Sunday, 5 April 2015

20 most important thumb rules to help you in financial decisions in new financial year 2015-2016 and in your future

As we welcome and step in new financial year 2015-2016

few thumb rules which shall help us in financial decision this year and also always in our future to ensure wealth and prosperity-

1- 100 minus our age should be our minimum equity allocation.

2- Minimum 20 times or more of our yearly income should be our retirement fund.

3- We should save & invest minimum 30% of our income every month.

4- We should not have monthly house hold expenses more than 35% of our income.

5- We should invest at least 5% of your annual income on skills / self development and on our health betterment & wellness.

6- E.M.I and Loan payouts should not be more than 30-35% of our gross monthly income (Zero is the best- Invest this percentage also if it is zero). Always keep checking in market for cheaper loan available and shift your loan to minimise your EMI. Avoid high interest loans like Credit card and Personal loan etc.

7- Cost of our house should not be more than 8-10 times of our total family income.

8- Rate of returns on investment ideally should always beat inflation.

9- Try & follow Rule of 72 & 115 -
     How many years double or triple our money
     72/Returns = Double in years
     115/Returns = Triple in years

10- Rule of 70 = Future buying power of your money (time in which your money purchase power depreciates and cost of product doubles) = 70/Inflation = Number of years in which your money depreciates to half and the product cost doubles).

11- Always keep 6 months expenses as an emergency fund in liquid assets.

12- Life cover should be minimum 10-15 times of your yearly income.

13- We should have minimum medi-claim / health insurance of Rs 5 Lakhs for a family of Husband Wife and 2 kids.

14- Minimum Rs 5 Lakhs separate medi-claim / health insurance buy for senior citizens parents.

15 - Cover adequately all the risk of all your assets i.e - home, car and other valuables through respective insurances.

16- Save small sums in equity every month, start early, invest regular, invest in disciplined way, invest for long term of periods, invest for higher returns (Equities) and invest for higher frequency of compounding returns.

17- Focus on your basic needs and avoid unnecessary more frequent outings, luxury expenses and impulse shopping.

18- Appoint a Qualified Financial Advisor to get your financial plan ready for all your financial goals of future and pay annual fees to Financial Advsior  for construction of financial plan, asset allocation for execution of your financial plan, review of plan at regular intervals and re-balancing of asset allocation at decided frequencies to enhance returns and minimise risk in portfolio which shall help you create wealth and prosperity of yourself and your future generation.

19- Through your financial planner / advisor help do a proper tax planning & estate planning.

20 - Don't go over board on a particular asset class or follow trends of masses to buy too much of a particular asset class. Always maintain a well diversified asset allocation for good healthy return on overall portfolio of yours.

Thanks and Regards 

Manish K Pandey
Navi Mumbai
# 022-65550210
Email -