Financial Planning for Defence Personnel

Involving your better half in the financial planning- humfauji initiative

Involving your better half in the financial planning.

When Wing Commander AK Singh (name changed), a serving Air Force officer, approached us for preparing his financial plan, it was clear to us that his expectations of sending two children to an expensive boarding school in the next three years while still in the process of acquiring a flat for his family, two office spaces for investment, paying for eight insurance policies with yearly premium of Rs 2.22 Lakhs and still planning to take VRS four years later, all from his Govt salary earnings, were not realistic. Fortunately, his wife was associated with the financial planning process right from the beginning and was instrumental in moderating the expectations. She had her reservations about many of the goals they were pursuing but was keen herself too about the boarding school for children. Their financials did not support their requirements. Their household expenses were high, there was large outgo into insurance ...
Early Start, Good Planning will result in Good Future Ahead- humfauji.in

Early Start, Good Planning will result in Good Future Ahead

Lt Col Jit Bahadur Chettri, a 39 year old Indian Army officer, is posted in a remote area in North-East India. His wife Ritu is also an officer in the Army Education Corps. They have two sons, Sparsh and Utkarsh, aged 9 and 7 years respectively. He represents that rare breed of officers who are financially well-aware of the need to meet their financial goals comfortably. When he approached us for financial planning this year, they already had a well-diversified investment portfolio. With a gross monthly pay of around Rs 1.8 Lakhs and the family spread over two locations, they had kept their monthly expenses well under control at 48,000pm, including Rs 15,000pm support to their parents. Since they had already accumulated more than Rs 10 Lakhs combined in their DSOPF (Defence Services Officers’ Provident Fund), they had sensibly pared their further monthly contributions to Rs 12,000pm. They had Rs ...
Problems of Armed Forces officers-humfauji.in

Problems of Armed Forces officers

Typical Problems of Armed Forces Officers which hamper a good financial planning and investment for them:- Postings to remote locations – very difficult to get any reasonable financial advice. At the best, an insurance agent may be the only available financial advisor, with no idea of the concept of financial plan and maybe, with his own axe to grind. There would most probably be no internet, the newspaper would reach 2-7 days late (if at all) and mobiles/telephone may work erratically. Frequent Dislocations – generally the postings of Army and Air Force officers take place every 2 to 3 years, thus seriously disrupting any continuity of financial planning for long-term goals. That way Navy officers are better off but dislocations hurt them too in a similar manner. Nature of the Job – Armed Forces job is a 24X7 career. At times, one may get a comfortable posting with limited hours ...
Never Ignore Stock Markets-humfauji.in

Never Ignore Stock Markets

At the start of every New Year, there are a series of articles focused on which asset class is likely to do well for the next 12 months. There are two fundamental problems with such a discussion: It limits the time frame of the discussion to the next 12 months. This is tantamount to projecting what your child will grow up to be like based on what he ate for breakfast this morning; There is a false assumption that, though you may be guided into the right asset class by your private client wealth advisor, you will be sold the correct specific investment as opposed to the instrument which pays the wealth advisor the highest commission. This is tantamount to saying that because your child goes to school he actually learns something useful on how to deal with life. Stocks are risky, but can make you money Since January 1981, ...
Opportunity Cost of Delaying Financial Planning-humfauji.in

Opportunity Cost of Delaying Financial Planning

Dear Friends, While 2011 dissolves into brand-new 2012 and you look forward to the New Year with renewed optimism, we would request you to go through two articles which we have culled out for you from our archives. They present before you a fresh perspective of looking at matters financial – we’re sure they will be a useful reading for you. We would also like to inform you that, in line with our increased costs on all fronts, we are increasing our Professional Charges for preparation of customised Personal Financial Strategy to Rs 6000/- from 16 Jan 2012 onwards. All those who wish to get this life-time roadmap for financial salvation at current charges, will have to act fast. -------------------------------------------------------------------------------------------------------------------- Economic Times [Arunagiri N, 29 December 2011] The most intriguing behaviour that still eludes behavioural finance experts is the one that comes in plenty at times of market tops and ...
ARE TAX-FREE BONDS, BEING ADVERTISED NOW, SUITABLE FOR YOU- humfauji.in

ARE TAX-FREE BONDS, BEING ADVERTISED NOW, SUITABLE FOR YOU?

When we sent a promotional mail to our subscribers few days back, we received a good response for these bonds including from some very young persons. We quizzed some of them and found that they really did not understand the actual nature of these bonds. We were actually able to dissuade some of them not to apply for them while rang up some older subscribers to get to subscribe to them. Given below are clarifications on what are these bonds and to help you decide if they are for you:- What is the Buzz about these Bonds? This financial year (FY 2013-14), the Govt has allowed Nine Public Sector Units (PSUs) to issue tax-free bonds totalling Rs 48,000 Crores. Rural Electrification Corporation (REC) has already finished with one such offering, while HUDCO (Housing and Urban Development Corporation) is in the market with their issue currently. Others will also come subsequently ...
Is financial Planning Only for the Rich-humfauji.in

Is financial Planning Only for the Rich?

Normally, it is assumed, erroneously of course, that getting a proper financial plan made from a Financial Planner is the recourse of only the rich – “if I don’t have a ‘lot of money’, what financial planning can be got done?”. But look at it from another angle – because one doesn’t have a ‘lot of money’, there is an immediate need to plan so that it gets allocated to only those financial goals which are important for the well-being of own-self and own family! This is what Suresh Sadagopan in the article below tries to convey. Is financial planning only for the rich?  It is nothing to do with being rich or poor. It all boils down to how seriously one takes one's own future. I don’t have money, what planning can I do? This is a common refrain I get to hear. These same people often tell me ...
ITS TOMORROW THAT MATTERS

ITS TOMORROW THAT MATTERS

Prashant Jain is one of the most respected Mutual Fund managers in India. In a recent article, “Its Tomorrow That Matters”, he makes out a very persuasive case for investing in equity-linked products NOW. By giving behavioural, fundamental and philosophical aspects of equity investing, he asserts that this is the time to invest in equity linked products like diversified equity mutual funds. Some excerpts of the same article are given below in point form for easy assimilation. To download the full article, use the link http://poweraxis.com/projects/emailer/hdfcmf/2012/may/6/pdf/its_tomorrow_that_matters_prashant_jain_hdfcmf.pdf   Good returns are seldom made on investments made in good times. Rather, Good returns are typically made on investments made in adverse times. 1. Look at the performance of investments made in stock markets at different times:- Table A: Performance of Investments made in good times Time Sensex Level 1 yr forward P/E Main news / reason Total returns after 3 yrs Total ...
You owe it to your children

You Owe it to your Children – Part 1

Saving for your child’s future needs is one of your most important goals in Life  as also your Bounden Duty as a parent Remember Farhan Qureshi in the 3 Idiots? His father planned out his education and career the day he was born. The senior Qureshi's career choice may have been out of sync with his son's passion for wildlife photography but the underlying objective — to secure the financial future of his child—was bang on target. An increasing number of Indian parents are doing that today. According to the survey, 63% of the 1,908 respondents said they started saving for their children's education when they were born. Another 9.2% had started even before the kid was born. That's good news, because the earlier you start, the more the time available for your investments to grow, and the bigger the corpus. But are Indians choosing the right options when investing ...
FINANCIAL PLANNING FOR CHILDREN BY ARMED FORCES OFFICERS

FINANCIAL PLANNING FOR CHILDREN BY ARMED FORCES OFFICERS Part-2

Introduction Financial planning for your children is probably something that takes up a lot of your 'worrying' time. You know that you need to start setting aside money for your child's needs. But what you do not know is the ideal way to go about doing the same. Whether your objective is to provide for your child's marriage, property or seed capital for a business venture for your child, the approach given here holds good. Why is this exercise more strenuous for Armed Forces Officers Due to the nature of the profession, wherein there is constant movement from one end of the country to the other and even abroad; when one does stop for a short while, it is in some unpronounceable place in the middle of nowhere; in the name of a financial advisor or facility, there is a semi-literate, maybe ill-intentioned, insurance agent available, if at all; the ...

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