Personal Financial management tips:
- save first spend later. incase of self-employed pay yourself first then others ex: tax, operating expenses
save at least 20% of your income
- Track your Net worth (Assets and liabilities) daily /weekly /monthly/annual cash flow.
- Keep on eye on the cash flow it flowing negatively to debt or positive to the asset column
- budget 30% for lifestyle spending
movies, restaurants, and happy hours—basically, anything that doesn’t cover basic necessities
- Maintain an emotional bank account
- buy productive assets that create positive cash flow buying stocks or house generates monthly income.
- Know the difference between good debt and bad debt good debt ex: house loan
bad debt EMI based vehicle
- Compare FD VS EMI Interest rates if your investment giving low returns and paying high-interest rates personal loan, Credit card loan you can close FD and pay the debt.
Paying insurance by lending money. insurance better of risk coverage.
bit if you are paying for endowment plan savings+returns
then your returns will be at 4%*. not even beats inflation.better to buy term plan and rest of amount in mutual funds or other investment strategies.
- Give Money to Get Money
the more satisfaction you get when giving somebody that makes them happy. your returns depend according to the law of attraction
- Compare credit card benefits vs charges
Insurance (Term & Health)
Emergency Fund 6-12 Months salary (self-employed 1 year )
Gold & Real Estate
Maslow’s Hierarchy of Financial Needs:
Income >>Insurance>>Credit>>Savings>>Investments (Stocks,Bonds,Real estate).
Power of Regular Savings aka SIP
- start Early
- Invest Regularly
- Power of Compounding Invest
|Particulars||Mr. A||Mr. B|
|Age||25 (35 years)||45 (15 years)|
|Monthly SIP /investment||5000||15000|
|Total Amount Invested||21,00,000||27,00,000|
|at 60 Years age @15%* CAGR||5.71 cr or 571M||92 lakhs or 9.2M|
Financial Life Cycle
- Wealth Basic Protection
- Section 80C up to 1.5 lakhs (Home Loan, Saving schemes, ELSS, PPF, Life Insurance, etc)
- 80 D Health Insurance up to 25k to 75K (for parents & family)
- 80 G Donations 50% to 100%
- 80CD NPS (extra 50K)
- Carry forward & set of losses
- Capital gain tax LTCG & STCG
Fixed returns (fixed deposits & other savings schemes)
- Saving accounts ar 4%
- Fixed deposit
- Recurring deposit
- Saving schemes PPF and NSC, Sukanya Samriddhi Yojana and Senior citizen saving Scheme
volatile returns (debt mutual funds and other etc)
High-risk high returns
- Equity Mutual Fund (invests in only shares /equity high volatility)
- Debt Mutual Fund (buy bonds from government & corporate companies)
- Balanced mutual funds (invest in both equity and debt schemes)
- investing in Gold (trading gold now very easy with a Demat and trading account)
- commodity trading (gold, silver, petrol, etc)
- Forex trading.
Note: if you are an investor don’t trade frequently, generally traders do it on a daily basis.
Difference between trading and investing?
the simple answer is, investors, wait for a long time. but Trader sells quickly basis on some loss or profit.
investing in Real Estate
There are 2 types of taxes are there direct and indirect tax.
Indirect taxes added to the products and services directly ex: GST and the direct popular one is Income tax.
Income Tax (this most popular parts every person who crosses the current FY slab limits can file the return)
Corporation Tax (companies take care of this)
Capital Gains Tax (earning from selling a property)
Securities Transaction Tax (while buying shares)
Professional Tax (by state governments)
Education Cess (3% of the overall tax at returns)
Wealth Tax (no more to avoid foreign accounts)
GST (all services & products at 18%)
Customs duty (while importing)
Stamp duty (registering a property)
General insurance (Home, motor. term insurance, health insurance, Personal Accident policy).
it’s valid only for 1 year if no claim you will lose all of your money, unlike life insurance policies.
Life insurance: These plans again different types based on the needs of the customer. But most of the plans related to
saving cum protection, family, child, pension plans, money-back policies, ULIP, etc.