Financial Focus
Few weeks after end of the second wave of covid, few of my school friends came
home for a get together, after a decade. My friend's group was diverse group, with one
of them, a rich businessman, another a CXO in a company, another in a state
government job, another a financial trader, partnering with his spouse and I myself
was a consultant after 2 decades in corporate world.
While enjoying our party, having few laughs and pulling each other's leg on silly things
that we did/did not do, during our school days, each one of us revealed some issues
or challenges that they were trying to resolve with respect to their personal finances.
These challenges ranged from inadequate savings, lower income due to covid
impacting their savings potential, inflation impact, uncertainty of achieving their
financial goals for their kids, or house, health issues, high taxes, lack of liquid funds
during emergency, despite large amounts of investments, inability of their spouse to
manage the family finance and one of them even recounted what troubles she had to
navigate to recover savings bank balances after the sudden demise of her parent.
Preoccupied with their work, family commitments, attending to old parents, kids schooling, their own health and unfulfilled personal goal or uncertainty in achieving such goals, all my friends despite their education, long work experience, support from their CA or financial advisors, were not quite happy with their personal finances.
After I gave them a send-off, I sat down and recounted in my mind, the various issues that were shared and how the struggles of everyday life, uncertain times, challenging economic environment, increasing transparency of financial transactions - PAN Aadhar mapping, innumerable passwords, enormous data on shares/investment received from various sources, cluttered the mind, leading to unhappy state. During my conversations, I shared with my friends what I did to minimise this uncertainty and bring some cheer in my life in managing my personal finances. These are steps that they were quickly drawn into, while some of them were already taking these steps, during this conversation, they resolved to do it not only for their own personal finances but also help their parents with it.
The Approach and Plan
- I had written down in a A4 paper, the list of all my investments, savings account, their cust id and passwords and important data like list of mutual funds, nominee names for each of the investments, no. of term insurance taken and the name and no of the agent who managed them. I had put this in an envelope sealed it and given it a name "Sept'2020". As an alternative, I attached my consolidated statement issued by NSDL every month.
- Every six months or so, I opened the sheet made changes (password, mail id, nominee changes if any etc) and sat down with my spouse explaining to her what and where of these investments. Along with this envelope, I had also placed a file with importance documents like property documents (copy if the original is under mortgage), print of property tax paid (for reference) and also a pen drive with all these information.
- I also shared with my spouse, the purpose of each of the investment was and specifically identifying/earmarking the emergency funds, should something happen to me.
- I had written down the phone nos of my CA, who was handling my IT returns and also of investment advisor.
- Since I had a health insurance, I shared with health insurance cards, wrote down the no's that needed to be called when, the insurance is activated.
- While this sounded overkill to some of my them at that time, I shared how these conversations lead to questions from my spouse, leading to higher savings, higher apportionment for emergency funds (covid impact), releasing investment that were illiquid, lower returns and better understanding of how the financial goals were progressing.
- Couple of them, called me back thanking me that after they did this exercise, they were meticulously acted to ensure that every year, they took the full benefit of 80C, 80D and one of them even found investments lying around in various physical forms in their names/spouses' names, their parents that they had forgotten or lost track off.
- One of them informed me that, since he became meticulous about savings taxes, he stopped his bad habit of hurriedly investing in some product, not useful to him, at the fag end the year.
- It also helped one of my friend to allocate some funds on a regular basis to donation to environment cause that was close to his heart.
- In recent times, I had consolidated my portfolio in an app and shared the app id and password with my spouse to ensure continuity and safe use, when needed.
ShivKumar Swaninathan | shiv@readywealth.in
Free Lunch. Anyone?
Drawing your attention to the old Adage which we would have heard multiple times since our childhood - "There are no free lunches" which in simple words means nothing comes for free. I asked few folks and customers with whom I often interact on varied subject's to seek their viewpoint and compare it with mine for learning and to cultivate intellectual intimacy with; I even paraphrased the adage for some to simplify the meaning of the phrase and eagerly asked what would you say in response to this adage if you have to counter the phrase to prove there are important and crucial things which are free. To my surprise I did not get very convincing replies; where some even mentioned the social relief function of philanthropist's offering free lunches to the needs. We are not taking about charity. To my surprise I did not get very convincing replies; where some even mentioned the social relief function of philanthropist's offering free lunches to the needs. We are not taking about charity.
In Investments management there is always a free lunch and it's available for everyone and that thing is called "Diversification".
Diversification is a situation where there is no extra cost incurred by the Individual for doing an asset allocation to different asset classes. It attempts to maximise your returns and minimize pain during market crashes. Happy Investing! Happy Diversification !!
Sajdin Ahmed | sajdin@readywealth.in