Financial Cocktail Samosas

Balance your investment buffet: Add a healthy dose of stability to a portfolio with Bonds

Imagine your investment portfolio as a delicious buffet. You’ve got all the exciting stuff – stocks in companies you believe in, maybe dash of cryptocurrency for some spice. Believe it or not, bonds are the broccoli of your investment buffet, and they’re just as important!
Why Bonds?
Stocks are the rockstars of investing, soaring high but sometimes unpredictable. Bonds, on the other hand, are more like reliable friends. They offer a steady income through interest payouts, adding much-needed stability to your portfolio. They act as the calm, collected adult at a party, ensuring things don’t get too wild.

How Much Bond is Enough?
The right amount of bonds you need depends on your age, risk tolerance, and investment goals. Generally, younger investors can afford more risk and might have a smaller bond allocation. As retirement nears, increasing bonds can help protect your nest egg.

Buffett’s Secret Recipe
Even legendary investor Warren Buffett knows the value of bonds! He recommends a simple recipe for beginners: 90% stocks (the exciting part of the buffet) and 10% bonds (the broccoli). This mix offers a good balance of growth and stability.

The Bottom Line
Bonds might not be glamorous, but they keep your portfolio healthy. When building your investment buffet, don’t forget the broccoli – the bonds! They’ll help you weather market storms and keep your investments on track for the long haul.

(Contributed by Aman Goyal, Relationship Manager, Team Vikrant, Hum Fauji Initiatives)

Baby Steps: Crafting Your Financial Blueprint for Starting a Family

Starting the beautiful journey of parenthood? While the emotional rewards are priceless, the financial aspects need thoughtful planning. Let’s walk through some practical steps to craft your financial blueprint for parenthood.

Baby Step 1 (Craft a Budget): Review your current spending and find areas to cut back. Research typical baby-related expenses and budget for essentials like cribs and ongoing costs like diapers.

Baby Step 2 (Build a Safety Net): Create an emergency fund covering 3-6 months of living expenses for unexpected costs. Use tax refunds or bonuses or small windfalls to boost this fund.

Baby Step 3 (Invest for the Future): Start early! Invest in diversified mutual funds to grow wealth for your child’s future. Look into tax-advantaged options for extra benefits.

Baby Step 4 (Protect Your Family): Get term life insurance to secure your family’s future. Consider disability insurance to replace income if you’re unable to work.

Baby Step 5 (Communicate and Seek Guidance): Discuss financial goals with your partner and create a shared budget and investment plan. Consulting a financial advisor can offer personalized advice.

Remember, this is an ongoing process. Regularly review and adjust your budget as your child grows.

By taking proactive steps, you can build a secure financial foundation, allowing you to focus on the joys of parenthood.

(Contributed by Prerna Pattanayak, Financial Planner, Team Vikrant, Hum Fauji Initiatives)

What Did Our Clients Ask Us in the Last 7 Days?

Question: I am an investor with you in regular mode of investments, and now considering investing my retirement corpus in the direct mode with you. Could you explain the implications of this change, and what steps I need to take to make this transition?

Our Reply: Transitioning your retirement corpus to Direct Mode is a significant decision, and we’re here to help you understand the implications and steps involved. Please remember that this kind of facility and management is only offered by Corporate RIAs (Registered Investment Advisors) like Hum Fauji Initiatives who number just a handful in the entire country, unless you are ready to have different advisors for different purpose which can get your overall financial management into a messy soup.

A mindset change that you also have to contend with from now onwards is that you would have to pay a quarterly fee to us. Remember that you have not paid any fee directly to us so far all these years while it was nevertheless being deducted by the mutual fund companies and being given to us.

Once you switch to Direct Mode with an Advisor, you can no longer make additional investments in the Regular Mode, including bulk investments or systematic plans like SIPs and STPs. Any ongoing SIPs and STPs in Regular Mode will need to be halted and restarted in direct mode.

Your existing investments made before the switch will remain unaffected and will continue to grow with market conditions. You can still redeem these investments whenever needed and we will continue to monitor and review your investments regularly like hitherto fore.

One key difference in Direct Mode is the commission structure. In Regular Mode, we receive commissions from Mutual Fund companies (AMCs). However, in Direct Mode, these commissions cease, we will get nothing and hence we will charge a fee based on your Assets Under Management (AUM) with us to keep our business running.

All our services will continue as usual in Direct Mode. This includes regular client connects, portfolio monitoring and reviews, assistance with ITR filing, loan analysis, insurance analysis, and recommendations on various financial products whether held through us or otherwise.

To transition to Direct Mode, please reach out to us, and we will guide you through the necessary steps to make this process smooth and seamless.

(Contributed by Team Arjun, Hum Fauji Initiatives)

May 22nd, 2024

Unlocking Global Mobility: The Mystery Behind Tax Residency Certificates for NRIs

Ever heard of Double Taxation? It’s like paying for your burger, or Dosa for that matter, twice—ouch!
But fear not, countries have a solution: Double Taxation Avoidance Agreements (DTAAs). They make sure you’re only taxed once.

Enter the hero: Tax Residency Certificate (TRC). It’s like your passport for taxes, proving where you call home for tax purposes. It essentially states which country has the right to tax your worldwide income.


Why does TRC matter for Non-Resident Indians (NRIs)?

  • Avoid Double Taxation:  TRCs are crucial for claiming benefits between countries under DTAA. These agreements ensure that income isn’t taxed twice—once in the source country and again in the resident country. The TRC serves as proof of residency, allowing you to benefit from reduced or exempted tax rates as outlined in the specific treaty.
  • Compliance and Investment Opportunities: Several investment opportunities may be restricted for non-residents. A TRC can be your key to unlocking these avenues and managing your finances effectively.
  • Proof of Residency: A TRC can serve as official proof of your tax residency status, which may be required for various purposes, such as opening bank accounts or claiming benefits in your resident country.

And how do you obtain a TRC?
NRIs need to obtain TRC from the foreign country’s authorities or the country in which they are a resident. After you’ve got the TRC, by submitting a Form 10F along with your TRC to the Indian income tax department, you demonstrate your residency status and simultaneously claim the benefits you’re allowed under the DTAA applicable to your country. Just remember to renew your TRC before the tax season ends, to keep those benefits flowing.

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

Money And Marathon

Venturing into new endeavours is thrilling, but the true challenge lies in sustaining momentum.

Consider marathons: while completing one may seem casual, the journey involves enduring rigorous training, often in adverse conditions. Surprisingly, marathon prep isn’t all high intensity; it’s mostly gentle, consistent effort.

Frequently, our attempts of forecasting the market’s fluctuations overshadows the patience needed for long-term investment strategies. The allure of rapid wealth generation leads us to pursue greater returns within condensed periods, neglecting the broader perspective. The market does a pretty good job of boring, at times scaring, impatient investors.

Since inception, the NIFTY50 has soared 78-fold with a robust 13.8% CAGR as of February 2024.

Yet, the daily dance of the NIFTY-50 reveals a capricious rhythm: nearly half the time in short durations, it dips into the red, and only in a scarce 20% of the days does it leap by 1%. This unpredictability tests investors’ resolve, tempting them with risky shortcuts.

Data shows that almost half of Equity Mutual Fund investments are redeemed within two years, though the ideal horizon is five or more.


Source: AMFI

Ultimately, building wealth is a marathon, not a quick dash. Short-term portfolio performance is insignificant compared to the long-term results of staying committed. True wealth creation demands full dedication, without shortcuts.

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

Tax Hacks for Entrepreneurs: Proven Strategies to Cut Your Tax Bill

Entrepreneurs often face a higher tax burden compared to others due to the dual responsibility of personal and business tax liabilities. However, there’s a bright side: the Income Tax Act 1961 offers various tax deductions for entrepreneurs.In this article, we’ll delve into several tactics entrepreneurs can employ to reduce their tax burdens and boost their net income

•  Leverage Business Expenses
Deductible expenses like rent, utilities, and salaries can shrink your taxable income. Keep meticulous records to justify these deductions.• Opt for the Presumptive Taxation Scheme
If your business has a turnover of less than ₹2 crore (for non-professionals) or ₹50 lakh (for professionals), you may qualify for the presumptive taxation scheme under Section 44AD and Section 44ADA, respectively. This scheme allows you to declare a percentage of your turnover as profit (6% for digital transactions, 8% for cash), simplifying your tax calculations and reducing compliance costs.• Depreciation on Fixed Assets
Depreciation allows you to spread the cost of tangible assets over several years, reducing your taxable income each year. The Income Tax Act has specified rates of depreciation for various asset classes, such as computers, machinery, and vehicles. Ensure you’re claiming depreciation accurately.

• Consult a Tax Professional
The tax system can be complex, and tax laws are subject to change. To ensure you’re using the most effective tax-saving strategies while remaining compliant, it’s wise to consult a tax professional. They can help you navigate the intricacies of the tax code and identify additional opportunities to reduce your tax bills.

Incorporate these strategies to trim your tax bill, stay compliant, and keep more earnings in your pocket. Stay informed, keep records tight, and seek expert advice when needed.

(Contributed by Neeraj Kumar, Financial Planner, Team Prithvi, Hum Fauji Initiatives)

What Did Our Clients Ask Us in the Last 7 Days?

Question: I am an NRI investor. What’s the most efficient and tax-friendly way for me to repatriate funds from India?

Our Reply: Repatriating funds as an NRI from India involves navigating a strict regulatory landscape. Full repatriation of funds is allowed from NRE and FCNR accounts as there are no specified limits on repatriation.


Documents Required for Repatriation

For NRE/FCNR accounts, the process is comparatively straightforward. Simply submit a request application to your Indian bank and complete the A2 (FEMA declaration) form.
Repatriating funds from NRO accounts entails additional steps:

  • Request to the bank.
  • Fill out the A2 form.
  • Submit Form 15CA for self-declaration of payment details liable for taxes.
  • Submit Form 15CB, an affirmation from a Chartered Accountant confirming tax clearance.
  • Don’t forget to email self-attested copies of the required documents.

It is crucial to recognize that each financial scenario in case of cross-country dealings is distinct. Seeking guidance from a financial advisor ensures a strategy tailored to your specific circumstances, maximizing efficiency and minimizing complications.

(Contributed by Team Vikrant, Hum Fauji Initiatives)

May 16th, 2024

The Art of Doing Nothing: How Not Reacting Can Boost Your Wealth?

You’re stuck in a traffic jam, everyone’s honking, and you’re constantly changing lanes hoping to get ahead. Sounds familiar, right? Well, believe it or not, this scenario mirrors how we sometimes approach investing – always moving, always doing something, but not always getting where we want to be.

Let’s break it down. There’s this concept called ‘bias for action’ in investing. It implies an investor always feeling the need to do something, anything, because Action is equated to Success. But here’s the catch: sometimes, especially when markets are volatile, doing nothing is the best move. Yep, you heard that right – doing nothing can be a winning strategy too.

Now, let’s talk more on this. Instead of constantly tinkering with your investments, sometimes it’s best to just let them be and give them time to grow; something like planting seeds in a garden – you don’t keep digging them up to check if they’re growing, right? You give them time, water, and sunlight, and eventually, they flourish.

A study in 2007 on 286 football penalty kicks in top events showed the downside of action bias. It showed that penalty takers’ kicks went 32% to the left, 38% to right, and 29% in the centre. Surprisingly, goalkeepers’ dive direction is highly skewed towards left and right, while only 6% stayed in the centre – possible reason is ‘Action Bias’. In fact, the study suggests that staying in the centre more often could have lead to better outcomes for the goalkeepers. This example demonstrates the power of stillness as a strategic approach.

Source: Action Bias among Elite Soccer Goalkeepers: The Case of Penalty Kicks, Michael Bar-Eli and Ilana Ritov (2007)

In investing, the potency of stillness lies in granting investments time to mature, rather than constantly tinkering with them. This historical approach has consistently yielded superior long-term returns. While action is often lauded, the power of stillness can be equally formidable.


So, next time you feel the urge to make a move with your investments, take a moment to pause and consider the power of stillness. Remember, sometimes the best action is NO ACTION AT ALL.

Or better still, contact a trusted and unbiased financial advisor like us.

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

How Married Women Property (MWP) Act Protects the Rights of Women

As the head of the household, you naturally want the best for your wife and children, whether it’s providing love, care, or financial security. When you buy life insurance, it’s to ensure they’re taken care of, if something happens to you.

However, if you have outstanding loans and you pass away before settling them, your life insurance money payable to your family may be used to pay them off, even against your wishes. However, Married Women’s Property (MWP) Act can protect your family’s financial future even in such circumstances.

The hustle and bustle of the financial world can often feel disconnected from the natural world. But what if the secrets to sound financial practices lie beneath the rustling leaves? Surprisingly, nature offers insightful lessons that can guide us towards financial stability and responsible stewardship of our resources.

Here’s why buying insurance under the MWP Act can be a smart move:

  • Protecting Your Assets: The MWP Act shields assets from potential legal threats and creditors by allocating insurance benefits exclusively to named beneficiaries. This ensures financial security for the insured and their family members, particularly in the absence of the husband.
  • Avoiding Family Disputes: Insurance policies under the MWP Act provide a clear title to the beneficiary, typically the wife and children, which helps in resolving any family disputes over inheritance or the deceased husband’s estate. These policies operate as a separate trust and cannot be included in the policyholder’s will or claimed by anyone other than the designated beneficiary, even if they are legal heirs or there’s a dispute.
  • Empowering Women: By allowing married women’s control over insurance benefits, the MWP Act promotes their financial independence. This empowers them to manage policy proceeds directly, without dependence on their husband or others.
  • Estate planning: The MWP Act facilitates the active participation of women in estate planning, enabling them to secure assets for their future and that of their children. This contributes to long-term financial stability within the family.

How to buy term insurance under the MWP Act?

When filling out insurance forms, choose ‘Yes’ for purchasing term insurance under the MWP Act. Do note that an insurance policy under the MWP Act only allows your wife and any children to be your nominees.

The Married Women’s Property Act is a wise option for safeguarding family finances with insurance, particularly beneficial for married individuals concerned about their spouse and children in unforeseen circumstances.

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

ESG Investing: Opportunities in Sustainable Mutual Funds

In recent years, a notable shift has occurred in the investment landscape, with more investors prioritizing Environmental, Social, and Governance (ESG) factors when making investment decisions. This trend has driven the rise of sustainable and ESG investing within mutual funds too, offering investors the opportunity to align their financial goals with their values. Let’s delve into this trend, exploring what ESG investing involves, why it matters, and how we can evaluate ESG funds effectively.

Why ESG Investing Matters:

Think beyond just making money. ESG investing acknowledges how a company’s actions impact the environment, society, and even its own governance. Imagine if your investments could not only bring you financial gains but also contribute to a better world.

By choosing companies that ace these areas, investors can create positive change while still aiming for those sweet financial returns. Generally, companies with strong ESG practices tend to be more resilient, innovative, and competitive – talk about a win-win!

How to Choose the Right ESG Funds:

When evaluating ESG funds, investors should consider several key criteria to assess the fund’s alignment with their investment objectives and values:

  • ESG Integration: Make sure the fund walks the talk by fully integrating ESG factors into its investment process.
  • Portfolio Holdings: Review the fund’s portfolio holdings to understand the types of companies and industries it invests in. Consider whether the portfolio aligns with the sustainability goals and risk tolerance.
  • Expense Ratio and Fees: Nobody likes surprises, especially when it comes to fees. Check that the fund’s fees are fair and square compared to others out there.

The Future Looks Bright:

And here’s the cherry on top – governments worldwide are pushing for greener economies and less climate risk. This means more opportunities for social causes and a cleaner, greener future for all. By investing in ESG funds, you’re not just securing your financial future – you’re shaping a better tomorrow!

So, next time you’re thinking about where to put your money, consider ESG investing. It’s not just about profits – it’s about making a positive impact on the world.

And hey, who says responsible investing can’t be exciting? 🌱📈

(Contributed by Neeraj Kumar, Financial Planner, Advisory Arjun, Hum Fauji Initiatives)

What Did Our Clients Ask Us in the Last 7 Days?

Question What are the tax implications of receiving gifts, particularly from relatives, unrelated persons, and during weddings?

Our Reply – Ah, the joy of receiving gifts! But be careful about the tax man who can come knocking!

Gift from Relatives: Good news first! Gifts from relatives are like little bundles of joy exempt from the taxman’s reach. So, whether it’s your spouse, siblings, or even those cool close aunts and uncles, you can breathe easy. The Income Tax Act generously exempts gifts from these dear ones from any tax obligations. In case of HUF, gift received in HUF from any of its members is exempt from Income Tax.

Gift from Unrelated Persons: Now, here’s where it gets a bit trickier. If you’re receiving gifts from someone unrelated and the total value of such gifts in a financial year exceeds Rs 50,000, you have gotten into  Uncle Tax’s gaze. These gifts are considered taxable income and will be subjected to regular tax rates under the head ‘Income from other sources’. So, remember to keep an eye on those big-ticket presents!

Gifts Received at Own Wedding: Well, good news again for newlyweds! The gifts you receive on the auspicious occasion of your marriage are like little tokens of affection, exempt from the clutches of taxation. So go ahead, dance, celebrate, and cherish those heartfelt gifts without worrying about tax implications! Remember, while gifts are indeed wonderful gestures, understanding their tax implications can save you from any unwelcome surprises. So, whether it’s from dear relatives, distant friends, or in the midst of matrimonial bliss, know your tax game to enjoy those gifts to the fullest!

Happy gifting! 🎉

(Contributed by Team Vikrant, Hum Fauji Initiatives)

April 12th, 2024

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