Financial Cocktail Samosas: Bitesized Money Morsels For You, 23/08/2023

Navigating Volatility: Your Ally or Adversary? How to Make It Work for You

Volatility: a word often associated with uncertainty and unease in the realm of finance. Yet, did you know that this market rollercoaster can actually become a companion for those who understand its ways? Here’s how to master this dance:

• Capitalizing on Market Swings: Picture this – when the market’s mood swings wildly, prices bob up and down like a seesaw. But within these fluctuations lie golden opportunities to make strategic purchases.
• Riding the Rupee-Cost Averaging Wave: Imagine yourself investing a fixed sum at regular intervals, regardless of the current price. This smart move, known as rupee-cost averaging, can steady your investment ship, helping you sail through stormy markets.
• Tempering the Temptation to Flee: Amidst the turbulence, a calm mind prevails. It’s tempting to hastily part ways with your investments when the market trembles, but remember, sticking to your game plan is the path to steadiness.

Of course, volatility can also play the adversary. Without proper preparation, it might nudge you into impulsive decisions that jeopardize your long-term financial voyage. To convert it into your ally, follow these navigational tips:

• Seeing Beyond Short-Term Fluctuations: Our Indian economy, much like a steady ship, sails towards growth in the long run. If your financial goals are distant shores like retirement, don’t let passing waves divert your course.
• Crafting a Tapestry of Investments: Imagine your investments as threads in a rich tapestry. Diversity is the key – if one thread frays, others remain strong, cushioning you against potential losses.
• Mastering the Art of Patience: Amidst market tremors, remain anchored. Panic selling may seem like a quick escape, but it often leads to regret. Stay resolute, and your investment ship shall weather the gale.

By embracing volatility, you’re steering toward a sunlit horizon of financial success. It might be a wild ride, but remember, every twist and turn can be harnessed to your advantage. So, let’s embark on this journey with confidence and skill.

(Contributed by Abhilash S Rana, Financial Planner Team HNI, Hum Fauji Initiatives)

Present a United Family Front on Finances

Marriage is a partnership, and that includes a financial partnership. When you get married, you’re not just merging your lives together, you’re also merging your finances. That can be a challenge, especially if you and your spouse have different financial habits or goals. But it is important, and always better, to make joint financial decisions if you want to build a strong financial future together.

Here are some rules to make Joint Financial Decisions That Work for Everyone

1. Set financial goals together – What do you want to achieve financially as a couple? Do you want to buy a house, save for retirement, or send your kids to college? Once you know your goals, you can start to make joint decisions about how to reach them.
2. Communicate openly and honestly about your finances – This means sharing your income, expenses, and financial goals with each other. It’s also important, to be honest about your spending habits and financial history.
3. Make decisions together – You shouldn’t just assume that one partner will take care of the finances. Both of you should be involved in making financial decisions, even if one partner is more financially savvy than the other.
4. Be flexible – Things don’t always go according to plan; so be prepared to adjust your financial goals and decisions as needed. The important thing is to be on the same page and work together towards your financial future.

Additional Tips for Making Joint Financial Decisions
Review your financial plan regularly. Your financial goals and needs may change over time, so it’s important to review your plan regularly and make adjustments as needed.

Get professional help from a financial advisor. A financial advisor can help you create a budget, set financial goals, and make prudent investment decisions.

Making joint financial decisions can be challenging, but it’s important to remember that you’re in this together. So choose your path wisely together.

(Contributed by Gautam Arora, Associate Financial Planner Team Sukhoi, Hum Fauji Initiatives)

Don’t look for the needle in the haystack. Just buy the haystack

The saying, “Don’t look for the needle in the haystack. Just buy the haystack”, encapsulates a pragmatic approach to investment and decision-making. The analogy suggests that instead of expending considerable effort searching for a single valuable item (the needle) within a vast field of options (the haystack), one should consider investing in the entire field itself. This concept has relevance not only in the world of finance but also in broader aspects of life.In the context of investing, the phrase advocates a diversified portfolio. Rather than fixating on individual stocks or assets with uncertain outcomes, the strategy advises spreading investments across a variety of options to minimize risk. This approach aligns with the principle of not putting all eggs in one basket. By ‘buying the haystack’, investors can benefit from the potential growth of multiple assets while safeguarding against the failure of any single one.

This philosophy can extend beyond finance. In decision-making, it encourages a broader perspective. Instead of obsessing over minute details or overthinking a single choice, embracing the larger context can lead to better outcomes. By considering the entirety of circumstances, one can make informed choices that align with long-term goals rather than getting caught up in short-term concerns.

However, it’s essential to note that the ‘buy the haystack’ approach isn’t universally applicable. While diversification can reduce risk, it may also limit potential gains.

In conclusion, it emphasizes the advantages of a balanced, holistic perspective. It encourages diversification in investment and a broader consideration of options in decision-making. While not an absolute rule, the concept underscores the importance of striking a balance between focused efforts and broad exploration for achieving success and minimizing risks in various aspects of life.

(Contributed by Ankit Kumar Singh, Associate Financial Planner Team Sukhoi, Hum Fauji Initiatives)

What did our clients ask us in the last 7 days?

Question– My son is a seafarer, a merchant navy officer, and is thus not a resident in any country. Should he file his ITR in India?

Answer–
Income tax rules for Indian seafarers depend on their residential status, which is determined by their period of stay in and outside India.
If the crew member of a ship works outside India for 183 days or more during a financial year as per his/ her CDS (Continuous Discharge Certificate) or passport, his/ her residential status changes to a Non-Resident Seafarer. Overseas salary of a non-resident seafarer/ Merchant Navy staff shall not then be taxed in India.

Calculation of Period outside India: Stamping dates in the passport is the basic criteria for calculation of the period outside India. Generally, passport dates are used when you join and sign off from a ship outside India. However, the dates of the CDC are the conclusive evidence at the time of scrutiny that you are outside India for the purpose of employment.

New resident provision from FY 2020-21
As per the new Section 6(1A), applicable from the financial year 2020-21, an NRI (including seafarers) can be categorized as a resident in India if his/ her stay in India exceeds 119 days and the taxable income in India exceeds Rs. 15 lakhs during a financial year.

However, visiting NRIs, including Indian seafarers, whose taxable income in India is up to 15 lakhs during the financial year will continue to remain NRI retrospectively if their stay in India doesn’t exceed 181 days. Seafarers and merchant navy are not obligated to pay taxes or file Income Tax Returns (ITR) in any country worldwide.

However, it is highly recommended and advantageous for seafarers to file an ITR in India, even though it is not mandatory according to the Income Tax Rules in India. By filing an ITR, seafarers can obtain several benefits, such as using it as a crucial document for purposes like loan applications and visa applications.

(Contributed by Team Sukhoi, Hum Fauji Initiatives)