Most of the parents are worried about the future of their children and especially the girl child and her marriage. Looking at current social change I personally believe that worry has become less relevant today. However, if still one wants to save for daughters' education & marriage the majority question everyone has is which instrument to choose?

Today we will try to compare and evaluate 2 well known options 1. Sukanya Samruddhi Yojna & 2. Jeevan Tarun Plan

Both plans are guaranteed by the Government of India so they are risk-free. Let us compare features of both the plans.

 The Verdict:

Both plans are good in their place but when it comes to pre-mature withdrawals in case of emergency Jeevan Tarun is better. Similarly interest rate in SSY is variable so risk of downward shift is always present. Moreover Jeevan Tarun gives a stream of cash flow from age 20-25 which can be useful for higher education fees payment.

Overall one can say that the Jeevan Tarun plan has an upper edge over SSY looking at its flexible features.

To know more feel free to contact on +91-7990290560

Hardik Baxi,

Baxi Investment

Firstly I would like to thank you for clicking on the article and reading it. But you better know the answer to this question than I do. Yes, you know it better than I do.

  Why?

• I get about 5 calls/messages every day saying we have determined this time we will save and invest for our better future but none of them turn out to me.

• I have few clients who commit monthly savings but than in few months feel pain of fixed monthly outflow for investment.

• I have few clients who are fully determined but suddenly need money for buying gift for spouse or children or want to go on unplanned vacation or replacing mobile or vehicle which is working fine.

Above are few examples of people who form 75-80% of investors. I think they have answer of how to succeed without determination that is why they lack determination. I can not achieve financial well being without determination.

When we take a loan, it creates a liability. We remain loyal in repaying the loan as we fear the company may take away the article or take legal actions against us. Now, when we are committed to some asset why cant we have same determination as our determination towards our liability?

This article may seem a casual one but try to understand the profound message hidden within it.

Hardik Baxi,

Baxi Investment.

Critical illness is an illness that is a major illness affecting an important organ of the body. Examples of critical illnesses – heart attack, stroke, cancer, kidney, lungs, liver failure etc. The longer that we are living, the more the chances of any of these critical illnesses striking us. 99% of clients that I have met are usually aware of hospitalisation policy, for example, a “Mediclaim” policy.

They are not aware of the risk of the outgo on account of major illnesses that critically threaten a patient’s life. Critical Illness typically requires ICU, nursing, specialised medicines and tests that are costly. Typical critical illness such as cancer can cost upwards of Rs 20 lakh. Most of the hospitalisation policies for medical treatment do not cover such large amounts. It is therefore important to have a separate insurance policy for the risk of major illness striking us.

The difference between a hospitalisation policy and critical illness policy is this – hospitalisation policy gives you reimbursement of all the hospitalisation costs such as surgery, ICU et cetera. It will not cover many items such as medicines, cost of stay of the relatives, some diagnostic costs, and nursing cost required at home. Sometimes in chronic illness, these other costs are higher than the main surgery or the hospitalisation cost.

Unlike hospitalisation insurance, critical illness policy will pay you a lumpsum upon diagnosis of a critical illness. It is not dependent on submitting hospital bills and is therefore not a reimbursement policy. For example, if one has a critical illness of Rs 30 lakh and one is detected with a major liver disease, he/she will get a lump-sum claim of Rs 30 lakh without requiring any bills or other questions.

Many of the critical illnesses are chronic in nature which means they are present for a long time and require long-term care and treatment. This automatically increases the cost of treatment and burden of this cost falls on the financial savings of the patient.

Today it is a happy development that most health insurance companies offer critical illness plans. There are many life insurance companies who offer critical illness “rider” to be added on to life insurance plans. This money is the cash that will sustain the person for all myriad costs that he/she will have to incur in order to treat herself back to health.

Most of us buy mutual funds but do not know when to sell them. We also do not know which fund to buy? How many funds to buy? When to buy? How to buy? this when and how creates a confusion and the confusion leads to errors in investing.

Today I will try to explain a product which will eliminate all which and how queries.

MARS = Mutual Fund Automated Re-balancing System 

It is first and only of its kind advanced mutual fund management system which has predefined rules which help you to keep your mutual funds balanced. The system adjusts proportion of mutual funds in your portfolio to give you the best outcome. The system automatically reduces equity exposure when markets are high and reduces debt exposures when markets are low. The robust and dynamic model strikes optimum balance between risk & return and delivers best outcome.

If you are stuck with the age old way of managing mutual funds than please change. You can get more details about MARS from here.

This service is free free free. Why pay advisers when you can get advise free of cost? You can also divert your existing mutual funds to MARS.

Call us today to start your free MARS. 

Indians have always been crazy about the things happening in western world. We blindly follow them without using our brains. We follow what we see and what we see may not be what it actually is.

One such trend which is visible now is making children independent to live their lives the way they want. It is not a bad idea. But have we realised that the western parents plan for their retirement first and then make children independent? We live with mixed mind-set of making children free according to western culture and then not planning our retirement and expecting that the children will support us. These are two contradictory thoughts we live with.

So now whether we want to separate the children or not it’s high time we have another child who will take care of us when we grow old and support us in times of need. This child will remain loyal and be present in times of need. He will not leave us for his better life. The benefit of this another child is one does not even need to marry for having it.

Let us meet this child.

This child is LIC. By investing Rs. 500000 today you can get secure income of Rs. 1,69,000 a year and a risk cover of almost Rs. 80 lakhs to Rs. 2.77 crs. This is available till 100 years of age.

If you are interested to understand the plan or plan your retirement with assured returns call Baxi Investment today on +91-7990290560. Remember 5,00,000 today can fetch you Rs. 1,69,000 from 61 to 100 years of age and guaranteed death benefit of up to 2.77 crs depending on age.

Hardik Baxi

Baxi Investment

A guest lecture was organised by Mr. Himanshu J. Shah at Shree Mahavir Jain Charitra Kalyan Ratnashram, Songadh. Students of Standard 11th & 12th commerce were to be addressed.

It was a wonderful experience to interact with the lively students who had many questions in their minds. To my utter surprise they were aware about crypto currencies, block chain and recent issues at domestic and international economic levels.

The students were briefed about Investment, available investment alternatives, choice of investment alternatives, tax planning, importance of financial planning, equity analysis using technical and fundamental analysis. Students were also given detailed understanding of how the Elliott Wave Theory works and how it is implemented on the Indian stock market.

I am very thankful to the trustee members and Mr. Himanshu Shah for this opportunity of interacting with such bright students.

Yes, you heard it right. We all save and that is where we usually stop. The problem is we have lot much biasness in our minds. The first being,

1. Knowledge biasness, we have lack of knowledge of what to do with savings. So we either don’t save or we just save and don’t invest or invest in FD as it is the only instrument we understand.

2. Information biasness, we believe when certain people say something. It begins from our family members who always look at banks as ultimate savings & investment option.

3. Incentive biasness, I have heard many savings channelized into non-productive areas just for getting one time share of income from agents. Remember, the agent who has to share commission is like getting a Parle-G at discount. It’s just not possible as already there are very low margins. So if you get an incentive just BEWARE of such investment option.

4. Simplification biasness, we save because it’s simple, we don’t invest because its complex.

5. Bandwagon biasness, we save or not save just because others are saving or not saving.

Still there is much biasness which we can talk about. Todays’ article is to make everyone understand that real wealth is created in investing and not just saving. Savings have to be invested which create an asset. That asset may be financial or physical which earns money in form of interest or capital appreciation. If we just save and not invest, money does not earn anything and we lose purchasing power of our hard earned money.

So stop just saving and start investing. If you have any biasness you can call on +91-7990290560. I will help you overcome your biasness and clear all of your confusions about investment. Start with SIP of Rs. 500/month and you will not feel any difference in your budget. If we lose a Rs. 500 note do we moan? Do we think all the time about it? Than why can’t we start SIP of Rs. 500 and forget about it? I am sure you will regret after some time why did I just forget Rs. 500 and not Rs. 5000.

 With March ending around the corner most of the individuals are busy evaluating investment options for their tax planning. Different advisors giving different advice depending on commission they get from your investment. So the question is which investment option to choose?

BEST OPTIONS U/S 80C

   – Investment in PPF – Has 15 year lock in
   – Employee’s share of PF contribution – Not all private employers provide it
   – Life Insurance Premium payment – Long lock in depending on term chosen
   – Principal Repayment of home loan – One has to buy property for this benefit

– Investment in Sukanya Samridhi Account – A daughter is must
– ULIPS – Bad History of returns
– ELSS – Shortest lock in of 3 years and average of 12%+ returns over long term
– Five year deposit scheme – Lock in of 5 years

The dilemma is which option to choose?

No doubt about ELSS as it is the best performing investment option for tax planning with least lock in. However, the question is should you invest in ELSS? All financial advisors will suggest ELSS all insurance agents will suggest insurance, those not involved in financial service business will advise PPF and Sukanya Samriddhi and you will get a new advice and experience from each one of your friends and relatives whom you talk with.

Buy sorry to tell you all are right in their opinions but wrong for you. Why? Because the tool you select depends on your spending habits. I have seen people investing in ELSS just because they can use the money in 3 years, for such people ELSS is worst option. There are people who invest for 35 years with LIC with risk-free moderate returns, for such people ELSS is the best option. Select your investment option based on your spending habit.

If you are thoughtless and extravagant in spending, go for long term options like LIC policies. If you are a thoughtful spender go for ELSS option.

Remember LIC offers plans with 19%-21% annual returns too. It is just that we are not aware about them. For knowing such plan read more.

Yes you heard it right. A financial advisor writing an article on why we do not need a financial advisor.

We usually do not take medicines without consulting a doctor, why? It is because we know that if we take wrong medicine it can harm us not only today but can create long term complications too.

We usually do not take independent legal decisions without consulting a lawyer, why? It is because we know it can harm us not only financially but can also lead to loss of reputation and social disgrace.

Than why don’t we need a financial advisor?????

The answer is, impact of our wrong financial decisions are felt over long term which we usually blame on others starting from the Government, its policies, our family, relatives, friends and lastly our destiny. But it is no one’s fault. It is because we have taken wrong financial decisions.

Read the above once or twice or even thrice till you get the message.

Than ask yourself do I need a financial advisor?

Hardik Baxi,

Baxi Investment.

Most of us are very much clear when it comes to buying things for ourselves about the performance of product. If we buy a family car we don’t expect it to do wonders on the road. Likewise if we buy a sports car we don’t expect to fit in the entire family. Post purchase we are satisfied because we have rational expectations of performance considering amount spent. But now consider a case where you buy a family car and enter into a race with it. Can you blame the manufacturer for your defeat? The answer is NO. Likewise while purchasing insurance people talk about returns. Many clients ask that does any policy do more than 4.5%? Dear Sir/Madam you are expecting a family car to do 300km/hr which is not possible and you are surely going to be dissatisfied.

All those reading this article please make sure that while buying a life insurance policy please do not ask about returns, look at options available, cover provided, raiders available as we are buying an insurance for life cover and not returns.

Yes, there are plans available which act like MUV (Multi Utility Vehicles) cars which provide insurance +  moderate returns. Do not expect these plans to do wonders for you. To know more about such products call us today on +91-7990290560

In today's article I would like to draw your attention on "Why we don't need an insurance policy?"

Insurance in India is majority times sold and not purchased. In most of the sales calls I have done majority people have insurance policy because some of their relative had taken LIC agency and as a result they sold them a policy which they could not refuse. This is a fact which we have to agree upon.

Think of an example where the bread earner is going out of town for a week leaving family behind. The first thing he will do is give money for more than 7 days to the other members in case he is late in returning. But when it comes to Insurance we do not care. We think of one week absence than why don't we think of sudden permanent absence?

The article title says it right, We don't need insurance policy but we need to be insured.

For an unmarried person amount of insurance must be at least 5 times annual income depending on dependents while for a married person it must be at least 10 times of annual income.

So now ask your self, Do we need insurance policy? or Do we need to be insured?

While buying insurance the first question comes to our mind is, which insurer to select? this question comes to our mind because of constant advertisements bombarded by private insurers claiming to be the best. People try to act smart by looking at claim ratios of various companies which is a misleading figure because if you compare LIC which had 30 crore+ policies in force while others have not even 10% in force it is obvious figures can not be compared.

One must stick to the giant whose policy is guaranteed for repayment by the Government of India. There is no question of default or closure of company.

So think over are you Insured??? If you want to get your insurance needs assessed do get in touch with us.

Hardik Baxi,

Baxi Investment

The country of millennials is at crossroads. While the seniors would prefer the age-old ways of personal meet ups, the generation Y is opting for online snap messages. When the septuagenarians seek solace in golden hits of 50s and shastriya sangeet, youth are tapping to rap and rock.

While the seniors still find confidence in fixed deposits (FDs) and public provident fund (PPF), but are those the right way to go about investments in the current era, when the pace of inflation is neck-to-neck with the interest rates?

So, when you are zeroing down on tax-saving investments for the year, don’t forget to change with the era. A dash of equity is what would dress up your portfolio in tune with the time. There are three tax-saving instruments, which help you stitch equity in your portfolio — namely Equity linked savings scheme (ELSS) offered by mutual funds, Unit-Linked Insurance Plan (Ulips) from life insurers and National Pension Scheme (NPS) by Pension Fund Regulatory Authority.

ELSS, which have generated a 5-year return of 15.87%, and 10-year returns of 17.24%, would be the right fit.

Hemant Rustagi, CEO, Wiseinvest Advisors, nods in affirmity, “The other tax-saving instruments are debt-heavy. Even NPS, after the changes brought about, restricts the equity component to 75% and it starts decreasing by the time you are at the peak of your career. Only ELSS offers the long-term advantage of equity.”

What does one look for in a tax-saving investment option? Value for money, good returns, safety low-lock-in, ease of investing, transparency, one that syncs well with your overall investing objectives. ELSS offer all of these with the lowest lock-in of 3-years compared with 10-years plus of ULIP, retirement age lock-in of NPS, 15-year lock-in of PPF and 5-year lock-in of NSC, Senior Citizen Savings Scheme and tax-saving FDs.

Zaharah Sheriff, founder at Fedwinteg Knowledge Series, says “In the game of investments getting the asset allocation right is far more important than anything else.”

Tax and ELSS

A brickbat which has been raised against ELSS is that the gains from the investment exceeding Rs 1 lakh would be subject to capital gains tax of 10.4%. In response to the tax axe, Sheriff says, “When you are paying a tax, one should assess, the 10% of tax is being deducted as a percentage of what. If the gains are higher than other debt and hybrid tax-saving investments, then you would always end up gaining better compounded returns.”

Take for instance, an amount of Rs 1 lakh being invested for a period of 10 years in a mutual fund, where the gains are taxed and another in a debt or hybrid instrument earning lower returns without any tax on gains.

Assuming the mutual fund investments earn 15% returns, the value would swell to Rs 4.04 lakh, while the other investment earning 7% would grow to Rs 1.97 lakh. Even if one has to bear the tax of 10.4% (amounting to Rs 21,273 for the gain above Rs 1 lakh in MF), you would be better off with Rs 1.86 lakh on the overall investment in MF compared with the other debt or hybrid investment.

Hence, Rustagi rightly points out, “When the 10-year returns are in the range of 20-21%, even after paying a 10% tax on the gains you are still better off in the long-run.”

Selecting schemes

With more than 200 tax-saving schemes available in the market in different plans, how should one select the best ones?

Durgesh Pandya, MD, My Advisor Finserv, suggests, “Opt for schemes that are 5-10 years old and not the ones that are at the New Fund Offering (NFO) stage. Zero down on a reputed fund house that has a stable fund management team, instead of linking the decision to cost of fund management and short-term performance. Select one or maximum two ELSS schemes to park your funds every year and stay invested for the long horizon.”

But investing the money in a single shot isn’t what advisors recommend. The situation gets a little tricky for those thinking of a Systematic Investment Plan (SIP) through the year. “Instead of starting a SIP, it is better to create a kitty in a liquid fund and invest as lumpsum or in two-three tranches in the ELSS scheme to ensure that you aren’t stuck with a longer-lock in on each investment tranche and get the gains of market ups and downs.

Ignore lock-in for wealth creation

Sheriff suggests that “Even though ELSS has a 3-year lock-in, one should always treat equity investments with a 5-year horizon.”

Moreover, when investors lock-in funds in other low-return instruments for a longer-horizon, a similar attitude and stickiness in ELSS would be rewarding.

Pandya exemplifies, “Even though the tenure of PPF is 15 years, majority investors are habituated to extend the tenure by 5 years twice, investing Rs 1 lakh for a total period of 25-30 years. If investors stick to for the same time horizon, then they would garner a wealth of Rs 5 crore on the investment of Rs 30 lakh even if we go by a conservative estimate of 15% returns on the investments.”

Though there is a lock-in of 3 years, one should consider it as an investment buddy for a long-term perspective. “Over the 2-8 year time frame, ELSS has outperformed even diversified equity funds. The lock-in has acted as an advantage from fund management perspective as the fund manager is able to take long-term bets by avoiding redemption pressure,” Pandya adds.

Thus bid your tax woes adios and go with the right choice.

An emergency fund is a pool of liquid money set aside for unforeseen expenses like a medical expense or job loss. Having an emergency fund can be the difference between a small bump in your financial life and complete disaster in your entire life.

Many people fail to prepare for the future. Financial security is important for every person. An emergency savings fund can help individuals look forward to the future without worrying about being unprepared for unexpected expenses.

Having an emergency savings fund is critical to the financial security of your family. Learning more about this type of fund can better prepare people to start saving if they have not already done so.

Everyone has a certain set of fixed expenses each month. These bills have to be paid on time to retain excellent credit. Some of these expenses include a mortgage, health insurance, life insurance, car payments, car insurances, home utility bills, food, and automobile gas. Let’s say that a person is living week to week and has no savings at all or has only a very minimal amount in a bank account. If this person suffers a job loss, this could be catastrophic.

That’s why no matter how hard it is to save; an emergency fund must be saved in order to carry a person or family through those tough economic times when not enough income is coming in to pay all the required expenses. People can lose their homes to foreclosure. Renters can be evicted and have no money to stay at a hotel or to re-rent another home. Shelter is a must, as is food, and paying for prescription drugs, and keeping up all of the insurance policies and car payments, otherwise people can have their cars repossessed if they do not make the payments.

So it’s imperative to save a separate emergency fund. One way to do this is to cut back on nonessential items such as eating out every day or buying fancy clothing that people don’t really need. Keep a journal of the items you cut out, and put that money into a savings account each week. As the account starts to grow, you’ll probably start to feel a real sense of accomplishment, and you probably won’t even notice the things that you cut out of your spending.

Paying down debt is also a great way to help grow your savings. As you pay off your loans and credit cards, the money you used to put toward these bills can be set aside in savings where it will grow for you year after year.

How much money to set aside as emergency fund?

Ideally it must be an amount equal to 6 months income.

How to invest emergency fund money?

Always remember that emergency fund has an intention of being useful at any point of time so liquidity is of prime importance. Second comes safety as we cannot afford to lose anything from this fund. Third is it must provide average returns. Liquid funds are the best option. With NJ E-Wealth account one gets this facility without additional cost. The service is available at just a click of mouse or a tap on your mobile screen. One can get returns on daily basis, so if you have money even for 24 hours, you can invest it. Average returns are 6.5% per annum.

To know more about planning and investing your emergency fund contact us today on +91-7990290560

Hardik Baxi,

Baxi Investment. 

Hello readers,

The title of today's article is "Buying potatoes from health insurance companies", yes you heard it right. This is how our Indian mentality works. Recently I had 5 sales calls from them there was a group of 3 elderly gentleman looking for health cover. They inquired me regarding plan details, its advantages and limitations. On completion of my presentation they told your company is charging 33000 Rs. while other is charging 27000 Rs. They concluded we do not wish to buy health insurance from your company. They had gathered so that they can bargain the amount of premium the way we bargain with hawkers that if we buy thrice the quantity what discount will you offer us.

The situation was like Mr. A is selling potatoes for 10 Rs. a Kg while Mr. B is selling it at 11 Rs. a Kg and hence we will purchase from Mr. A. People do not understand that the bargaining and hunting for low price strategy is for commodities where all supplies are same. The same strategy cannot be applied for Insurance. 

Comparing premiums for same same insured and selecting one with lowest premium is a type of suicide. The insurance market is highly competitive with companies incurring losses or normal profits. None of them can afford to provide more at less price or provide less at more price. The difference in pricing is due to difference in features.

So please those who are reading the article please understand that you have to purchase insurance and not potatoes. The strategy of bargain and less price for same quantity is not applicable here. Here there is a contract which is full of conditions, medical terms, highlighted advantages, undisclosed limitations and much more.

Compare features and not premium as we are buying a serious product and not potatoes.

Hardik Baxi

Baxi Investment

Investing in tax planning schemes is a key priority for those who are yet to finalise their tax related investments for the current financial year. Apart from investing in Public Provident Fund (PPF), mediclaim and term life insurance, one should consider Equity Linked Saving Schemes (ELSS) for the purpose of tax planning. Popularly known as tax saving funds, ELSS is one of the tax saving vehicles that qualifies for deduction under Section 80C.

ELSS is a typical diversified mutual fund equity scheme that comes with tax breaks and requires a lock- in period of three years from the date of the investment. If you invest in an ELSS through a systematic investment plan (SIP), each investment will be locked in for three-years from its respective investment date.

Importance of ELSS funds

 

By investing in ELSS mutual funds, one is eligible for tax deduction up to Rs. 1,50,000 u/s Section 80C of Income Tax Act. If you invest Rs. 1,50,000 in ELSS, you will save Rs. 45,000 (30% on top tax bracket). So the amount that you plan to invest in ELSS can be deducted from your income before calculating taxes. This is subject to an overall cap of Rs. 1,50,000 on the investment amount along with other tax saving instruments.

From April 1, long term capital gains made on transfer of equity mutual funds that have an equity exposure of 65 per cent or more will have to pay a 10 per cent tax on long-term capital gains above Rs 1 lakh a year. The LTCG made till January 31, 2018, however, remains grandfathered, i.e., gains will remain tax-exempt.

Start investment early

Many tax-payers normally tend to start investing in ELSS funds only towards the end of the financial year, when the time to submit investment proof is upon them. This is a bad investment and tax-planning strategy. In such a situation, one could face cash flow related problems towards the end of the financial year. Moreover, investing towards the end of the year forces the investors to put lump sum amount in ELSS. This, in turn, creates the risk of market timing. If the equity markets are up, the investor ends up purchasing the fund's units at higher valuations, which in turn affects his returns. One should always plan their tax related investments in advance and invest through SIP route in ELSS to get the benefit of rupee cost averaging.

Continue to invest beyond three years

Of all the tax-saving products, ELSS funds offer the shortest lock-in of three years. In other products, the lock-in period varies from 5 to 15 years. A common mistake most investors make is to redeem their investments in ELSS as soon as the three-year lock-in ends. Since the underlying asset class here is equities, they should stay invested for a time horizon of at least five-seven years to garner good returns. Hence, one should not pull out his money as soon as the three year lock-in ends. While ELSS gives tax break, it also has the potential to generate superior returns when compared to other asset classes as well as beat inflation in the long run. ELSS funds are best in the tax saving lot till date as these funds suit every category of investor.

Betting on the current best performers

The funds that are topping the charts currently (in terms of trailing returns over the past one or three years) may not be the best choice for you. Instead, investors should focus on funds that have a track record of consistency. To select a consistent fund, one must compare the fund's performance with the average returns generated by the category year-wise for the past five or seven years. Another alternative is to compare rolling returns. This is a good measure for capturing consistency. Another commonly observed mistake is that investors put their money in a new ELSS fund every year. Over an 8-10 year period, they end up accumulating a large number of ELSS funds. This causes excessive diversification and results in cumbersome portfolios that become hard to monitor.

Key Takeaways

Investors looking to save on tax should avoid ELSS funds if they are not comfortable with equities. ELSS is an ideal tax saving vehicle only for those investors who are willing to stay invested for the long term, understand volatility and are willing to ride through it. Further, one should plan these investments as early in the year as possible. If you haven't done so, then this is the right time to plan for the next financial year in April itself. And once you start, there's no need to stop investing next year. Since the best way to invest regularly in a fund is through SIP, you should just start one in a carefully-chosen ELSS fund and let it run for a long duration.