Blog - VSRK Capital | Trusted Mutual Fund Distributor & Financial Advisory Services

November 23, 2020

4 Tips For Planning Your Retirement

Planning a retirement is not always easy. It’s the biggest decision you’ll ever make and a lot of things have to be considered before it can be made. Regardless of age, whether you’re 25 or 55, investing in retirement planning is always a wise financial plan. Everyone will face a time in their life when retirement is just around the corner, either by necessity or by choice.

Whether you need to catch up with the Joneses or want to better prepare for your later years, there are many options available to you in the form of investment strategies, saving strategies, and even tips for early retirement. There are also plenty of guides and articles written on the topic of retirement, including the essentials on saving, investing, and creating wills.

Great Retirement Planning Tips

For many people, saving and investing for one’s retirement day will not be an easy process. The goal is not to have the most money that you can, but to have enough to support your family and keep living comfortably until retirement. It is important to realize that, while saving money is a vital part of any retirement planning, investing money is not the only step to take. You also need to have the knowledge to determine when to invest your money so you don’t spend too much and lose it all.

These are four tips for saving for your retirement that anyone can use.

Diversify

First, make sure to diversify your investments. Diversifying your portfolio is the single best thing you can do for your retirement. Once you have a solid portfolio that covers a number of different markets, you can start to look into which investments are safe. Choose safe investments in order to protect your money from losses and to allow it to grow gradually over time.

Save

Second, set aside some money to save. You’ll need money to invest in your savings account. It can be as small as $100 every single month, if you wish. Put that money aside for when you need it, whether it’s for unexpected medical bills, or a vacation down payment on your next home. This money will serve as a buffer against the effects of inflation, and any other emergencies that may occur.

Budget

One of the most important things that you have to do when planning for your retirement is to create a budget. There are a lot of things you have to consider when you’re dealing with your finances. You also have to look at your expenses and see if they’re reasonable. If they’re not, then you have to be honest about them and decide whether they can be adjusted accordingly.

Be aware of your spending habits. You may be tempted to spend more than you earn, but you’ll also need to consider that this will eat into your income. Budget your money and set aside enough for your future living costs.

You should be conscious of how much money you have now, and how much you are going to make for your future. You should also have a clear idea of where you want to retire, because it has to be planned long before it happens. If you plan out the whole thing in advance, then you’ll be able to handle all kinds of situations that can arise during your retirement years.

Get Professional Help

To help you plan your retirement, it’s important to choose a firm that can help you sort out what’s necessary for now and what’s needed for the future. This step may be simple for some. For others, they may not need to work with a personal finance expert that can help you choose the right option. You’ll need to make a list of your priorities, and go with the one that best meets your needs, be it a bank, or a private investment company.

If you prefer a more hands-on approach to investing, or if you just want to be more knowledgeable with your money, you may find an e-book a helpful tool. Even a good retirement calculator can be helpful in determining how much money to invest or save. With all the resources available on the internet to teach you regarding your retirement, be careful about scammers that are only out to take your money.

Conclusion

Planning a retirement is the same as planning your life, because you have to strategize so you can live comfortably and successfully. No one wants to be caught off-guard down the road. There are so many questions to be answered and so many details to be taken care of. Do yourself a favor and begin that process now. Research the variety of ways you can save or invest. Talk to someone about diversified accounts and early retirement plans. Check out all your options so that you may live out the rest of your days in comfort and security.

November 16, 2020

How Financially Compatible are You with Your Partner?

Marriage planning

India is surrounded by traditions and rituals. The marriage season never goes off. Talking about destination weddings or simple marriage ceremonies there is always a bar rising higher than before.

It is said that marriage is not just a relation between two partners but the entire two families. What’s the main point we look into the partner? Mainly emotional compatibility, secondly understanding. Two individuals are said to be perfectly compatible when they understand each other in every aspect. Apart from emotional compatibility, it’s the financial compatibility that is seen. Financial compatibility helps the partners to live an accomplished life. Many of you think that financial compatibility means both partners have equal money, but it’s not the case. It means what perspective both have towards money and what is the importance of money for them.

Know what money makes to your partner:

Different people have a different value for money. Before getting married, you should know what attitude your partner keeps towards money. Lack of communication can create a sense of misunderstanding between you and your partner. Planning a wedding is not as easy as it seems to be, we can say that it’s a step by step plan. These plans reduce the burden as a whole.

These steps involve-

Setting a budget
The theme of your functions
Preparing guest list
Choosing venue
Inviting the guest

And other small but essential things. Marriage is the most overwhelming activity for couples. The excitement and expectation are to the next level. Imagining a perfect wedding and making your imagination the reality needs a well-planned functioning.

Having a conversation around money with your partner:

When you both come to know each other’s views regarding money, make this topic a part of your regular conversation. The income and how you spend it and also how much you save and through what, these are some common talks that you may include in your common talking.

Setting a budget includes income ratio and expenditure ratio. Expenses are necessary plus luxury too. Also, your investments will have a glance in your budget. Checking up the bank accounts will help in dealing with various such heads. Deciding a day every month where bank accounts can be checked. This will help in planning a further budget and will rectify if any issue arises.

Arrive at a common goal:

While going your own way of managing money and bank balance, maybe one person is not satisfied with the way of other person management of money. Both have to discuss and mutually agree on common terms, spending, and saving. In case you cannot come to a common and stable decision you can consult a financial advisor. The financial advisor will tell you every detail regarding every possible term and this will then help you to come to a common decision.

Make the other person accountable:

When both of you, you and your partner come upon a middle ground decision, it is important that you keep your partner accountable. Don’t make your partner feel like his/her opinion was not considered. Communication is the key to a healthy marriage life. It will ensure that you are on the right path.

Conclusion:

Financial compatibility plays an important role in couples. Don’t let financial incompatibility be the reason for issues in your relationship. All the above factors will help you to grow your financial compatibility and will help you in the present and future too.

October 19, 2020

What are the Taxation rules of Equity Funds?

One thing that comes to every investor’s mind apart from the return and related risk is the associated tax compliances. The last time we checked 2 types of taxes were applicable on sale of mutual funds i.e. capital gains (under Income Tax Act) and dividend distribution tax (DDT).

Capital Gains

If any investor holds a mutual funds unit of the scheme for a period of up to one year, provisions of short-term capital gain (STCG) are applicable on the sales proceeds. The applicable tax rate on such securities is 15%. So, if you have a unit of mutual funds that you sell within a year, you are liable to pay 15% as tax of the capital gain on sale proceeds for that financial year.

However, if the investor holds the units of the mutual fund scheme for a period exceeding one year, then the capital gains earned by you are called long-term capital gains (LTCG). LTCG above Rs.1 lakh is taxed at 10% without indexation benefits.

Dividend Distribution Tax (DDT)

On mutual funds, dividend distribution tax is applicable at 10%. Dividend distribution tax is applicable on dividend receipts. This amount is taxable in the hands of the corporates. The corporates deduct the dividend distribution tax before giving any dividends to its investors. The investors do not have to pay anything as it has been already deducted. Therefore, there is no need for investors to pay additional dividend distribution tax on dividends received on their investment.

Conclusion

It could be concluded that on a mutual funds unit held for 1 year or less, the applicable tax rate is 15% on total gain. Whereas, in cases where mutual funds have been held for more than 1 year, a tax rate of 10% is applicable on total gains. Also, dividend distribution tax is applicable at 10% which is automatically deducted from the dividends and paid by the corporates.

October 15, 2020

How to Save Money For a Child’s College Education

Education is one the most powerful weapons in today’s competitive world. We live in an environment where change is constant. Education prepares us for coping with these changes around us. In simple words education is the quality of one’s life; how a person lives, talks and treats others around him/her.

A Good education is important for all of us. A proper education usually involves huge sums of school, college and tuition fees. Good education never comes free. Just like money is important for our day to day needs, similarly, money is very important for higher education. Not only knowledge, but values and moral habits too comes with our learning. For a rich and highly esteemed family, it is easy to spend money, but for an average middle-class family, it is important to maintain a proper system of their income and spending.

If you are a new parent, your child is young, it is beneficial to start saving for your child’s college education from today. This will not only reduce your burden in the future but will also be healthy for your expenditures. In many Indian families, it is often seen that the parents are not very highly educated but they want to make their children do well. But due to less income, they can’t afford the fees of the colleges. For such conditions, the loan facility is becoming common nowadays. Most Indian families face financial problems in regard to their child’s education, this problem is overcome due to loan facility, which is beneficial for the parents as well as children. However, the interest rates on such loans are very high which puts a big burden on the shoulders of the children and their families.

If you are aiming to make your children study in a well-known institute, the best way is to start early savings. As early as you will start to save the better it will be. Ideally, you should start when your child is born. Even small savings each much can help a lot. Also, it is important to invest in assets and get a great return. Mutual funds are the best option for investing your money. Long-term investments are generally time-consuming but are worth your money and time. Proper investment and high returns are the essential steps towards your child’s dream. In between the savings and expenditures, don’t make it complicated that it leads to loss of your major part of income. We can help to formulate a plan by giving the best advice that will protect your income from the loss and will give you a better version of savings for your child’s college education.

According to the experts, if you have 12 to 15 years for your child’s college education, equity funds are the best option. Also, one of the effective ways to save for your child’s education and future is to create a savings account for your child and start depositing the amount regularly. It will be an easy and convenient way of saving for your child’s future. There are certain children’s education plans which guide you with what to do and how to save your money for educating your children.

Having a good and pre-planned child education policy can also be helpful for you and your children. Every parent wants a safe and secure future for their children. A bright future is not possible without the light of education and knowledge. Make your child’s education your first priority, control some not-so-important expenditures and put those in your child’s education savings.

Financial mentor like ourselves will give you a well-planned estimation providing you the best advice that will be helpful for you as well as beneficial for your future. Income, expenditure, and savings, balancing these three can make your present and future on track.

Education is a light that guides your future but doesn’t come without a cost. Making this cost worth spending, your aim should only be on acquiring education. At an early age, during school days children start to build their dreams. The fulfillment of these dreams depends upon his/her higher education so you can’t compromise regarding education. Your child’s dreams are precious, make them come true by saving accurately for your children’s college education because education needs no compromise so every parent needs to save for their children.

October 12, 2020

How Much Should a Couple Save For Retirement ?

Retirement means a permanent leave from a particular job or a working place. At a young age when you are doing any job or work, you earn income which is satisfactory over your expenses and lifestyle. On the other hand, life after retirement is not exactly a joy ride. Not only do you have to change your lifestyle but also have to balance your expenses and needs. In your early year when you save some part of taxable income, these savings will surely help you in your future. Most of you can’t judge how much to save your income for future use. Some experts suggest that one should invest at least 15-20% of their monthly income towards retirement funds. For working couples, mutual decisions and understanding play an important role to decide the lifestyle after retirement.

Couples planning for retirement have to face certain challenges at their age. It is said that at the age of 40 you make real money. Making decisions regarding your money is not easy. There are certainties, possibilities, and also uncertainties. Retirement requires balancing between these. Your lifestyle portrays the estimation of money that you will need. Try to save 15% of your income per year. Keep that as your ‘savings for retirement’. Retirement involves a combination of personal planning and financial planning. Retirement planning includes calculation of expenses, identifying the income sources, and programming the savings.

The process of retirement planning can be held by the professionals called retirement planner by the national association of personal financial coach. You can approach an experienced retirement planner such as ourselves. Also, there is a retirement calculator that can help you in estimating how much money you need before retirement and how to make plans for it. It is easy when you have to plan a retirement as an individual but is a little difficult couple. This is because you both differ in spending, needs, income. There are certain points which must be crystal clear between you both, like-

“How you want to spend the rest of your life after retirement?”

“where you want to live after retirement?”.

“What you want to do after we get to retire?”

Being a working couple and planning to retire, you must plan the spending and prepare a budget for your upcoming life probably after retirement. The option for you is the retirement planner. A retirement planner will help you in the ways you could never plan. Retirement planning must be efficient and worth executing, which can be done by a planner.

Considering the age and health difference one of you may live longer than the other, keeping all these points under consideration, one must plan for the retirement. When it comes to a well-planned future after retirement, you should always take some good advice from a professional i.e., retirement planning advisor. A retirement planning advisor gives you a piece of suitable and effective advice regarding your plans, expenses, savings, and income.

Keeping his advice in mind, you can put up your requirements, needs, and other relevant details in Infront of the retirement planner. keeping in mind all your points, he will formulate a perfect plan for your future (life after retirement). For a working couple, best way to secure their futures are investment and assets. One should invest in money plans and long term-investments.

Keeping some part of your income for investment will be beneficial. Investments are long term as well as short term. Long term investments are mostly beneficial. Investing in funds and policies will give you a satisfactory result after a certain point in time. With the growing age, consciousness regarding health rises. Your saving and investment can come at the time of a health emergency.

Consulting with a retirement planner will reduce your stress as planning is the first step of every activity we do. Making a complete retirement plan will give you a clear vision of your life before and after retirement. The Future is uncertain and unpredictable so we should always be ready for the challenges. Life after retirement is much more tough and full of challenges. Retirement planning, planners, and advisors make your future bright and also less stressful, leading a well-planned life after retirement.

October 9, 2020

The Complete Beginner Guide to Budgeting

In today’s fast-paced world, managing your finances has become more crucial than ever. Whether you’re looking to save for a dream vacation, pay off debts, or simply gain a better understanding of your spending habits, creating a budget is the foundation of financial success. If you’re new to budgeting, fear not! This informative and human-friendly guide will walk you through the basics of budgeting and help you get started on your journey towards financial stability.

Understanding the Basics of Budgeting

Budgeting is essentially a plan for your money. It’s a tool that helps you allocate your income to various expenses and financial goals, ensuring that you have a clear overview of where your money is going. The ultimate goal of budgeting is to spend less than you earn and make intentional choices about your financial priorities.

Creating Your Monthly Budget

Calculate Your Income: Begin by determining your total monthly income. This includes your salary, any side gig earnings, and other sources of income. This step will give you a clear picture of how much money you have to work with.
List Your Expenses: Make a list of all your monthly expenses. Categorize them into fixed expenses (e.g., rent/mortgage, utilities, insurance) and variable expenses (e.g., groceries, entertainment, dining out). Don’t forget to include periodic expenses such as annual subscriptions or quarterly bills.
Set Financial Goals: Define your short-term and long-term financial goals. Whether it’s building an emergency fund, paying off debt, or saving for a major purchase, having specific goals will guide your budgeting decisions.
Allocate Funds: Distribute your income to cover your expenses and contribute to your financial goals. Start by covering your fixed expenses and then allocate funds for variable expenses. Be sure to prioritize your goals during this step.

Practical Budgeting Tips for Beginners

Be Realistic: When creating your budget, be realistic about your income and expenses. Overestimating your income or underestimating your expenses can lead to frustration and failure.
Track Every Expense: Keep track of every penny you spend. This will help you identify areas where you might be overspending and make necessary adjustments.
Emergency Fund: Always allocate a portion of your budget to an emergency fund. Life is unpredictable, and having a financial cushion will prevent you from derailing your budget in case of unexpected expenses.
Review and Adjust: Your budget isn’t set in stone. Regularly review your budget to ensure you’re staying on track and making progress toward your goals. Adjustments might be necessary as your circumstances change.
Use Technology: Take advantage of budgeting apps and tools that can simplify the process. Many apps categorize your expenses automatically and provide visual representations of your spending patterns.
Stay Disciplined: Budgeting requires discipline and commitment. Stay focused on your financial goals, and remind yourself of the rewards that come with responsible money management.

In conclusion, budgeting is a powerful tool that can help you take control of your finances and work towards a more secure financial future. By understanding the basics of budgeting, creating a well-structured monthly budget, and following practical tips for beginners, you’ll be well on your way to achieving your financial goals. Remember, the key is consistency and a willingness to adapt as your financial situation evolves. Happy budgeting!

September 24, 2020

What are Difference between ULIP and Mutual Fund

This is one of the most commonly asked questions by a potential investor who is often confused by the mix use of these 2 investment instruments. Many financial planners use these terms interchangeably. However, ULIP and Mutual Fund are two separate concepts. We have explained the meaning of ULIP and Mutual Fund and the difference between them.

Mutual fund

Mutual fund is an investment plan where your money is managed by a portfolio manager. He puts your money into multiple companies on the basis of your investment objectives and associated risks. For every investment made in mutual fund, certain units of that fund are allocated to the investor. There are multiple types of mutual funds available in the market; each having its investment objectives, liquidity and risks.

Unit Linked Investment Plans (ULIP)

Unit linked investment plans are a hybrid combination of investment and insurance schemes. Herein, a small portion of the monthly premium goes to secure life insurance and the rest is invested just like a mutual fund.

Difference between ULIP and Mutual Fund

Basis	Mutual Funds	ULIP
Regulating Authority	SEBI	IRDAI
Product Type	Investment	Insurance
Liquidity	Highly liquid	Less liquid
Potential Returns	High returns subject to market risks	Low returns as part of it are invested in the insurance
Lock-in period	Only in ELSS	3 to 5 years
Tax benefits	ELSS are eligible for deduction under 80C. Long Term- Equity Funds: Tax Free Debt Funds: 10% or 20%	Deduction under 80C
Charges	Low- 1% to 2.5%	No upper limits
Portfolio Disclosure	Mandatory Disclosure	No such requirement

Regulating Authority and Product Type

Mutual funds are an investment product and are regulated by the Securities Exchange Board of India (SEBI). The Unit linked investment plan is essentially an insurance plan with additional investment option.

Liquidity and Lock-in Periods

Multiple mutual funds options are available in the markets viz. equity, debt, growth, index, hybrid, etc. Most of the mutual funds are highly liquid as compared to less liquid ULIPs, as ULIPs are meant for a relatively long time. Usually, only ELSS mutual funds have a lock-in period, rest all mutual funds can be redeemed easily almost anytime.

Potential Risks & Returns

ULIPs are less prone to market risks are they are insurance instruments. Mutual funds are comparatively riskier as they invest directly into the market which is highly market. This volatility is also the reason why mutual funds give a higher return than ULIPs. ULIPs offer a safer but lower return as a chunk of it is invested in insurance policies.

Portfolio Disclosure

As per the rules of SEBI, the companies have to maintain a strict disclosure of transactions and such other information. SEBI has directed all fund managers to send the portfolio statement via email to its unit holders every month. Such rules and regulations help to ensure transparency and accountability. On the other hand, there is no such regulation for ULIPs.

Tax Benefits & Charges

The charges associated with mutual funds are as low as 1% to 2.5% which is far lesser than that of ULIPs. Charges on ULIPs have been reported to be as high as 18% and there are no such upper limits. ULIPs are eligible for deduction under section 80C. The ELLS category of mutual funds is eligible for deduction 80C. Mutual funds options other than ELSS do not have deduction under section 80C but they provide additional tax benefits such as returns on mutual fund up to a certain limit is exempt. Also, as per general reports LTCG on such mutual funds attracts much lesser tax.

September 9, 2020

How its Benefits of Investing in Mutual Fund Online

Investment in mutual fund online is gaining popularity as the easiest ways of investing. Such investment could be done by accessing our Website or downloading the VSRK mobile application.

Benefit of investing in mutual funds online

There are various benefits of investing in mutual fund online. We have mentioned some of them as following-

Online Registration and E-KYC

The customers can register online through filing the necessary information and submitting the required documents viz. PAN card and Aadhar card. Such information is sent to the backend for verification. Once the information is verified you are ready to invest.

Option to Invest in Small Amounts

Investing in mutual fund online gives you the option of investing in various securities in small amount. You have the option to start your SIPs with just rupees 500 per month. By keeping out a small portion of your salary aside you would be able to accumulate a wealth over a long time.

Ease of convenience

Investment in mutual funds online is one of the simplest and the easiest form of investment. in this you just need to have the access to the website or mobile application of your AMC. You can access your portfolio information, current stock rates and various other information just through one click.

Liquidity

One of the most important benefit of online investment in mutual funds is the liquidity. the investors have the option to redeem the unit at any point of time. However, mutual funds do have factors like pre exit penalty and exit load we should be taken into consideration before redemption.

Security of funds

All the mutual fund related transaction come under the scope of SEBI. SEBI is a government regulated organization regulates AMCs to maintain transparency and accountability of transactions. Its aim is to safeguard the investors and solve their grievances. Further, SEBI makes it compulsory for all mutual funds to disclose their portfolios every month.

August 20, 2020

Difference Between Capital Budgeting and Capital Planning

In the modern world, most of the day to day decisions of a normal business include basic marketing & operational activities such as how to approach a customer, how to increase market reach, how to take the business online, how the stores shall be arranged, and how many employees are needed for a smooth running of the business, etc. However, such businesses are also required to make other essential decisions such as capital budgeting and planning. These 2 terms, i.e. capital budgeting and capital planning are often used synonymously. However, they are not the same. In the given article, we will try to differentiate between capital budgeting & capital planning.

Capital budgeting is defined as, how businesses choose the best investment alternative to ensure growth and high profitability. It refers to identifying and evaluating large projects that provide cash flows over a period longer than a year. It helps an organization to decide whether or not an organization should fund a specific long term investment. It is the process to evaluate potential major projects or investments. Such methods are often used where a big long term investment is made such as procurement of new machinery, construction of a new plant and acquiring other businesses. Capital budgeting involves the valuation of a company’s lifetime cash inflows and outflows from a project to determine whether the decisions of investing in that project are feasible or not. On the other hand, the process of capital planning tells you where the money for capital projects comes from. It includes preparation of a detailed portfolio by evaluating predicted cash flows, asset values and withdrawal plans. It also provides a roadmap to meet the goals and objectives strategized by the businesses. Capital planning contains several processes that business owners follow while accomplishing various goals. It is the is a comprehensive evaluation of an organization’s current pay and future financial state by using current known variables to predict future income, asset values and withdrawal plans.

Capital budgeting, thus, determines what investments an organization makes by evaluating the expected cash inflows, initial outlays and scrap value of the asset after expiry. Whereas, Capital planning deals with the questions of how this selected investment would be funded after evaluating an organization’s overall cash inflow, cash outflow, asset values and withdrawal plans.

August 6, 2020

What Is the Debt-Snowball Method?

Legendary investor, Warren Buffet has called the power of compounding- the eighth wonder of the world. Compounding is the process in which an asset’s earnings are reinvested to generate additional earnings over time. This return can be in the form of interest, dividend or capital gains. Compounding can be explained as interest on interest- the effect of which is to magnify returns to interest over time, this is also known as the “miracle of compounding”. This can very well be understood by the example of a snowball.

Have you thought what happens when you push a small snowball down a hill? When you push it down a hill, it continuously picks up more snow. By the time it reaches the bottom of the hill it is a giant snow boulder. While falling downhill it gets bigger with every revolution. The same happens with money, if you invest INR 100 for 2 years at 10% compound interest p.a., at the end of 1st year you have INR 110. Now, for the second year, the whole INR 110 is reinvested. So you get interest in this INR 110. Therefore, you get INR 121 at the end of the second year.

It is not a secret anymore that you can grow the money you save by investing it to earn a return. You can make your money grow faster if you reinvest the returns along with the principle amount. Various investments like savings accounts, fixed deposits, recurring deposits and bonds pay interest. Such investments provide you with clarity as exactly how much money you’re going to earn. Here, you still benefit from compounding by reinvesting your earnings on other investments, like stocks, mutual funds and exchange-traded funds.
Additionally, Rule 72 is a highly used method for understanding the application of the power of compounding. It is a technique to identify at what period would a particular sum of money double it at a given rate of interest. It requires you to divide the number 72 by the rate of interest. For example- if you invest a sum of money in a fixed deposit at an interest rate of 8% p.a. it would take 9 years for you to double the amount (72/8).