Financial Cocktail Samosas: Bitesized Money Morsels For You, 09/08/2023

Simplifying your Financial Checklist Before Moving Abroad

Are you gearing up for an exciting adventure abroad? As you plan your new journey, don’t forget to put your financial matters in order. Here’s a simplified checklist designed with your needs in mind, presented in an easy-to-understand manner:

1. Bank Accounts: Streamline Your Finances: Before your move, make sure to convert your existing savings account into a Non-Resident Ordinary (NRO) account. This account allows you to deposit both domestic and international income and handle payments in India. Additionally, consider opening a Non-Resident External (NRE) account for tax-free interest on your international earnings.

2. Review Your Mutual Funds Portfolio: If you’re holding onto mutual funds, update your Know Your Customer (KYC) details. Some funds might have restrictions for Non-Resident Indians (NRIs) from certain countries, so examine your options carefully.

3. Secure Your Insurance: Check with your insurance provider if your term life coverage extends to your new international location. Keep policies that align with your needs and consider discontinuing ones that no longer suit your circumstances.

4. Navigate Equity Investments with PIS: If you’re keen on investing in Indian stocks as an NRI, you’ll need a Portfolio Investment Scheme (PIS) account. This Reserve Bank of India (RBI) initiative enables NRIs to buy and sell shares.

5. Manage Your PF Investment: Depending on your situation, withdrawing funds from your Provident Fund (PF) might be possible. Although fresh contributions to the Public Provident Fund (PPF) might not be an option, your existing balance will continue to accumulate interest.

6. Credit Cards and Loans: Streamline your credit card usage by discontinuing cards with less advantageous forex charges. For online usage in India, link your card to the NRO account.

Remember, this checklist aims to simplify your financial considerations as you embark on your international journey. Keep in mind that everyone’s circumstances are unique, so seeking personalized financial advice is a wise step.

Wishing you safe travels and success in your exciting new chapter!

(Contributed by Yogesh Gola, Relationship Manager, Team Advisory, Hum Fauji Initiatives)

Worried on this aspect of financial planning for yourself or your family member moving/moved abroad? You can speak to us.

Focus on the person behind the wheel, not the vehicle

Financial confusion often stems from choices, not tools. Instead of pointing fingers at financial instruments, let’s focus on the individual’s decisions for a brighter monetary journey.

  • Buckle Up for Financial Joyriding: Ever felt the urge to splurge without considering the lasting effects? That’s financial joyriding – it leads to debt, money worries, and unmet financial goals. Remember, tools like credit cards aren’t the culprits; it’s our choices that matter.
  • The Captain at the Wheel (You!): Picture your mindset, behaviors, and attitudes as the driver. To overcome financial joyriding, we need a financial makeover. Enhancing financial knowledge, spending habits, and disciplined money management can make all the difference. Here’s a road map:
  • Budgeting – Lay the Foundation: Crafting a practical budget forms the bedrock of financial stability. It shines a light on your income, expenses, and savings targets, enabling smarter spending decisions.
  • Saving and Investing – Navigating the Long Haul: Making a habit of saving and investing early can change the game for long-term financial safety. Regularly setting aside a portion of your income helps build an emergency fund, achieve future aspirations, and ride the wave of compounding interest.
  • Debt Management – Taming the Debt Dragon: Handling debt responsibly is crucial. Focus on paying off high-interest debts first and dodge unnecessary borrowing.
  • Seek Expert Navigation – Charting a Smooth Course: If financial management feels like uncharted territory, a financial advisor can be your compass. They guide you towards attainable goals and create a comprehensive financial strategy.

Rather than pinning the blame on external forces, remember that our own actions and perspectives wield great power over our finances. Recall, the tools you use are just vehicles. It’s your duty to be the skilled driver, steering your financial journey with wisdom and foresight.

As Woodrow Wilson aptly said, “The way to stop financial joyriding is to arrest the chauffeur, not the automobile.”

So, let’s take control and set sail toward a prosperous financial future.

(Contributed by Pratibha Pal, Financial Planner, Team Sukhoi, Hum Fauji Initiatives)

Got questions about your own financial joy-ride? Connect with us now.

Unlocking your Retirement Cash Flow: The Magic of Systematic Withdrawal Plans (SWP)

When it comes to investing in mutual funds, you’re probably familiar with SIPs (Systematic Investment Plans). But have you discovered the equally efficient Systematic Withdrawal Plan (SWP)?

For retirees seeking a steady income stream, or additional regular income beyond your pension, SWP is a clever tool to keep in your financial toolkit.

Picture this: You’ve diligently invested and built a tidy sum over your working years. Now it’s time for retirement, and you’re wondering how to turn your investments into a regular income source. Enter SWP, your financial ally. This plan allows you to withdraw a fixed amount at regular intervals from your portfolio, tailoring it to match your needs.

The beauty of SWP lies in its flexibility and huge, huge tax-efficiency. You decide the withdrawal amount, how often you want it, and for how long. This provides a comfortable rhythm of income while letting your investments continue to grow, creating a win-win scenario. And you do this while saving more than 70% of the tax you would save in any other avenue.

But here’s the twist: If your withdrawal rate surpasses your investment’s growth rate, your capital might dwindle over time. Take competent financial advice on this issue if you’re not very clear yourself.

The Secret Sauce thus is the: Withdrawal Strategy

Here’s a golden rule: Always withdraw less than your assumed return. It’s the recipe to maintain your corpus without draining it. And if you wish to enjoy your retirement by traveling, spending like a king, or having children’s marriages or education to complete, your withdrawal rate should keep all these in view.

For those who are not going to get any pension, optimal withdrawal rates hover around 4-5% annually for shorter-duration funds, while for hybrid and equity schemes spanning 10-20 years, 6% is a safe bet. If you’re up for some risk and have a longer time horizon, equity-oriented schemes are your go-to.

Now, let’s unravel Shankar’s story who is not going to get a pension from any source – see if it rhymes with somebody you know:

Meet Shankar, a prudent investor who’s nurtured his portfolio to Rs 50 lakhs. Retirement beckons in September 2023, and he’s looking to SWP his way to monthly expenses. With expert advice, he plans an annual withdrawal of 6% based on a portfolio return of 10% and a 30-year horizon.
Result? David effortlessly withdraws Rs. 25,000 each month, summing up to Rs. 90 lakhs over three decades.
And while he’s done this, his accumulated corpus still grows to, mind you, Rs 14.15 Crores after three decades!!

So, there you have it – a straightforward route to steady retirement income. Think of SWP as your financial GPS, guiding you towards a secure and fulfilling retirement journey.

(Contributed by Ujjwal Dubey, Associate Financial Planner, Team Prithvi, Hum Fauji Initiatives)

Schedule a call now to know more about SWP and having a great, great Retirement…

What did our clients ask in the last 7 days?

Client –Hi, I have received a message of rejections of SIPs in mutual funds. Why?
We Replied: 
You got a message about your SIPs being rejected in mutual funds? Please don’t worry, many investors are facing the same situation currently.

Why, you ask?
Well, the culprit is often the missing link between your PAN and Aadhaar.

Think of it this way:
Your PAN and Aadhaar are like two puzzle pieces that need to fit together. But if they’re not linked, it’s like trying to complete a puzzle with a missing piece – things just won’t fall into place.

You see, the tax guys (the Income Tax department, to be precise) have set a rule that everyone needs to connect their PAN with their Aadhaar. The deadline for this was June 30, 2023. If you’ve missed this train, your SIPs might keep getting the thumbs-down.
Because mutual fund wizards need to make sure you’re not a financial ghost before they process your SIP requests.

Why is this linking thing such a big deal?
Well, it’s not just about playing by the rules. Linking your PAN and Aadhaar helps mutual funds verify who you are. It’s like showing your ID at the entrance of a party. This process, called KYC (Know Your Customer), becomes smoother, faster, and hassle-free for both you and the mutual fund folks. Plus, it’s vital for filing your tax returns – and it’s your golden ticket to claiming tax refunds.

Now, who’s exempt from this linking game?
If you’re over 80 years old or you’ve set your roots as a non-resident, you’re off the hook.

Worried about how to get this done?
Fear not, we’ve got your back. The IT department’s official website is your trusty guide. Here’s the link:

In a nutshell, linking your Aadhaar with your PAN is like giving your financial puzzle that final piece. It makes things smoother, fairer, and fraud-free. Plus, come tax season, you’ll be ready to file your income tax return (ITR) like a pro.

As your financial guide, we’ve been waving the flag for prompt action for a long time but somehow you seem to have missed it. Make this link-up happen, so your investment journey stays on track. Let’s keep those financial goals on the horizon, uninterrupted and hassle-free.

Thanks for connecting with us on this topic. If you’ve got more questions, we’re here to help.

(Contributed by Team Arjun, Hum Fauji Initiatives)

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