S&P BSE Sensex*	Re/US $	Gold Rs/10g	Crude ($/barrel)	FD Rates (1-Yr)
36,496.37 |-45.26 -0.12%	68.95 |-0.39 -0.57%	29,742.00 | -405.00 -1.34%	72.58 |-1.87 -2.51%	5.00% - 7.00%

 

Everyone knows farmers are a big vote bank for all political parties, as is the rising middle class, who carry a significant weight in the vote-race.

And in the name of development, land-grabbing from farmers is perfectly acceptable because these voters are easily pacified with announcements of developments. So are the people working in the unorganised sectors, especially those who have no social security support—house help, gardeners, drivers, and daily wage-workers, among others.

These days, Pension Fund Regulatory Development Authority (PFRDA) is pondering on the idea of increasing the pension slabs under Atal Pension Yojana (APY) to Rs 6,000 p.m, Rs 7,500 p.m., and Rs 10,000 p.m.

At present there are 5 slabs—Rs 1,000 p.m., Rs 2,000 p.m., Rs 3,000 p.m., Rs 4,000 p.m. and Rs 5,000 p.m.

PFRDA is conducting a feasibility study on shuffling the minimum guaranteed pension slabs. It’s also examining the potential government liability that the dispensation might have to assume on account of this. There are over 1 crore subscribers so far and the total collections have been around Rs 4,500 crore.

For those who don’t know what APY is…

APY aims to provide pension to workers (who are citizens of India) and bank account holders from the unorganised sector. APY aims to help them voluntarily save for retirement.

[Read: Should You Depend on Atal Pension Yojana for Retirement Needs?]

Were the government and PFRDA too conservative initially about the minimum guaranteed pension when the scheme was launched in the Union Budget 2015-16?

Or are these early signs of what to expect from the government in the pre-election year?

What’s still unclear is whether such revision in slabs would result in subsequent rises in the contributions.

While it’s extremely crucial to make India’s social security system robust, all governments until date have fallen short of their efforts in this regard.

Unfortunately, social security camouflages ‘vote security’.

Under APY, the entry age limit is 18-40 years and the pension starts at 60. Meaning a person starting at 18, contributes for 42 years and after 60, he/she will receive Rs 6,000 or 7,500 or Rs 10,000 every month, depending on the quantum of contributions.

Even if you assume average inflation of 5.0% for next 42 years, the value of Rs 6,000 at that time would not be more than Rs 775 in today’s terms.

What do we (as a nation) achieve by running such big machinery in the name of social security?

This is the most inappropriate way one can choose to plan one’s retirement.

Can anybody run a household in such paltry amount today? You may starve during your retirement if you depend on social security systems such as APY.

Then, what’s the right approach?

Successful retirement planning is a science.

✔ Start early

✔ Estimate your post-retirement inflation-adjusted cash-flow requirements

✔ Consider your life-expectancy

✔ Take into account your risk appetite too

✔ Invest regularly and intelligently

✔ Review your portfolio periodically

And…you are done!

But, it’s easier said than done.

[Read: The Step-by-Step Approach To Retirement Planning]

Curbing the temptation to spend money is difficult, which makes it nearly impossible for many of us to invest regularly. If you overcome this hurdle, investing intelligently is another task where people often fail.

Being influenced by the emotional appeal that insurance companies create to market their pension and retirement plans, you are likely to end up with a bad deal.

Similarly, if you rely only on fixed income instruments such as Public Provident Fund (PPF) and other Small Savings Schemes (SSS), you may fall short of retirement savings, as these savings don’t generate high inflation-adjusted returns.

In other words, unless you invest in risky assets such as equities and therein prudently in equity-oriented mutual funds right since the prime phase of your economic life cycle, you are unlikely to beat the inflation bug and create an adequate corpus for your retirement.

When you invest in equity through mutual funds, you enjoy a whole host of benefits such as diversification, economies of scale, and professional management to name a few.

You can invest as low as Rs 1,000 per month in equity mutual funds through Systematic Investment Plan (SIP) route to take exposure to equity; but you must begin early!

This is not to say, fixed-income instruments don’t have any role in your retirement plan. In fact, you should craft a personalised asset allocation and invest accordingly for all your financial goals, including retirement.

Investing in equity mutual funds through SIPs can make your dream of living a blissful retired life come true.

[Read: Best SIPs for 2018]

But, here, the key is prudent selection of mutual funds schemes.

Want to learn how to select winning mutual funds? Download and read PersonalFN’s guide: 10 Steps To Select Winning Mutual Funds. This guide is a great valuable resource.

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PersonalFN has a dependable track record and has efficiently guided investors to achieve their envisioned financial goals. The recommendations are unbiased and research-backed. A comprehensive rating methodology is followed.

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Happy Investing!

How I Got My Wife To Invest In Mutual Funds…

“Mutual Funds Sahi Hain” (mutual funds are good), is what I told my wife a decade ago, after we were united in wedlock.

[Read: Are All Mutual Funds ‘Sahi Hai’? Find Out Here…]

Like every couple who engages in sensible money-talk after marriage, we were trying to understand each other’s outlook towards money (even though ours is a love marriage).

One thing we agreed on was, while we want to live a comfortable lifestyle, saving and investing is imperative for a bright and secure financial future––our child’s education, marriage, and even our own retirement.

But one thing we differed on initially was taking some risk and investing in mutual funds.

I have always been a big proponent of investing in mutual funds, particularly equity mutual funds for long-term wealth creation.

In contrast, my wife had been investing in bank fixed deposits, recurring deposits, and other small saving schemes. Back then, she was not exactly risk-averse but had heard stories about people losing money in the stock market and mutual funds. Perhaps this clouded her faith in investing money in mutual funds.

To read more, please click here.

Is Your Mutual Fund Portfolio Based On Your Risk Profile?

Barry Ritholtz, an American author, newspaper columnist, and equity analyst, has aptly said, “When it comes to investing, there is no such thing as a one-size-fits-all portfolio.”

Unfortunately, not many Indian investors understand the importance of customization of financial advice.

Take the example of Shashank and Shekhar.  Both of them are old friends.

To read more, please click here.

How Mutual Fund Distributors And Banks Cheat You

Does your mutual fund distributor often make you invest in New Fund Offers (NFOs)?

Does your mutual fund distributor churn your portfolio heavily and at frequent intervals?

Do you have more sector and thematic funds in your portfolio?

Do you hold more close-ended funds that the open-ended diversified equity funds?

Do the majority of schemes in your portfolio underperform their benchmark indices?

If 'yes' is the answer to most of the above questions, you are perhaps the victim of mutual fund mis-selling.

To read more, please click here.

Is Mutual Fund Categorization Affecting Your Portfolio? Review It Now!

Rahil will turn 37 next month.

His mutual fund portfolio has matched that number already.

He has 37 mutual fund schemes in his investment portfolio.

About 12 years ago, he started investing in mutual funds and since then, he has been piling up his portfolio with New Fund Offers (NFOs) and star-rated schemes.

[Read:Why To Skip NFOs, And Instead Consider Building A Strategic Mutual Fund Portfolio ]

[Also read: Why You Should Stop Looking At Mutual Fund Star Ratings Now]

Being a seafarer who goes on voyages for 6-8 months,  the only time he focuses on investments is when he’s back on home soil.

Unfortunately, his investment strategy is predominantly via a lump-sum and a meagre sum through Systematic Investment Plans (SIPs).

To read more, please click here.

Kotak Balanced Advantage Fund: Advantageous For Your Portfolio?

Kotak Balanced Advantage Fund (KBAF) being a dynamic asset allocation fund will hold the flexibility to invest across equity, debt and money market instruments.

KBAF may also invest upto 10% of its total asset in Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs).

Further, for the purpose of hedging and portfolio rebalancing, KBAF may invest in derivative instruments (viz. index futures, stock futures, index options, stock Options, warrants, convertible securities, swap agreements, etc.) as permitted by the regulatory guidelines.

To read the complete note, click here.

5 Basic Steps To Pick The Best Mutual Funds To Invest For The Long Term

The Best Value Funds For 2018 — Don't Rely On Mutual Fund Categorisation

Real Rate of Return: A real rate of return is the annual percentage return realized on an investment, which is adjusted for changes in prices due to inflation or other external effects. This method expresses the nominal rate of return in real terms, which keeps the purchasing power of a given level of capital constant over time. Adjusting the nominal return to compensate for factors such as inflation allows you to determine how much of your nominal return is real return.

Quote: "The Stock Market is designed to transfer money from the Active to the Patient”‒Warren Buffett