Tag Archives: wealth

Thursday Trivia ~ 7 Stepping Stones towards Estate Planning

We tend to have an inbuilt strength that some of us have never realized. One often makes use of that strength completely unaware of it. That strength is the power of giving a life related advise. And the best part is we tend to give a right advice when it comes to someone else but don’t follow it in our own lives. The reason is best known to each individual but that’s not the point of today’s article.

Today’s article is based on Estate Planning. It relates to handing over one’s asset to the next generation. So my dear reader, now you know why I started with ‘power of giving advice’ as an inbuilt strength. Whenever we hear about some property dispute, the very first thing we say, it Mr. X had written everything in his will or planned how to distribute his wealth then his children won’t be fighting in the court. It’s true but have we done it for ourselves? The answer is always No – because most parents are over-confident that their children won’t fight in the court for property. There is love and bond between them. So did Mr. X think before passing away.

We constantly hear about its importance but never quite practically do it. One particular reason that pops up in our interactions with investors is that Estate Planning is long and tedious. So here are 7 ways to make the process less tedious.


  • Keep paperwork in order

When we go for a long drive, the most important part is to check whether our vehicle is in good shape. Right from fuel to oil to tire pressure, every tiny detail is of significant importance. Other way to look at it is, a sum of these tiny details tend to provide a pleasure filled long drive.

Imagine, going for a long drive from Mumbai to Ahmedabad with tire problems, low oil and fuel issues. That constant worry won’t provide a peaceful journey.

In a similar light, when we speak about wealth creation or achieving our financial goals, these tiny details hidden inside our paperwork is of utmost importance. The reason one is constantly worried is because they don’t know how their money is spread out. Worst is when one person dies and the second generation has absolutely no clue.

Hence, it’s important to vet the paperwork. Make sure the investments are in joint names (preferred), nomination is appropriate, they are filed properly, so on and so forth. Infact, in our last Thursday Trivia ~ 5 Things to do during Lockdown, we have given 1st priority to reorganise paperwork. If you’ve not done it so far, then we request you to get it done.

  • Check for any Unpaid Premiums or Discontinued Policies

One thing that always stands out while organizing paperwork is lapsed or discontinued policies for which premiums weren’t paid. Along with some discontinued SIPs of a mutual fund of which we don’t remember the name.

Yes, it’s a disappointing feeling of missing that due date of payment. Reason for which cannot be ascertained now. Yet, it makes a very important case for us so that we set reminders in our smart phones next time.

  • Check for Investments that are Matured but no Redeemed

Sometimes going through investment paperwork might bring out a bunch of surprises. My personal experience was a mutual fund that my father bought back in 2000s and I got to redeem it in 2018 at a clear 8 times return. We didn’t even know these mutual fund existed before. There were some physical share certificates too. Upon demat of these shares, we found that bonuses were given by a few companies which meant our investment value was much more than we had anticipated.

Also, there were a few physical share certificates which were good for nothing. One often finds light and dark while going through previous investment certificates.

A friend of mine had an interesting case. He found an old PPF account of his father, which hadn’t been redeemed or closed even after the active contributions were stopped and lock-in period of 15 years was over. Uncle told me that he completely forgot about it as my friend was able to take care of household expenses. However, the family was in need of funds to purchase a new home and this PPF money came in handy. His loan amount reduced by half and after 2 years, he repaid the loan fully.

Hence, its prudent to check for any PPF account, fixed deposits, recurring deposits, mutual funds, etc.

  • Pool all the Investments under a single umbrella

So while going through these shocks and surprises, it’s important to create a single umbrella for these investments. If there are multiple broking accounts, it’s worthwhile to bring them under a single broking account. Similar is the case with insurance and mutual funds.

This activity should be done with the help of a financial advisor. You should ask him to create a single window to view your financial investments. When you have that single window, then thinking about estate planning becomes a lot simpler. Because now you know where all the eggs are and how to distribute them becomes an easier decision to make.

  • Create 1 page Wealth Report

Estate planning is not just about financial investments alone. It also two major asset classes in physical investment space – Gold and Real Estate / Property.

1 page report offers a single window to look at your complete wealth. This enhances the ability to make decisions on passing on wealth to the next generation.

In Indian households, real estate is where most of the money is parked. It constitutes around 40% to 60% or in some cases even 80% of their total wealth. Hence, distribution amongst children becomes a problem. 

An uncle of mine had 4 daughters and a 2BHK house in South Bombay was his only property with some pension coming from his years in Government service. After he passed away, 4 daughters have been fighting for possession of the house. They have thought about selling it but expectation of money is different. So nobody in his right mind is even coming to see that property. So now the property is there but none of these daughters can enjoy that wealth. 

So what should have been a solution to this? Of course, uncle should have written a will stating the terms and conditions on how to sell and who will get what. That’s exactly the next point in this article.

  • Write a Will

1-page wealth report allows a person to then decide how to pass it on to the next generation. Divide it equally or not, is a decision that can be taken with complete conviction.

There are multiple formats under which a person can write a will. Also, it’s better to get a No Objection Certificate from the beneficiaries to the will and get it notarized so that the next generation won’t spend time in court fighting out for your hard earned assets.

One should also try and impart their value system of life through a will. The words should be carefully chosen as they will be an important communication to the next generation. Try to request the next generation to take good care of wealth bequeathed to them and never compromise on ethics to gain quick money.

“Dishonest wealth will dwindle, but what is earned through hard work will be multiplied.” – Bible 13:11

  • Give a portion of Wealth for Charity

One important part of Estate Planning should be charity. It’s our moral obligation to give back something to the society that helped us live a meaningful life. Sharing our wealth with those who are less fortunate often gives us a deeper satisfaction.

Just like Chankya said, “Money earned must be kept circulating and put to some good use. Just like the water of a pond having an inflow and outflow system is clean. On the other hand, Water-logged ponds collect dirt in them.”

To conclude, it’s important to spend time sharpening your axe before going to cut a tree. Same applies to organizing paperwork. A good amount of time is spent in bringing information under a single umbrella. After that, next steps are relatively easy. Hence, don’t be lazy with your paperwork.

If you need any assistance for your estate planning, please reach out to us. We will be happy to be in service.

– Jinay Savla

Thursday Trivia ~ 5 New Year Resolutions for Creating Wealth and Managing Finances

Resolution 1: Create a budget for life

When it comes to finances, life can be viewed as cash flowing in—and out. Saving and investing during your working years, if you stick with it, should lead to a rising net worth over time, enabling you to achieve many of life’s most important goals. Creating your own budget and net worth statement can help you build your road map and stay on track. Here are steps that can help:

  • Create a budget and pay yourself first. At a minimum, be sure to have a high-level budget with three things: how much you’re taking in after taxes, how much you’re spending, and how much you’re saving. If you’re not sure where your money is going, track your spending using a spreadsheet or an online budgeting tool for 30 days. Determine how much money you need to cover your fixed monthly expenses, such as your mortgage and other living expenses, and how much you’d like to put away for other goals. For retirement, our rule of thumb is to save 10–15% of pre-tax income, including any contribution from an employer, starting in your 20s. If you delay, the amount you may need to save goes up. Add 10% for every decade you delay saving for retirement. Once you commit to an amount, consider ways you can save automatically. Research shows that saving is easier when you “pay yourself first.” 
  • Calculate your personal net worth annually. It doesn’t have to be complicated. Make a list of your assets (what you own) and subtract your liabilities (what you owe). Subtract the liabilities from the assets to determine your net worth. Don’t panic if your net worth declines during tough market periods. What’s important is to see a general upward trend over your earning years. 
  • Project the cost of essential big-ticket items. If you have a big expense in the near term, like children education or house rennovation, allocate your savings and treat that money as spent. If you know that you’ll need the money within a few years, keep it in relatively liquid, relatively safe investments like short-term deposits or money market funds. If you choose to invest in a FD, make sure the term ends by the time you need the cash. If you have more than a few years, invest wisely, based on your time horizon.
  • Prepare for emergencies. We suggest creating an emergency fund with three to six months’ worth of essential living expenses, set aside in a savings account. The emergency fund can help you cover unexpected-but-necessary expenses without having to sell more volatile investments.

Resolution 2: Manage your debt

Debt as we have been saying can be seggragated into good loan or bad loan. For most people, some level of debt is a practical necessity, especially to purchase an expensive long-term asset, such as a home. However, problems arise when debt becomes the master, not the other way around. Here are 3 things that I want to discuss which one should resolve to manage debt.

  • Keep your total debt load manageable. Don’t confuse what you can borrow with what you should borrow. Keep the monthly costs of owning a home which includes principal, interest and insurance below 30% of your pre-tax income and your total monthly debt payments including credit cards and auto loans and below 35% of your pre-tax income.
  • Eliminate high-cost consumer debt. Try to pay off credit card debt and avoid borrowing to buy depreciating assets, such as cars and mobile phones. The cost of consumer debt adds up quickly if you carry a balance. Consider consolidating your debt in a low-rate loan or liquidating some of your assets to generate cash. You can also check with your bank if any to up is available on your home loan. Set a realistic budget and have a planned schedule to pay back your loans.
  • Keep a check on your credit score. CIBIL allows you to generate a free credit score report every year. You can search for free credit report and find the link for CIBIL’s website. Resolve to generate this report and keep a track of your score. Any outstanding credit card balance which is pending due to dispute will also show up here. Its important that you settle all these outstanding balances. Outstanding dues lead to detoriation of credit score which will impact your ability to borrow in future. 
  • One Time Settlement of outstanding dues. Once you have settled the disputes and repaid all outstanding, make sure to receive a no due confirmation from the lender.

Resolution 3: Optimize your portfolio

We all aim for getting better returns on our investment. But research shows timing of markets is difficult and can be counter-productive. Also this urge of making higher return forces you to keeping looking for new products and take bigger risk. So create a plan that will help you stay disciplined in all kinds of markets. Follow your plan and adjust it as needed. 

What are the ideas to help one stay focused on their goals.

  • Focus first and foremost on your overall investment mix. After committing to a savings plan, how you invest is your next most important decision. Have a targeted asset allocation that you’re comfortable with, even in a down market. Make sure it’s in sync with your long-term goals, risk tolerance and time frame. The longer your time horizon is, the more time you’ll have to benefit from up or down markets. I cannot stress enough on this point. Its very simple but difficult to implement. Resolve that one should invest looking at the future goals. 
  • Diversify across and within asset classes. Diversification reduces risks and is a critical factor in helping you reach your goals. Mutual funds and exchange-traded funds (ETFs) are great ways to own a diversified basket of securities in just about any asset class.
  • Consider taxes. Invest in relatively tax-efficient investments, like debt mutual funds instead of Fixed Deposits. If you trade frequently, do consider that transaction cost and taxes do eat up into your investment returns. Various tax benefits are available on certain investments, but as pointed earlier invest with future goal in mind and not only for saving tax. 
  • Monitor and rebalance your portfolio as needed. Evaluate your portfolio’s performance at least once a year using the right benchmarks. Remember, the long-term progress that you make toward your goals is more important than short-term portfolio performance. As you approach a savings goal, such as the beginning of a child’s education or retirement, begin to reduce investment risk, if appropriate, so you don’t have to sell more volatile investments, such as stocks, when you need them.

Resolution 4: Prepare for the unexpected

Risk is a part of life, particularly in investments and finance. Your financial life can be upended by all kinds of surprises—an illness, job loss, disability, death, natural disasters. If you don’t have enough assets to self-insure against major risks, make a resolution to get your insurance needs covered. Insurance helps protect against unforeseen events that don’t happen often, but are expensive to manage yourself when they do. So let me lay out the guidelines that can help you prepare for life’s unexpected moments.

  • Protect against large medical expenses with health insurance. Select a health insurance policy that matches your needs in areas such as coverage, deductibles, co-payments and choice of medical providers. I think this is a no brainer and more and more people are aware about it and are ready to allocated money for covering this risk.  
  • Purchase life insurance if you have dependents or other obligations. If you have minor children or you have large liabilities, you need life insurance. Consider having a low-cost term life policy. These days policy is available to age of 80 or even 85 which is more than enough. Also make sure not to mix investment with insurance and go only for pure term cover. 
  • Protect your earning power with add on insurance covers. Generally these covers get ignored because of lack of awareness. 2 covers that one must look at is Personal accident or a disability cover and a critical illness cover. These covers come in handy when these particular risks play out help one retain his earnings in scenarios where one might get incapacitated. 
  • Protect your physical assets with property insurance. Check your homeowners and auto insurance policies to make sure your coverage and deductibles are still right for you. Review your homeowner’s policy to see what’s covered and what’s not. Talk to your agent about flood or fire insurance if either is a concern for your area. 

If you’re tech-savvy, consider storing inventories and important documents on a portable hard drive. It’s also a good idea to have copies of birth certificates, passports, wills, trust documents and insurance policies in a small, secure “evacuation box” the fireproof, waterproof kind you can lock is best, that you can grab in a hurry in case you have to evacuate immediately. Make sure your trusted loved ones know about this file as well, in case they need it.

Resolution 5: Protect your estate

An estate plan may seem like something only for the wealthy. But, there are simple steps everyone should take. Without proper nominations, a will and other basic steps, the fate of your assets or that of your children may be decided by the court. Taxes and fees can eat away at these assets, and delay the distribution of assets just when your heirs need them most. Here’s how to protect your estate—and your loved ones.

  • Review your nominations, especially in PF account, pension plans and life insurance. The nomination is your first line of defense, to make your wishes for assets known, and ensure that it gets transfered to whom you want, quickly. Keep information on nomination up-to-date to ensure the proceeds of life insurance policies and retirement accounts are consistent with your wishes, your will and other documents
  • Update or prepare your will. A will isn’t just about transferring assets. It can provide for your dependents’ support and care, and help you avoid the costs and delays associated with dying without one. Keep in mind that what’s written in a will is considered the ultimate wish and will override the nominations in various assets, so make sure all documents are consistent and reflect your desires. When writing a will, we recommend working with an experienced lawyer or estate planning attorney.
  • Coordinate joint holding with the rest of your estate plan. Designation of someone as a joint holder of your property or any other investments, can affect the ultimate disposition of your assets. Talk to a lawyer to make sure they reflect your wishes, and are consistent with will you are writing.
  • Consider creating a revocable family trust. This is especially important if your estate is large and complex, and you want to spell out how your assets should be used in detail. A family trust may not be needed for smaller estates where nominations, joint holding and a will can be sufficient. But talk with a qualified financial planner. 
  • Take care of important estate documents. Make sure a trusted and competent family member or close friend knows the location of your important estate documents.

Thursday Trivia ~ 5 Golden Nuggets for Every Young Star

It’s been 5 years since Rajesh started his full time job. In the past, he has done many part time jobs to support his education. Apparently, Rajesh comes from a very well to do family. But it’s his father’s wish to have Rajesh finance his own education and take care of his life ahead. It may sound hard but this has actually worked in his favor. There have been times in the past when Rajesh may have complained to his father innumerable times but his father didn’t seem to give it a second thought. As a result, today Rajesh is living a dream life just when his other peers are trying to get hold of their careers. But there is one problem. Despite of making a lot of money, Rajesh seems to be running out of money all the time. As usual, just like his peers, every month end he would look at his bills and say, ‘Mumbai – A City of Dreams’ and accept his fate that he will never be able to save anything. Just like what every son does, when faced with a problem the very first person to turn to is – father.


His father listened to the whole story with great patience. After a brief moment of silence, father said, ‘Rajesh just do 5 things that I say henceforth and money will never trouble you.’  Let’s look at those golden nuggets which changed Rajesh’s life forever.


  1. Save First – Spend Later


It’s not that people with the best careers or high income earning professionals have the most comfortable financial future post retirement. However, during the course of a career, everyone seems to think that way. The next job switch, promotion, bonus, commissions, etc. will lead to a better financial future, yet the reality is far from truth.


Rajesh was driven about creating a better career because of which he never gave enough thought to his money habits. His father gave him a small formula : Income – Saving = Spending


Budgeting for savings is equally important. Every month, a person is exposed to installments to be paid for home / office, car / bike, fees for children’s education and other adhoc expenses. Most of these expenses are directly debited from the bank. Hence, it’s wise to first decide how much to save and then spend.


  1. Emergency Fund


Rajesh’s father asked him, if he ever considered his job being lost? Answer was obviously No. However, Rajesh thought a lot of his colleagues stood the chance of losing their jobs. It’s a classic case of underestimating bad events that happen to a person and overestimating the same bad event happening to some one else. As a result, his father asked him if there was enough money in the bank to keep the house floating for 6 months if Rajesh ever lost his job. Again, the answer was No.


As a result, Rajesh now considered keeping an emergency fund which would sustain the expenses of his house for at least 6 months.


To add a small note, emergency fund should not be created for purchase of a gadget, downpayment for a car, or a vacation.


  1. Insurance


Everyone takes insurance when they start working. Usually, at start of career the cover seems to be adequate. But as life progresses, not many bother to look at whether their insurance cover would still be enough? Even the omega question of whether it’s a plain insurance policy or an insurance policy which has an investment option is never thought about.


On hearing this, Rajesh took a note of this and called up his insurance advisor to review his policy the very next day.


  1. Asset Allocation


Doctors always suggest every person to have a regular health check up done atleast once a year. However, it’s common to see very few follows such an advise. Most others visit a doctor only when something serious happens to them. When Rajesh’s father asked him to keep a wealth manager, the first sentence which he said, ‘I can’t afford a wealth manager, I don’t have enough money.’


More often than not, people miss out on keeping a wealth manager under a common notion that they don’t have enough money, just like they won’t visit a doctor because their health is not bad. In this notion, a person misses out on the fact that it’s important to start from somewhere. Starting small builds a solid foundation of future wealth. Also, it provides enough flexibility in terms of asset allocation.


Rajesh never thought about making investments in different asset classes. He always had invested his money in shares of a company suggested by his friends. A small fixed deposit was created just because bank managers had asked him to. Yet, he wasn’t aware about the return on investment in both his investments. When his father took a note of it, Rajesh replied with a stern voice ‘it’s not my job.’ To a large extent, he is right. It’s not his job to select a good company to invest or check out for any further options available. That’s where his father suggested on having a wealth manager look at it.


A plethora of investment options are available to every investor, such as mutual funds (equity and debt), commodities (gold / silver), portfolio management services, liquid funds, etc. Since, it’s not the job of every person, they don’t have enough exposure to the same. Even creating different allocation strategy with these investment options are not taken as seriously as they should be.


For more please read the asset allocation series we published some time back – Series 1, Series 2 and Series 3.


  1. Celebrate Life, Not Money


The real use of money is the very problems it helps to solve. Rajesh could never believe that in the very rat race of his career he had forgotten that it was his father’s birthday. Rather than celebrating a birthday, they were worried about his finances. To which his father asked, when was the last time he took his wife out for a long drive. Rajesh could barely remember, when he looked at his calendar it was already 6 months and they had not even taken a day off from work. Weekends were spent either sleeping or working.


If we are working so hard for money, does money work hard for us? Think about it for a while. If money is not working hard for us, then are we not missing out on the true golden nuggets of our life such as family, friends, life partner, children and our close confidants. When was the last time, you had a cup of tea with your friends without an inch of stress of work or when was the last time you played some sport with your children? That’s where it’s best to have an expert wealth manager who makes our money work hard for us, while we steal these little moments of life.

– Jinay Savla