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Are you concerned about your retirement prospects in these turbulent times?Do you feel anxious about whether you have saved enough, invested wisely, and planned adequately for your golden years? If so, you are not alone. Many people struggle with retirement confidence, especially in the face of economic uncertainty, inflation, and rising costs of living.

But there is hope. You can take steps to improve your retirement confidence and prepare for a comfortable and fulfilling future. Here are some tips to help you:

𝐂𝐫𝐞𝐚𝐭𝐞 𝐚 𝐜𝐨𝐦𝐩𝐫𝐞𝐡𝐞𝐧𝐬𝐢𝐯𝐞 𝐫𝐞𝐭𝐢𝐫𝐞𝐦𝐞𝐧𝐭 𝐩𝐥𝐚𝐧: A retirement plan is more than just a savings goal. It is a detailed roadmap that outlines your income sources, expenses, lifestyle preferences, and contingency plans. A retirement plan can help you estimate how much money you will need, how long it will last, and what adjustments you may need to make along the way.

Unlocking Your Financial Future: Retirement Planning 101 – Mutual Funds- AMFI Registered Mutual Fund Distributor (shahfin.com)

𝐏𝐫𝐢𝐨𝐫𝐢𝐭𝐢𝐳𝐞 𝐬𝐚𝐯𝐢𝐧𝐠𝐬 𝐚𝐧𝐝 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭𝐬: Saving and investing for retirement is not optional. It is essential for building your nest egg and ensuring your financial security. The sooner you start, the more time you have to benefit from compound interest and growth. Aim to save at least 15% of your income for retirement and invest it in a diversified portfolio that matches your risk tolerance and time horizon.

𝐒𝐞𝐞𝐤 𝐩𝐫𝐨𝐟𝐞𝐬𝐬𝐢𝐨𝐧𝐚𝐥 𝐠𝐮𝐢𝐝𝐚𝐧𝐜𝐞: Retirement planning can be complex and overwhelming. You may benefit from the advice and expertise of a financial planner or advisor who can help you create and implement a realistic and effective retirement plan.

𝐒𝐭𝐚𝐲 𝐩𝐨𝐬𝐢𝐭𝐢𝐯𝐞 𝐚𝐧𝐝 𝐟𝐥𝐞𝐱𝐢𝐛𝐥𝐞: Retirement confidence is not only about numbers. It is also about attitude and mindset. Having a positive outlook can help you cope with uncertainty and overcome challenges. Being flexible can help you adapt to changing circumstances and seize new opportunities. Remember that retirement is not a destination but a journey that can be rewarding and enjoyable if you plan ahead and stay optimistic.

Retirement confidence is possible, even in today’s uncertain financial environment. By following these tips, you can improve your retirement confidence and look forward to a bright future.

𝐂𝐨𝐧𝐜𝐥𝐮𝐬𝐢𝐨𝐧 Don’t let the uncertainties of the present deter you from planning for your retirement. Start taking action today and take control of your financial future. With careful planning, discipline, and the right guidance, you can achieve the retirement you envision.

Planning for retirement is an essential aspect of personal finance. In this blog post series, we will explore the key steps to secure a comfortable retirement and achieve financial freedom. Stay tuned for valuable insights and practical tips!

Planning for retirement is often an overlooked aspect of personal finance, especially in a fast-paced world where immediate financial goals take precedence. However, it is crucial to start early and prioritize retirement planning to secure a comfortable future and achieve financial freedom. In this blog post series, we will delve into the key steps and strategies for effective retirement planning, providing valuable insights and practical tips along the way.

Step 1: Set Clear Retirement Goals

The first step in retirement planning is to define your goals. What kind of lifestyle do you envision for yourself during retirement? Would you like to travel the world, spend time with family, pursue hobbies, or start a new venture? Understanding your retirement dreams will help you determine the financial resources you will require to achieve them.

Step 2: Assess Your Current Financial Situation

To effectively plan for retirement, you need to evaluate your current financial standing. Take stock of your assets, investments, savings, and debts. Consider consulting a financial advisor who can assist you in assessing your financial situation comprehensively. By understanding your current financial status, you can set realistic targets and develop an appropriate retirement plan.

Step 3: Calculate Your Retirement Needs

Once you have a clear vision of your retirement goals and have assessed your current financial situation, it’s time to estimate your retirement needs. Consider factors such as daily living expenses, healthcare costs, inflation, and potential emergencies. While it may seem challenging to predict your expenses decades in advance, having a rough estimate will provide a solid foundation for your retirement plan.

Step 4: Create a Retirement Savings Strategy

There are different types of retirement plans in India, such as the National Pension System (NPS), Public Provident Fund (PPF), Employee Provident Fund (EPF), mutual funds, annuities, etc. These plans offer tax benefits and help you save for retirement. You need to understand the features and benefits of each plan and choose the one that suits your needs and preferences.

Step 5: Diversify Your Investments

Diversification is a key principle in retirement planning. Spread your investments across different asset classes like stocks, bonds, real estate, and international markets. Diversifying your portfolio helps reduce risk and increases the likelihood of earning returns even during market fluctuations. Regularly review and rebalance your investments to ensure they align with your changing circumstances and risk tolerance.

Step 6: Prepare for the Unexpected

Life is full of uncertainties, and retirement planning should account for them. Consider investing in insurance policies like health insurance, life insurance, and long-term care insurance to protect your assets and provide a safety net for unexpected events. Adequate insurance coverage ensures that your retirement savings are not depleted by unforeseen circumstances.

Step 6: Prepare for the Unexpected

Life is full of uncertainties, and retirement planning should account for them. Consider investing in insurance policies like health insurance, life insurance, and Critical insurance to protect your assets and provide a safety net for unexpected events. Adequate insurance coverage ensures that your retirement savings are not depleted by unforeseen circumstances.

Conclusion

Retirement planning is a journey that requires careful thought and consistent effort. By setting clear goals, assessing your financial situation, calculating your retirement needs, and implementing a savings strategy, you can unlock a financially secure future. Remember to diversify your investments, prepare for unexpected events, and regularly monitor and adjust your retirement plan. Stay tuned for more insightful blog posts on retirement planning, as we delve deeper into each step and explore additional strategies to help you achieve your financial freedom and enjoy a comfortable retirement. #RetirementPlanning #FinancialFuture

Nicolas Cage, a famous Hollywood actor, once found himself in a multi-million dollar debt due to his extravagant lifestyle and poor business decisions. However, we can learn valuable financial lessons from his experience. In this blog post, we’ll explore the lessons we can learn from Nicolas Cage’s debt and how to apply them to our own financial management strategies.

𝐈𝐧𝐯𝐞𝐬𝐭 𝐰𝐢𝐬𝐞𝐥𝐲 𝐢𝐧 𝐫𝐞𝐚𝐥 𝐞𝐬𝐭𝐚𝐭𝐞: Nicolas Cage made the mistake of investing heavily in real estate without assessing market trends and risks. When the market collapsed, he was unable to sell his properties or pay taxes and mortgages, resulting in foreclosure and losses. To avoid this, it is important to research the real estate market, invest wisely, and avoid overinvesting in a single asset class.

𝐃𝐢𝐯𝐞𝐫𝐬𝐢𝐟𝐲 𝐲𝐨𝐮𝐫 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭𝐬: Cage’s financial portfolio was heavily invested in real estate, which suffered a major downturn in the late 2000s. Diversifying your investments across different asset classes, such as stocks, bonds, and mutual funds, can help mitigate risks and protect your wealth.

𝐋𝐢𝐯𝐞 𝐰𝐢𝐭𝐡𝐢𝐧 𝐲𝐨𝐮𝐫 𝐦𝐞𝐚𝐧𝐬: Cage spent a lot of money on luxury items, such as sports cars, private jets, and yachts, and had a lavish wedding that lasted only four days. To avoid overspending, it is important to create a budget, avoid unnecessary expenses, and save for emergencies and retirement.

5 Most Common Personal Financial Mistakes

𝐏𝐚𝐲 𝐲𝐨𝐮𝐫 𝐭𝐚𝐱𝐞𝐬 𝐨𝐧 𝐭𝐢𝐦𝐞: Cage owed $6.3 million to the Tax Department for back property taxes. To avoid this, it is important to file your tax returns correctly and pay your dues on time. Hiring a professional accountant or financial advisor can also help you manage your finances more effectively.

𝐀𝐯𝐨𝐢𝐝 𝐢𝐦𝐩𝐮𝐥𝐬𝐢𝐯𝐞 𝐝𝐞𝐜𝐢𝐬𝐢𝐨𝐧𝐬: Nicolas Cage’s debt story is a cautionary tale for anyone who wants to achieve financial success and stability. To avoid impulsive decisions, it is important to assess risks, weigh the pros and cons, and seek advice from experts before making any major financial decisions.

In summary, Nicolas Cage’s financial struggles provide valuable insights into financial management. By investing wisely in real estate, diversifying investments, living within our means, paying taxes on time, and avoiding impulsive decisions, we can protect our wealth and achieve financial security. Let us learn from Cage’s mistakes and make informed financial decisions to secure our future.

Are you wondering whether to break your old Fixed Deposit (FD) to invest in a new one with higher interest rates? It’s a common dilemma that many people face.

Before you make any decision, it’s essential to calculate the penalty and the interest rates for both the old and new FDs to determine if it’s financially beneficial. Let’s break down the concept with an example:

Suppose you have an old FD of INR 1,00,000 for 1 year at an interest rate of 6% per annum. At maturity, you will receive INR 1,06,000 (which includes INR 6,000 as interest earned).

Now, you have the option to break your old FD after 6 months and invest the money in a new FD with a higher interest rate of 7% per annum for the remaining 6 months.

However, breaking your old FD will incur a penalty of 1% (INR 1,000). So, should you break your old FD and invest in a new one?

To make an informed decision, you need to compare the total returns from both scenarios.

Here’s a table to help you calculate:

From the table, we can see that if you keep your old FD, you’ll earn INR 6,000 as interest, but if you break it and invest in a new FD, you’ll earn INR 1,750 as interest and incur a penalty of INR 1,000.

Therefore, in this case, it’s not financially beneficial to break your old FD and invest in a new one. However, if the penalty for premature withdrawal is lower, or the difference in interest rates is higher, it may be worthwhile to break your old FD and invest in a new one.

Let’s take another scenario for a person who has an FD of INR 1,00,000 for a tenor of 3 years with an interest rate of 6% p.a. and is considering breaking the FD after 1 year with a penal rate of 1%:

From the table, we can see that if the person breaks the FD after 1 year, they will receive INR 1,05,000, which includes INR 6,000 as interest earned till 1 year and a penalty of INR 1,000.

On the other hand, if the person reinvests the amount in a new FD with a higher interest rate of 7% p.a. for 2 years, the maturity value after 2 years will be INR 1,14,000, which includes INR 14,000 as interest earned for 2 years.

Therefore, in this case, it may be financially beneficial to break the old FD and reinvest the amount in a new one with a higher interest rate, provided the person is willing to pay the penalty of 1% on the amount.

However, it’s important to note that the decision to break an FD should not be taken lightly, and the person should carefully evaluate the penalty charges, the difference in interest rates, and the duration of the new FD before making a decision.

Planning for RETIREMENT is an essential aspect of financial planning, and it involves putting in place a financial plan that will help you achieve your financial goals during retirement. It is important to determine your retirement goals, calculate your retirement savings needs, start saving early, and develop a retirement savings plan. By following these steps and working with a financial advisor, you can develop a retirement savings plan that aligns with your goals and helps you achieve financial security during your retirement years.

• Determine your Retirement Goals: The first step in planning for retirement is to determine your retirement goals. Consider what you want to achieve during your retirement years. Do you want to travel the world, buy a second home, or simply live a comfortable life without financial stress? Once you have established your retirement goals, you can determine how much money you need to save to achieve those goals.
• Start saving early: One of the most critical aspects of retirement planning is starting to save early. The earlier you start saving, the more time your money has to grow, and the less you will need to save each year to reach your retirement savings goals. Consider opening SIPs/STPs and contribute to it regularly.
• Develop a retirement savings plan: Developing a retirement savings plan involves outlining the steps you will take to achieve your retirement savings goals. It should include a budget, investment strategy, and a timeline for achieving your goals.
• Monitor and adjust your retirement plan: Monitoring and adjusting your retirement plan is essential to ensure that you stay on track to achieve your retirement goals. Review your plan regularly and make adjustments as necessary to ensure that you remain on track. One popular method to use during the distribution phase is the bucket strategy, where you allocate your retirement savings into different buckets based on your short-term and long-term needs. This strategy can help you manage your retirement income and expenses and ensure that you have enough money to cover your needs throughout your retirement years.

In conclusion, retirement planning is crucial to achieving financial security during your retirement years. By following these steps and working with a Professional Finance Professional (PFP), you can develop a retirement savings plan that aligns with your goals and helps you achieve financial security during your retirement years. Remember to start early, develop a plan, and adjust it regularly to ensure that you remain on track.

Indian life insurance companies are set to hike premiums for their term insurance plans after several reinsurers increased rates for underwriting portfolios of these pure-protection covers. The move comes even as the domestic life companies face higher-than-expected mortality claims due to Covid.

The Insurance Regulatory and Development Authority of India (Irdai) has issued a notice warning the public against buying motor insurance policies from the fake website Digital National Motor Insurance with email id: digitalpolicyservices@gmail.com.

The insurance regulator clarified that Digital National Motor Insurance has been selling motor insurance policies, although it has not been licensed or granted registration by the regulator to sell insurance policies of any kind.

The insurance regulator has been constantly making public cautioned against spurious calls and fictitious offers.

Considering the fact that several complaints were received from members of the public relating to spurious calls and fictitious offers involving insurance products, IRDAI launched a multipronged campaign to caution members of the public through print, electronic and social media platforms and by way of specific directions to insurers to incorporate the caution in their publicity material in policy-related advertisements as well as advertisements in print, electronic media, and Television,” said the Irdai annual report.

The regulator has also launched several insurance awareness campaigns. Some of them are:

‘BimaBemisaal’ is the brand name for Irdai’s insurance awareness campaign. It is a consumer education initiative and has the tagline “Promoting Insurance. Protecting Insured”. BimaBemisaal educates policyholders about their rights and obligations and informs them about the complaint resolution methods available to them. It also creates awareness about insurance among the general public.

Television Campaign: Irdai has undertaken a pan Indian campaign where Television Commercials (TVCs) cautioning the public on Spurious Callers were telecast on Doordarshan and Private Television channels.

Radio Campaign: Radio Jingles on Life Insurance, Property Insurance, Health Insurance, Motor Insurance, Misselling in Insurance, etc. were broadcast across All India Radio and other private FM Channels throughout the country for the purpose of creating insurance awareness, as per the Irdai annual report.

Source:livemint.com

Previous Blog: Understanding REIT: http://shahfin.com/understanding-real-estate-investment-trust-reit/

This is for education purpose and the story is made up to simplify the concept, don’t take it at face value.

Lets say I am a Real Estate developer, K Raheja. I like a land in Mumbai & Hyderabad for some commercial development. I decide to buy it. Where will I get the funds to buy & construct it?

• Self

• Bank, NBFC, MF – Debt

• Partner – someone else investing as Equity

So I invest some funds, got some from banks & MF’s & I also got Blackrock to invest to buy the land & make the business park called Mindspace. I constructed around 23-mn sq ft with multiple building & I started leasing them out to companies who wanted rented office premises.

There comes a point where I needed more funds to build new building (6.4 mn sq ft), pay off the loans etc., where do I get the funds? So I decide to do an IPO. Not of the entire company K Raheja but only this project called Mindspace. So I formed a trust or corporation.

I committed to payout 90% of my rent income to the shareholders proportionately as dividends & I will use this money to invest a minimum 80% in completed real estate, which is generating rent and will use 20% in constructing new Real Estate.

Is the IPO a win-win?

• K Raheja gets more money 2 pay off debt, investment in more commercial real estate.

• Investors will receive dividends semi annually (from the rent income) which is tax free + as its listed on the exchange the stock prices can go up.

Why will the stock price go up?

• Rents increase year after year

•  The value of the land increases

•  New construction means more business.

Why invest in a REIT?

• G-Sec is at 6% and the rent yield in commercial RE is 7.5%-8%

• Diversification – It’s a combination of Debt (rent income) & Equity (listed so prices can move)

• Investment in RE with just 50K.

Tax Structure?

There are 3 types of income,

• Rent–Tax-free

• Interest – REIT’s can also loan money to another developer (maximum 20%) & receive interest. If you receive interest from the REIT, It will be taxed at the slab rate. Practically this is very less or zero.

• Capital Gain on the stock exchange – 15% Short Term Capital Gains Tax if you sell the REIT before 3 years and 10% Long Term Capital Gains Tax if you sell the REIT units after 3 years.

• Capital Gain on the stock exchange – 15% Short Term Capital Gains Tax if you sell the REIT before 3 years and 10% Long Term Capital Gains Tax if you sell the REIT units after 3 years.

What to look for before investing in a REIT?

• Weighted Average Lease Expiry – Higher the better

• Vacancy Rate – Lower the better

• Concentration of top 10 tenants – Lower the better

• Sector Concentration – Lower the better.

REITs operate exactly like MF’s

•  Sponsor – K Raheja and Blackstone

•  Manager – K Raheja (receives AMC fees for managing the properties)

• Trustee

But

REITs and real estate mutual funds are not the same.

Disclaimer: This is not investment advice.
Source: Kirtan A Shah, you can reach him on his twitter handle @kirtan0810

In a move that will enhance the flow of information between taxpayers and tax authorities, the Income Taxn Department has launched a revised form 26AS or Annual Information Statement from this assessment year, which will reflect details of all high-value transactions.

Since the details of high-value transactions will now be reflected to the taxpayers in the new form as against the tax department earlier receiving information from financial institutions and then acting upon it, there would now be a greater onus on taxpayers to comply in a voluntary manner.

List of specified financial transactions to be available in Form 26AS

The additional SFTs that will now be reportable and will be visible in the Form 26AS are:

1. Payment of educational fees/donations above Rs 1 lakh in a year
2. Hotel bills exceeding Rs 20,000
3. Purchase of jewelry, white goods, marbles, paintings etc. exceeding Rs 1 lakh in a year
4. Life insurance premium payment over Rs 50,000 per annum
5. Payment of property tax above Rs 20,000 per annum
6. Electricity bill payment above Rs 1 lakh per annum
7. Health insurance premium payment above Rs 20,000
8. Domestic business class air travel/ foreign travel (threshold limit not yet specified)
9. Share transactions/ demat accounts/ bank lockers (threshold limit not yet specified

The SFT transactions already reportable are:

1. Purchase of bank drafts or pay orders in cash (if more than Rs 10 lakh in a year)
2. Purchase of pre-paid instruments in cash (if more than Rs 10 lakh in a year)
3. Cash deposit in the current account (if more than Rs 50 lakh in a year).
4. Cash deposit in account other than current account (if more than Rs 10 lakh in a year).
5. Time deposit (if more than Rs 10 lakh in a year).
6. Payment for credit card (if more than Rs 10 lakh in a year through non-cash methods. Limit is Rs 1 lakh for cash payments)
7. Purchase of debentures (if more than Rs 10 lakh in a year)
8. Purchase of shares (if more than Rs 10 lakh in a year)
9. Buyback of shares (if the tendered value is more than Rs 10 lakh in a year)
10. Purchase of mutual fund units (if more than Rs 10 lakh in a year)
11. Purchase of foreign currency (if more than Rs 10 lakh in a year)
12. Purchase or sale of immovable property (if more than Rs 30 lakh in a year).
13. Cash payment for goods and services (if more than Rs 2 lakh in a year)
14. Cash deposits during a specified period of 9th Nov to 30th Dec 2016 (if more than Rs 12.5 lakh in a current account or Rs 2.5 lakh in other accounts)

The aforesaid information will only be reported in Form 26AS if the transaction crosses certain threshold limits. It is worth noting that this information was also available with the tax authorities for earlier years and was used at the time of assessment proceedings. Providing this data to the taxpayers beforehand is hence likely to increase transparency in the tax proceedings.

Information relating to assessment proceedings, both pending and completed, has been included and it will show if assessment proceedings have been initiated and if yes, whether they are pending or completed.

The information will reflect in Form 26AS within three months from the end of the month in which the said information is received by the tax authorities.

In addition to the name, permanent account number (PAN ) and address of the taxpayer, the new form will also have the date of birth, mobile number, email address and Aadhaar  number as per the tax department’s database.

Form 26AS will thus be an all-inclusive document for ease of reference for taxpayers both at the return filing stage and at the time of assessment proceedings.

Conclusion: New Form 26AS will increase the information flow to the tax authorities, especially the details of all high-value transactions which will help the government  to widen the tax net and get more and more people to file their income tax returns. A total of about 55 lakh or 80 per cent of the total returns are filed by people having an income of up to Rs 5 lakh, as per the Central Board of Direct Tax’s numbers as of July 31, 2020. Only 5,066 individuals, who have an income above Rs 1 crore file returns, accounting for 0.73 per cent of the total individual tax returns.

Disclaimer: The information provided herein is based on publicly available information and other sources
believed to be reliable, but involve uncertainties that could cause actual events to differ materially from
those expressed or implied in such statements

Gold is considered by many to be a safe-haven asset, i.e., the demand for gold usually increases during times of financial crises. As the current economic scenario is plagued by uncertainty caused by the Covid19 crisis, gold has seen an increase in demand. Since the beginning of the year, i.e., January 1, 2020, up to June 19, 2020, in India, gold has given an absolutely return of approximately 14.5% in USD terms. (Source:World Gold Council)

The demand for gold has also come from central banks around the world. In fact, globally, central banks have been net buyers of gold for the last two years, and they continue to do so in 2020. In terms of metric tonnes, global gold reserves have increased by approximately 2.7% from 33,974 tonnes on 31st March, 2018 to 34,892 tonnes as on 31st March, 2020.

As can be observed from the above chart, the price of gold had appreciated significantly since the 2008 financial crises, until it reached its peak around September, 2011. The reserves of gold held by global central banks also started increasing after the 2008 crisis. This correlates with the notion of gold being considered as a safe haven asset, whose demand increases in times of financial crises.

Experts believe that it is possible that gold reserves and prices may follow a similar trend in the wake of the current economic crises around the spread of Covid-19. Even though the price of gold has increased in recent years, the demand for gold is not likely to wane in the near future. The increasing covid-19 cases have increased concerns of a delay in economic recovery. Also, possible increases in inflation due to the push for higher liquidity, lower interest rates and stimulus packages by central banks may keep the demand for gold intact. Gold is generally considered a hedge against inflation, and therefore tends to benefit from stimulus measures.Indicative of sentiment that gold is often used a safer store of value in times of economic and political crises, the holdings of SPDR ETF, a world’s largest gold ETF, have increased and stood at around 1136.219 tonnes as on June 18, 2020.

Therefore, it will be interesting to observe the demand for gold in the coming months amidst the uncertainty created by the Covid-19 crises.

Sources: IMF, Goldhub, World Gold Council and other publicly available information.

Disclaimer: The information provided herein is based on publicly available information and other sources
believed to be reliable, but involve uncertainties that could cause actual events to differ materially from
those expressed or implied in such statements.