Category: Financial Goals

Couples can effectively save together by adopting a strategic and collaborative approach to their finances

Couples can effectively save together by adopting a strategic and collaborative approach to their finances. Here are some practical tips:

Set Common Financial Goals:
Discuss and Align: Have open conversations about what you want to achieve together, whether it’s buying a house, saving for a vacation, or planning for retirement.
Create a Vision Board: Visualize your goals together to keep motivation high and ensure you’re both on the same page.

Create a Joint Budget:
Track Expenses Together: List all income sources, regular expenses, and discretionary spending to understand your combined financial picture.
Allocate Savings: Decide how much to save each month for your joint goals and make it a non-negotiable part of your budget.

Open Joint Accounts for Shared Goals:
Savings Account: Consider opening a joint savings account dedicated to your shared goals. This makes tracking progress easier and keeps you both accountable.
Emergency Fund: Establish a joint emergency fund to handle unexpected expenses, ensuring that financial stress doesn’t impact your relationship.

Automate Savings:
Set Up Automatic Transfers: Automate monthly contributions to your savings and investment accounts to ensure consistency and avoid the temptation to spend.
Use Apps: Utilize budgeting and saving apps that can help both of you stay on track and get alerts on spending.

Regular Financial Check-Ins:
Monthly Review: Schedule monthly or quarterly check-ins to review your progress, adjust your budget, and discuss any financial concerns or changes.
Celebrate Milestones: Acknowledge when you reach small goals; it keeps the process rewarding and motivating.

Divide and Conquer Responsibilities:
Shared Responsibilities: Assign roles, such as one partner handling investments while the other manages the budget. This ensures both are involved and contributing actively.

Be Transparent and Communicative:
Open Dialogue: Be honest about your financial habits, fears, and expectations. Transparency builds trust and helps you work together more effectively.

Prioritize Debt Repayment:
Attack Debt Together: If either of you has debts, prioritize paying them down together. This not only reduces financial stress but also strengthens your teamwork.

Plan for the Unexpected:
Insurance and Wills: Secure life and health insurance for both of you and consider setting up a will. These measures protect your financial future.

Invest in Your Future:
Long-Term Investments:Consider investing in mutual funds, stocks, or real estate to grow your wealth. Plan for retirement together and make contributions to secure your golden years.

By working together, setting clear goals, and maintaining open communication, couples can create a strong financial foundation that supports both their current lifestyle and future aspirations.

August 30, 2024
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
October 6, 2020
5 Most Common Personal Financial Mistakes
For better or worse, money is a big part of most people’s lives and it’s easy to get caught up in financial mistakes that will hurt you in the long run if you’re not careful.

Certain financial mistakes can wreak havoc on your financial future, leaving both you and your loved ones under the shadow of uncertainty. If you are constantly putting off decisions relating to insurance and investment planning, you may be doing a disservice to your financial health.

Read on as we discuss 5 such common financial mistakes that can have dangerous ramifications.

1. Not buying insurance(Term/Medical)

If you think buying insurance is a waste of money, you’re probably making a costly mistake. Insurance comes to the rescue to bail us (or our dependents) out of a serious crisis like no one else. One must ensure that they’re adequately covered. So that their family members are not left in the lurch after their demise. As far as life insurance is concerned, you’ll be well-advised to go for a policy with a sum assured that’s at least 10 to 15 times your annual income. You may also consider to go for a no-frills term insurance plan. It can get you adequate coverage without steep premiums, especially if you start the policy at a young age.

Also, in the present times of high medical inflation, it’s always advisable to have a comprehensive medical insurance cover for the entire family.To prevent precious savings or investment returns from getting drained to fund hospitalisation expenses. And no, your office-provided group health insurance policy may not provide adequate coverage or complete protection in the absence of important add-ons (like critical illness cover, pre- and post-hospitalisation cover, etc.). You should consider going for a personal health insurance plan with sufficient coverage amount and choose a plan that meets the medical requirements of all the policy beneficiaries.

2. Not having in place an emergency fund

Well, you may have no control over life’s uncertainties (like a sudden job loss or a family emergency), but you can definitely try to immune your finances from their impact by being farsighted. And having in place an adequate emergency fund is perhaps your best bet to that end. Ideally, you should set aside at least 3-6 months’ worth your expenses in a separate savings account as your emergency fund. And, contrary to popular opinion, it’s okay even if you build your emergency fund in a fixed deposit account and let it earn more interest than a normal savings account. You can easily liquidate it in minutes through your mobile banking application in the face of an emergency by losing just 1% of the interest value.

3. Not budgeting

For most people the word budget evokes a negative feeling, something that restricts us from living life freely. However, truth be told, reckless spending can lead to depletion of savings, emergency fund or investment capital in no time. Worse, this may leave you in an avoidable debt situation (and sink your credit score) that can put breaks on your journey to attain financial freedom.

It’s very important that you have in place a proper budget for your expenses and avoid random overspending to ensure you meet your important financial goals in time, like raising down payment fund for your home or setting up a retirement corpus (more on this in the point below). And yes, it’s better if you plan out even for your “desire spends” like vacations, gadgets, etc.

Here are some helpful pointers:
- Allocate a realistic budget for your expenses (like groceries, conveyance, shopping, etc.) at the beginning of the month and try not to breach them
- Take help of a budgeting mobile app if need be
- Track all your expenses and look for ways to cut down on wasteful spends (like skip hefty gym memberships if you prefer to work out at home, ditch frequent cab rides if you can manage with public transport, start cooking at home if you spend a lot eating out, so on and so forth).
4. Investing without predefined financial goals

Setting precise short, medium and long-term financial goals provide direction to your investments. Once you have in place a specific goals, it becomes easier to channelize your savings and other investment returns to meet that goal within the time-frame. On the contrary, investing without proper goals may lead to confusion and you may have to struggle to arrange for funds to meet an important requirement at the last minute, something that could have easily been achieved if you had planned for it in advance.

One more thing: investing just to save taxes shouldn’t be your only financial goal.

5. Investing only in low-risk low-return instruments

It’s a fact that no one likes to lose money, but investing only in low-risk and low-returns instruments (like only fixed deposits or recurring deposits) can jeopardise your financial goals. In other words, not taking any risks is risky too. So, depending on your age and financial goals, one must look to intelligently spread out their investments in a number of low-risk, medium-risk and high-risk instruments so that one ensures they grow their wealth over time while keeping the overall risk factor under control.And avoid some financial mistakes.

This is important, especially to meet important goals like raising an adequate retirement fund. If you only invest in low-returns “guaranteed” instruments, you might find your fund inadequate to sustain your post-retirement life, especially when you consider inflation eating away value of returns and the rising cost of living. Things can complicate further as you might not have a regular source of income then.

As a result, it’s better that you add slightly riskier instruments in your investment mix too, like equity mutual fund SIPs and even real estate. That being said, it’s superlatively important that you have complete clarity on how different investment tools work, what’s the inflation-and-tax-adjusted returns and other exit loads, etc. before making any investment decision. Do thorough research, seek professional help if need be, but don’t take the plunge based on hearsay or assumptions.

These prudent strategies will go a long way to ensure you hold your ground in your journey to grow your wealth.

Source:financialexpress.com
September 17, 2019

Tata Capital Financial Services Limited NCD

Tata Capital Financial Services Ltd is coming with the 2nd tranche of public issue of secured, redeemable non-convertible debentures of face value of Rs 1,000 each, up to Rs 2997.9 crore and Unsecured, Subordinated, Redeemable, Non-Convertible Debentures of face value of Rs 1,000 each (“Unsecured NCDs”) up to Rs 1128.1 crore aggregating upto Rs 4126 crore (“Tranche II Issue”). The base issue size of tranche II issue is Rs 500 crore with an option to retain oversubscription upto Rs 3626 crore, aggregating upto Rs 4126 crore (“Residual Shelf Limit”).

The issue will open for subscription from August 13, 2019 to August 23, 2019 (The Issue shall remain open for subscription during the period indicated above except that the Issue may close on such earlier date or extended date as may be decided by Board of Directors of the Company (“Board”) or the Working Committee). The company will be paying an interest ranging between 8.35% and 8.85% p.a. on these bonds.

The proposed NCDs issue has been rated ‘CRISIL AAA/Stable’ by CRISIL and CARE AAA; Stable by CARE Ratings Limited. Instruments with this rating indicates highest degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk.

Objects of the Issue: TCFSL proposes to utilise the funds which are being raised through the Tranche II Issue, after deducting the Tranche II Issue related expenses to the extent payable by TCFSL (“Net Proceeds”), towards funding the following objects (collectively, referred to herein as the “Objects”):

For the purpose of onward lending, financing, and for repayment /prepayment of interest and principal of existing borrowings of TCFSL; (atleast 75%); and;
General Corporate Purposes (upto 25%)

Issue Details

Issuer	Tata Capital Financial Services Limited
Issue Size	Public issue of secured, redeemable non-convertible debentures of face value of Rs 1,000 each, up to Rs 2997.9 crore and Unsecured,Subordinated, Redeemable, Non-Convertible Debentures of face value of Rs 1,000 each (“Unsecured NCDs”) up to Rs 1128.1 crore aggregating upto Rs 4126 crore (“Tranche II Issue”). The base issue size of tranche II issue is Rs 500 crore with an option to retain over subscription upto Rs 3626 crore, aggregating upto Rs 4126 crore (“Residual Shelf Limit”).
Issue opens	Tuesday , 13th August 2019
Issue closes	Friday , 23rd August 2019
Allotment	First Come First Serve Basis, Compulsory in demat form
Face Value	Rs 1000 per NCD
Issue Price	Rs 1000 per NCD
Nature of Instrument	Secured Redeemable Non-Convertible Debentures and Unsecured Subordinated Redeemable Non-Convertible Debentures eligible for inclusion as Tier II capital.
Minimum Application	Rs 10,000 (10 NCDs) collectively across all Options and in multiple of Rs 1,000 (1 NCD) thereafter across all Options
Listing	NCDs are proposed to be listed on BSE and NSE
Rating	‘CRISIL AAA/Stable’ by CRISIL CARE AAA; Stable by CARE Limited
Security and Asset Cover	The principal amount of the Secured NCDs to be issued in terms of the Tranche II Issue together with all interest due on the Secured NCDs, as well as all costs, charges, all fees, remuneration of Debenture Trustee and expenses payable in respect thereof shall be secured by way of first ranking pari passu charge on the identified immovable property and on identified book debts, loans and advances, and receivables, both present and future, of TCFSL. TCFSL has created the security for the Secured NCDs in favour of the Debenture Trustee for the NCD Holders on the assets to ensure 100% security cover of the amount outstanding in respect of the Secured NCDs, including interest thereon, at any time.

Allocation Ratio

Institutional Portion	Non-Institutional Portion	High Net Worth Individual Portion	Retail Individual Investor Portion
15% of the Overall Issue Size	15% of the Overall Issue Size	35% of the Overall Issue Size	35% of the Overall Issue Size

Credit Rating:

The NCDs proposed to be issued under this Tranche II Issue have been rated “CRISIL AAA / Stable” for an amount of upto Rs 7,50,000 lakh by CRISIL Limited vide its letter dated August 15, 2018, revalidated vide its letter dated August 27, 2018 and further revalidated by letter dated July 25, 2019, and have been rated “CARE AAA; Stable” for an amount upto Rs 7,50,000 lakh by CARE Ratings Limited vide its letter dated August 14, 2018, revalidated vide its letter dated August 27, 2018 and further revalidated by letter dated July 26, 2019. The ratings of the NCDs issued by CRISIL Limited indicate highest degree of safety regarding timely servicing of financial obligations.

Liquidity and Exit Options: The Bonds are proposed to be listed on the BSE and NSE

Allotments in case of over subscription: In case of an over subscription in a category, allotments to the maximum extent, as possible, will be made on a first-come first serve basis in that category and thereafter on proportionate basis, i.e. full allotment of the Secured NCDs to the Applicants on a first come first basis up to the date falling 1 (one) day prior to the date of over subscription and proportionate allotment of Secured NCDs to the applicants on the date of over subscription (based on the date of
upload of each Application on the electronic platform of the Stock Exchange, in each Portion)

Company Background:

Tata Capital Financial Service Ltd is a Systemically Important Non – Deposit taking Non – Banking Financial Company (“ND – SI – NBFC”) focused on providing a broad suite of financing products customized to cater the needs of various segments. It has a robust marketing and distribution network which provides customers a diversified financial services platform with presence in 23 states through 125 offices as on June 30, 2019. Its financing products include:

Corporate finance: The Corporate Finance Division (“CFD”) offers commercial finance which offers vanilla term loans, working capital term loans, channel finance, bill discounting, construction equipment finance, leasing solutions, lease rental discounting, promoter finance and structured products. In addition, the Special Assets Management Group (“SAMG”) was formed to manage the project finance portfolio of the erstwhile infrastructure finance division;

Consumer finance: The Consumer Finance and Advisory Business Division (“CFABD”) offers a wide range of consumer loans such as car and two wheeler loans, commercial vehicle loans, tractor loans, business loans, loans against property, personal loans, consumer durable loans and loans against securities;

Additionally, it has launched Tata cards, which are white label credit cards that enable customers to earn and redeem points across Tata group partners and offers convenient payment options in the form of EMIs. TCFSL is promoted by and is a wholly owned subsidiary of Tata Capital Ltd. (TCL), which is a diversified financial services company providing services through its subsidiaries to retail, corporate and institutional clients. TCL is the financial services arm of the Tata group, which is a diversified global business group serving a wide range of customers across varied sectors such as steel, motors, power, chemicals, telecommunications and hospitality.

TCFSL’s total income (Consolidated) and profit after tax from continuing operations of the Company (Consolidated) for the year ended March 31, 2019 stood at Rs 5,585.66 crore and Rs 432.81 crore respectively. The loan outstanding of the Company stood at Rs 44,623.97 crore as on March 31, 2019. The CRAR, as of March 31, 2019 computed on the basis of applicable RBI requirements was 16.84% compared to the RBI stipulated minimum requirement of 15% as per the Prudential Norms of RBI. The gross NPAs and net NPAs as a percentage of total loan and advances outstanding was 2.45% and 0.39% respectively as of March 31, 2019.

Key Operational and Financial Parameters:

Parameters	Fiscal 2019 (as on March 2019) (Ind AS) (Rs in Cr)
Net worth	5,723.11
Total borrowings of which	39,805.66
i) Debt Securities	16,091.48
ii) Borrowings (other than debt securities)	20,416.58
iii) Subordinated liabilities	3,297.60
Property, plant and equipment	914.87
Capital work in progress	0.62
Intangible assets under development	1.08
Other intangible assets	21.79
Financial assets	45,058.96
Non-financial assets	1,208.64
Cash and cash equivalents	251.63
Bank balance other than above	0.36
Investments	381.59
Financial liabilities	2,046.24
Non-Financial liabilities	1,942.74
Total income	5,585.66
Revenue from operations	5,529.68
Finance cost	3,125.01
Impairment on financial instruments	451.53
Profit for the year from continuing operations	432.81
Total Comprehensive Income	428.55
Gross NPA (%)	2.45
Net NPA (%)	0.39
Tier I Capital Adequacy Ratio (%)	12.11
Tier II Capital Adequacy Ratio (%)	4.73

Competitive Strengths of the company

Integrated financial services platform
Diversified and balanced mix of businesses
Robust internal processes and risk management framework
Synergy and parentage of Tata group
Widespread operational network
Strong and experienced management team
Strategy
Consolidate existing lines of business
Explore new business opportunities
Leverage technology advantage
Expand client base and geographical presence
Attain and retain talented professionals

Key Risks and Concerns:

Fluctuation in interest rate;
Inability to sustain growth or manage it effectively;
Inability to successfully diversify portfolio;
Any disruption in sources of funding;
Inability to recover on a timely basis the full value of collateral amount which are sufficient to cover the outstanding amounts due under defaulted loans;
Highly competitive nature of the industry TCFSL operates in;
Changing laws and regulations governing the banking and financial services industry in India;
Inability to obtain or maintain statutory or regulatory approvals and licenses for conducting business; and
Inability to continue to benefit from relationship with Promoter and the “Tata” brand.

August 9, 2019

Yoga For Your Financial Health

Practicing yoga daily keeps our health on track, while a systematic investment plan helps us keep our financial health on track. It allows us to see the bigger picture and set realistic and achievable goals. With a proper financial plan, taking big financial decisions become easier and compatible.

Yoga and investments have a lot of things in common and you could incorporate certain yogic techniques in your financial life to beat the stress associated with it.

1. Discipline
Only if you are fully committed while doing yoga you will be able to reap rewards. Similarly, a disciplined and regular approach in investments can help you achieve your financial goals. Starting a disciplined investment through SIP even of a small amount in a lifelong journey would help in creating a big corpus for your sunset years.

2. Practice
You will not become an expert at yoga overnight. Practice makes you perfect. Similarly an inexperienced as well as a seasoned investor learn and gain knowledge with respect to the field of investments as much they can. Right knowledge about the behavior of a particular asset class might also help to increase your risk appetite.

3. Patience
With yoga, one cannot expect results overnight. Similarly one cannot expect to make money in a month. Warren Buffett once quoted, “Someone’s sitting in the shade today, because someone planted a tree long ago.” It is never too late to start investing, but the earlier, the better. If you want to enjoy the shade of a big tree, you need to plant the seed today!

4. Lifelong investment
Yoga is a lifelong investment to achieve healthy mind, body and soul. In a similar manner, systematic investment towards the identified goal such as retirement, will help you achieve those goals in their defined time period.

5. Focus
While performing asanas in yoga you must focus on your breathing or else it could be detrimental. When it comes to investments, many people at some point experience equity market volatility and end up withdrawing their investment. By doing so you are locking losses and missing out on future potential profits.

By adopting a focused investment approach and gearing your assets towards meeting your financial goals, the day-to-day fluctuations will not affect your plan. For your long-term investment strategy to work, you need to stick to your investments.

Conclusion:
Investors who seek quick and easy returns on their investments are generally not successful. By understanding the process behind long-term investing, a mature and patient investor can avoid excess risk and become financially successful. As long as your money is working hard and taking you towards your pre-decided goals, there is no reason to look anywhere else. Just focus on your goals.

Source:Moneycontrol.com

June 21, 2019
5 Mantras for a Secure Financial Life

The month of March marks the end of the fiscal year. Some of you may feel that you have not done enough to save Taxes. You all want to get your finances right. A realisation to do so is a good beginning. The month of March is just about the right time to look forward to the new financial year with hope and better planning ideas to secure your financial future.

Here are five financial mantras that you may follow in the new financial year:

Mantra 1: Analyse your Finances To form a long-term friendship with your finances, you need to know your finances well. By analyzing your finances, you get a clear picture of your capacity to fulfil financial Goals, your saving and spending habits.
TIP: Record your every expense. Analyse your expenditures. Make a list of items, before going shopping, stick to it.
Effect of Mantra 1: “I know, my capacity to save, invest and spend.”

Mantra 2: Seek financial advice Financial Advisers can help you make the right investment decision, at the right moment. Seeking financial advice can also help you overcome investment biases and bust myths.
TIP: Seek financial advice before investing.
Effect of Mantra 2: “I know, I am going in the right direction to reach my financial Goals.”

Mantra 3: Plan your Taxes early By planning your Taxes soon, you can integrate your Tax Saving Goal with various other financial Goals. That can be done quickly with the help of ELSS (Equity Linked Savings Scheme). However, you might miss this chance by planning your Taxes at the last moment.
TIP: Plan your Taxes early. Divide your Tax Saving amount into 12 SIPs (Systematic Investment Plans).
Effect of Mantra 3: “I am having a stress-free financial year-end. I’m not only saving Taxes, but also accomplishing my Goals.”

Mantra 4: Invest in Mutual Funds Mutual Funds offer a plethora of Schemes. Each scheme is designed to fulfil specific financial Goals. You can choose Funds that suit your risk profile. In addition to returns, Mutual Funds also offer many benefits like rupee cost averaging, compounding, investment discipline and risk diversification.
TIP: Have a separate portfolio for each of your Goals.
Effect of Mantra 4: “I don’t have to worry about uncertainties like inflation. Mutual Funds are like an umbrella that protects my money during rainy days.”

Mantra 5: Review your Portfolio Markets and government policies keep changing, from time to time. It would be best if you were sure that you are making appropriate investments to reach your Goals. Therefore, you should regularly review your portfolio.
TIP: Consult a financial Adviser, if you are unaware of when and how to review your portfolio.
Effect of Mantra 5: “I can fulfil my financial Goals easily. I feel financially secure now.”

April 1, 2019

Category: Financial Goals

Couples can effectively save together by adopting a strategic and collaborative approach to their finances

Understanding Real Estate Investment Trust (REIT)

5 Most Common Personal Financial Mistakes

1. Not buying insurance(Term/Medical)

2. Not having in place an emergency fund

3. Not budgeting

4. Investing without predefined financial goals

5. Investing only in low-risk low-return instruments

Tata Capital Financial Services Limited NCD

Yoga For Your Financial Health

5 Mantras for a Secure Financial Life