Tag: Systematic Investment Plans for army officers

25 Apr 2017
LET YOUR SIPS ROLL, -Systematic Investment plan


The markets have been choppy lately for past four months and are reflecting the drunken movements of a ship in turbulent waters. As always happens in similar times, we have started fielding the familiar questions from worried customers – Is the India story dead? ; Should we get out of the mutual funds now? ; You said I’ll get good returns – see them now; I’m not even getting the FD returns on my investments; or worse – Get me out of these funds before its too late even if I have to pay tax and exit load on them!

This is the same story every time. A large number of investors get into equity mutual funds when the markets are doing well with the avowed aim of investing ‘for the long term’. But the moment there is some volatility, their ‘long term’ perspective becomes ‘short term’ in no time and they get out. Consequently, they get in at high rates, get out in panic at lower rates, and the cycle continues. They almost never get to see the returns that equity investments give in the long run, always maintain that equity should be avoided at all costs. Their long-term ‘real’ requirements suffer due to short-term ‘notional’ losses and they would revert to so-called safe investments of FDs, post-office products and insurance policies which would invariably give them negative post-tax-and-inflation returns, thus effectively eroding the purchasing power of their money.

The Business line newspaper column (Dated 14 June 2015) reproduced below gives out this same theme.

Don’t let market turbulence scare you. SIPs work well only because equity investing is a roller-coaster ride

‘Buy low, sell high’ — lesson 101 for success in investing is really a no-brainer. But for us emotion-driven humans, this cardinal principle is easier said than practised. When the market turns choppy, as it currently has, many of us panic and stop our systematic investment plans (SIPs) in mutual funds.

Don’t make this mistake. SIPs work great in the long run precisely because the equity investing is a roller-coaster ride.

In a SIP, you invest a fixed sum at regular intervals to buy units of mutual funds. The number of units you get depends on the prevailing net asset value (NAV) of the fund at the time of investment; the higher the NAV, lesser the number of units you get. And lower the NAV, higher the number of units in your kitty.

So, when the market and the NAV fall, you accumulate more units of the fund. This results in what is called ‘cost averaging’ — your average cost of acquiring the mutual fund units comes down.

In the long run, despite the volatility during interim periods, equity as an asset class and well-run equity mutual funds should see their values trend higher. Your return will be maximised when the average cost of investment is minimised.

This happens when you buy cheap, making a falling market the best time to invest in SIPs.

Need help in planning or organizing this? Give us an email at contactus@humfauji.in or Buzz us in on tele numbers 011-4054 5977 / 4240 2032 / 4903 6836 or send us a SMS / Whatsapp on 9999 053 522

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27 Jul 2016
Decomplicate your life

Decomplicate your life

There’s too much of financial ‘wisdom’ being branded about. Too many words telling you too less. Don’t get overwhelmed with it – here’s the gist of it.

Financial planning is simple. One sincere Sunday sitting with your wife and you can pretty much simplify and sort a lot of your financial issues.

Generally you can’t help or control how much you earn. However what you do with the money after it is earned, is fully in your control. Most of us worry more about what they have no control on, and neglect what they have full control on, in financial matters.

You’re paying a lot of tax on your salary. Agreed. But there’s nothing much you can do about it. Stop worrying about it, therefore.

There’s a lot of tax you can save on the investments that you do after you get your salary. Worry about that. It is in your control!

If you want to save yourself future financial hassles, save for specific requirements (‘financial goals’) like children education, their marriage, a house etc, rather than saving in general. You’re more likely to stick to the savings plan if you know what is coming up in future.

Insure yourself, your house, your car, your business, your health against things that shouldn’t happen but can happen. It doesn’t cost much.

Don’t be proud of a big balance in your savings bank account or in FDs. Your banker is celebrating it more than you.

Don’t be proud of so many insurance policies you have. They’re creating a lot of wealth – for your insurance agent and the insurance company.

The big balance in your credit card statement is not your gain but what you owe. Settle it in full – always and every time.

Pay slip is not as complicated as you think. Understand it as also your taxation and the concept of inflation. There’s no bravado in not knowing about them.

Start healthy SIPs in a good bouquet of mutual funds. Great if you can do it yourself. Otherwise, don’t have an ego issue in going to a financial planner to manage your financial worries.

Build an emergency fund equal to about 3 – 6 months’ expenses. Put it away in a bank FD or better still, in a liquid fund.

You’ve never thought about WILL. It’s not that only others die prematurely. Get that protection umbrella over your family – you owe that much to your loved ones.

For more information, feel free to reach us on, contactus@humfauji.in or call + 011 – 4240 2032, 40545977, 49036836

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05 Jul 2016
Inputs on 7th CPC Questionnaire

Inputs on 7th CPC Questionnaire

1) What are 5 things you advice government officials should do with increased pay and arrears once the pay hikes come?

  1. The 7th Pay Commission money will come to the Government officials in two forms– approximately seven months’ pay arrears and the monthly increased money.

Unlike the earlier pay commissions which took a long time to finalise their recommendations (6th CPC took 30 months), this one has done it pretty fast, implying that there is likely to be just about seven months of arrears that become due. Hence, the arrears are going to be quite small, just about equal to a month’s salary post-tax. For this reason, there is neither much excitement about the arrears nor could there be great plans required to be made to spend it. However, since it will become available anyway, the best way to utilise it is to retire debt, if any. This implies that one should try to reduce the loans taken – costlier loans first. A logical order to pay off the loans should be Personal loans, product loans (taken for vehicles, durables, jewellery etc), loan against property, and lastly home loans. It not only reduces the interest payment, but there is a big psychological relief too when a loan is paid off, however small. After the loans have been paid off, if some money is left, a contingency fund, typically equal to about three months’ expenses (including all loan payments) should be created or topped up, as the case be. Any further money available should be directed towards tax related savings for the financial year. Given the small amount of arrears likely to be available this time, these priorities should take care of it more than adequately.


More important this time will be the monthly increments that will become available. It has been clarified that this additional monthly amount is likely to be in the range of about 15-20% over and above what one is already getting. Rather than aiming to go in for a ‘better lifestyle’, or buy that long-pending big car on loan and pay EMIs, it will be better to take a look at your long term goals and how this additional monthly increment can be used to fortify them. This could go to increase your PF contribution, start or increase of mutual fund SIPs (Systematic Investment Plans) or even recurring deposits. That way, this increase would help you meet your dreams, responsibilities and obligations that you would’ve otherwise struggled to meet. Children’s higher education, marriage, home, etc are all more easily achievable if these small droplets are accumulated to make an ocean. It should not happen that few years, or maybe even few months down the line, you do not know how timely non-utilisation of the additional increment of money simply went to your lifestyle expenses without actual increase in your quality of life.


2) Could you give some good Mutual funds to invest?

Good funds would depend upon three main aspects – risk profile of the individual, his future requirements (or financial goals), and the market conditions. If one is a novice and entering mutual funds for the first time, primarily debt funds should be gone into with some balanced equity funds. As one becomes comfortable with equity, large cap and multi cap funds can be added. However, if one is knowledgeable about equity, a portfolio of large cap, multi cap, mid & small cap and balanced equity funds can be made. The ratio in which each fund is taken would depend on the three factors already enumerated.


3) How much of portfolio should be invested in gold?

Gold could be looking attractive now due to it having zoomed up lately. But please remember the old adage – ‘Gold zooms when the world is Doomed’. Due to large uncertainties associated with global economy, financial markets have been very volatile lately. Hence the rush to perceived safe havens like Gold. But these very uncertainties and rush times have also made Gold very volatile! We do not advocate more than 5-10% allocation to Gold at any time and this is true of bulk investments as also monthly ones.


4) What are the best tax-saving investment options?

There is a large variety of tax-saving options available under Income Tax Section 80C. However, the key issues are the safety, returns and tax status while investing, of its returns periodically received and when it matures or is redeemed. PPF is the best tax saving avenue for the risk averse as it gives decent interest of 8.1% as on date and enjoys the E-E-E (Exempt-Exempt-Exempt) status. If you find the returns low and are prepared to accept some volatility of returns, tax saving mutual funds (called ELSS – Equity Linked Savings Scheme) are very good. If chosen carefully, they also provide E-E-E status, are likely to provide higher returns than PF, can be contributed to regularly through automatic ECS from bank account and provide the option of continuing as long as you want. They also have the shortest lock-in period of all tax-saving investments of just three years. But please remember that their returns are market linked. Apart from these, five year tax-saving bank FDs, Insurance policies and NSC also are 80C investments. But low returns take their sheen off. NSC are E-E-E provided the interest received is shown re-invested in the Income Tax Returns each year (except the last year when it matures) and bank FDs are in the E-T-T bracket.

For more information, feel free to reach us on, contactus@humfauji.in or call + 011 – 4240 2032, 40545977, 49036836 or

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