and services like
0
Comments
Theywillofferservicesthroughown
accepting deposits and remittances, but cannot
networkofaccesspoints,business
extend loans. They will offer services through own
correspondentsornetworksprovided
networkofaccesspoints,businesscorrespondents
byothers.
ornetworksprovidedbyothers.
While they are expected to deepen financial inclusion, it's not only the unbanked or
lower income groups who will benefit from payment banks. "They will service all
customers. They will appeal to the youth in particular," says Abizer Diwanji, National
Head,Financial Services, EY. "They will target customers from all segments. If they
don't,theywon'tbeabletoprofit,"addsShinjiniKumar,PartnerandLeader,Banking
andCapitalMarkets,PwC.
TheRBI'smovecomesatatimedigitalpaymentsaresetforabigleap.Accordingtoa
BostonConsultingGroupstudy,thedigitalbankingcustomerbase,whichisprojected
to cross the 230 million mark by 2020, could touch 300 million with payments banks
coming in. Moreover, existing mainstream banks and entities that provide payment
processing services have already created a fertile ground for such banks. Half of all
digitalbankingcustomerssaytheyarekeentotryoutpaymentbanksoncelaunched.
Hereishowtheycanaffectthewayyourtransact.
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Lowertransactioncosts
While payment banks are expected to complement the existing banking system,
competition will push banks to up the bar. Given that many of the approved entities
havedeeppockets,youcanexpecttransactioncoststogodown."Disruptionbyway
of nearzero fees is a possibility," says Kumar. Today, fee structures are similar
amongstallbanks,butpaymentbankscouldchangethescene.
However, Vibha Batra, Group Head, Financial Sector Ratings, ICRA, cautions:
"Variousbankchargesareregulatedtoalargeextent.Itremainstobeseenifpayment
bankscanmanagetoactuallyreducetransactioncosts."
Betterservicestandards
Competition from payment banks, which are expected to be more nimblefooted and
hence in a better position to be responsive to changing customer needs, is likely to
drive existing banks to provide better services. Bureuacratic functioning means
customersareshortchanged.Forinstance,somebanksinsistonchequepaymentfor
issuingademanddraftdespiteaccountholdersbeinglongtimecustomers."Thiscould
beagoodgroundfornewbankstostepin,"saysKumar.
Biggerrolefortechnology
Some entities like Vodafone Mpesa, Airtel Money and Fino PayTech that have
receivedthepaymentbankapproval,haveatrackrecordofprovidingmobilebasedas
well as technologyintensive payment processing services. "New banks are likely to
implement technologydriven solutions, reducing transaction time. This will help
customerscutdownoncashusage,"saysDiwanji.
Innovation
Since they have to compete with established banks, payment banks will have to
innovate to differentiate themselves and stay in the race. Kumar feels the entire
approach to creating products and services will change. "They will have to start
thinkingfromthecustomers'perspective,"shesays.
Widernetwork
Someoftheplayerswhohavebeenallowedtosetuppaymentbankshaveastrong
presencephysical or digitalin the space. For instance, India Post, Paytm, Fino
PayTechandCholamandalamDistributionServicescommandahugecustomerbase.
"Someentitieswillbeabletoleveragethestrengthsoftheirexistingnetwork,meaning
improvedaccessibilityofbankingservices,"saysDiwanji.
READMORE: Vodafone|Networks|leverage|FinancialServices|AbizerDiwanji
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66/93
9/1/2015
Middaynapsmaylower
yourbloodpressure
IcopySatyajitRay:Shoojit
Sircar
Singlecocainedose
affectsperceptionof
sadness,anger:Study
Debtfundslookmoreattractiveinthe
shortterm,sayexperts
ETBureau | 31Aug,2015,08.25AMIST
Thoughequityisexpectedtogeneratebetterreturns
in the long term, most experts think that debt is a
good bet in the short term. "Due to the potential to
generatecapitalgains,bondsareagoodplacetobe
in India now," says Shankar Sharma, Vice
ChairmanandJointManagingDirector,FirstGlobal.
This is because the interest rates are expected to
0
Comments
Longtermdebtfundscoulddeliverup
comedowninthecomingmonths."TheRBImaycut
to15%inthenextoneyearifRBIgoes
rates on or before the September policy review.
forratecutsaspeoplehaveexpected
Furtherratecutscouldhappeninthenextcalendar
itto.
year.Weexpectthe10yeargovernmentbondyield
tofalltoaround7.257.35%byMarch2016fromthe
current 7.78%," says Ritesh Jain, CIO, Tata Mutual Fund. The 10 year yield has
alreadycamedownfrom8.56%inthepastoneyear(seechart).
The heightened risk in equity due to a possible FII outflow is another factor that is
makingexpertsbullishondebtnow."Equitymarketsareatmoreatriskofcorrection
thanfixedincomemarketsbecauseforeignownershipisquitehighforIndianequities
ascomparedtobonds(lessthan2%ofoutstandingissuances),"saysJain.
Sincelongtermbondsaremoresensitivetointerestratefluctuations,investorsshould
use the long duration funds to invest. If interest rates fall as expected, these long
durationdebtfundsarelikelytogenerategoodreturnsofaround15%inthenextone
year (8% yield and another 7% from capital appreciation). However, longterm bonds
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year (8% yield and another 7% from capital appreciation). However, longterm bonds
are more volatile. If you are looking for stable returns, go for shortterm bond funds.
Theseschemesmaynotgiveveryhighreturnsbecausetheirpotentialtoearncapital
gainsislimitedbytheshorttermbondsintheirportfolio.However,theywillstillchurn
out9%annualisedreturnsinthenext12years.
"Long duration debt looks better on the riskreward basis. If debt investments are
capableofgenerating15%returnsinoneyear,Ineedmuchhigherreturnfromequities.
Thatappearsunlikelyinthecurrentscenario,"saysJaspreetSinghArora,SeniorVice
President,SystematixShares&Stocks.
READMORE: ShankarSharma|investments|interestrates|interestrate|equities
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'Phantom'earnsRs21
croresinfirsttwodays
'Baahubali'tobescreened
atBusanFilmFestival
CoffeeputsBPpatientsat
heartattack,diabetesrisk
Doyoureallyneedahighvaluehealth
insurancepolicy?
ByNehaPandeyDeoras,ETBureau | 31Aug,2015,08.24AMIST
A health insurance floater policy of Rs 5 lakh was

considered adequate till recently. However, rising
healthcare costs are pushing individuals to opt for
higher covers. Cashing in on the trend, some
companies are now offering Rs 50 lakh, and even
Rs1crorecovers.Apartfromhospitalisationcosts,
these highvalue policies offer higher maternity,
0
Comments
Asignificantriseinmedicalinflation
baby care, posttreatment, OPD and daycare
hasseenhealthinsurancecosoffering
procedure covers, insure organ donation and fund
veryhighvaluecovers.However,you
alternativetreatment.
maynotreallyneedthem.
They do not apply sublimits on room rent. Some

policies also cover treatment abroad and allow reinstatement of sum insured. Not
surprisingly,thepremiumsaresteep.AnindividualhealthcoverofRs50lakhfora30
yearoldwouldcostRs20,00060,000ayear.Afamilyfloaterofasimilarsuminsured
wouldcostRs40,00050,000iftheoldestfamilymemberis3035yearsold.
Howmuchdoyouneed?
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Divya Gandhi, Principal Officer and Head of General Insurance, Emkay Insurance
Brokers, says a `2025 lakh policy is sufficient even if you plan to get treated in the
bestofhospitalsinmetros."Theentiresumassureddoesn'tgetutilisedandthehigh
premiumiswastedasnotmanyclaimformorethanRs20lakhayear,"shesays.
The biggest advantage of high value covers is that international treatment is
compensated. However, the list of ailments covered is restrictive. Usually treatment
abroad is covered for diseases like cancer, benign brain tumour, major organ/bone
marrow transplant, heart valve replacement and coronary artery bypass graft. An
overseastreatmentclaimishonouredonlyifsimilartreatmentisnotavailableinIndia.
These policies also have a higher copayment clause for senior citizens at 20%.
According to certified financial planner Abhinav Gulechha, the yearonyear premium
costdoesnotjustifythecoverageprovided.
Whatareyouroptions?
Gulechha suggests buying an indemnity plan of up to Rs 5 lakh and increasing it as
and when your requirement or responsibilities increase by way of a topup policy.
Vishal Dhawan of Plan Ahead Wealth Advisors says review your health insurance
portfolio every three years and then decide whether to increase it or not. You could
takeacallbasedonincreaseinsalary,familyresponsibility,changeinjobprofileand
soon.
Assumingyoumaystillconsidergoingoverseasforaspecialisedtreatment,youcould
buy a fixed benefit policy like for critical illness, in combination with the regular
hospitalisation cover. You could also buy a highsum insured critical illness plan and
get the entire sum insured as lump sum. Highvalue covers are beneficial if you are
lookingtocoveryourfamily.
READMORE: insurance|Inflation|Healthcover|ETWealth|Cancer
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69/93
9/1/2015
World'sfirstdevicetolet
paralysisvictimsspeakvia
theirbreath
Sonakshitweetsapology
toDelhiharassment
accused
RobinWilliams'family
battleover'expensive'
bikecollection
Threestrategiesforearningaregular
incomefrominsurancemoney
ETBureau | 31Aug,2015,08.23AMIST
Youmayhaveinsuredyourselfforalargesum,but
will your family be able to deploy it optimally? Life
insurers have introduced term plans that give
staggered payments, but the returns they offer are
very low. Here are three strategies for earning a
regularincomefromtheinsurancemoney.Findout
whichofthesesuitsyourfamilybest.
Herearethreestrategiesforearninga
0
Comments
regularincomefromtheinsurance
CONSERVATIVEPLAN
money.Findoutwhichofthesesuits
yourfamilybest.
Reliescompletelyonfixedincomefromoptionsthat
giveassuredreturns
Thebenefits
1) The principal is safe and the
incomeisassuredforperpetuity.
2) The investment is simple and
does
not
involve
complex
procedures.
Theproblems
1)Thisincomeisfullytaxable.EvenafterthemaximumtaxsavingofRs1.5lakh,the
investorwillpayaroundRs67,000intaxeveryyear.
2) The interest rate offered is not forever. When the fixed deposits mature, they will
havetobereinvestedattheprevailinginterestrate.
3)Thisapproachdoesnottakeinflationintoaccount.IfthefamilyneedsRs50,000a
monthin2015,itwillneedaroundRs70,000amonthin2020andalmostRs98,500a
monthin2025.
4) For the first six years, the investment will generate surplus income which can be
reinvested. After the sixth year, inflation would push up the monthly requirement and
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reinvested. After the sixth year, inflation would push up the monthly requirement and
familywillhavetostartliquidatingsomefixeddepositseverymonth.
MODERATEAPPROACH
Usesamixoffixedincomeoptionswith
adashofequity
Thebenefits
1) This strategy takes inflation into
account and sustains the increase in
expenses of the family as the years
pass.
Theproblems
2) It is a little complicated. Requires
basic understanding of how mutual
fundswork.
3)Sustainexpensesforonly24years.
If investor is in her 30s, the money will
endwhensheisinher50s.
AGGRESSIVESTRATEGY
Takes a bigger exposure to equity to
enhancereturns
Thebenefits
1) This strategy sustains the inflation

adjusted expenses of the family for
nearly30years.
2) The SIP route to equity funds
minimises the risk of investing in
stocks.
Theproblems
1)Justascomplicatedasthemoderate
approach. The investor needs to
understandbasicsofmutualfunds.
2) The risk is higher because of the
largerexposuretoequities.Investorwill
have to maintain utmost discipline to
gainfromthisapproach.
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9/1/2015
READMORE: SIP|mutualfunds|interestrate|insurance|Inflation
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RobinWilliams'family
battleover'expensive'
bikecollection
10peoplewhomadeitbig
infieldstheydidn'thavea
degreein
Ninewaystodealwitha
moodyboss
Justupgradedtoanewsmartphone?
Hereareyourmusthaveapps
ByKaranBajaj ,ETBureau | 31Aug,2015,08.21AMIST
Justboughtyourfirstsmartphoneorupgradedtoa
newone?Hereisthelistofapps,youmusthave.
SOCIALNETWORKING
A number of manufacturers now preload social
networking apps on your smartphone. However, in
0
Comments
Facebook,Twitter,StreamingMusic,
case your phone does not come with preloaded
CloudmagicandLookoutarefewapps
apps, consider the following apps to stay updated
youmustdownloadintoyournew
withfriendsandfollowersonthego.
smartphone.
Facebook
TheofficialFacebookappisfreeandavailableacrossallsmartphoneplatforms.Keep
inmindthattheFacebookmessengerappforchattingisnowastandaloneappsoyou
willneedtoinstallitseparately.ThereisalsoaFacebookLiteappforAndroid users
whowanttosaveondatacost.
Twitter
Twitter'sofficialappisalsofreeforallplatformsandisgoodenoughfornewaswellas
72/93
9/1/2015
Twitter'sofficialappisalsofreeforallplatformsandisgoodenoughfornewaswellas
experienced users. However, if you prefer an app with advanced features then we
suggest you try out the Falcon Pro 3 for Android users, Tweetbot for iOS users and
UberSocialforBlackBerry10users.
ENTERTAINMENT
Our smartphones now double up as entertainment hubs thanks to the large high
resolutiondisplayandbuiltinmusicandvideoplayers.However,storageisanissueat
timesandtoavoidthishassle,youcanusestreamingapps.
Streamingmusic
There are multiple apps available today that let you stream songs over a 3G/WiFi
connection.Someappsevenoffersongdownloadforofflinelisteningviasubscription
packages. Check out Gaana, Wynk, Saavn and Guveraall of them have large
collectionofmusicavailable.
Streamingvideos
Whiletherearemultipleoptionsavailableformusic,forvideostreamingtherearevery
fewappsthatworkwellinIndia.CheckoutBoxTV,WynkMovies,HooqandbigFlixto
stream movies and TV series to your phone. If you prefer live TV, then check out
NexGTV,MobiTVandHotstar.
EMAIL
The default mail application available on iOS as well as Android are great for most
users. However, they may appear lacking when compared to some of the better
options available. BlackBerry 10 scores in this regard as not only is its default mail
applicationwelldesigned,itisloadedwithfeatures.AndroidandIOSuserscantryout
thesealternativeoptions.
Cloudmagic
Otherthanthefactthattheappisfree,CloudMagicisoneofthefewappsthatsupport
multiple email accounts, third party app integration and does not eat your device
resources.Moreover,itofferspasswordlockandtheoptiontoremotewipeyourdataif
youloseyourdevice.
Dropboxmailbox
Other than its minimalistic design, the app impresses with its feature setyou can
schedule mails, mark them a todo list and learn how you work with mails. There is
even a handy button to reduce mail clutter and that chat conversation view makes
readingmailseasier.
OTHERUSEFULONES
Lookout
Thisoneworksasaonestopshopforyoursecurityneeds.Itdoesdatabackup,theft
protection,devicetrackingaswellasremotewipeandlock.TheAndroidversionofthe
appalsohasbuiltinantivirusforprotectionagainstmalware.Apremiumpaidversion
alsoaddsfeaturesforautomaticbackup,privacyadviserandtheftalerts.
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Swiftkeykeyboard
ThedefaultvirtualkeyboardthatcomesonBlackBerryandWindowsPhonecannotbe
changed.However,onAndroidandiOS,youcanupgradetoabetterandfeaturerich
keyboard. Swiftkey is our recommended choice as it offers multiple customisation
options,themesandsupportsformultiplelanguages.
Evernote
Ifyouarelookingforsomethingtotakenotes,youcannotgowrongwithEvernote.Not
onlydoestheappoffertypesofnotes(text,audio,video,todolist)butalsoletsyou
sync the notes across multiple devices. If you upgrade to the paid premium version,
yougetbetterprivacy,PDFannotationandunlimitedbusinesscardscanfeatures.
WPSOFFICE
MostphonesdonotcomewithanydocumenteditorsinstalledandthefreeWPSoffice
app is a great option. It is compatible with documents, PDF, spreadsheets and
presentations and can also open/edit document stored on various cloud services.
Moreover,itevensupportswirelessprintingandBluetoothkeyboards.
READMORE: wpsoffice|Windows|Twitter|resolution|MobiTV|IOS|Friends
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Ididn'tevenhavethetime
tomournmyson'sdeath
20yearsago:Satish
Kaushik
Aslongasyouareloved
by1.2billionpeople,afew
cynicalremarksdon't
matter:SaniaMirza
Don'thaveanyviews:
ArjunRampalondivorce
rumours
MNCsseeIndiaasbiggestmarketplace
forproducts:SaravanaKumar,LIC
NomuraMutualFund
BySanketDhanorkar,ETBureau | 31Aug,2015,08.23AMIST
PSUbankswillshowimprovementinperformance,
while duration funds will remain the best bet for
investors.Saravana Kumar says he remains very
bullish on India, in an interview with Sanket
Dhanorkar.
74/93
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0
Comments
What are the key takeaways from the June

PSUbankswillshowimprovementin
quartercorporateearningsshow?
performance,whiledurationfundswill
remainthebestbetforinvestors,said
SaravanaKumar.
The June quarter results of 201516 appear to

indicate that demand growth is still under some
pressure.However,thecorporatesarebeginningto
experienceanimprovementintheirmarginsduetothesoftcommodityprices.Apick
upindemandislikelytobeafewquartersawayaseconomicrecoverybeginstotake
root. In the first quarter of 201516, the net profit of BSE 30 Sensex companies
increased1.8%yearonyear,EBITDAremainedflatandtherewasapositivesurprise
fromTataSteel.DownstreamOilMarketingCompanies(OMC)benefitedfromoneoff
adventitiousgains.Banksreportedhighslippagesdespite5/25schemesallowingthem
to treat certain recoveries. Consumers, industrials, real estates and telecom missed
the estimates of the street. Automobiles, auto components, energy, and
pharmaceuticalsbeatthemarketexpectations.
Areyoubullishonthesectorsdirectlylinkedtocrudeoilpricemovement?
The sharp appreciation of stocks benefiting from lower crude oil prices appears to
factor in a fair bit of optimism on this count. Riskreward for investing now in these
stocksmaynotbefavourablecomparedtothesituationayearback.Itistobenoted
that the global brent crude has softened from a peak of $ 110 per barrel to $ 50 per
barrel.ThisinturnreducesIndia'simportbillbyapproximately$145billion(Rs9,13,500
crore)perannum.
Istheroadssectoragoodplaygiventhepushfromthegovernment?
Theroadssectorhasseenafairamountofpolicythrustfromthegovernmentoverthe
past six months and this is likely to help some of the companies delever balance
sheets.Thiscouldleadtononlineargainsforshareholdersinsomeofthecompanies.
ArePSUbankingstockshighriskoragoodvalueproposition?
We believe that companies exposed to the investment cycle revival are likely to be
best placed to deliver stockholder returns over the next 35 years given their
valuations.Banksandfinancialinstitutionswhichareexposedtothisdevelopmentare
likelytoperformwell.PSUbanks,whichtypicallyhaveahigherproportionofloansto
the corporate sector, can be expected to show an improvement in their operations,
albeitgradually,overthenextfewyears.Further,thegovernmenthasalsoannounced
measurestostructurallyimprovetheiroperations,whichcouldtakeawhilecomingbut
isdefinitelyapositive.
Can the economy still grow at a reasonable pace in case the key reforms
continuetofacedelays?
ThereformswhichweareexpectingaretheGSTBillandLandBill.Thediscussionson
GST Bill started in 2000 and after a series of amendments, it has taken 15 years to
reachtheHouseforapproval.Duringthisperiod,wehaveclockedagrowthrateof7to
7.5%onanaverage,withgrowthpeakingto10.3%in2010.Thisispossiblebecause
wehaveaverylargepopulationandMNCsseeitasthebiggestmarketplacefortheir
products.Wecannowseethatthegovernmentismakingcontinuouseffortstoshiftthe
economyfromaconsumptionledonetoamanufacturinghubthroughitspetMakein
Indiaproject.WehaveseenmultipleMNCstryingtosetupmanufacturingunitshereto
exporttoothereconomiesoftheworld.Thisitselfshalldrivethepaceoftheeceonomy
even if some key reforms are not carried out due to ideological differences between
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even if some key reforms
are not carried out due to ideological differences between
politicalparties.WeareverybullishontheIndianeconomy.
Willthecurrentrupeeweaknesspersist?
IwillnottermthecurrentrupeevalueasweakagainsttheUSdollar.Itisjustcorrecting
with our biggest competitor China. If we see rupee on a REER basis (Real Effective
Exchange Rate), the rupee had appreciated against currencies of major developing
economies. It has to weaken to make our exports affordable in comparison with
Chineseproducts.Henceithasreadjustedaccordingly.Idon'tseefurtherweaknessin
therupeeaswehadseeninearlypartof2013.
Giventheslowingconsumerinflationanddecentmonsoonshowers,istheRBI
likelytomoveforratecutssoon?
RBI is monitoring the following parameters before taking a call on reducing the Repo
rate: (a) Persistence of recent inflationary pressure (b) Monsoon outcome (c) Timing
and implications of Fed actions (d) Transmission of earlier rate cuts and (e) Policy
effortstounclogsupplysideimpediments.Basedontheabovefactors,weexpectthe
RBItoreducereporateby50bpsinsixtoninemonthsfromnow.
Wherearethebiggestopportunitiesforinvestorsinthedebtfundspace?
Thebiggestopportunityfortheinvestorsisindurationfunds(mainlygiltfundandbonds
andcreditfunds)astheeconomyissetforadownturnintheinterestrate cycle with
slowing inflation numbers and supply side of the inflation well managed by the
government of India. This gives RBI an opportunity for further rate cuts and its long
termgoalofinflationtobeat4%by2018shouldalsobeverymuchvisibletarget.
What will be your approach as you attempt to effect a turnaround in the
performanceofLICNomuraequityschemes?
Wecontinuetofollowwelldefinedequityresearchprocessesforidentifyingstockson
abottomupbasisandmaintainingadisciplinedapproachtowardsinvesting.Ourequity
schemeshavebeensteadilymovinguptheranksoverthepastthreeyearsandallour
schemes have beaten their respective benchmarks over a fiveyear period. This is
testimonytotheprocessesthatwenowfollowatourmutualfund.LICNomuraGrowth
Fund is not only outperforming the reference bench mark, it is in the top quartile of
performancein1year,3yearsand5yearstimeperiod.
READMORE: USFederalreserve|stocks|Sensex|SaravanaKumar|Rupee|interestrate|Inflation
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76/93
9/1/2015
Don'thaveanyviews:
ArjunRampalondivorce
rumours
Thestrangeriseand
suddenfallofNoel
Biderman,theformer
CEOofAshleyMadison
BartCummings,
Australia'sgreatesthorse
racingtrainerpasses
away
Whyangelinvestingmaynotworkfor
retailinvestors
ByNehaPandeyDeoras,ETBureau | 31Aug,2015,08.24AMIST
After the latest round of funding from Alibaba,

Foxconn
and
SoftBank,
online
marketplace
Snapdealisestimatedtobevaluedatover$4billion.
IfyouhadinvestedRs10lakhinSnapdealwhenit
was founded in 2010, your investment would have
growntoRs19.8croretoday.Hadyouinvestedin
Flipkart in 2007, your investment would have
0
Comments
Angelinvestingmayappear
swelledtoRs30crore.InvestmentofRs10lakhin
rewarding,buttherisksfaroutweigh
Olacabsin2011wouldbeworthRs6.9crorenow.
thegains.So,ifyouarethinkingof
Having missed out on these Indian unicorns, are
turninganangelinvestor?Think
again.
younowthinkingofturninganangelinvestor?Think
again.
Fortheordinaryretailinvestor,sayexperts,angelinvestingisfartoorisky."Sevenout
of10ventureswilldie,"saysRajanAnandan,prominentangelinvestorandManaging
Director,GoogleIndia.Thismeansthatthereisa70%chanceofyoulosingyourentire
investment.
YoumightthinkthatyouhaveinvestedinanotherFlipkartoranOlainthemaking,but
your hopes of 300% returns may get shattered if the company does not find venture
capital (VC) funding. Not only would your investment fail to generate the expected
return, you might find it hard to get your principal back."An individual with a monthly
expenseof`30,000cansurvive25years,atbest,witharetirementcorpusofRs3.50
crore.
Therefore, do not play around with your hardearned money," cautions Mumbaibased
financial planner Suresh Sadagopan. Besides the high chance of losing your entire
investment,theothermajordownsidetoinvestinginastartupisthatyourmoneygets
lockedindefinitely.Itisanilliquidinvestment.
UnlessVCsshowaninterestinthestartup,youwillfinditexceedinglydifficulttoexit.
Promoters, scouting for VC funding, won't buy it back, and secondary salesselling
staketootherinvestorsarealwaysatoughproposition.Theopportunitycostofsuch
aninvestmentcanbehighforthosewithlimitedcapital.
Ifyoumust
If,despitetherisks,youstillwanttotryoutyourluck,it'sbesttobethoroughinstartup
selection.Youmustbereadytodoalotofresearchstudyingthebusinessmodel,
thepossibilityofsuccess,thedemandfortheservicebeingoffered,gaugingthequality
of the management and the founders, among other things. Given the required effort,
expertsdoubtthatordinaryinvestorsareuptoit.
"Startups are diverse, it is very difficult for one person to understand so many
businessesatonetime.Anaverageretailinvestordoesnotunderstandmutual funds,
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businessesatonetime.Anaverageretailinvestordoesnotunderstandmutual funds,
howwillheunderstandstartups?"asksSadagopan.
Startup investing platforms such GREX, however, offer an alternative. GREX is a
marketplaceofsortswhereinvestorsandstartupsmeet.Peopleinterestedininvesting
instartupscangetthemselvesregisteredontheplatformforanannualfeeofRs6,000.
Startups,afterbeingvettedbyapanelofGREXexpertstoascertaintheirprospects
arethenregisteredforanannualfeeofRs10,000ontheplatform.GREXregistered
investorscanchoosetoinvestinacompanyoftheirchoice,basedontheupdatesthey
getfromtheregisteredcompanies.Aninvestormaychoosetoexitbypostingtheprice
at which he bought the shares and the price at which he is willing to sell. Those
registered on GREX can then take up the offer. "I believe GREX is solving the
problemsofindividualswhocantaketheriskofinvestinginstartupsbutweren'tableto
find an opportunity to do so," says Delhibased IT professional Vikas Kumar who
invested around `15 lakh via GREX. Kumar has limited his startup exposure to less
that10%ofhistotalinvestmentportfolio.
Despite platforms such as GREX facilitating angel investors find quality startups, the
investment risks are still quite high. And for those enthused by the idea of making a
quick buck, the words of Nikesh Arora, President of Japanese telecom and Internet
giantSoftbankandaprominentstartupinvestor,shouldserveasawarning:"Thereisa
startuppartyonbutmostinvestorswillwakeupwithahangover."
READMORE: venturecapital|Softbank|Retailinvestors|RajanAnandan|mutualfunds|Google|
Flipkart
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WhyMoanaismaking
headlines
Feelingaccomplished
yet?Hereisalistof
peoplewhoseIQlevels
havecreatedrecordstime
andagain
Whyoneislikelytohear
moresongnotesthan
gunshotsinNagavillages
thesedays
Dontavoidinsurancebecauseofthe
hikeinservicetax
31Aug,2015,08.20AMIST
ByKomalAgarwal
Not having enough surplus money is one of the
flimsiest excuses that people use for not buying
insurance. On 1 July, the government gave them
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insurance. On 1 July, the government gave them
another reason to avoid purchasing this critical

componentoffinancialplanning:thehikeinservice
0
Comments
Insuranceisthebulwarkofyour
taxratefrom12.36%to14%.Thiswillpushupthe
financialplanningbecauseit
costofinsurancebecauseservicetaxisapplicable
safeguardsyourandyourfamily's
onthepremium.
financialfuture.
But should the increase in costs make you

reconsideryourdecisiontobuyinsurance?Theanswerisanemphaticno.Insurance
is the bulwark of your financial planning because it protects you against unforeseen
expensesandsafeguardsthefinancialfutureofyourfamily.
Thoughthehikeintheservicetaxratewillpushuptheinsurancepremium,theimpact
willbemarginal.IfyouwerepayingRs12,000forthehealthcoverofyourfamily,the
newpremiumwouldbeRs12,175.IfyouwerepayingRs15,000foraRs1croreterm
insurance,youwillhavetoshelloutRs219moreeveryyear.IfyouwerepayingRs
6,000ayearforinsuringyourcar,thenewpremiumwouldbeRs6,088.
Somemayarguethattheimpactappearssmallbecausethesearelowcostpolicies.If
thepremiumishigher,asinthecaseofUlipsandendowmentpolicies,thehikeinthe
taxratewillpinch.That'snottrue.Servicetaxisnotapplicableontheentirepremium
payablefortheseinvestmentcuminsuranceproducts.
It applies only to the risk premium and on certain charges levied in the insurance
contract.Fortraditionallifeinsurancepolicies,theearlierrateof3.09%hasbeenhiked
to3.5%inthefirstyear.Forsubsequentyears,thetaxratehasbeenhikedfrom1.5%
to 1.75%. If you were planning to purchase a traditional endowment policy with a
premiumofRs50,000,thehikeintaxratewouldpushupthepremiumtoRs50,199.If
yourpolicyisalreadyinforce,thepremiumwouldgouptoRs50,123.
InUlips,therateofservicetaxis14%.Butthetaxisapplicableonlyonchargessuch
asfundmanagement,mortalitypremium,premiumallocation,policyadministrationfees
and the switching fee. Since the regulator has already capped these charges at 2
2.5%,theimpactofthehikewillbeminimal.Here,thehigherservicetaxwillnotresult
inahigherpremium.Instead,aloweramountwillnowflowintotheinvestmentchosen
bythepolicyholder.
(ThewriterisCAandpartner,MaheshK.Agarwal&Co)
READMORE: Ulips|Servicetax|lifeinsurance|insurance|financialplanning
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79/93
9/1/2015
DidJawaharlalNehru
alienateAssamese?An
untoldstory
Howawalkin
Copenhagenmakesone
realisethattheworkof
HansChristianAndersen
stilldelights
Nawabi,Nizami,Mughal&
Maratha:Howkebabs
representatriumphof
imaginative,inventive
cooking
GreavesCottonsettoflourishwith
improvingmargins
GreavesCottonsawa10%fallinrevenueyearon
year(yoy)inthefirstquarterof201516.Theexit
from the infrastructure equipment business is the
main reason behind this fall in revenue. Delayed
recovery in fourwheeler small commercial vehicle
segment and a sluggish growth in farm equipment
segment,duetoslowreleaseofsubsidiesandsmall
Thecompanysawa10%fallin
increase in minimum support price, have also
revenue.Despitethefall,thecompany
Comments
contributedtothisrevenuecontraction.But,despite
hasimpressedthemarketbecauseof
thefallinrevenue,thecompanyhasimpressedthe
arobustgrowthinprofit.
marketbecauseofarobustgrowthinprofit.
ADDTO
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ve
GreavesCottonLtd.
Improvement in margins helped the

company report an adjusted net profit
growth of 22% yoy. The reported net
profit growth is up 51% yoy. The net
profitthistimealsocontainsaonetime
profit related to the sale of properties.
The
527
basis
points
margin
improvement, yoy, in the first quarter,

is
largely
attributable
to
Cotton
Greaves's exit from the infrastructure

equipmentbusiness,whichwasmaking
continuous losses at the EBITDA
(earnings
before
interest,
tax,
depreciation and amortization) level.

Improved operational efficiencies, such
as reduction in material and employee
costs, further contributed to better
margins.
Though Greaves Cotton is into the
manufacturing of engines that work on
almost all fossil fuelspetrol, diesel,
keroseneandcanusedinautomobiles
threewheelers, fourwheeler small
commercialvehiclesfishingboats,agripumps,etc.,mostofitsrevenuecomesfrom
theautomobilesegment.GreavesCotton,withamarketshare of 85%, is the biggest
playerinthethreewheelerautosegment.
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Toaugmentitsautoenginebusinessfurther,thecompanyhasdevelopedenginesthat
canbefittedonvehiclesweighingupto3.5tonne,amajorjumpfromthepreviouslevel
of 0.8 tonne. The company should see a significant improvement in its fourwheeler
engine market share, currently at 14%, in the coming years. In July, the company
signed a deal with EicherPolaris for its 600 cc fourwheeler vehicle, Multix, and is
trying to get one more fourwheeler company on board during this financial year.
Besides new tieups, a ramp up in volumes from existing partners is also possible,
giventheincreaseinthecompany'sengineofferings.
The future looks extremely bright for Greaves
Cotton and as per the consensus analysts'
estimate, its net profit is expected to zoom to Rs
211 crore in 201617, an annualised 59% gain
comparedto201415.Thisfastgrowingcompany's
stock is quoting at reasonable valuations and,
therefore, investors can buy it for longterm
investment.
SelectionMethodology:Wepickthestockthathas
shown the maximum increase in 'consensus
analyst rating' in the past one month. Consensus
rating is arrived at by averaging all analyst
recommendationsafterattributingweightstoeachofthem(5forstrongbuy,4forbuy,
3forhold,2forselland1forstrongsell)andanyimprovementinconsensusanalyst
ratingindicatesthattheanalystsaregettingmorebullishonthestock.Tomakesure
thatwepickonlycompanieswithdecentanalystcoverage,thissearchisrestrictedto
stocks that are covered by at least 10 analysts. You can see similar consensus
analystratingchangesduringthepastweekintheETW50table.
READMORE: stocks|marketshare|margins|GreavesCottonLtd.|ETWealth|earnings
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Nawabi,Nizami,Mughal&
Maratha:Howkebabs
representatriumphof
imaginative,inventive
cooking
'Phantom'mintsRs8.45
croreonopeningday
ShahidMira,Sooraj
Pancholiaddstarpower
toMasabaGupta'sLFW
show
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Foursmartthingstoknowabout
commercialpapers
31Aug,2015,08.22AMIST
1) CPs are unsecured money market instruments

issued to meet shortterm needs of companies.
NBFCsareprimaryissuersofCPs.
2)CPscanbeissuedformaturitiesrangingfrom7
daystoayearfromthedateofissue.Interestrates
are determined by market forces of supply and
demand.
CPsareunsecuredmoneymarket
0
Comments
instrumentsissuedtomeetshortterm
needsofcompanies.NBFCsare
primaryissuersofCPs.
3) CPs have to compulsorily be rated by a credit

rating agency and the minimum credit rating has to
beA2.
4)CPsarepurchasedprimarilybyinstitutionalinvestorssuchasmutualfunds.Retails
investorscanindirectlyparticipateinthismarketbybuyingshorttermdebtfunds.
The content on this page is courtesy Centre for Investment Education and Learning
(CIEL).ContributionsbyGirijaGadre,ArtiBhargavaandLabdhiMehta.
READMORE: NBFCs|interestrates|ETWealth|commercialpapers|CentreforInvestmentEducation
andLearning|ArtiBhargava
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I'mprotectiveabout
Shahid:AliaBhatt
Twitterwantstohiremore
women,butonly1%more
inthenextyear
Unstablemoodsmayruin
yourromantic
relationships
Howtomanagealimonytosecure
one'sfuture
31Aug,2015,08.22AMIST
Bhavika,38,ispartingwayswithherhusbandof10
years. She wants custody of her 8yearold son,
consideringthefactherhusbandisanalcoholic.Her
parents want her to be pragmatic and contemplate
her financial future. She freelances with some
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9/1/2015
advertising companies and her earnings are
sufficienttosupporthercurrentlifestyle.Shehasno
Bhavikahasnoimmediateplansof
immediate plans of remarriage. She wonders if she
remarriage.Shewondersifshewillbe
Comments
willbeabletosecureheraswellasherson'sfuture.
abletosecureheraswellashersons
future.
Bhavikamustrealisethatshehastherighttoclaim
andreceivealimony,evenifsheisearning.Alimony
referstoamonetarycompensationwhichmustbepaidtothespousewhoisunableto
supporthimself/herself.Inhercase,theprovisionsundertheHinduMarriageAct,1955
willapply.Tillsuchtimeasthecourtproceedingslast,amaintenanceamountwillbe
payable to Bhavika. The final alimony would be given after the legal separation. She
canclaimthepostseparationalimonyeitherasaonetimelumpsumoraperiodicfixed
paymentmonthly,quarterlyandthelike,dependingonherrequirements.
Moreover,shewillhaveexclusiverightsoverher'streedhan'(personalwealth),mainly
intheformofherjewelleryandcashgifts.Shewillbeentitledtohershareinanyjointly
heldassets(house,shares,bonds,mutualfunds,savingschemes)acquiredandjointly
paid for during the course of the marriage. The estranged couple can choose to
continue to hold these assets. However, in case Bhavika wants to receive
compensation for such assets, her husband will need to either buy out her share or
redeem/sellsuchassets.
Thereisn'tanyfixedformulatoquantifytheamountofalimonytobepaid.IfBhavika
and her husband agree to an amicable divorce, the alimony may be mutually agreed
upon.Otherwise,itwillbedecidedbythecourtbasedonfactorssuchasstandardof
living,numberofdependents,financialstatus,incomesofbothspousesandtheoverall
networth of the household. It typically ranges between onefifth and onethird of the
husband's networth. While choosing the mode of payment, Bhavika must prefer the
lump sum option as it will give her certainty. A regular fixed payout may stop or get
delayedduetoreasonssuchashusband'slossofjobordeath.
Moreover,thelumpsumamountisnottaxableandwillbetreatedasacapitalreceiptin
Bhavika'shands.However,thereturnsfrominvestingsuchamountswillbesubjectto
tax,asapplicable.Bhavika'shusbandwillbeliabletopaythealimonyandsupporther
andtheirchilduntilsheremarries.
READMORE: mutualfunds|ETWealth|Bhavika|ArtiBhargava|Alimony
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83/93
9/1/2015
Youjustcan'tavoid'the
morningafter'hangover
'Minions'grosses$1
billionglobally
Here'showfishoildiets
benefityou
Howsecuritiesaretransmittedon
deathofdemataccountholder
31Aug,2015,08.22AMIST
In case of death of single account holder or one of

joint holders, rules will apply with respect to
securitiesheldintheaccount.
Demat accounts can be held by a single individual
or jointly. In case of death of the single account
holder or one of the joint holders, rules of
Incaseofdeathofsingleaccount
transmissionwillapplywithrespecttothesecurities
holderoroneofjointholders,ruleswill
Comments
held in the demat account. The surviving joint
applywithrespecttosecuritiesheldin
holder/s, nominee or legal heirs of the deceased
theaccount.
account holder need to approach the Depository

Participant (DP) with the requisite papers for
transmissionprocessofthesecurities.However,ifshareswereheldinphysicalform,
onewouldhavetoapproacheachcompany.
Nominationexists
Ifasingledemataccountholderdiesleavinganominee,thetransmissionprocedureis
simple. The nominee is required to submit a duly filled in transmission form and a
notarised copy of death certificate duly attested by a Gazetted Officer or a Notary
Public.TheformcanbeobtainedfromtheDPofficeorcanbedownloadedfromtheDP
website.TheDPverifiesthesubmitteddocumentsandiffoundinorder,transmitsthe
securitiestotheDPaccountofthenominee.
Nonomination
In case of death of a singlyheld demat account holder with no nominee registered,
securitieswillbetransmittedtolegalheirsofthedeceasedasdeterminedbytheorder
ofacompetentcourt.IfvalueofsecuritiesarelessthanRs1lakh,thetransmission
request may be processed on submission of transmission form, attested death
certificate copy, a letter of indemnity, an affidavit in the prescribed format and NOC
fromalllegalheirswhodonotobjecttotransmission.
Jointlyheldaccounts
For jointly held accounts, the securities are transmitted to surviving holders on
submission of the duly filled transmission form, and duly attested copy of the death
certificateofthedeceasedholder.Fortransmissionofsecurities,thesurvivingholders
need to have or open a separate DP account with names in the same sequence in
whichthenamesappearinthejointaccounttobeclosed.
Pointstonote
1) Registering a nomination for a demat account helps eliminate the need for
documentssuchaswill,successioncertificatefortransmissionofsecurities.
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2)Thenominee/legalheirsarerequiredtohaveaDPaccountifnotalreadythere.
3)AsanalternativetoNOC,attestedcopyofafamilysettlementdeedcanbeprovided.
READMORE: gazettedofficer|ETWealth|depositoryparticipant|demataccountholder
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Here'showfishoildiets
benefityou
ShraddhaKapoorglowsat
NamrataJoshipura'sLFW
show
SalmanKhanreleases
teaserofNagarjuna'sson
Akhil'sfilm
PlusandminuspointsofSenior
CitizensSavingsScheme
ByPreetiKulkarni ,ETBureau | 31Aug,2015,08.24AMIST
It has everything that a senior citizen investor can

ask for: assured returns, safety of capital and
regular payouts. The Senior Citizens' Saving
Scheme(SCSS)alsoofferstaxbenefitsunderSec
80Candallowsprematurewithdrawals.Atthesame
time,thereareafewproblemsthatneedtobefixed.
Forinstance,theincomefromtheschemeissubject
0
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+ve
ve
ICICIbank
to TDS. Delhibased VK Mahajan and his wife Madhu are happy their investment
fetchesthemaregularincome,butmiffedthattheinterestearnedistaxable.Letuslook
atthesalientfeaturesofthescheme.
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Eligibility
Theminimumageatentryis60years.Butthiscanberelaxedto55yearsincaseone
hasoptedforvoluntaryretirement.However,VRStakersmustopentheaccountwithin
amonthofreceivingtheirretirementbenefits.Also,theamountinvestedcannotexceed
thevalueoftheretirementcorpus.Investorswhosatisfytheseconditionscanopenan
accountatanypostofficeoratdesignatedbranchesof24PSUbanksandICICIBank.
Investmentlimit
AnindividualcannotinvestmorethanRs15lakhintheSCSS.Depositscanbemade
inmultiplesofRs1,000.Anindividualcanopenmorethanoneaccountbyoptingfora
jointaccountwithhisspouse.
However,theinvestmentlimitofRs15lakhappliestoallaccountscollectively.Thatis,
anindividual'stotalinvestmentinSCSScannotbreachtheRs15lakhceiling.
Rateofinterest
TheinterestrateoftheSCSSismarketlinkedand100basispointsabovethe5year
governmentbondyield.Therateforthecurrentfinancialyearis9.3%.Aninvestmentof
Rs15lakhwillyieldaquarterlyincomeofRs34,875(Rs11,625permonth).Oncean
investorlocksin,therateremainsunchangedtilltheschemematures.Thebigdrawfor
investors is that the scheme is managed by the government and offers assured
returns.Theonlyriskisthereturnscouldbelowerinfutureasbondyieldsdecline.
Interestpayment
The interest is paid out every quarter on fixed datesthe first working day of April,
July,OctoberandJanuary.Thisisirrespectiveofthedateofinvestment.Thequarterly
payment is useful for retirees who need a stream of regular income for their living
expenses. However, it may not be beneficial for those who don't immediately need
suchincome.Thequarterlypayoutsmeantheylosethebenefitsofcompounding.
Tenureandforeclosure
TheSCSShasatenureoffiveyears,butitcanbeextendedforthreeyearsafterthe
schemematures.Incaseofanemergency,aninvestorcanforeclosetheaccountafter
ayear.Iftheaccountisclosedbeforetwoyears,thepenaltyis1.5%.Aftertwoyears,
thepenaltyis1%.
Thereisnopenaltyiftheaccountisclosedintheextendedperiodafterthemandatory
fiveyears.
Taxation
ThetaxationoftheSCSSisamixedbagforinvestors.Whileinvestmentsareeligible
fortaxdeductionunderSection80C,theinterestearnedfromtheSCSSisfullytaxable
asincome.Theincomeisalsosubjectedtotaxdeductionatsource(TDS)ifitexceeds
Rs10,000inafinancialyear.Thisisamajorpointofcontentionforseniorcitizenswho
may not have a taxable income but still have to file their tax returns to get back the
excessTDS.
READMORE: Taxation|savings|investments|invest|interestrate|ICICIbank|ETWealth
86/93
9/1/2015
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AddYourComments
Lookingtoswitch?Here's
alistofhighestpaying
jobsatGoogle
LatinAmerica,notIndia,
leadstheraceof
emotions:Gallup
There'sagorgeous
Googlepoweredluxury
watchthatworkswiththe
iPhone
Willtherealestatebubbleburstdueto
fallingsales&risinginventories?
Yourdreamsofowningahousecouldcometrueif
thenightmareoftherealestatesectorcontinuesfor
afewmorequarters.Therealtyindustryisfacinga
terrible slowdown, with sales down drastically and
the inventory of unsold flats piling up. Even
investors in property are facing the heat: property
pricesinmostmetroshaverisenatatardypacein
13
Comments
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MotilalOswal
the past one year while the cost of capital remains high. The Magic Bricks National
Property Index, which is the weighted average of supply of real estate and property
prices across 11 cities, has registered annualised growth of a mere 1.7% since
January2013(seegraphic).
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Experts feel there is more pain in store for the real estate sector, especially the
residential segment. Saurabh Mukherjea, CEO, Institutional Equities, Ambit Capital,
foreseesadeepercorrectioninresidentialprices(seeinterview)."Whilestatedprices
remain elevated, transaction prices have already fallen by 1015%. Discounts have
increased significantly in the secondary market and distress sales are becoming
increasinglycommon,"saysarecentAmbitCapitalreportonthesector.
Willpricesfall?
However, a correction does not mean that real estate prices will come down by 30
40%."A3040%crashcanhappenonlywhentheeconomygoesintoarecession.Our
economyisdoingwellnow,theGDPisgrowingatagoodpace,inflationisdownand
foreigners are investing in both manufacturing and ecom businesses," says Sanjay
Dutt,EMDSouthAsia,Cushman&Wakefield.
But even a slow rise is actually a correction in real terms. In major markets like the
NationalCapitalRegion,propertypriceshaverisen1%inthepastoneyear.Duetothe
oversupply,thepricesareexpectedtoremainflatorregisteramarginalgrowthinthe
next12months.
"Apartments that are unaffordable right now might witness demand when the
disposableincomesincreaseinthenext23years.Tillthen,theresidentialrealestate
segmentwillcontinuetoseetimecorrection,"saysSharadMittal,Director&HeadReal
EstateInvestment,MotilalOswalRealEstate.
Thepaltryreturnsgeneratedinrecentyearsandthegrimprospectsofrealestatehave
dampenedinvestorsentiment.Realestatehaslostitscharmasanassetclassamong
investors. "Not all real estate investors are wealthy individuals with deep pockets.
There are ordinary people who bought a second house because they thought real
estatewoulddowell.Thatisoneofthebiggestreasonswhytransactionvolumeshave
dropped," says Gulam Zia, Executive Director, Knight Frank India. Though longterm
investorsareholdingon,hopingforbetterdaysahead,shortterminvestorsaregetting
nervous and have started selling below the brochure rates offered by the builders.
Whathasspookedtheshortterminvestorsisthedropintransactionvolumes.
"Shortterminvestorsprefertobookprofitintheirexistinginvestmentsbeforeputtingin
moremoney,"saysDhruvAgarwala,CEOandCoFounder,PropTiger.com.
Cashstrapped developers are offering bigger discounts, throwing in freebies and
coming up with innovative financing schemes to attract buyers. However, very few
have bitten the bait because property prices are still very high. Last week, RBI
Governor Raghuram Rajan said that the industry must bring prices down to attract
buyers."Ifrealestatedevelopersbringdownprices,itwillbeabighelptothesector.
Oncethereisasensethatthepriceshavestabilisedmorepeoplewillbewillingtobuy,"
hesaidatafunctioninMumbai.
Discountsindisguise
There'sagoodreasonwhydevelopersareshyingfromcuttingthebrochureratesof
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There'sagoodreasonwhydevelopersareshyingfromcuttingthebrochureratesof
theirprojects.Theyhavealreadysoldasignificantinventoryofthoseprojects."Ifthey
cutpricesnow,theywilllosecredibility,"saysAmitOberoi,NationalDirectorValuation
& Advisory and Research, Colliers International (India). Others argue that the
innovativefinancingschemesareactuallydiscountsindisguise."Buyerssaveinterest
tilltheygetpossessioninthe8020schemewithoutahomeloan.Thisiseffectivelya
1015%discount,"saysDuttofCushman&Wakefield.
One key reason for the slowdown in real estate is the government's crackdown on
black money. Real estate has traditionally been a convenient place to deploy
unaccounted money and almost 1030% of the transaction value is done in cash.
However, the Narendra Modi government's efforts to uncover black money has
reducedthegenerationofblackmoneyinthesystem.
Theimpactofthischangewillbecomemorepronouncedinthecomingmonths."With
thenewBlackMoneyBill(whichwaspassedbytheParliamentonMay26)andwith
theCabinetapprovingtheBenamiTransactionsBillinMaythisyear,thecrackdownon
blackmoneywillcontinuefurther,"saysthereportbyAmbitCapital.
Besides,thehikeincircleratesinmanycitiesacrossthecountryhasreducedtherole
ofblackmoneyinrealestatetransactions.Sincethecircleratesarenowclosertothe
marketrates,thebuyerdoesnothavetopayalargerproportionincash.
Waitingandwatching
Investorsandendusersarealsoinawaitandwatchmodefollowingnewsreportsofa
massiveunsoldinventoryinthesystem.Buyersarepostponingtheirdecisions,leading
toahugesupplyoverhang.Thoughtheindustryusedtoputupabravefaceearlier,the
situationhasbecomeprecariousnow."Somethinghastogivein,itcan'tcontinuelike
this," says Agarwala of PropTiger.com. "The real estate industry has started taking
correctivestepsbutthingswillgetworsebeforetheygetbetter,"saysDutt.Hesaysit
maytaketwomoreyearstostabilise,withthegreenshootsbecomingvisibleaftera
year.
Whatbuyersshoulddo
As mentioned earlier, the price correction has already happened in pockets like the
NCR. Since the trend is clearly down, there is no need for investors to jump in right
now.However,expertsadviseenduserstoutilisethisopportunitytobuytheirdream
house. "Softening in prices is an excellent opportunity for endusers to purchase a
property,"saysMittalofMotilalOswalRealEstate.Itisabuyers'marketandtheycan
dictatetheirtermstogetthekindofhousetheywantandattherightprice.Onlything
theyshouldbereadytoputupahardbargainwiththedevelopersandsellers.
Ifyouareplanningtobuyahouse,it'sagoodideatostartsavingaggressivelyforit
right away. Put away as much as you can into a shortterm debt fund every month.
Thiswillnotonlyhelpyoubuildalargeramountforthedownpaymentbutwillalsomake
you get used to the monthly outgo of the EMI. On the other hand, it will also tell you
whetheryoucanactuallyaffordahouse.Ifyoufinditdifficulttoputawaythatamount
everymonth,maybeyouneedtodeferyourhomebuyingplanstillpricescomedown
furtheroryourincomegoesupsubstantially.
DELHINCR:TOOFEWBUYERS
89/93
9/1/2015
DELHINCR suffered due to inventory overhang. Lack of sales and stagnant prices
keptinvestorsaway.Sincethereisalreadycorrectiontothetuneof20%inpockets,
pricesarenotexpectedtofallfurtherinnearfuture.However,launchesfrombuilders
andsecondarymarkettransactionsarestillhappeningatratesbelowthebrochureand
askingprice.Investorsshouldstayawaytillstabilityreturns.
MUMBAI:PRICINGPRESSURE
Therecentpricerisehastakenhomeswellaboveaffordablelevels,especiallyinthe
islandcity.Supplyisexpectedtoincreasebecauseoffasterclearancesbythestate.
That may be reason why extended suburbs like Thane are brimming with real estate
activity. While the affordable segment of the residential market is expected to remain
flat,theluxurysegmentisfacingpricingpressure."AnythingpricedaboveRs45crore
is finding few takers", says Gulam Zia, Executive Director, Knight Frank India.
Investors should stay away because the situation may remain like this or may even
worsen. Since we are already in a buyers' market, the end users should use the
currentopportunitiestogetmaximumdiscountfromthesellers.
CHENNAI:REVIVALTIME
TherealestatemarketinChennaiisheadingforarevivalduetothepoliticalstability
there. Along with Bengaluru and Pune, Chennai is also a major beneficiary of the
flooding ecommerce investments. Just like other cities, it is the affordable segment
thatisgeneratingcustomerdemandwhilethemidandluxurysegmentsaregettingonly
lukewarmresponse.Thoughtheinvestorscanstayawayforthetimebeingbecause
theexpectedreturnisbelowthecostoffunds,endusersshouldnotdelaytheirhome
purchases.
90/93
9/1/2015
KOLKATA:INABEARHUG
KolkataISgoingthroughabearmarketkindofsituationandexpertsdon'tseechances
of a recovery in the near future. Though there is some traction in the affordable
segment, the highend segment continues to reel Boon for end users and the overall
sales volume has plummeted by around 60% in the last one year. Since no price
appreciation is expected in the immediate future, investors should stay away for the
timebeing.Traditionally,Kolkatahasbeenanenduser'smarket.Thereareveryfew
investors in real estate. People who want to buy for their own use should use the
currentslowdowntogetbetterbargains.
HYDERABAD:BACKINFAVOUR
After falling out of the favour thanks to the Telangana movement related strife,
Hyderabadrealtyisslowlycomingbacktothelimelightagain."Costofhousingisvery
low in Hyderabad and it also has very good trained manpower. So business will be
happytomoveinsolongasthereisnodisruptionandpowerrelatedissues,"saysAnil
Kothuri, President and HeadEdelweiss Housing Finance & Credit. Entrance of e
commercemajorsisanotherpositivefactor.Thoughtheinvestorscanstayawayfor
the time being because the expected return is below the cost of funds, end users
shouldnotdelaytheirhomepurchases.
BENGALURU:BOOMAHEAD
Bengaluru has emerged from the shadows of Mumbai and Delhi with the highest
numberoflaunches."With31%ofoverallIndialaunchesinAprilJune,Bengaluruhas
leftNCR(25%)behindforthefirsttimeinrecenthistory,"saysAnujPuri,Chairman&
Country Head, JLL India. It is favoured by developers owing to its affordability,
91/93
9/1/2015
availability of land and relatively fewer bureaucratic hurdles. With the ecommerce
boomhittingIndia,thingswillonlyimproveincomingyears.Thoughitstilldoesn'tmake
sensetobuyasaninvestmentastheexpectedreturnisbelowthecostoffunds,end
usersshouldnotdelaytheirpurchases.
AHMEDABAD:LOOKINGBLEAK
ThoughthedevelopmentofGIFTCityandtheDelhiMumbaiindustrialcorridorhave
beenpositiveforthecity,ithasnotbeenabletomaintainthemomentumitwitnesseda
fewyearsback.Despiteefforts,ithasnotbeenabletoattractcompaniesfromtheIT,
FMCG and finance sectors, necessary for driving up prices in a big way. The
automobilesector,whichwasleaningtowardsGujarat,hasalsobegundesertingitfor
Pune in Maharashtra. With not much migration happening to the city, investment in
homes here may not fetch good returns in the immediate future. Endhome buyers,
however,shouldusethisopportunitytostrikebetterbargains.
PUNE:GOINGSTRONG
Due to its proximity to Mumbai and also due to the lower cost of operations, most of
Maharashtra'sITandITeSgrowthishappeninginPune.Itsstatusasaneducationhub
hasalsohelpedthecity.Itisoneofthefewrealestatemarketsthatisstillstrongin
India."Puneistheonlycitythathasshowndoubledigitpriceappreciationinthelast
two years," says Ashutosh Limaye, Head of Research & Real Estate Intelligence
Services, JLL India. Though the investors can stay away for the time being as the
expected return is below the cost of funds, end users should not delay their home
purchases.
READMORE: SanjayDutt|realestate|propertyprices|MotilalOswal|housingfinance|fmcg|finance
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