Does your Investment have Cash Reserves?

 

Does your Investment have Cash Reserves?

To understand this very important aspect of investing please read on .....every successful business never invests all its profits back into the business, a part of the profit is extracted and kept aside as cash reserves, this helps to iron out the volatility in the business, business Orders are never steady, sometimes Orders can flow at a fast rate, and at other times the flow can ebb as business slows down the highs and lows all are part of a business cycle, the cash reserves work like shock absorbers that allow the business to wade through tough times.

It is like the Emergency Fund one needs to have to wade through uncertain times like the Pandemic, an Investment Portfolio too needs a cash component to handle Market Volatility When we enter Bear Markets and Portfolio Value falls one has two options.

A) To wait out patiently - This is a tried and tested method and perhaps the best thing one should do who is invested purely in Equities

B) Even while you wait out through the bear markets, you can use your additional cash reserves to buy out Equities at bargain prices and thus make the volatility work for you

Clearly, while 'A' is a standard option 'B' becomes the preferred option 

There are two methods to use the 'B' Option

C) Do Asset Allocation & Rebalancing  yourself 

D) Allow the Fund to do Asset Allocation and Rebalancing

The 'C' Solution has Capital Gains Tax implications

The 'D' Solutions has no Capital Gains Implications

 'D' Solutions are provided by the Dynamic Asset Allocation Category of Funds which have a debt ( Cash Element ) and during every bout of volatility they use the spare cash to buy equity at low prices

Many a times 'C' Solutions are not implementable because when the opportunity shows up the client is not available to sanction more investment

 Or the Client is influenced by the 'Market Fall' Chatter and takes time to understand the opportunity by which time the opportunity may disappear

Also 'D' option is based more on Algorithm based processes which keep human emotions out of financial decisions

 Human Emotions are the biggest enemy of Investing Decisions, when we will be able to control our emotions we will be to minimize our loss, if we do this, we will be able to maximize our profit.

 Raja Bhattacharjee

 Email:  investment.junctions@gmail.com

 Phone: 09830146206

7 Money Things You Should Do Before Hitting 30

 7 Money Things You Should Do Before Hitting 30

 

For most of us, reaching the age of 30 is like entering a new phase in life. In our mid-20s, we take life more seriously and approach this milestone with a more mature attitude. If you have a partner or a kid, your obligations will almost certainly increase.

Here are the seven major financial decisions you should consider before celebrating your 30th birthday.

1. Have an adequate emergency fund

It's a given that life can be unpredictable, and preparing for the unexpected with an emergency fund is essential. An emergency fund would help you tide over a job loss.

The sum of money in your emergency fund will depend on your financial obligations. Typically, anywhere between three to nine months of expenses in an emergency fund is ideal.

Also, do not use your emergency savings for anything other than an emergency. You can keep it in a separate bank account or a liquid mutual fund for easy accessibility.

2. Make plans for alternative sources of income

Having a high-paying job with a hectic schedule isn't unusual. Most of us are concerned about our job security. The pandemic has made us realize jobs are not as safe as it seems to be. Hence, it is essential to plan for alternative sources of income instead of depending on one source of income.

3. Buy a Health Insurance

A trip to the hospital may wipe your entire savings. In this scenario, health insurance comes to the rescue.

Even if your work provides a health insurance plan, it may not provide adequate coverage. Get health insurance that would cover your and your family's medical bills.

4. Get a term insurance policy

If you have a dependent spouse or have kids, getting a term life insurance policy should be a priority. A pure term insurance policy will take care of your family members in the event of your untimely demise. Adequate life insurance will help your family members to continue with their dreams.

5. Start investing for future goals if you haven’t already

When you turn 30, there is a high probability that you have been working for a few years. 

One of the ways to make sure that your income can beat inflation and help you achieve your financial goals is by investing as early as possible. The easiest way to kick start your investment journey is to set up a Systematic Investment Plan (SIP) in a diversified equity fund.

SIP allows you to start small investments at a very young age and gradually increase the SIP amount invested in the upcoming years.

6. Diversify your investments

Investing in diverse asset classes that perform differently to the market news and events can help cut down the risk in your investment portfolio. For example, the equity portion of your portfolio will help in wealth generation, while the debt instruments will help to stabilize and protect your portfolio returns.

7. Plan for your retirement

Retirement may seem like a very distant event. But the years roll quicker than we realize. It is never too early to invest for your retirement. Unlike our parents and grandparents who could depend on government pensions and financial help from their children, many of us don't have the luxury in this day and age. So, it has become imperative to take care of our retirement.

As you reach 30, it becomes crucial to take care of one of the most critical aspects of your life, i.e., the financial life. Just earning well isn't enough. In this blog post, we have jotted down the seven important money things that you need to take care of before hitting 30.

This blog is purely for educational purposes and not to be treated as personal advice. Mutual fund investments are subject to market risks, read all scheme related documents carefully.

Raja Bhattacharjee

  Email:  investment.junctions@gmail.com

 Phone: 09830146206

 Office : 09681518774   /  7449858289

Why you shouldn’t depend only on EPF for your retirement?

Do not rely only on EPF for your retirement

Why you shouldn’t depend only on EPF for your retirement?

 

When most people think of retirement, they think of employer benefits like Employee Provident Fund (EPF). While this is a great option, but it is not the only one. You can supplement with other investment options such as mutual funds. This blog will highlight the importance of investing in mutual funds for your retirement.

EPF is a tax-efficient investment instrument and has the backing of the government.

Mutual funds and EPF can help boost your retirement savings and ensure that you don’t run out of your retirement savings.    

Here are some reasons you shouldn’t rely entirely on your employer for your retirement benefits:

EPF is primarily a debt-based product:  

EPF is primarily a debt-based product. It is essential that you understand that EPFO can invest up to 15% of its incremental flow in equities. 

Equity-based instruments have the potential to make real returns on your money. Real return is the return given by the investment option after subtracting the effect of inflation.

You can build a retirement corpus if you invest in options that beat inflation, especially if you start early. You can invest in equity-oriented mutual funds, which involve higher risks than most other investment instruments but offer impressive returns over time.

Minimal investment amount:

In EPF, employees and employers both contribute 12% monthly to EPF. They can contribute up to 12% of Rs.15,000, or Rs.1800. However, if your income exceeds Rs.15,000, the company is not required to contribute 12%. So, regardless of your income, the employer’s contribution may be smaller.

Basically, the overall amount that gets credited to your EPF account may not be sufficient to fund your retirement goals.

You can invest more in your EPF account. This option is called Voluntary Pension Fund (VPF), and it is an extension of EPF.

Previously, VPF investments were tax-free. However, according to Budget 2021, if your EPF and VPF contributions exceed Rs. 2.5 lakh in a financial year, they tax the interest that you earn on such contributions.

Cap on maximum investment amount:

As an employee, you can make tax-free contributions of up to 12% of your basic to EPF. If you want to invest more towards your retirement plan, you can invest in mutual funds. You may choose from a variety of mutual funds depending on your investment objectives and time horizon.

If you invest in mutual funds, there is no cap on the maximum investment amount. Moreover, taxes apply on redemption.

Availability of different investment options:

Mutual funds offer different investment options such as lumpsum and Systematic Investment Plans. It means that you can make investments at any time of the day from anywhere.

A systematic Investment Plan (SIP) is a regular investment plan through which you can invest a predetermined amount at regular intervals. You can also increase or decrease your SIP per your financial conditions. So, mutual funds offer investment flexibility that EPF does not provide.

Conclusion:

The importance of retirement preparation cannot be overstated. It’s possible that relying on EPF isn’t the greatest option. Inflation might deplete your savings faster than you expect, so your retirement fund may not be sufficient to pay your daily expenses. You might use a Systematic Investment Plan (SIP) to invest in mutual funds for retirement income. SIP allows you to invest a set amount at regular intervals. It’s completely optional, and you may increase, decrease, or stop your SIP investments at any time. As a result, you may develop a retirement plan and invest to meet your retirement objectives.

This blog is purely for educational purposes and not to be treated as personal advice. Mutual fund investments are subject to market risks, read all scheme related documents carefully.

Raja Bhattacharjee

 Email:  investment.junctions@gmail.com

 Phone: 09830146206

 Office : 09681518774   /  7449858289

 

website: https://www.investmentjunctions.com

 

Why mutual fund is market risk?

Those few points we may know or may not, but we should know.

Why mutual fund is market risk?

Like all securities, mutual funds are subject to market, or systematic, risk. This is because there is no way to predict what will happen in the future or whether a given asset will increase or decrease in value. Because the market cannot be accurately predicted or completely controlled, no investment is risk-free.

What are the 4 types of financial risk?

One approach for this is provided by separating financial risk into four broad categories: market risk, credit risk, liquidity risk, and operational risk.

Are mutual funds regulated by RBI?

Along with SEBI, mutual funds are regulated by RBI, Companies Act, Stock exchange, Indian Trust Act and Ministry of Finance. RBI acts as a regulator of Sponsors of bank-sponsored mutual funds, especially in the case of funds offering guaranteed returns.

What is the role of RBI in mutual funds?

The Reserve Bank of India regulates three categories of financial markets; money markets, government securities markets and foreign exchange markets. Mutual Funds have a presence in the first two and the Reserve Bank is therefore interested in the role that they play in developing them.

How long must you hold a mutual fund before selling?

According to   AMFI law, investors have the right to sell the shares of their mutual fund back to the fund itself at any time. Once the share has been redeemed, it is typically incumbent upon the fund to reimburse the former shareholder within one day to three days,

Is SIP subject to market risk?

Mutual funds SIP return is subject to market risk as it is an indirect equity exposure. That's why tax and investment experts advise investors to look at various angles while a choosing mutual funds SIP plan for investment.

8 ways to mitigate market risks and make the best of your investments.

Diversify to handle concentration risk .

Tweak your portfolio to mitigate interest rate risk .

Hedge your portfolio against currency risk .

Go long-term for getting through volatility times .

Stick to low impact-cost names to beat liquidity risk .

Fight horizon risk arising out of assets-liability mismatch .

Triumph over reinvestment risk .

In addition, there is also geopolitical risk, which normally gets factored in volatility risk of a stock or the market.Please remember, risks can be many, but a phased, well-informed, and disciplined approach can help you mitigate them to a considerable extent. 

Raja Bhattacharjee

 Email:  investment.junctions@gmail.com

 Phone: 09830146206 / Office : 09681518774   /  7449858289

 

 

 

 

 

 

 

 

 

 

 

 

 

PMJJBY, PMSBY become costly: What makes the govt hike premium rates?

 

PMJJBY, PMSBY become costly: What makes the govt hike premium rates?

Seven years after the inception of its flagship insurance schemes – Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Pradhan Mantri Suraksha Bima Yojana (PMSBY), the Government of India has raised the premium for the first time.

Following this, the annual premium for PMJJBY – which provides a death coverage of Rs 2 lakh to the beneficiary of the policy in case of the sudden demise of the insured person – has been moved from Rs 330 to Rs 436.

On the other hand, the premium of PMSBY – which provides a death coverage of Rs 2 lakh to the policy beneficiary in case of the insured’s accidental demise – has been moved from Rs 12 up to Rs 20.

Reasons behind Premium Hike

While there is high demand for the two insurance plans, what compels the government to increase the rates?

High Claim Ratio

According to the Ministry of Finance, since the launch of the PMJJBY, Rs 9,737 crore has been collected as a premium, while the amount of claims paid till March 31, 2022, is as much as Rs 14,144 crore.

In the case of PMSBY, Rs 1,134 crore has been collected as a premium since the launch of the accident policy, while the amount of claims paid till March 31, 2022, is more than double the premium collected at Rs 2,513 crore.

Such a high claim payout – in comparison to the premium collection – makes the insurance plans unviable, unless the premiums are increased.

“Government-sponsored insurance schemes for the underprivileged all over the world face a particular challenge – claims rise due to inflation, actuarial wishfulness, or unforeseen events such as COVID, but premiums cannot be increased due to affordability constraints. For some time, this gap is borne by the participating insurers or bridged through government subsidy, till the schemes become simply unviable. Premiums then get revised, but with a lot of hesitation, because the optics of increasing premiums for the underprivileged are not particularly good.

Impact of COVID, Inflation

Higher than normal mortality rate during the COVID-19 pandemic and high rate of inflation makes the continuation of the insurance plans further difficult without increasing the premiums.

“The recently announced increases in premiums of PMJJBY and PMSBY have to be seen in this context. These premiums have been revised after 7 years, during which period the tectonic pressures of adverse claim ratios were building up. COVID-19 resulted in a spike in claims that was the proverbial last straw. Therefore, premiums had to be increased to make these schemes viable. The interesting thing is that the sum insured amounts have not been revised even after 7 years to correct for inflation. Therefore, in real terms, the amount of coverage to the insured under these schemes has actually reduced over time.

Raja Bhattacharjee / 9830146206

https://www.investmentjunctions.com/

# this information is shared just for your awareness.

7 Money Things You Should Do Before Hitting 30

7 Money Things You Should Do Before Hitting 30

 

For most of us, reaching the age of 30 is like entering a new phase in life. In our mid-20s, we take life more seriously and approach this milestone with a more mature attitude. If you have a partner or a kid, your obligations will almost certainly increase.

Here are the seven major financial decisions you should consider before celebrating your 30th birthday.

1. Have an adequate emergency fund

It's a given that life can be unpredictable, and preparing for the unexpected with an emergency fund is essential. An emergency fund would help you tide over a job loss.

The sum of money in your emergency fund will depend on your financial obligations. Typically, anywhere between three to nine months of expenses in an emergency fund is ideal.

Also, do not use your emergency savings for anything other than an emergency. You can keep it in a separate bank account or a liquid mutual fund for easy accessibility.

2. Make plans for alternative sources of income

Having a high-paying job with a hectic schedule isn't unusual. Most of us are concerned about our job security. The pandemic has made us realise jobs are not as safe as it seems to be. Hence, it is essential to plan for alternative sources of income instead of depending on one source of income.

3. Buy a Health Insurance

A trip to the hospital may wipe your entire savings. In this scenario, health insurance comes to the rescue.

Even if your work provides a health insurance plan, it may not provide adequate coverage. Get health insurance that would cover your and your family's medical bills.

4. Get a term insurance policy

If you have a dependent spouse or have kids, getting a term life insurance policy should be a priority. A pure term insurance policy will take care of your family members in the event of your untimely demise. Adequate life insurance will help your family members to continue with their dreams.

5. Start investing for future goals if you haven’t already

When you turn 30, there is a high probability that you have been working for a few years. 

One of the ways to make sure that your income can beat inflation and help you achieve your financial goals is by investing as early as possible. The easiest way to kick start your investment journey is to set up a Systematic Investment Plan (SIP) in a diversified equity fund.

SIP allows you to start small investments at a very young age and gradually increase the SIP amount invested in the upcoming years.

6. Diversify your investments

Investing in diverse asset classes that perform differently to the market news and events can help cut down the risk in your investment portfolio. For example, the equity portion of your portfolio will help in wealth generation, while the debt instruments will help to stabilise and protect your portfolio returns.

7. Plan for your retirement

Retirement may seem like a very distant event. But the years roll quicker than we realise. It is never too early to invest for your retirement. Unlike our parents and grandparents who could depend on government pensions and financial help from their children, many of us don't have the luxury in this day and age. So, it has become imperative to take care of our retirement.

As you reach 30, it becomes crucial to take care of one of the most critical aspects of your life, i.e., the financial life. Just earning well isn't enough. In this blog post, we have jotted down the seven important money things that you need to take care of before hitting 30.

Raja Bhattacharjee

Email:  investment.junctions@gmail.com

 Phone: 09830146206

 Office : 09681518774   /  7449858289

 

website: https://www.investmentjunctions.com

This blog is purely for educational purposes and not to be treated as personal advice. Mutual fund investments are subject to market risks, read all scheme related documents carefully.

 

The Changing Ecosystem, Education System, Employment System

 The Changing Ecosystem, Education System, Employment System

Who is your best employer? It is neither Tata nor Birla? It is you, yourself.

Please read &  understand the biggest secret of our life 

 The Indian economy is amongst the fastest growing economies and certainly is poised to become more prosperous, but we are waiting to receive the crumbs/dole/subsidy that a prosperous country may provide, or do we wish to ride the cycle.

Despite the prosperity, the old steady corporate kind of jobs that was prevalent in the ecosystem is vanishing at a fast pace, and the middle management which provides employment and career path to many is vanishing at a fast pace.

 Career spans are shrinking with the retirement age advancing by more than 10 years. Don't be surprised to find ourselves jobless in the forties. 

 FIRE (Financial Independence Retire Early) is the new kid on the block.

Entrepreneurship has come of age but, are we prepared to ride this growth curve? Do we know how to set up an Enterprise?

Start-Ups are the new buzzword but do we know what it entails and how we can be a part of this 

 Otherwise, we will see others steal the march right under our nose

In an evolving ecosystem, the approach toward education needs to change .

Even though we may not want it to be any different than the past but there is nothing we can do before the change juggernaut.

While Conventional Degrees & PGs are no longer a license to a bright future, the need to become a lifelong student is getting more significant in order to stay in tune with a rapidly changing ecosystem.

Money continues to be the fuel that will drive our lives and this one truth will remain uncontested

As we can see the window to earn money is shrinking rapidly, and  th e window for our Money to Work for us and Serve us in order to maintain our lifestyle is expanding day by day. Soon we will be earning for 15 to 20 years to support the next 40 to 50 years. This is a huge social problem staring at the society

Therefore Money Management is  becoming a  significant and vital requirement for everyone

 From accumulating a large corpus slowly over a long period of time supported by steady jobs 

 We are now moving towards a life where a rapidly ramped up Annuity (Corpus) from ramped-up short careers has to support a long life. high-paying

All the professional Certification Course in this changing ecosystem provides the tools that people need to live an awesome life in today's context. 

 The modules like  Investment Planning help one to understand how to best invest one's money to create a sizable wealth infrastructure 

Retirement Planning helps one to understand how to ramp up a meaningful corpus in a relatively short period of time in order to create a new source of lifelong income.

 Tax Planning helps us to optimize our tax management by understanding the significance of tax provisions to enhance the quality of life. How the system is designed to help the ecosystem and to push us into becoming investors.

Insurance Planning plays a significant role in designing a life that is well protected against  unexpected challenges like health and life-related exigencies 

And finally, as Society gets Wealthier & Inter-Generational Wealth transfer becomes significant, Estate Planning & Business Continuity Planning will become extremely significant for to balance the social pressures

 At the end of the day, Personal Finance is the most significant part of everyone's life 

Because we  may land up losing  every job, our business can come to the end of its lifecycle , 

However, the only Employer who will never ever stop paying us our Salary, who will arrange either the Rent or the EMI and ensure that you are never ever Evicted from your Home is the Annuity / Wealth / Corpus that you will build or receive as a legal heir 

The entire scope of managing human life, its challenges, its joys, its emotions, and the ability to transform ordinary lives into awesome lives are all covered in the Financial Planner Program.

Raja Bhattacharjee