Have you planned for your child’s future?

Diwali storms up the social whirlwig; food, dress up and meet up is all on cards. The usual worry of how to keep the kids gainfully occupied is thankfully averted during such catch ups. They find playmates and enjoy their time, which for us parents is a huge load off.

 This diwali, we too had some great fun socializing. A new parent couple among our friends got talking about how responsibilities are keeping them engaged. Life has been very different after their child’s birth and one responsibility they can’t get a handle on is money planning. More discussions among the group led to finding out that it is a rather widespread question, parents are grappling to figure. It obviously became imperative that a blog post covers the topic of planning our children’s future.

Before setting out on a task, we have to understand what is it going to achieve. So parents unanimously voted Education and Marriage as goals to work for. Both are gargantuan expenses and require disciplined action. Depending on your age, children’s age, your risk profile, choice of education field and costs involved you will have to ascertain a sum required after a said amount of time. We are mentioning the tools you can use for investing. 

SIP

When you keep a horizon as long as your child’s growing up years, SIPs in small to mid cap funds and balanced funds are your best bet. They let your money gain with the benefit of compounding year on year. For those with some risk appetite, consider funds which invest a considerable part in equities of growing companies. Balance funds are slightly less risky because they have equity and debt (such as term deposits, bonds) instruments both.

For the uninitiated, SIP is Systematic Investment Plan better known as ‘the good EMI’. You invest every month a fixed sum as small as Rs. 500 into a mutual fund. The fund is managed by a team of experts and they in turn invest in various instruments to generate returns. We have more posts on MFs coming momeys 😄


Sukanya Samriddhi Yojana
This has to be our favorite for those who have daughters. The scheme encourages parents to build a fund for the future education and marriage expenses for their female child. The scheme currently provides an interest rate of 8.3% p.a. (new rates are likely to be announced). It allows deposit upto Rs. 1.5 lacs in the name of your daughter every year and it matures when she reaches 21 years of age. You can either choose monthly or yearly contributions. Momeys should absolutely consider monthly contribution!

Insurance

Well it’s not our favorite, but we have to bring it into discussion to give you our reasons. If you search online for children investment options, you will find a gazillion ads by Insurance companies luring you with child plans. What should you do? Well our advice would be to ignore. They are mostly selling ULIPs to you which are far inferior in returns to mutual funds and charge expensive premiums. You might as well directly invest in MFs through SIP.

However, we have to add that you must take insurance, as life cover to safeguard your family and children in an unlikely event.

Gold ETFs

Gold ETFs are exchange traded funds that passively track the performance of Gold Bullion. These funds buy gold with investor’s money (on the behalf of investors) and convert it into units. 

Gold Exchange Traded Funds can also be an option if you want to invest for using them during marriage. These are traded on stock markets and are a great alternative to physical gold.

With children, you wouldn’t want to take a chance. So invest today for their tomorrow.

The Corporate Mom

Hello Moms! This is our part 2 in the Millennial Mom series. I am sure you recall our first one was The Media Mom.

To get started, I remember a discussion that dates back in time when I was a salaried employee. I was discussing my tax plan or rather the lack of it with another female colleague. I thought I was in pits as far as my investments were concerned, but to my utter surprise, my friend said that she has never made a single investment on her own. “There is something done by her husband on CA’s advice”, were her words. At that point, we were joined by another team mate and a senior, and the all women’s team shared their investments. A 5 year FD and real estate respectively were spoken of as their investments. But when asked, why these instruments, for what time horizon, what would be their future money requirements be like, these questions drew a blank. 

Now, Moms let me profile these women. Working millennial moms, married to high pressure jobs, over worked most of the times, all very well paid. Academically, management degree holders, fitness lovers, keen readers, well turned out, well travelled, conscious eaters and aware parents. Wouldn’t you expect them to be on top of their finances? But here’s the truth, they may have been HNIs along with their spouses but they were clueless about wealth creation.
Just like my colleagues, there are many millennial moms who have high disposable incomes but lack of awareness, interest and time add up to their financial ignorance. 
So there! We are sharing investments that the uninitiated can consider. These are overall recommendations which can aid in wealth generation and tax planning. However we do encourage our Corporate Mom to take help of a professional financial planner.

Emergency Fund: This is a critical element that we all must pay heed to. All the planning may go for a toss if we don’t keep an accessible emergency fund. Keeping all the money invested with a long term view may not be the best idea since exigencies can come down as a hard reality.

You should consider your 3 to 6 months expenses in emergency fund. If you are savvy about growing your money, then you can park the emergency funds in short term debt funds.

ELSS Funds: Equity Linked savings schemes are an ideal tax saving tool which can give better returns than traditional tax saving schemes. These are essentially tax saving mutual funds that come with a 3 year lock-in.

PPF: For those who are risk averse can invest in PPF for its tax efficiency but declining interest rates are definitely playing dampener on the returns. Plus a 15 year lock-in is a long enough horizon to get above-moderate returns from market linked products.

Mutual Funds: The equity markets have been climbing charts for the last few years. MFs have also been doing well therefore. Since MFs are professionally managed by a team of experts, they can be the best vehicle for working people. You don’t have to monitor market movements everyday basis. 

New investors with a long term horizon should start with large cap funds or balanced funds. 

The most preferred way for the salaried is Systematic Investment Plan better known as SIP. We will speak about it in detail in a following post.

Term Insurance: An important part of financial literacy is life cover. However due to misspelling and ignorance, it is not emphasized enough. Term Insurance is the protection that all income generators should take to cover for their lives in case of any uncertainties. It is a must for the Corporate Mom who makes a crucial contribution to household income.

In addition to above, working moms can also invest a small portion in Gold ETFs or if keen, then dabble in Equities with a long term view.

In the end, all we can say is investments don’t take as much time as we think. Moms and all women should consciously take steps towards investing. Remember Earning for Spending is not the deal, Earning for Growing is.

Checklist: How not to go broke this Diwali

It’s that time of the year when we all say Mera waala Pink.. We are feverishly preparing. Starting with Ganesh Chaturthi, followed by Durga puja, Diwali and right till Bhai Dooj, its packed with festivals. 

To give you a dekko of what all has played on our minds, here’s a cheat sheet of to-dos:

● New upholstery and wall painting

● Cleaning and home decor

● Sweets and savouries – home made and purchased

● Clothes 

● Gifting

● Pooja essentials and crackers

● Hosting a card party and attending a few 😄

This fervour is not going to leave anyone untouched. To achieve all this, major spends will happen. 

I recollect last festive season came as a big learning for a friend. Saying she went overboard in prep, would be an understatement. Some hasty swipes and she was up against massive credit card bills. Soon the festivals were upon us and she was having a delusional celebration owing to money worries.

To prevent from getting carried away, here’s is a checklist everyone should run past.

1. Have you checked inflow (salaries, bonuses received) vs. outflow (fixed expenses, bonuses paid to support staff or house help)? 

2. Have you made a festival shopping budget?

3. Have you made a list of people you need to gift?

4. Are there things you can up-cycle from some other time – especially clothes / gifts / crackers

5. Have you considered saving / investing a part of your diwali bonus?

6. Can you recycle the ethnic attire in the upcoming wedding season?

7. Are you ditching physical gold purchase for ETFs or a child plan?

8. If bringing home a new car, have you paid maximum possible down payment to keep EMIs reasonable?

9. Have you regularised your festival leaves with your boss to avoid loss of pay?

10. Can you manage yourself rather than calling for professional services like home cleaning, decorations and catering?

A motley of measures can save you the post celebration crunch. Have a happy Diwali Momeys! 😊

Successful habits of a Money Managing Mom

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Money knows no short cuts. It takes an effort if not an army 😊 to accumulate the riches we so desire. Momey-hood is a tough role but no one can do better justice than us at being good money-managers. Here are our absolute best habits for Moms to excel with money.

  1. Ledger of expenses: An account of household expenses keeps the overheads under check. It also motivates to save more by keeping an eye on outflows.
  2. Due-dates: A calendar for all payment due-dates keeps you prepared for any big expenses that can knock down liquidity such as: School fee, Insurance premium, SIPs, Loan EMI, House help salaries, Credit card payment and the like
  3. Saving first rule: A good part of (minimum 30%) monthly income should be first and foremost kept for savings / investments as a rule. The balance should be used up for family’s expenses.
  4. Create separate funds: To fund your wish lists, create small pools such as travel fund, festive shopping fund. This will ensure you plan your recreational expenses and not do them on impulse. You can exhaust these funds and start all over again for your next goal.

​Your checklist to becoming an W-investor

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Hola Momies! First up we have to lay it out..

An W-investor is a combo of:

  1. Woman investor
  2. Winning investor

If you are new to investing, then we have a fun checklist here for you to find out if you have the makings of becoming an W-investor. Read on,

     ●  You make a budget every month for                      expenses: if yes then you have a discipline            to identify your cash flow. You can surely             graduate to Goal-setting for your family               and tread on the path of Financial Planning        – a must for becoming an W-investor.

 

  • You have a kitchen garden: or some home plants. When you nurture plants, you learn to have patience because there are no quick spurts, fruition takes time. This is true for investing also. A sense of time horizon is key for an W-investor – you get returns over time.
  • You compare prices in supermarket: you are either the kind who compares or you are not; there can’t be a mid way. There’s good news in store if you compare because same buying behavior will also apply to financial products and instruments. Say while purchasing Insurance you have to compare premiums or while opening an FD you have to compare rates offered by banks.
  • You like experimenting different things for family: Despite knowing your choices clearly, you like to dabble with different cuisines for family, signing up for new apps, exploring news brands in groceries.. You feel calculated risks are important to experience a variety of things.  You have thw truest grain of an W-investor because investing comes with some amount of risk for sure. And no risk is no gain.
  • Even if small, you save a sum every month: Be a proud mom for being able to save because most people are not. There are various instruments which can work with small amounts but when consistently done, can payback well. Own the badge of W-investor guilt free because your SIP may just be the smartest investment around.

 

 

What’s your dream, Mom?

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There ain’t a  mother without dreams for her children. This is true for fathers too but nothing like a mother’s innate love and desire for her kids’ bright future.

Through cinemas, tv commercials, and other media forms, we have grown up picturing a sacrificial mother – Mother India rings a bell? Giving up her own pursuits, subjecting herself to odds at work or around the house yet giving unflinching, unrelenting care is the hallmark of an Indian Mother.

But honestly, other than your love and encouragement, what does your child need to realize those big dreams? The right answer would be – Financial Planning. Have you thought about back of hand calculations of cost of child education? Right from start to higher studies. In future it may touch a few crores. And what about expenses along the way – lifestyle, indulgences for him / her like a holiday, a swanky gadget, special coaching if your child is in performing arts or sports? And Oh wait! The big fat indian wedding is not even getting accounted for. Let’s not get there, as they say.

We know raising kids is by no means economical. Then why not be smart about it and have an investment plan around it? Merely saving up is not sufficient since inflation bites hard into savings. Today’s earnings have to be channelized to meet demands later. Question is, how do you do it? Well it’s nothing short of a scientific process, but an easy one. Through this blog, we will be your friend and guide to make dreams possible. We will give out simple tools, methods and suggestions so you would be able to set your personal & financial goals, make right choices of investments and accomplish your goals.. So you Mom, won’t just be a dreamer, but also an achiever.