“Deepa’s money tips “: Ask ,Ask and Ask for More !!

 

Hi ,

Firstly ,would like to wish my readers a very Happy and prosperous 2014 .

Many were asking me the reason for an intermittent halt on my writing . To share on a positive note, it’s the zeal of starting the year on an action packed note by many of you which kept me busy . I am happy that many have moved from “the resolutions on paper to resolution in action mode . “

There came  queries from some  of you which needed to be resolved   . I wanted to resolve those queries so I could share them with you all . The information collected by me on couple of topics will shortly follow this article , and I am sure every one of us will benefit with that kind of information.

In sciences ,no amount of theory can give us clear understanding of a topic than a practical. In every article of mine in 2013, I had directly and indirectly requested you all to ask any query related to any financial topic . Today , if I have gained all the respect for my knowledge , its not my achievement , rather your support which has tagged me as a resourceful individual. If there is no give and take of information , imagine how the world would have progressed !!

I am also glad that I see more and more individuals setting aside their inhibitions and coming forward to ask me for  personal, one to one discussions . The feedback I have received from every such individual is that the reason for their comfort are my promises which I keep repeating time to time . Taking this opportunity to repeat them again :

1. I will not ask for any income ,assets and net worth details during the discussion.
2. A discussion will be  treated as exchange of ideas, and therefore comes with no obligation to bind us into a client planner relationship . A yes or no are treated equally as long as we have had a meaningful, constructive discussion.

Mails, blogs, writings are one way communication methodologies . They may give generic awareness on specific topics but does not provide specific solutions to individuals . Every individual has unique needs and requirements which need to be addressed individually and no amount of book reading ,net surfing  can help one arrive at a personalised solution

So thank you for asking and asking for more . Every query received has helped us learn something new. Every discussion I have had last year helped us grow together . You will see more and more coming your way this year from me . Do not hesitate in sharing feedback . I am sure a constructive feedback can do wonders  and I am open to it.

 Thanks again

Best regards

Deepa

deepanittala@gmail.com

 

 

“Deepa’s Money tips : The reason Behind “

 

 

Today , I would like to share the secret behind me writing these articles and sharing with all. There was a time when people would misinterpret my role . A few months back when anybody would call me for a discussion  ,  I would ask “ What is top of your mind ,when you called me ?”

people had some specific questions in mind :

“What is the best return you can get me ? “

“ What products do you sell?’

“Ohh ,you don’t sell products , you only advice “?

( even after last 10 years history has evidences how people burnt fingers by investing without  proper advice and by purchasing products without guidance)

It used to take a while to explain and put my point across that personal finance is not all about investments .  Not anybody’s mistake , since the environment itself is like that these days .

I therefore decided to write and  dissipate the knowledge I have as daily experiences . This relentless writing for past few months , brought in new experiences for me . Today I see people giving a serious thought to every decision they take .  Even  when they call me for a discussion , specially in the last 2 months , I see a sea change in the thought process . My question even today is the same :

“ What is top of your mind ,when you called me ?”

But the responses have changed .Would like to share a few .

1.“I am earning , I am spending and I am saving  but I don’t know if the direction I have taken is right. Can you help me analyze it ?”

2. “Is my saving pattern sufficient to fulfill all my requirements and aspirations in future. What additional income should I create to fulfill all of them? “

3.”I have a surplus but I am not sure if I am deploying this in the right proportion across different saving instruments . Can you guide ?”

4. “Are my choices tax effective , what is the tax implication on each ?”

“I have understood Deepa , that these are questions can’t be answered by my insurance or investment advisor . It’s a financial planner who can take a holistic view of my financial life and guide me the way forward .So I have come to you . What is the best advice you can give me ?”

I am glad with this change in perspective that I have seen , and I thank all my readers for taking my messages in the right spirit.I have never written much in my life except essays in school and official correspondence at work, but its all your encouragement and queries ,that showed me the way forward to write more and more .

A big thankyou , and my best wishes for a great financial future . Lets take these right decisions , let’s think before we act , let’s act immediately and lay the foundation , to start with a great year 2014 ahead.

Good luck and have a great day !!

Thanks

Best regards

Deepa Nittala

 

 

 

 

 

 

Sharing a Testimonial

Hi ,

There are times when I am having discussions with individuals for planning their finances . One would wonder why I keep repeating trillion times “Take products which match your need ” . Understanding our needs and matching them with appropriate ,cost effective and tax effective products can make a world of difference, and give much more confidence of moving in the right direction ,than directly picking up a product can .

In this context ,would like to share a testimonial by one of my clients . Refer my linkedin profile as below for the original extract .This is the same expression of thought which one can get when they plan their financials and follow the plan .This inturn is the power of unbiased advisory .

http://www.linkedin.com/pub/deepa-nittala/17/6ba/499

On 2:15PM, 10/12/2013, Bhaskar Mukherjee wrote:
——————–

Dear Deepa,
I’ve written this recommendation of your work to share with other LinkedIn users.

Details of the Recommendation: “I have been trying to get hold of a financial planner for a while and after talking to many many people, I gathered that there is no one out there who is not thinking about his or her gain even as they advise me. That was until I came across Deepa.

Deepa has been entrusted the role of keeping my finances in check and planning for the future based on my family situation. She has won over our confidence with her knowledge, integrity and the willingness to go the extra mile. These are traits that distinguishes a person from the rest of the pack that a degree never reflects.
Just knowing that I can rely on Deepa for her advise without ever having to think twice is testimony to what she has accomplished with us as a family.

I look forward to many years of working together with Deepa and for those that need a financial planner I will strongly recommend her.”

Thanks
Best regards
Deepa

Deepa’s money tips : Why talk to a Planner ? Some Questions that can get us the Right Answer !!

 

 

image source :businesstoday.intoday.in

Hi ,

 

In one of the sessions I was conducting , we came across a few impromptu questions which were raised either by me or by the participants. The journey of finding answers to these questions was very interesting and enlightening. I received a positive feedback on this session. These might be the doubts which everybody may be having in mind .One may or may not get the opportunity to ask ,so I am sharing these in this forum .

 

During the discussion we had , we identified that any investment should be ideally done to meet a need . A plan helps us to list down the needs. 

 

A need can be :
1. “To give best of education to our children.
2. Meet the necessities of life with available resources ,rather than opting for loans as an alternative .
3.Ensure the goals do not get effected due to loss of income if any untoward incident happens.
4.To maintain our lifestyle after Retirement without compromises and lead an independent life .
5.Upgrade  vehicle 
6.Have  own venture,etc”

Some people then asked me, now that we have identified our needs , and we know we should save towards it ,

 

a)why should I plan?

b)Why is planning critical?

c) Why should I not invest directly ?

d) How can I decide whether I should myself take care of my savings and planning and when exactly to seek professional help?

 

I gave them a very simple technique to get answers to above questions . I gave them a set of questions and told them that if their answer is YES to all the below questions ,then they do not need a PLANNER. If the answer is NO to any of the questions , it means they need to discuss with a planner on that specific area. And if the answer is NO to multiple questions and if the questions are critical to their financial life, then need to seek Professional advice .

 

This is a set prepared exclusively by me. Hope it helps.

 

1.I periodically refer my income, expenses and future needs and confident that I am deriving the right cash flow pattern to save for all needs.

 

2.I know how to factor inflation in my living expenses.

3.In my given monthly surplus, I know exactly how to distribute my investments in the right proportion and arrive at an optimum saving pattern (e.g., how much to invest in equity, FD/Debt products ,Real estate, Gold). In short, I know my risk appetite and can diversify assets accordingly.

4.I know how to manage my loans ,which one to pay off first ,how much to prepay systematically and their tax benefits.

5.I know the tax implications of investing in various asset classes.

6.I know exactly how much coverage to take for an Insurance policy which can replicate my financial responsibilities in my absence.

 

7. I know exactly how much would be the value of my goals , when they come up ( e.g. I know how much Retirement corpus is required to support me through retired life)and how much to save for them.

8.I have the time to effectively manage my finances ,post allocating time to my core job responsibilities and family.

9.I am confident that my current way of planning and investing is in the right focus and direction.

10. I don’t believe that a Professional ,practising personal finance can add any value to my financial life .

The above questions excited them a lot and they were now ready to ask me the last question .

 

Who are financial planners and how are they different from investment managers ?I answered as below :

Financial Planners are trained and certified :

– to analyze your available resources , which is your surplus post expenses ,
– Is a one stop shop for any financial solutions related to investments,taxes,retirement,insurance,etc.
– estimate the value of your goals considering inflation 
– help you strategize a path to achieve the goals in the best way possible .
– Monitor the plan and bring you back to path as and when you take a detour.
– Most importantly, they identify pockets where expenses can be reduced and diverting such money saved in the right direction.

A financial planner is one you can trust will work for your benefit. 

 

P.S: The objective of this mail is to create awareness  on criticality of  financial planning. Its not intended to promote my profession. So one who has understood the criticality can approach any planner and not necessarily me.  I hope this clarifies the intention.

Best Regards
Deepa
deepanittala.wordpress.com

 

Deepa’s Money tips : “What’s the right way to start planning Our Finances”-2

 

Hi,

Through my previous article ,we have understood ,that the best way of initiating our financial planning is to sit and jot down all our future cash flow requirements . What are the proposed expenses for the years to come, the large future financial responsibilities coming up and make decisions which are more optimal and meaningful today.

Once we have done the above , we arrive at the ideal amount we can save now , coming months and years to come . This surplus has lot of work to do .

How many times have we not heard,

a) I don’t believe in saving ,because there is so much volatility in market.

b) I lost big time in shares , and therefore I would like to stay away

c) I believe in living in present , I don’t like to think of future.

I get to hear this very regularly , hence the need to clarify .

a) Planning is not only about investing.

b)Every saving need not be related to market, saving is for our goals, our children,our life .Saving should be done atleast to beat inflation, otherwise our money will only keep eroding.

c)Savings has a pattern which is explained in the pyramid below . When we start planning our finances ,we should first look at securing our base . First things first :

a) Lets set aside a contingency fund for any emergency expenses or expenses more than budgeted.

b) Protect our family and key financial responsibilities against loss of income /income earner’s life by taking sufficient term life insurance cover.

c)Guard the assets that we have already created by preparing a will.

d)Once this is done, and still surplus available, put them in guaranteed return instruments like PPF,VPF,Tax free bonds ,FD’s,RD’s.

e)Still more surplus available, now look at growth options like Large Cap Equity Mutual funds, own house, safe long term real estate avenues.

f) Now all our cash flows are planned and we still have money to play ,we can then look at speculating,stocks ,day trading shares or short term real estate avenues.Any loss here ,will then not pinch us hard ,as we have not compromised with our needs at any point.

Many of us often follow the pyramid,but upside down. So will our finances not tumble down like a cards house? Now,is it easy to answer the above questions ?

The objective of this article is to help one reason that one should use the right product at the right time in a systematic way . Else ,we will only be disappointed with our decisions .

Thanks

Best regards

Deepa

 

Many ask me ,”What is role of a Financial Advisor”- Let’s discover !!

Hi,

I came across a very interesting article .Many people ask me what is the difference between a Financial Advisor and one who calls self as investment manager .

I could have chosen to write about the same,but for the benefit of bringing in an independent opinion , I am sending an article from Economic times ,which gives clarity on the role of a Financial advisor.

http://articles.economictimes.indiatimes.com/2011-11-17/news/30410353_1_financial-planning-investment-advice-investment-advisors

Will summarize this through an illustration. One is approaching a Pharmacist when one is ill . One takes a medicine and tries out. It doesn’t work, one takes another medicine . Then finally approaches a doctor,who does a diagnosis , takes corrective action if there was a side effect by wrong medication ,and then gives a course of action to be followed in future . Also , good doctors also suggest a diet which can help in preventive care and avoid future such illness. A good doctor is not loyal to the pharma company which manufactures medicines , or to the medicines. Rather, will look at what will benefit the patient most , by doing an analysis on medicines  available in market, keeping a tab on what are the new innovations happening ,and then suggest the best one which will cure the patient and also ensure it does not cause side effects. Multiple options are used like diet,medicines or some exercises while a pharmacist can only provide medicines . 

Now relate the same to a financial advisor. The financial advisor is a financial doctor taking care of client’s financial life.

Hope that helps and feel free to write to me with any queries to deepanittala@gmail.com

Best Regards

Deepa

Deepa’s tips on Savings –“ Which strategy works better -Moving forward or working backwards”

Hi All,

Firstly, thanks to all my readers. Many of you have come back and appreciated my insights and I am glad my practical experiences are “practically” useful . I am overwhelmed to know that many of you look forward to my mailers and heartfelt thanks for your kind appreciation.

Secondly, sorry for the long silence .The long weekend gave a break to my think tank and it took quite a while for me to refill it .Now am back to you with something very interesting. I assume these tips will go a long way in helping you make those critical decisions which have huge financial impact .

Coming back to today’s topic :

When we employ somebody , we try our best for optimum utilization. Imagine I employ a person ,do not guide her ,instead ask her to figure out for herself what work to be done and still expect great results.

Alternatively,a situation where I list down my needs and expectations to the person and ask her to work in such a way that my needs are fulfilled. What if we apply the same logic to the money we earn?

Which is the most awaited day of the month? No its not Sunday ..No,not any festival too..Its the “Salary Day “.We earn and spend and almost exhaust our income by the end of the month. There would be a residue lying in the account, which would lie there only ,until it heaps up over a few months. It gives us great pleasure and a sense of security and satisfaction when money accumulates in savings account .What next ,we either book an FD with it .If its substantial , we more conveniently start looking at a real estate option to buy . Some may also invest in shares , mutual funds once they see this money idle.

Kids school fees comes up ,we pay up from this chunk . A new car launch ,and we think of buying it since anyway funds available . Requirements keep coming up and we plough our funds and fulfill all of them. Time for the bigger requirements . Own house gives us a high ,we pool all our savings and pay the down payment and start savings all over again .This is called “moving forward “ .Earn, spend and save. Believe it or not , I have seen a similar pattern across 90% of the people I have had a discussion with ,including myself in my first few earning years.

You may ask me ,what is the other option . Its Working Backwards .

“Earn,Save and Spend “

Any expense coming up in our life ,which requires sizable money can be termed as a Goal.

1.We can make a list of the key goals coming up in the next 5 years ,next 10 years , next 15 years,20 years …

2.Estimate the amount required for this goal .

3. Make a fair estimate of how much the cost might go up in the given time. It would be even better if we incorporate inflation mathematically,but nevertheless .Some estimate is still better than no estimate.

4. Work backwards to identify how much we should save for each goal including interest income .

5. Income comes in , expenses are budgeted ,savings get routed before 5^th of the month and before we realize we create different buckets of savings ,addressing each goal .

6. Find below a very small example of savings for 5 years.

    

   Savings are critical , and more critical is guiding them the right way and make optimum utilization of its potential .Nobody else can be interested in our progress as much as we ourselves .So ,lets take charge of our financial life and take every decision thoughtfully.

   Planning is all about making informed,thoughtful decisions,since,every decision has a huge “Financial Implication”.It’s not only about investments and products.

Hope it helps  
Thanks

Best regards..Deepa

 Image source : http://moneyexcel.com

Most Common Financial Mistakes we make -3

 

Hi , 

Day in Day out ,in newspapers and news channels ,we read and hear about inflation and its impact on economy . Time to sit back and analyze impact of inflation on us.

As part of my daily interaction with clients ,I come across varied dreams and aspirations that each individual has for his/her family. I have realized that people may be in same age group ,same income bracket but still every individual is unique in his/her financial situation,life stage and aspirations. How does inflation impact our aspirations?

Lets take an example of two 38 year old individuals.

Mr X ,has a 3 year old kid  on the other side  Mr Y has a 10yr old kid . 

Mr X  dreams of a good education for his 3yr old and believes 15 lakhs is sufficient for graduation and post graduation put together .He assumes this 15 lakhs may become 30 lakhs in the coming 15 years due to inflation . 

In reality ,inflation also is compounding in nature like our investments.With an 8% inflation the 15 lakhs actually translates to 48 lakhs .

Mr Y also wants a good education for his 10yr old ,and feels 15 lakhs is required. He feels 8 yrs down it may become 20 lakhs. In reality , it turns out to be Rs 27 lakhs.A time period of 7 years in both the kids can create a difference of 20 lakhs to the education corpus itself.

This is only one goal. The income we earn has to achieve many goals for us , like a home, car , children’s schooling ,higher education ,marriages ,vacations and last but not the least ,an independent and peaceful retired life after all of these goals are effectively taken care of.

Assuming Mr X wants to retire at 55,he has 17 yrs to save for most of the remaining necessity goals while taking care of daily living expenses without a compromise on standard of living.

If we have to earn and save so much in 17 years time or whatever be our income earning years,all I have to ask is “Is it possible to achieve without an active plan , a long term strategy or a regular supervision ? “.

Think about it !!

Regards

Deepa

(source of image : economictimes)