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Asset allocation: Diversifying Investments


Good investment strategy is the key to achieve your financial goals. This can be done by minimizing risks and thereby maximizing returns. Risks can be minimized by diversifying your investments. In simpler terms it means `do not put all your eggs in one basket’. Your investments should not be focused on just one asset class. It should be allocated strategically in different asset classes. Diversified portfolios are proven to have reduced losses in events such as economic crisis or bearish stock market.

When you diversify assets, any downward movement in one class of asset is offset by growth in another class of asset. It is unlikely that all different types of assets will grow or decline at the same time. Each asset has its own benefit and by diversifying you get the advantage that they have to offer. The various asset classes are cash, stocks, gold, fixed deposit, real estate, provident fund, mutual fund and so on. These can be classified into aggressive, balanced and conservative assets. One can also further optimize your portfolio by diversifying within each investment class. For example, when investing in mutual fund, you can investment different funds such as small, mid and large cap rather than investing in only one fund.

Diversification of asset will depend on your age, financial goals, amount of investment, timeline and your risk appetite. An ideal investment portfolio should have mix of aggressive, balanced and conservative allocation. When you are younger, you can have increased exposure to riskier investment such as equities. These have higher earning potential but it can take longer to give expected returns. There is also need to have balanced assets which are mix of aggressive and conservative assets. Lastly, some allocation has to be done in conservative assets. These are considered safe investment avenues but have lower earnings potential. Liquidity is another aspect that you need to consider while choosing your investments as you never know when you will be in need of funds.

The thumb rule for asset allocation says that `100 minus your age’ is the percentage you need to allocate in equities and the rest in debt and cash. However, everyone’s needs are different and allocation should be done accordingly. A high exposure to equity may give you good returns but increase your losses if the market turns bearish. On the other hand, a conservative investment will be a safe option but it will not have the potential to meet your future needs. Thus, allocation will need to have a good mix of aggressive and conservative investments.

Once you have created a well balanced portfolio based on your needs you can stop worrying about your investments and let your money work for you. You will still need to monitor your portfolio occasionally. You should refrain from constantly adding or removing different assets. As you age, you can shift your preference towards a more conservative portfolio. Do keep in mind not to over-diversify.

Critical Illness Insurance


Critical illness insurance is a policy that covers some specific life threatening diseases. It typically covers illnesses like cancer, heart attack, organ transplant, kidney failure and paralysis. These conditions may seriously affect your lifestyle and your ability to earn income in the future. The cost of treatment of such illness is also very high and can easily drain your lifetime worth of savings.


Cash is King


India is a largely cash dependent economy. Even after extensive drive for digitization of transaction, cash still remains the go to option for many individuals. Cash transactions have yet again come on par with the pre-demonetisation levels. Though there is huge progress in the number of digital transactions, there is still a long way to go. Here is why cash is king for most individuals.


BUDGET 2019 – Full of JOSH!

Budget 2019

The Modi government delivered an impactful budget today, just before the elections, showering multiple benefits to the Tax Paying Citizens. Key benefits are as under:

Tax Rebate:The government has proposed to introduce full tax rebate for individuals earning up to 5lacs. With Tax saving investments included, the tax rebate extends to income till 7.25lacs. (includes 1.50lacs under section 80C, 50k in NPS, 25k in health insurance)


Aadhaar Based e-KYC: All You Need To Know


To put an end to problems that most people face while opening a bank account, applying for a passport, to avail pension schemes, etc., Aadhaar e-KYC was introduced by the Ministry of Finance. KYC, commonly referred as Know Your Customer, guidelines have been majorly formed to allow the citizens of India to avail benefits of a government and social welfare schemes.  Here’s a sneak peek into the details of it:-

What is Aadhaar-based e-KYC?


Growth vs. Dividend Mutual Fund


Mutual fund offers growth plan and dividend plan option for the same funds. The portfolio in which the fund invests is the same and the only difference is the treatment of gains.

In a growth option investors do not get payout in the form of dividend, instead this amount is reinvested in your fund. This increases the NAV of the fund. As there is reinvestment, the returns get compounded overtime and increase you returns in long term.


The Right Time To Start Financial Planning


Financial planning is a process which helps you to manage your finances. It works by linking your investments to your financial goals so that you can secure your future and be ready for life’s surprises.

The right time to start financial planning is as soon as you start earning even if your income may not be high at this point. Starting early will instill discipline in you and it will become a habit instead of urgency in the later years of your life. It will also give you a bigger benefit of compounding and thus a bigger corpus for your later years. At this age, you can afford to invest in riskier investment option such as equities. You will also be able to buy insurance at a low premium when you are young.


3 Simple Ways to Stop Leakage – Curtail Expenses

3 simple ways to stop leakage – curtail expenses

One of the hardest challenges youngsters face nowadays is that they are unable to control their expenses. Managing money is difficult as there is always some or the other attractive sale going on, there are so many food joints you want to try and so many places you want to visit. Thus, most of them complain of being broke as the end of the month nears. So if you don’t want to be broke at the end of the month, here are some simple tips to help you curtail your expenses.