Amit & Shalini: A Case Study of Smart Financial Planning

 

Back in 2018, Amit and Shalini, both IT professionals in their early forties, reached out to us through a referral from one of our existing clients. Based in Bangalore, the couple had some investments, but lacked a structured plan for key life goals such as their child’s education, retirement, and health coverage.

The Starting Point

Our initial assessment revealed gaps in their financial safety net and future planning:

• They had no health insurance coverage, leaving them vulnerable to unforeseen medical expenses.
• Their child, who was 10 years old at the time, had no dedicated corpus for higher education.
• Their retirement plan was insufficient, given their lifestyle needs and the uncertainty in the IT sector.

Step 1: Securing Health Coverage

The first step was to protect their family against potential medical emergencies. We helped them secure a ₹25 lakh health insurance policy with an unlimited recharge facility. This ensured that they wouldn’t need to dip into savings or investments for healthcare expenses, creating a crucial financial cushion.

Step 2: Planning for Their Child’s Higher Education

Their son’s higher education was only a decade away, so we designed a focused investment strategy:

• An aggressive SIP portfolio was initiated to maximize growth in the early years.
• We rebalanced the portfolio periodically, transitioning from aggressive funds to hybrid funds as the market reached higher valuations.
• Dynamic Asset Allocation funds were used for lump-sum investments, ensuring stability and alignment with their four-year goal horizon.

By consistently following this approach, we’ve grown the education corpus to nearly ₹60 lakh as of today. This fund will be ready for use within the next year, perfectly aligned with their son’s academic timeline.

Step 3: Building Their Retirement Corpus

While Amit and Shalini had a decent provident fund corpus, it was clear they needed to augment it to avoid a shortfall of ₹4 crore if they retired at 53. This concern was amplified by the volatile nature of IT jobs, where layoffs due to AI advancements and a younger workforce are common.

In 2018, we began a targeted retirement SIP of ₹75,000 per month. Over the years, we’ve gradually increased their contribution to ₹1.5 lakh per month. This disciplined approach, combined with strategic fund selection and periodic reviews, has kept them on track.

By 2028, Amit and Shalini are projected to reach their financial milestone of ₹4 crore in mutual funds. Along with other liquid assets, their total wealth is estimated to hit ₹10 crore, providing them with the security and freedom to enjoy their retirement without compromise.

Lessons from Amit & Shalini’s Journey

1. Start Early and Stay Disciplined: Time and consistency are key to building wealth.
2. Adapt to Life Goals: Financial planning isn’t static—rebalancing and re-evaluation are critical.
3. Health First: Adequate health coverage safeguards your investments from being derailed.
4. Plan for the Unexpected: Industry risks, like those in IT, should be factored into long-term plans.

Amit and Shalini’s story highlights how proactive planning can turn financial uncertainty into confidence and freedom. Their journey is proof that it’s never too late to take charge of your future.

At DhanCreators, we believe in turning aspirations into achievements. Our mission is clear and ambitious—to create 500+ Crorepati families by 2034. This isn’t just about accumulating wealth; it’s about enabling families to live their dreams, secure their futures, and leave lasting legacies.

We understand that every journey is unique. Whether your goal is to fund your child’s education, retire early, build generational wealth, or simply gain financial freedom, we are here to be your Saarthi—your guide and partner in this journey.

All you need to do is share your goals and dreams with us. We’ll work closely with you to create a tailored financial roadmap that aligns with your aspirations. With expertise, discipline, and regular reviews, we’ll ensure you stay on track, no matter the challenges along the way.

Your dream of financial freedom is closer than you think. Let DhanCreators help you turn it into reality.

Reach out to us today and take the first step toward your dream life!

Call us # 9998554836 / 9599956770 for more details.

Visit us www.dhancreators.com

 

Why Asset Allocation is Important?

 

Asset allocation refers to the practice of dividing your investment portfolio among different asset categories such as stocks, bonds and cash, it is like a balanced diet; just as you would not like to survive on only one type of food, so successful investing relies on a variety of assets to achieve desired financial health. Each asset class has different levels of risk and potential return, so finding the right mix is crucial for long-term success.

 

Let's say you’re planning for retirement. If all your money is invested in high-risk stocks, you might enjoy great returns in a booming market, but a sudden downturn could significantly impact your savings. By spreading your investments across various assets, you can manage risks better while positioning yourself for growth.

How Market Fluctuations Affect Asset Allocation Over Time

Market fluctuations are inevitable. Prices rise and fall due to various factors, from economic conditions to geopolitical events. As these fluctuations occur, your asset allocation can shift. For instance, if stocks plummet while bonds remain stable, you may find that your portfolio is now more heavily weighted in bonds than you originally planned.

 

Over time, it's essential to adjust your expectations based on these changes. The goal is to maintain a balance that aligns with your risk tolerance and investment objectives. Keeping a close eye on market trends can help ensure that your asset allocation continues to support your financial goals.

Significance of Maintaining a Target Asset Allocation

Having a target asset allocation is like having a roadmap for your investment journey. It provides guidance on where to invest and helps maintain focus during market turbulence. Sticking to an asset target can lead to better long-term performance because it encourages disciplined investing. When markets are climbing, it might be tempting to chase hot stocks, but sticking to your plan can protect you from overexposure to any one area.

 

Setting and maintaining this target allocation isn’t just for seasoned investors; it’s vital for anyone wanting to navigate the complex world of investing effectively.

When to Rebalance Your Portfolio

Time-based vs. Threshold-based Rebalancing Strategies

Rebalancing your portfolio is crucial for maintaining your target asset allocation. You can adopt two main strategies: time-based and threshold-based rebalancing. Time-based rebalancing involves reviewing your asset allocation at regular intervals—like annually or semi-annually—whether or not your investments have strayed from your target.

 

On the other hand, threshold-based rebalancing comes into play when your investments move beyond a specific percentage from the target allocation. For example, if equities soar and now make up 70% of your portfolio instead of 60%, you’ll consider rebalancing.

Annual or Semi-Annual Rebalancing: Pros and Cons

Choosing how frequently to rebalance your portfolio often depends on your investment strategy and tolerance for risk:

• Annual Rebalancing:
• Pros: Less time-consuming and minimizes transaction costs.
• Cons: May miss opportunities to take advantage of market fluctuations.
• Semi-Annual Rebalancing:
• Pros: Balances the need for discipline with current market conditions.
• Cons: Still may not react quickly enough to sharp market changes.

Identifying Key Market Events Prompting Rebalancing

Market events like economic data releases, earnings reports, or geopolitical instability can signal a time to rebalance. Staying informed about these happenings can help you adjust your portfolio proactively instead of reactively.

Benefits of Portfolio Rebalancing

Risk Management

Rebalancing isn't just about keeping things in order; it's a powerful tool for managing investment risk. Over time, some investments may perform exceptionally well, while others may lag. Without rebalancing, your portfolio could become overly concentrated in one area, increasing overall risk.

 

Historical data shows that investors who don’t rebalance typically experience higher risk levels during volatile markets. Rebalancing often involves selling high-performing assets and buying those that may have underperformed, which may feel counterintuitive. However, it can mitigate losses during downturns by preventing overexposure.

 

In summary, Asset Allocation and Regular Rebalancing are pillars of sound investing. They are important not only for achieving your financial goals but also for managing the risks that come with investing. By taking the time to follow these strategies, you’re not just betting on the market; you’re creating a well-thought-out approach to your financial future.

 

Happy investing!

Why is it important to invest NOW @ 16600 levels?

 

Why is it important to invest NOW @ 16600 levels?

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Because next stoppage could be 17500 or New All Time High….if we are able to cross 16800 – 17000 levels in next 10 – 15 days

 

Why So ?

Crude is cooling off… Brent down from 130 to 104 $ per barrel

US Bond yields have come down from 3.5% to 2.8%

Inflation data that is coming now,  is of last few months, which will cool off in future.

 

Most Important ** Markets are always forward looking ! Returns in markets are made when pessimism, negativity is at peak. When everything is good…markets will be in range and returns won’t be that high.

There will be rate hikes in US by 75 basis points and in India by 0.5% to 0.75% this month by RBI. It is already  factored in prices of stocks.

Political Stability -  India is due for General Elections in 2024 and as we speak seems the ruling party is expected to come to power , which the markets have not started to factor in till now.

Before the Euphoria starts building up, Time is NOW to invest your money in equity markets, as we have seen time and price correction both.

Remember  -  Add more Units/ Stocks when markets are down and rebalance your portfolio when markets are high, as we have been doing for our Investors.

Disclaimer - Mutual Fund Investments are subject to market risks. These are my personal views and I can go wrong. Pl do due diligence before investing.

Regards
Sameer Kaila

Retirement Planning

Retirement  Planning – Why we ignore this Goal?

 An individual completes his studies around 23 – 25 yrs of age and starts earning. They get married around 28-30 yrs, purchase a house, upgrade cars as per the status (35-45 yrs), pay hefty fees for children education (35-55yrs) continue to support family till children settle down. All of the sudden Retirement is knocking the door (58/60 yrs) where the lifestyle, medical and other expenses will remain and increase with Inflation year on year, and income will STOP/CEASE.

What are the options for Retirees:

•      To look for employment in the second innings:: 

 One of the options is to look for employment and postpone retirement for another 2-5 years maximum. There are chances that one may get the employment of one’s choice or not, compromise on salary etc.

•        To be dependent on Children::

  No one likes to be dependent on their children for their needs.  The way the inflation & expenses are rising, it’s getting the other way round. Many times children look forward to parents for support, It's immaterial to look forward to children for financial support

•        Create a Source of  Alternative Income:: 

 Real Estate Rental Income is one of the options that high net worth individuals opt for but real estate has its own challenges as the premises may or may not get occupied on rent, its maintenance cost, rental yields etc. Some people buy stocks / mutual funds and opt for dividend option which is irregular and dividend percentage varies, so can’t rely on this alternative as well.

•     Create Retirement Corpus during employment years::

It is recommended, to start investing for this goal at the beginning of employment years. This will be more clear with the example below.

 Mr. A is a 30-year-old individual with the monthly expense of 50,000 per month would be required close to Rs. 3 Lakh per month at 6% per annum inflation at the age of 60. He needs to accumulate 6.27 cr by the time he retires to survive for the next 20 yrs taking the average lifespan of 80 years.  He needs to Invest  Rs. 18,300 per month to achieve the requisite amount at 12% return per annum to achieve the GOAL.

On the other hand,  Mr. B 40-year-old individual with the monthly expense of 50,000 per month would be requiring close to Rs. 1.65  Lakh per month at 6% per annum inflation at the age of 60. He needs to accumulate 3.5 cr by the time he retires to survive for the next 20 yrs taking the average lifespan of 80 years.  He needs to Invest  Rs. 35,200 per month to achieve the requisite amount at 12% return per annum to achieve the GOAL..

Similarly,  Mr. C 45-year-old individual with the monthly expense of 50,000 per month would be requiring close to Rs. 1.25  Lakh per month at 6% per annum inflation at the age of 60. He needs to accumulate 2.56 cr by the time he retires to survive for the next 20 yrs taking the average lifespan of 80 years.  He needs to Invest  Rs. 51,500 per month to achieve the requisite amount at 12% return per annum to achieve the GOAL.

Therefore, it is clearly evident that early you start, the less amount one needs to invest on monthly basis to achieve the goal. In the above-mentioned example, Mr. A needs to invest one-third of the amount that Mr. C needs to invest to achieve his Retirement Goal.

Retirement is the only GOAL for which no LOAN is available. It needs to be self-created & self-funded.

Take the first step Today.

Let Your Money Work For You

Are you in need of more money but have no more time to work for it? 
Are you already putting in 80 hours of work a week, leaving little time for your family, or the things you enjoy?
 Stop working for your money and learn how to make your money work for you. Investments are no longer something that is only available for the rich.

Everyday people can put their money to work by investing. Many people are afraid of investments and have heard the awful stories about people who lost all their money on a single investment opportunity and now they are living in poverty. It is these tall tales which prevent people from reaching their financial potential.

A big part of fear is that most people do not understand how the stock market, investing, and financial planning works. Many individuals see investing as a form of gambling which is completely random and based on luck. Investments are not getting rich quick schemes and are not ways to make big money fast. These fantasy investments make for a great movie or story but do not exist in real life. Ten Rupees can never be turned into ₹10 million overnight and through a single investment.

Investments are the way in which you can make your money work for you. There are a number of investments which have almost no risk and require very little money to start. The best asset, the average investor has, is time.

₹1000 invested regularly, can grow to lakhs of Rupees over a long period of time. If you want to stop working those long hours at a job you can't stand and have time to spend with the family without worrying you should consider investing. The best place to begin is to find a stable business, or a mutual fund and invest your money in them.

Mutual funds are a very low risk and worry free place to invest your money. Companies that have a long history of success are also great places to invest. Companies like TCS, Hdfc Bank are corporates which have continued to be successful and not going to go out of business any time soon. They continue to show growth and success in the financial markets.

If you work hard for your money you know the value of putting in a long day's work. You can make your money work for you through investments. If you are interested in developing a financial plan contact a financial advisor who can help you begin your financial independence.

FMP(Fixed maturity Plans) vs FD(Fixed Deposit)

                                        FMP vs FD

                      In the Financial year 2018-2019, it would be best for you to revisit FD investments that you had invested a year ago, and choose to reinvest this year in an instrument, which provides better returns. As American financial specialist Peter Lynch has stated: "Realize what you claim, and know why you possess it.".  Fixed Deposits (FDs) are a well-known investment instrument on account of the guaranteed interest that they offer. Nonetheless, the Mutual Fund industry has created an efficient instrument that is Fixed Maturity Plans (FMPs).

What are FMPs? How would they contrast with FDs?

Fixed Maturity Plans (FMPs)  are closed-ended debt instruments. They have a fixed investment period, for three or more years. They are open for a predetermined period - that is the reason they are called closed-ended funds. These debt instruments invest in such as government securities, corporate bonds, commercial paper, certificates of deposits and treasury bills. Thus, we tentatively know the indicative returns of FMPs.

 Fixed Deposits enables an investor invests his or her funds with a bank for a specified period of time. FD interest rate and maturity amount are known to the investor since the beginning of the investment.  

Highlights of FMPs versus FDs

Fixed Deposit Interest Rates:

• FDs may guarantee you of fixed returns and thus offer greater security, however, FMPs offer higher returns than FDs.
• "In outright terms, FDs today give an interest of around 6.5%  to 7.5%  and in FMPs, it is from 8 -8.5%.
• "FMPs offer higher yields than Fixed Deposits. Bank FDs bring down returns contrasted with FMPs.  If you wish to buy a car three years from now, invest in a Fixed Maturity Plan with a maturity of three years.
• FMPs offer indexation benefit, which states that one can achieve higher returns through FMPs. The returns you get from FMPs are called capital gains and with indexation, it lowers tax outflow resulting in higher returns.

In FDs, the interest gets added to the income of the investor and taxed at applicable tax slab. In FMPs, 20 percent post-indexation benefit above three years, help investors with flat tax payout. To summarise, in FDs, after 30 percent tax, interest is around 4.30 percent to 5 percent against post-tax returns of FMPs - considering a 30 percent tax slab of investors - comes around 7.25 percent to 7.50 per cent.

FMPs give 3% more tax efficient returns than Fixed Deposits.

Gains on FMPs after 3 years are eligible for long-term capital gains (LTCG). Taxation in LTCG is at 20 percent with the indexation benefit. Indexation allows you to inflate the purchase price.

"For an  Indian resident, FMPs don't have any TDS. You have to pay taxes just in the time of maturity (on FMPs.  In FDs, the bank deducts Tax at Source (TDS) based on interest accrued, thus have to pay tax every year.

 If FMPs are less than three years old, then the taxation of FD and FMPs are the same. For FMPs with the maturity of over three years, capital gains indexation benefit makes FMPs far more tax efficient.

Liquidity on FMPs, FDs:

Assume you require cash earnestly. Clearly, you would need to fall back on your investments. FDs here prove to be useful in light of the fact that FDs offer an untimely withdrawal facility. FMPs are locked-in for the period of 3 years and in case you need funds, they cannot be withdrawn.

 Dangers on FMPs, FDs:

Since returns on FDs are known, they by and large influence an investor to feel more secure than FMPs.

"FMPs are presented to the danger of at least one of their fundamental papers defaulting (credit hazard), and this could possibly hamper their profits. They are additionally presented to a hazard known as 'reinvestment Risk' .”

Be that as it may, many people don't know about it yet even FDs are likewise guaranteed just up to a total of Rs. 1 lakh. Along these lines, an FD investor should know about the presence of such dangers.

So which is a superior alternative: FMPs or FDS?

"In the present market situation, the yields have risen, including the short end of the yield curve, making FMPs a powerful alternative to secure better returns.

The coupon rates of securities have climbed however FD rates have stayed low. In such a situation, locking into top notch (AAA-appraised) arrangement of FMPs can convey better returns than FDs.

Dhancreators Recommendation:

Be that as it may be picking amongst FDs and FMPs, as a financial specialist, we suggest investing in the one which suits him/ her the best. Based on your liquidity requirement, returns, and tax efficiency perspective,  a person can choose to invest either in FDs or FMPs.

Happy Investing !!!

Systematic Investment Plan

Want to invest but confused watching current Market Trend? Go for SIP( Systematic Investment Plan)