How an individual taxpayer can lower tax bill under the present Income tax act?

Taxes are said to be as inevitable in life as death and it is our social responsibility to pay them. Taxes are burdensome for all taxpayers. Saving money in taxes is high priority in Financial planning exercise. There are legally permissible ways to reduce taxes and retain more of your hard-earned money in your savings kitty. There are various tax deductions available under the present Income tax act and you should take advantage of them.
- Not starting savings early and not realizing power of compounding


What should be adequate life cover and how it is computed?

While life insurance is critical to meet financial responsibilities, adequate insurance cover is the key for meeting your responsibilities. So having a cover is not enough - having adequate cover is critical. Life insurance has moved from protecting life to protecting lifestyle. Financial needs can be classified broadly into following two categories.

Protection: if anything happens to the breadwinner, the family continues to be financially protected and maintain the same life style. Savings: one should be able to generate required corpus to meet milestones such as education / marriage expenses of children, buying a house etc.


What is the relevance of `Risk Profiling' in the financial planning process?

There are different life stages for an investor and at each life stage his risk profile could be different. Risk profiling helps investor to find appropriate asset allocation strategy at different stage of life. Like fingerprints, investment profiles of people are always unique. Age, Life stage, income, savings, dependents and mindsets are factors that define a person's attitude towards investments. Risk taking ability and mental frame of mind plays a key role in determining where the investor ultimately puts his money.
The first step in asset allocation is `Risk Profiling'.
Risk Profiling combines two key areas:

  • Estimating financial risk-taking capacity
  • Understanding the (psychological) risk tolerance level of an individual.

Risk profiling can unlock far more value for both investor and financial advisor. It provides advisor clear understanding of investor's mental frame of mind and his personal and financial circumstances.



What are the salient features of Small Savings schemes like PPF, NSC, KVP, RBI bonds, Senior Citizens Savings Scheme, Post office Monthly Income Scheme, and Post office Recurring Deposit?

With increased volatility in capital markets, there is a surge in demand for small saving schemes as a safe haven. Some of these options such as PPF and senior citizen schemes need to be part of asset allocation for investors. Although, it is good to keep some risk free investment in your portfolio as a part of overall asset allocation, there are certain pitfalls.



What is Asset allocation?

Asset allocation refers to the process of allocating your investments between different asset classes. Asset allocation means diversifying your money among different types of investment categories, such as stocks, bonds, gold, property and cash. The goal is to help reduce risk and optimize returns. The goal of asset allocation is to create an optimum mix of asset classes that have the potential to appreciate while meeting your risk tolerance level and financial goals.



What is Asset Re-balancing and how it is done?

The Process of rearranging assets to bring allocations to predetermined original level as per Financial Plan. Over time some of your investments may become out of alignment with your investment goals. You'll find that some of your investments will grow faster than others. By rebalancing, you'll ensure that your portfolio does not overemphasize one or more asset categories, and you'll return your portfolio to a comfortable level of risk. Asset Rebalancing forms part and parcel of every Financial Plan

Our experience in individual and family financial planning and investment management has helped many to build their financial dreams.



Grow Your Investment With Compounded Benefits

It is far better to invest a small amount of money regularly, rather than save up to make one large investment. This is because while you are saving the lump sum, your savings may not earn much interest.

With MF SIP, each amount you invest grows through compounding benefits as well. That is, the interest earned on your investment also earns interest. The following example illustrates this.

Imagine Neha is 20 years old when she starts working. Every month she saves and invests Rs. 5,000 till she is 25 years old. The total investment made by her over 5 years is Rs. 3 lakhs.Arjun also starts working when he is 20 years old. But he doesn’t invest monthly. He gets a large bonus of Rs. 3 lakhs at 25 and decides to invest the entire amount.

Both of them decide not to withdraw these investments till they turn 50. At 50, Neha’s Investments have grown to Rs. 46,68,273* whereas Arjun’s investments have grown to Rs. 36,17,084*. Neha’s small contributions to a SIP and her decision to start investing earlier than Arjun have made her wealthier by over Rs. 10 lakhs.

*Figures based on 10% p.a. interest compounded monthly.


Disclaimer: TheThe illustration above is merely indicative in nature and should not be construed as investment advice. It does not in any manner imply or suggest performance of any Mutual Fund Scheme(s). Please read Risk FactorsH

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NEWS Updates

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Permanent Account Number (PAN) is a code that acts as identification for Indian nationals, especially those who pay Income Tax.The PAN is mandatory for a majority of financial transactions.

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KNOW YOUR CLIENT (KYC) and its importance with regards to Mutual fund investmentKYC is an acronym for “Know your Client”, a term commonly used for Client Identification Process.

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Madhusudhan Gad featured in the TOI as one of the top most Insurance Advisors for Max Newyork Life.

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