Nurturing Young Investors: Fun Ways to Teach Kids About Money
Here are some engaging strategies to lay a strong financial foundation:
- Talk Money Like It’s Normal
Let money chats become part of your daily routine. While grocery shopping or planning a family trip, explain how you budget and make choices. Open the door for questions—it makes them curious!
- Be a Money Role Model
Kids are like sponges—they learn by watching you. Show them how you think before spending, like saving up for that big family vacation instead of making impulsive buys. Get them involved in family budgeting too!
- Make Investing Fun
Ever heard a kid ask, “What’s the stock market?” Use those moments to talk about investing like it’s an exciting adventure! Whether it’s tech news or stock market buzz, spark their curiosity and keep it fun.
- Learn From Mistakes Together
Share your own investment stories—yes, even the not-so-great ones! It’s all part of the learning journey, and it shows them that everyone has ups and downs in money matters.
- Explain with Chocolate!
Explain diversification with a box of assorted chocolates. Just like we enjoy a mix of flavors, a varied investment portfolio makes things sweeter.
By weaving investment principles into daily life, you’re not just teaching your kids to handle money—you’re empowering them to build wealth!
Let’s create a family-world where investing is an exciting tool even for children to learn, achieve near-term financial destinations, sparking confidence, and growing curiosity about finance.
(Contributed by Aman Goyal, Relationship Manager, Team Vikrant, Hum Fauji Initiatives)
Accident Insurance: A financial lifeline in challenging times
Accidents happen when we least expect them. From slipping on wet floors to unexpected car crashes, life’s uncertainties can take us by surprise. This is where Accident Insurance becomes your family’s financial superhero!
Why is it Important?
- The Unexpected Can Happen to Anyone
No matter how careful we are, accidents can strike anywhere—on the road, at home, or even during a weekend getaway. Accident insurance steps in when life throws these curveballs, offering much-needed financial support.
- Medical Bills Can Be Devastating
Hospital stays, surgeries, rehabilitation—it all adds up fast! Without accident insurance, these costs can drain your savings. Plus, in severe cases, you may face long-term care expenses that continue for years.
- Secure Your Family’s Future
Imagine the peace of mind knowing that your loved ones won’t be financially burdened in case of an unexpected accident. Accident insurance ensures that your family stays protected, covering everything from income loss to everyday expenses.
- A Safety Net for Your Legacy
Accident insurance doesn’t just provide security—it protects your legacy. In the event of your untimely death, it ensures that your family’s financial future is safeguarded, preventing financial strain.
In a world full of uncertainties, accident insurance is your family’s shield, providing peace of mind and financial protection when it matters most.
(Contributed by Prerna Pattanayak, Financial Planner, Team Vikrant, Hum Fauji Initiatives)
What You Must Know Before You Buy
In recent years, the buzz around Initial Public Offerings (IPOs) has skyrocketed in India. With big names like Zomato, Nykaa, and LIC hitting the stock market, investors are eager to buy into a company’s success story. But while IPOs can be thrilling, they aren’t always a golden opportunity.
Let’s explore the two sides of the coin!
- The Thrill of IPOs: When companies like Nykaa and PayTM go public, investors jump at the chance to get in early. The hope? The stock will skyrocket and bring huge returns. Take IRCTC, for example—its IPO made headlines when the stock surged by over 500% after listing!
- The Risky Side: But not all IPOs deliver. PayTM’s much-hyped IPO, for instance, left many investors impoverished as the stock dropped significantly. Why? Sometimes, IPOs are overpriced due to the hype. Add to that market volatility and untested business models, and you could end up losing money after the initial buzz wears off.
What Indian Investors Must Know:
Before investing in any IPO, do your homework. Check the company’s financial health, its industry, and whether its stock price makes sense. Pay attention to market sentiment and potential insider sales after the IPO, as these can also affect the price.
So, while IPOs can be an exciting way to invest in a company’s growth, they can also be traps if you don’t tread carefully. Smart, informed decisions will help you navigate this fast-moving world!
(Contributed by Avantika Agarwal, Financial Planner, Team Sukhoi, Hum Fauji Initiatives)
Question: I fall into the highest tax bracket of 30%. Would it be smarter to invest my retirement corpus in my wife’s name to reduce my tax burden?
Our Reply:
While it might seem like a tempting strategy to reduce your tax burden, investing your retirement corpus in your wife’s name is surely not a recommended approach.
Here’s why:
Clubbing of Income: Under Section 64 of Indian Income Tax Act, the income earned from assets transferred to a spouse without adequate consideration, is clubbed with the income of the transferor (you). This means that the income earned on the investment will be added to your income and taxed.
Problems in Filing the ITR: It is not easy to file your Income Tax Return if the tax has to be paid by you while the income is being reflected in your spouse’s tax account. You can surely pay the additional tax by reflecting the amount in your own ITR, but the system will not let your spouse’s ITR be filed easily without paying the tax on income which is being shown in your spouse’s tax account.
Increased Scrutiny by Tax Authorities: When you transfer assets to your spouse without proper documentation, the tax department might take a closer look, increasing the chances of more scrutiny and maybe higher penalties if something seems amiss.
Loss of Control: By transferring the money to your wife, you may lose control over how the money is invested. This could create issues, especially if there are disagreements or unforeseen circumstances.
Potential Complications in the Future: You might face issues later during inheritance planning, especially if you both have different wishes for how the money should be passed on.
Thus, while the initial gift to your wife won’t attract any tax, all the incomes generated from that gifted amount will still be taxed in your hands. So, there is no literal gain to you tax-wise anyway.
Instead, you can think about investing in your children’s names if they have little or no income. This way, the income earned from those investments would be taxed at their lower tax rates, helping reduce your overall tax burden. This has some of its own complications – please talk to us before going ahead with it.
(Contributed by Team Prithvi, Hum Fauji Initiatives)
