Wealth Wiser

A dear friend who is a Tech Whiz (Thank you, B – I owe you!) suggested me to shift to WordPress from Blogger. He said that if I am serious about writing the blog (Hell yeah! I totally mean business) then WordPress would be better for earning from the blog (Who can say no to more moolah?) and also to monitor the blog (Yup, I know you were here, I am so grateful). So here I am, at this new address (Cannot forget to mention you, A- Thank you for working hard to make this happen). So, please Like, Subscribe and Follow my blog.

In other news, husband is still not pleased. Now apart from his unhappiness about being my editor (Proof reader job has been forcefully seized by Daughter at Rs.100/m), he disliked my last post. He thought the topic was too basic. So, today I am going to write about something unusual (Gotta impress him, People) and about which many do not know i.e., ‘Invest in US market directly through NSE’.

WHAT DO YOU MEAN?

• Earlier if someone wanted to buy shares of US entities, it had to be through registered broker in US (quite cumbersome process) or through Mutual Funds investing in US markets. SEBI recently approved NSE IFSC (International Financial Service Centre – subsidiary of NSE) to trade in US stocks.
• This means that now Indian Investors will be able to trade in US stocks directly.
• Trading has started from 3^rd March at GIFT City, Gandhinagar.

HOW CAN I DO THAT?

• Investors will be able to make transactions through NSE IFSC’s registered brokers (36 brokers as of now).
• Open a trading and demat account with any of these and you are good to go (You will need to get a KYC done and complete documentation for the Liberalised Remittance Scheme with the bank but hey, no pain, no gain!)

OK, I AM INTERESTED. WHICH STOCKS I CAN INVEST IN?

• Currently eight US entities will be traded which will increase gradually to a total 50 largest stocks.
• The stocks currently trading are
  • Alphabet (Google)
  • Amazon
  • Tesla
  • Meta Platforms (Facebook)
  • Microsoft
  • Netflix
  • Apple
• The stocks that will be added soon are
  • Berkshire Hathaway (A Warren Buffet company)
  • Mastercard
  • JP Morgan Chase
  • Morgan Stanley
  • Nike
  • Paypal
  • Pepsico
  • Pfizer
  • Intel

HOW MUCH CAN I INVEST?

• Investments will be done in USD.
• Limit of total investments is currently set at $2,50,000 (approx. Rs. 1.9 Cr @ INR 75 per USD) by RBI under LRS route.

WILL I GET SHARES DIRECTLY INTO MY DEMAT ACCOUNT?

• US companies are not getting listing in India but Market Makers will buy shares on Investor’s behalf and issue receipts to investors against them.
• Investors will receive NSE IFSC receipts for their purchase that will be their proportional ownership in that company.
• The receipts will be provided in a certain ratio e.g., 1 Share of Tesla will be = 100 receipts so Investors will have the option to trade in fractional quantity value when compared to the underlying shares traded in US markets.

WHAT ABOUT TAX?

• Any long-term capital gains arising from sale of such stocks is taxable at the rate of 20% (plus applicable surcharge and cess), if held for more than 24 months. If held for up to 24 months than gain arising from sale of such stock is taxed as ‘short term capital gain’ at normal tax rate applicable to the Indian resident.

WHAT’S IN IT FOR ME?

• NSE IFSC platform will provide an opportunity to Indian Investors to invest in US stock market at low cost and with ease.
• It will also provide good diversification opportunity.

THERE MUST BE A CATCH

• Nothing good comes without any risk (If this blog doesn’t work, I can change my career path and become a life guru), Investing in depository receipts carries exchange rate risk, price risk, liquidity risk, and settlement risk.

-FORAM

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Market is loving the red nowadays (Why on earth my mind is stuck on ‘London Bridge is falling down…falling down’ rhyme? We know whom to blame but can’t risk writing it here. That ‘someone’ reads my blog and I can’t take any chances). Russia’s attack on Ukraine has caused turmoil in the market along with the fear about Fed Rate Hike. So, the question on everyone’s mind (If invested in the Stock Market, of course) is ‘What should you do? Should I pull out all my money?’ The short and sweet answer to this is ‘Nope’. (There, saved you so much time. If you have nothing to do like me then read on.)

The real question here should be ‘What you shouldn’t do in falling market?’ (I am too lazy to change the heading now)

No panic selling

My Father taught me a simple funda. ‘When shopkeepers (It’s a metaphor, people… I am not categorizing Shopkeepers here) start talking about stock prices and start giving stock tips then it’s time to leave the market (Book your profit) and when everyone is panicky and running away from market, it is the time to invest.” Market is volatile. Corrections are bound to happen from time to time. Don’t let it affect you. Block the outside noise. Consider this an opportunity. (If this fall is making you distraught and rattled, you need to check your risk tolerance and make investments accordingly). If you will sell in this market then you will have to book loss. Rather wait and let the low tide pass.

Volatility can be your friend

Falling markets makes me happy. (Do I have no empathy?)  It is the time to stop looking at your portfolio and gather all the cash you have and invest (Am I mad?) in the stock market. Make volatility work in your favour. Many good stocks trade at discount in these times. Previous bear phases (2008-09, March 2020) have proved that such dips provide opportunity to build your portfolios. Take benefit of entering the market at low and increase your investments (Advice for long term investors only). Market will rebound at some point. (Its not possible to time the market. Bear market can continue for a while but Bull market will surely follow). If not comfortable in making new purchases, then just wait it out.

Take small steps

If you plan to make fresh investments, don’t go all in at once. Invest in instalments. You don’t know at what point the market will bottom out (No one knows that). Make gradual and phased investments.

Diversify

This market volatility teaches us that ‘Don’t put all the eggs in one basket’. If you are a short-term investor and in need of a large chunk of money currently and all your money is stuck in stock market then you are in trouble. Stay away from equities if your investment horizon is less than 5 years. Diversify your portfolio. Include debt options for short term investments. Build your ‘Emergency Fund’ if not already done. There will always be a feeling of FOMO (Don’t know this? Do you live under a rock or what?) but don’t let it turn into BFL (I totally made this up. It means ‘Big Fat Loss’). So, let’s toast (with a mocktail of course, I live in a dry state) to the future with ‘all-the-time-in-green’ Sensex. Adios!

-Foram

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Husband is not happy. He hates his new job as my proof reader. He is too busy and I am too pushy. So, if you are interested in this job (unpaid, of course…I am still not earning a penny from this blog) than please contact me (Daughter wants this job badly but she is too critical of my writing skills!!!).

Stock Market is not taking Russia- Ukraine conflict kindly. So, if you are invested in the market (FYI – Volatility is expected to continue for some time) and its performance is affecting your health than this post is for you. (Check your health insurance if you already have one with the below mentioned points or if you don’t have one yet…what are you doing? Buy one immediately after reading this post!)

Buying a health insurance is a tricky business (So many clauses and pages that too in small fonts, who reads them?).

Here are the points (I love making bullet point notes if you don’t already know that) to consider while buying a health insurance.

• Claim settlement time and claim settlement ratio: Starting with the hard jargon…Claim settlement time means how fast the insurer settles claim and claim settlement ratio means how many claims are settled (in percentage) from total claims made during a particular period. Look for the policy which has a low claim settlement time and a very high (preferably > 90%) claim settlement ratio.
• Co-payment:Co-payment means policyholder will bear a pre-defined percentage of the claim amount and the rest will be settled by the insurance company. (Yes, exactly like going Dutch except here it’s not about a meal expense but your health expense) Do not choose the policies with co-payment clause.

• Waiting Period: It means waiting period for pre-existing illnesses and illnesses that occurs after buying the policy. Who likes waiting, right? (Don’t smirk Husband, I am worth waiting for 😊) The policy with lesser waiting period is better (Usual waiting period for existing illness in health policies are 2 to 3 years).

• Day-care procedures:Check whether one day procedures i.e., procedures undertaken without overnight hospitalization are covered. Choose the policy which covers day procedures (So you don’t have to stay overnight in the hospital just to get insurance money).

• Network hospitals: Go over the list of hospitals in your city which covers cashless transactions (No, no need to go hospital hopping to check that. You can find the list online) and choose the policy which covers major hospitals of your city and some good hospitals in proximity to your residence.
• Pre/Post Hospitalization: This means medical expenses incurred after and/or before hospitalization (They can be of substantial amount too). Check the number of days and amount covered during pre/post hospitalization phase, higher is better.

• Lifetime Renewability: Some policies are not renewable beyond certain age. Policy should be lifetime renewable as the requirement of the same would be more in older age.
• Cap on room rate: Cap on room rent means there is limit on rent paid by insurance company for the hospital room. If room with a higher tariff is selected then the amount needs to be paid by you. (Insurance companies wants us to share expenses everywhere. Why are we buying policies then?)  Select the policy with no room rentcap or with cap according to your standard.
• Disease wise Capping: Disease wise capping means limit on payment (yet again!) some specified illnesses. Ask for the list before buying the policy. Compare it with your pre-existing illnesses, family history, occupational hazards etc and accordingly make decision.
• Exclusions: Exclusions means illnesses not covered under policy. Check the exclusion list before finalizing the policy.

• Family Cover: Rather than buying individual health insurances for each family member, buy a family floater policy (Daughter got worried about her health insurance after reading this post so had to add this point). It will be cheaper.
• Tax Benefit:You can claim deduction from your total income under Section 80D for health insurance premium paid by you for self, spouse, dependent children (Yes Daughter, you are still dependent…Even though you feel otherwise) and parents.

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I love reading quotes. All kinds of quotes – on life, loss, positivity, women empowerment, humorous, finance everything (Daughter loves them too and throws them right back at me at appropriate times!). It gives me happiness, courage, power to jump start my day, positivity and knowledge as well. Some days ago, I read one quote which caught my mind.

 

 

This got me intruded. This is what I feel many many times. Many of us do. There are so many shopping temptations. Increasing due to social media. Hard to resist. (Stop showing me the advertisement of the garment I wishlisted, Google!) So, what should we do? Here is my solution.

• Money looks better in the bank than on your feet.

(Yup, yet another quote! – Keep this in mind whenever your temptations grip you) As already mentioned in last post, you should save minimum 20% of your income. By saving, I mean investing and not kept in bank accounts. If you will see high bank balance, you would be tempted to spend the money on unnecessary items. Start an SIP. Choose an SIP date very close to your salary day. That way, automatically, a certain amount will be deducted from your account every month and you won’t be inclined to buy anything by peeking into your bank balance. Focus on your future goals (I have so many!). A new car, a bigger house, kid’s education or travelling. Start a goal-based SIP.

 

• Necessity, Comfort and Luxury

After enough Savings, how you should take decision about whether to buy a product or not. So comes the rule of ‘Necessity, Comfort and Luxury’. This is the first financial rule my dad taught me and it has helped me tremendously in my financial decisions (Totally ignoring my overflowing wardrobe for the time being). Hope this benefits you too.

 

Put the object you want to buy in one of these categories: 

1. Is it a necessity?
2. Is it for my comfort?
3. It’s a luxury and I want to show off.

 

o  Necessity: You know the meaning of necessity. (E.g., Due to online schools, a computer/tablet/mobile has become a necessity for kids) Does the item you wish to buy fall into the category of necessity for you or your family? Do you have money to buy it? Don’t think twice. Purchase that thing. If you don’t have enough money for it then you can also dig into your savings to buy necessary items.

o  Comfort: Will the object you want to get bring comfort for you or your family? Do you have necessary dough? (Slang for money people, keep up) If yes, don’t make an immediate purchase. Give it some thought and a day (Once you will get used to that comfort, there is no going back). If you still want to buy it then off you go but if you don’t have enough bucks then start a goal- based SIP and delay your acquisition.

o  Luxury: The items which won’t fall into necessity and comfort zone will make an entrance into this category. (I am talking about yet another Jewellery item, Watch, Louis Vuitton Bag, High end car, Weekend homes etc). Once you are in this category, I believe we won’t be talking about whether you have enough Moolah or not (Yes, I am using a Thesaurus). According to Investopedia ‘A luxury item is not necessary to live, but it is deemed highly desirable within a culture or society.’ You got the point. This classification is the trickiest one. When buying a luxury item, think 100 times. Wait for a week or more (Recall the quote I dished out earlier in this post). Even after giving it enough time and thought, you can’t get it out of your mind (considering money is inconsequential) then go for it. What can I say?  YOLO.

 

                                      — X —

– Foram

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After highly publicizing my first post (Thank you, Husband and Mother) and pining all good diamond jewellery designs on Pinterest (if you have read my previous post than you would know what I am talking about), I had to come up with something good which would keep the momentum going. After some thoughts, I decided to write on something basic but essential, something that almost everyone knows but majority don’t implement. So here is my post on ‘First steps to Financial Freedom’.

On a totally different note, Daughter was not amused with the writing of my last post. She thought that I used the words ‘Cheap/Costly’ too many times. So, bear with me while I bring out my Thesaurus and try to use some ‘better’ words.

Here we go …

Creating an Emergency fund is Must!

You should have Emergency Fund of at least 6X your monthly expenses. Keep that money in your bank account or liquid fund, that’s your discretion (see!) but it should be readily available when needed. [That branded handbag (ahem!) or the Watch you loved and want to buy asap is not an emergency though it may feel like one!]

Buy a Term Life Insurance

Life insurance is a crucial product to cover risk for your family’s future. Never mix insurance and investment. Life Insurance should only be bought to cover the risk and not as an investment. Buy Term Insurance immediately if you have dependents and/or have some debt/loan. There are many ways to calculate the amount of Term Insurance you need but the most basic rule is ’10-15X Your Annual Income Plus the amount of Loan/Debt.

Prepare for Medical Emergencies

Invest in a good Health Insurance plan to cover your medical emergencies. Don’t rely on your emergency funds as well as medical cover provided by your employer. Considering the medical expenses these days, medical cover from the employer as well as Emergency funds could exhaust quickly. Select Health Insurance with Critical Illness and Disability rider. (Will write an exhaustive post on ‘How to choose your Health Insurance’ soon.)

Income – Savings = Expense

It’s never Income – Expense = Savings. Savings always come first. Manage your expenses from the amount that is left after Savings. I read this quote somewhere and it stayed with me – It’s not your salary that makes you rich, it’s your spending habits.

How much should you save?

Now the main question is ‘How much should you save?’ Thumb Rule is at least20% of your income. More never hurt though. (If 20% Savings isn’t within your reach yet, don’t feel discouraged. Any Savings is good Savings.)

Savings is not equal to Investing.

Just saving some amount every month is not enough. Invest that money according to your risk appetite. Consult a Professional (ME! ME!). Let your money earn for you.

Start Early

Don’t wait till you reach a certain income level to kick off your financial journey. Begin investing as soon as you start earning. Even a small amount will help you build a good corpus for the future.

Let me cite an example:

Laxmi started investing at the age of 25 while Dhani started at the age of 30. Both invested Rs 10,000 p.m. till the age of 60 and earned 12% ROI. Their corpus at 60 years of age is

Laxmi
Total Investment	42 Lakhs
Investment Value	6.4 Cr

 

Dhani
Total Investment	36 Lakhs
Investment Value	3.5 Cr

 

With just 5-year gap in Investment horizon, Laxmi earned Rs. 2.9 Cr more on her investments.

Credit card is not all that bad

All personal finance blogs/ articles will tell you to avoid credit card at all costs. I don’t completely agree with this view. Keeping one Credit Card is okay. Credit Cards are beneficial in some ways. Some payments require credit card, cashbacks are good way to save some money, you can earn air miles on them, get access to lounges at airports. There are many benefits but only if you pay your credit card bills preferably immediately or latest by the month end. Keep a reminder or an alarm for payment but never miss credit card payments. Credit card interest rates are egregiously high and late payments will surely put a dent on your savings. Also make a habit to use credit card only to get extra time for the payments and associated benefits. Do not use credit card for the expenses which you would have not incurred if you didn’t own a credit card.

— X—

– Forum

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