Financial Planning for Child’s Education

financial planning for child education

“Education is the passport to the future, for tomorrow belongs to those who prepare for it today.” – Malcolm

In India, everyone firmly believes that education is everything. We want our kids to go to the top schools and support them in what they want to do. We understand the importance of good education, but the cost is a concern. The cost of education is increasing at a high rate. As per a report in Financial Express, education inflation stands at 11 to 12%. Let us understand the impact of this inflation.

Assume your son is three years old, and the cost of education today is Rs 5 lakh for the courses you assume he may get enrolled in. You have 15 years before your son gets ready for graduation. Assuming 11% inflation, the education cost will be approximately Rs 24 lakh. Financial planning for a child’s education becomes essential to beat high inflation.

Steps you must follow

You can follow the below steps to start financial planning for your child’s education:

  • Know the time: The first step is to know how much time you have for your child’s graduation. The longer the time horizon, the easy it is for you to plan for it. You must not delay and wait for the last hour to start planning. It is one of the essential and mandatory financial goals, and you must plan NOW.
  • Find the cost of education: It is one of the toughest questions to answer as the education cost will depend on many factors. The first question to answer is whether you plan to send your child to a foreign university or you want them to graduate in India. There is no way you can predict – the course your child will enroll in the future. You can only assume – your child will be in a profession similar to yours. For example, if you are a lawyer, check the cost of this field and factor in inflation to calculate the education cost in the future. You may need a lot more or less depending on what your child is interested in doing, but it is a good starting point.  As the child gets closer to their 10th/12th standard, one may be able to plan based on your child’s interests.
  • Know the amount that needs to be saved monthly: Once you know the amount for education, you must decide the amount you need to save and invest to reach the corpus. If the goal is far away, the easiest way is to opt for regular monthly investments. Your goal should be to put aside some money regularly to meet your goals. Assume you are unable to invest the required amount for a child’s education. Then, you must try to reduce your household and personal expenses or find an additional income source. Taking the help of your financial advisor is one of the best things you can do. You can achieve your goal with a lower investment amount with proper guidance. They have expertise in balancing the risk and the reward.
  • Plan your investments smartly: This is the most crucial step in financial planning. You have to decide where you will invest to achieve your goal. You need to invest your hard-earned money in suitable financial instruments depending on your risk profile and investment horizon. You will also need to follow asset allocation. When the goal is far away, you can make most of your equity investment. As the financial goal nears, you have to move gradually from equity to debt – rebalancing is essential. If you think you cannot do it yourself, get in touch with Right Horizons. We have expertise in financial planning.
  • Prepare for the unexpected: Like any other journey, you may have unexpected turns in your financial journey. You should be prepared for them. Figure out what happens to your goals if you have an untimely death or an accident and can no longer earn. One of the biggest setbacks to a child’s education is the death of the only breadwinner in the family, and there is no insurance. Have enough insurance for your life and health. The coverage should be able to take care of your family’s future needs and also take care of your child’s education. Investing in plans that offer a child’s education protection option (for example, ULIP) can also be considered. A financial advisor would be the best person to tell you which is the best option to secure your goals.

Start now

The last thing or the first thing you must do is to start NOW. One way to surely not achieve your goal is procrastination. Since it is a mandatory financial goal, you should start it as soon as your child is born. You can save and invest early since the longer the time horizon, the easier your financial journey becomes. The power of compounding works magic for you.

If you have any questions about your child’s education planning, get in touch with us. Right Horizons has a range of products to share your burden and you to secure your child’s future.

Investing globally: Options for Indian Residents

Investing globally-options for Indian residents

Investors in the 21st century should be well-informed and aware of different markets’ performance. Today, there are no geographical boundaries for investors, and they can explore investment opportunities in different countries and get good returns. If you plan to invest in international markets, it is essential to understand the need – why should you invest in the global market?

In this article, we will talk about the benefits of investing in global funds and the different ways in which you can do it.

Reasons why you should invest in foreign funds

Below are some reasons why you should consider investing in the international markets. You must not invest in them because others are doing. Understand the need and risk and if it is in line with your goals, invest in them.

  • Diversification: As a financial advisory firm, we always create a diversified portfolio for our investors. We also educate them on the need for the same. The reason is simple – you should not keep all your eggs in the same basket. In the investing world, you should have different financial instruments in your portfolio for diversification. By investing in international funds, you diversify your portfolio even further.
  • Risks and Returns: Some international markets have delivered better returns than India and may continue to do so. When you invest in such a market, you give yourself a chance to get higher returns. However, you must be careful while choosing the market. The risk will depend on the market conditions and macroeconomic factors of the country you are investing in. It requires expertise to evaluate the economies to invest in.
  • Inflation Hedge: Investing in global funds is also a good way to hedge against inflation.

How to invest in global markets?

There are different options through which you can invest in the global market. Before you invest in any form, you must understand the risk. Below are some options we suggest to our clients. The suggestion varies as per the client’s risk profile and investment goals.

Listed Stocks: Investors can pick an economy that they believe is stable. Once done, the next step is to invest directly in the best stocks in the country. For example, if you want to invest in US stocks, you can pick companies that have been consistently generating returns for investors. We help investors end-to-end with investing in companies from the international market.

Exchange-Traded Funds (ETF): Investing in direct stocks comes with a risk and is not suitable for every investor. Investors looking to stay invested for the long term and looking for low volatility can invest in foreign companies through ETFs around the popular index. ETFs not only give you the option to invest in equity but also in commodities and can further diversify your portfolio.

Active funds: These are the easiest way to invest in foreign funds. There are mutual funds available for Indian investors that invest in foreign companies. You get the option to invest in economies like the US, China, and other emerging economies. It works just like any other mutual fund. The difference is – the underlying asset in these mutual funds are not Indian companies but international companies or international funds.

Unlisted companies: Many unlisted companies in different geographies are profitable, and you may want to have shares of those companies. For example, if given an opportunity to invest in SpaceX, would you like to own the stocks of SpaceX? If you want to invest in unlisted companies, you must consult a financial service provider as it requires experience and expertise in investing in unlisted companies.

Private equity funds: Have you heard of the Medallion fund? It is one of the best-performing funds in history. Unfortunately, it is a closed fund and not available for retail investors. However, there are ways to invest in private equity funds.

When it comes to international investment, 99% of investors think of the US market. However, it is not the only option. Many world economies have the potential to deliver high returns to investors. They all should be explored before investing.

Pros and Cons of investing in global markets

Pros

  • You get the opportunity to invest in the fastest-growing markets.
  • You insulate yourself against the ups and downs of the equity markets in your own country.
  • You diversify your portfolio, reduce risk and get a chance to get good returns.
  • If you plan an overseas education for your child, investing overseas can be a hedge against currency depreciation.

Cons

  • Your investment is exposed to market risks that you may not be completely aware of as it may be hard to track all the developments there.
  • If there is a depreciation in the currency into which one has invested, it will have a negative impact on your portfolio.

Invest in other markets for diversification

There is no doubt that investors should consider the option to invest in other markets. However, they must be careful before making such an investment. It is always better to have a specialist for such investments.

Right Horizons, over the years has integrated international investments in the portfolios of its high net-worth clients to create a diversified portfolio. Get in touch with us, and we will help you create a portfolio that will minimize your risk and maximize your returns based on your risk profile.

How can you prepare for threatening financial situations?

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Life is unpredictable – that is the least we can say about life. Though you cannot predict what will happen in the future, you can prepare for it. Most of us prepare only for the situations we want to happen. For example, we plan for retirement, a holiday home, or a foreign vacation. It is good to plan for these events, but what if life takes unexpected turns? How can you prepare for threatening financial situations?

Financial planning helps you and your family survive even the tough times. Sadly, not everyone does it. Today, we will discuss the four threatening financial situations. We believe that everyone must acknowledge them and prepare to face these situations. You may think these situations only happen to people around you, but the reality is these are common life situations and can happen to anyone.

Situation One: The Worst Case

Have you thought about what will happen to your loved ones in the unfortunate event of your death? If you are the only breadwinner in the family and not prepared for this situation, your family will have tough times – mentally and financially. Financial goals like a child’s education cannot be compromised, and you must ensure they are no hindrance to such financial goals. Your responsibility as a breadwinner is not only to earn money but to secure your family’s future. You must have adequate life insurance and planning to ensure in the unfortunate event of your death, your family can maintain the same living standard. You need to ask yourself this difficult question – Is my family financially secure in case I am no more? If not, you need to act now.  Our life is more precious than our cars that we religiously cover.

Situation Two: You lose your job

In today’s economic situation, there is always a possibility that one may lose his job. If a recession comes, many may lose one’s job. Yes, you can get another job. However, during the phase when your monthly income is zero, can you handle the situation? In such a situation, can you take care of your monthly EMIs, children’s education fees, health needs, etc? What if one is not able to get a job for an extended period?  These are some things you cannot avoid or park for the next month. You have to take care of them monthly.

You must plan for such a situation. You should either have enough savings or an alternate income source to save you on rainy days. Do you have another skill that can give your job immediately? You should ask yourself – Can I financially survive a few months without pay? If the answer is NO, you should plan for it. We are sure you do not want to be in such a situation, nor want your family to be in it.

Situation Three: You need a few lacs immediately

You or someone close to you may require a few lacs immediately. It could be a situation of a calamity, a medical emergency, or some other requirement. Can you handle such a situation? Every individual should maintain a reserve of three to six months of their monthly expenses in emergency funds. You can keep your emergency fund in liquid funds or fixed deposits. The important thing is that you should withdraw these funds only when there is an emergency – you need the cash immediately.

Situation Four: You or your family member is hospitalized

Like death, hospitalization drains you mentally and financially. The medical treatment cost in India is very high, and it is increasing with every passing year. If you met with an accident or are diagnosed with a critical illness like a heart ailment or cancer, the treatment cost is high. If you are unprepared for such situations, all your life savings may drain quickly. Have health insurance plans with riders to have all-around protection. The health insurance plan should cover you and your family members.

What you must do?

You must plan for every financial situation. You need to create a financial plan that ensures that life goals get fulfilled in all life situations. You not only have to plan but also plan carefully. For example, having the right cover for the term plan is essential. You should evaluate your financial situation completely, and accordingly, select the coverage amount. The same holds for a health insurance plan.

Financial planning requires a certain level of expertise, and we at Right Horizons have been doing it for years for our clients across the globe. We look at your situation holistically and offer the best possible solutions for your financial needs. Reach out to us if you want to have complete financial protection.

Do you need financial planning?

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Have you planned any trips? We are sure you have. If you want to go on a vacation from Delhi to Goa, how do you go about it? You start by deciding the dates – when you want to travel. Next, depending on your budget, you select the travel route you will take – train or air. Accordingly, you will pick the hotels, shortlist the spots you would like to visit, etc. Before you even think of a holiday, you will have to figure out if you can get leaves from the office. There is so much more to sort out.

Why are we discussing a holiday? It is to make you realize that to go on a week’s vacation – there is so much you need to plan. How about your finances – the important financial goals like a child’s education or retirement planning? Are you doing financial planning?

For most people, financial planning runs on auto mode. They earn, they save, and they invest. There is no planning for anything. It is equivalent to – you packing bags, booking a flight ticket, and landing in Goa with your family (including kids). The chances of you having a pleasant vacation with your family are bleak.

If the above situation sounds familiar to you, you have to act. If you are with us this far, you must be feeling the need for financial planning. However, the feeling may not be strong enough. Hence, let us list down the top reasons showing why you need financial planning. But before that, let us explain financial planning to you in simple language.

What is financial planning?

Financial planning is an ongoing process that helps you reduce your stress about money. The process supports your current needs and helps build a nest for your long-term goals. It helps you make the most of your assets and ensures you achieve your future financial goals.

As we mentioned above, you would already be saving money. Savings is like a seed, and it will only bear fruits when you plant them well and nurture your plant – make the right investments. And continue to monitor them.

Top 5 reasons you need financial planning

 1.  Manage cash flow: You will have to learn to budget, and financial planning makes you do it. You have to monitor every single penny you receive and spend every month. Budgeting under financial planning ensures you are on track for your long-term goals.

 2. Streamline your investments: If your investments are scattered, and you are unsure where and what percent you have invested in different financial instruments, your journey is a mess. Financial planning helps you put your portfolio in order. You may be investing in a haphazard manner without conducting a proper need-based analysis. You may do well in the short term. In the long run – you will not be able to achieve your goals.

3. Set the right asset allocation: Many people will tell you to invest in equity- especially when we are in the middle of a bull run. However, it is never wise to put all the eggs in the same basket. For the same reason, if you are not investing in equity – a lack of knowledge, interest, or some other reason, you are missing out on a good investment opportunity. Financial planning helps you create a balanced portfolio in line with your risk profile and investment horizon. The proper asset allocation protects your wealth during uncertain economic conditions and market volatility.

4. Get SMART goals: Going on a long journey without goals can get boring and monotonous. Financial planning helps you set goals and outline the path you need to take to achieve those financial goals. You create a prudent financial plan and vigilantly and religiously follow it to make your dreams come true.

5. Knowing the right insurance plan: Most of us know that we need to have an insurance plan – health and life insurance. However, most people fail to figure out the right amount of insurance needs. Knowing the correct amount is crucial when it comes to insurance as it can make or break the future of your loved ones. Under financial planning, your income, expenses, and goals are taken into account to determine the optimal coverage amount for both health and life insurance.

Do you need financial planning?

There is no second answer to the question – you need financial planning for sure. The right question to ask is – Can you do it by yourself? Or do you need support? If you want support and guidance – you can reach Right Horizons. We carry with us 18 years of financial advisory legacy, and currently, we are managing Rs 1500+ crore AUM.

I sold my company, how do I secure my family’s future?

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Introduction

Life is beautiful and exciting. It also comes with a lot of uncertainties. We cannot do anything about life’s uncertainties, but we can prepare for them.

We all have financial goals, and most of them are mandatory. For example, you need to save and invest for your children’s education. Also, you have to create a corpus for your retirement. These are financial goals you cannot avoid or delay. Then you must be planning for a foreign vacation with your family or buying a holiday home in the mountains.

You can only achieve these goals through financial planning. It is not only about achieving the goals. It is also about achieving them on time and preparing for the worst-case scenario(financial security). Financial planning takes care of every aspect of your financial goals.

Financial planning is a must if you have just sold your company and want to secure your family’s future.

What is the financial plan, and if you have sold your company, how can you secure our family’s financial future?

Planning is critical for humans in every aspect of life. When it comes to money, it gets even more essential. There are enough variables that can affect you if not planned well when it comes to money.

A financial plan is an evaluation of your current pay and future financial needs. It considers your existing assets, current income, future requirements, and withdrawal plans in the future. The financial plan is also about protecting you and your loved ones from life’s uncertainties and giving your financial security.

If you have sold your company and want to secure your family’s financial future, you need a detailed financial plan. You cannot risk the future of your loved ones with random investments.

Why is Financial Planning Necessary to Secure Your Future?

Let us understand the need for financial planning. Assume you want to travel from Delhi to Mumbai for a vacation. Can you get up one morning and travel? No, you cannot.

You have too many things to plan before traveling to Mumbai. First, you need to decide your budget, and based on budget, you will select the mode of travel. Second, you will choose the dates and then book the tickets and hotels as per the dates. Next, you will plan all the locations you plan to visit in Mumbai.

There is so much planning required for a week’s vacation. Can you imagine the planning needed for life? There are so many variables to life’s plan. You need to understand them to secure your future. Some of them are as below:

Inflation – Most people fail to understand how inflation is the biggest destroyer of purchasing power. You can purchase your dream car today at Rs 10 lakh, but the same will be available for Rs 15 lakh in the future because of inflation. Financial planning helps you bring inflation to your calculations.

Emergencies – Be prepared with money matters, or you will regret it. You can plan everything in life, but there can be unavoidable and unexpected events before you. They can eat up your savings. You prepare for the unexpected also with family financial planning

Retirement – One of the biggest goals for everyone is retirement. You would want to have a comfortable second inning of life. Creating a retirement corpus requires a lot of planning, and a financial plan covers it.

A financial plan is a must for every individual, and you should not postpone it any longer.

Five ways of Protecting the Financial Future of your family

You can protect your family’s financial future by following techniques:

Set SMART goals – The first step in financial planning is to set financial goals. Your financial goals should be SMART. It means they should be Specific, Measurable, Achievable, Realistic, and Timely. The other important aspect is to have clear short, mid, and long-term goals. You should be able to tag each financial goal in one of the above three categories.

Know your finances and get organized – Most people have no clue where the money goes by the month-end. In financial planning, you know everything related to your finances. You should know all your accounts and income streams. Secondly, you should know where and how much money flows out of your bank accounts. You have to get organized with your money.

Build emergency corpus – Your first goal should be to create emergency funds. Prepare for events like a medical condition or job loss. Hence, having an emergency corpus is a must. You should have 6 to 12 months of your monthly salary in your emergency corpus.

Clear off debt – If you have sold your company and have bad debt, you should clear it off. It could be a credit card bill or car loan. Bad debt chokes your budget and becomes a hindrance in your family’s financial future.

Insurance product – Just like financial planning is a must for every individual – insurance products are also a must. As mentioned earlier, life is full of uncertainties. You can prepare for them by buying the right insurance products. You need to have health insurance that covers critical illnesses and life insurance to secure the future of your loved ones.

What are the steps to involve the whole family in financial planning?

Financial planning is not an individual responsibility, and hence you need to involve your family members in the planning. Below are the steps to follow:

Talk about money – The biggest problem in an Indian household is that money is a taboo topic – money is not discussed among family members. When a family’s financial goals are designed, everyone should be involved and agree with the financial goals.

Everyone should stick to a budget – You can only achieve financial goals if every family member sticks to the budget. You should encourage young ones too to save from their monthly budget. It will keep everyone motivated in the family.

Identify responsibilities – You should share the financial responsibilities within the family. If you are the only breadwinner in the family, you should still invite your spouse in decisions related to money. Let her take care of specific household expenses.

Have fun in the process – To secure your family’s future, you should not compromise the present. Your focus should not only be on saving. Spend wherever required and enjoy life with your family. With financial planning, you invest in good investment instruments, and hence you do not have to stress too much on saving.

Investing options in Long-Term Goals

For your long term goals, you can invest in the below financial instrument:

You have sold your company and have a corpus in hand. With the cash in hand, your short and mid-term goals are sorted. However, you still have to plan for your long-term goals. Your money will lose its value over time if not invested intelligently.

  • PPF (Public Provident Fund)
  • Stocks and Mutual funds
  • ULIPs (Unit Linked Insurance Plan)
  • Bonds
  • Gold

Which options to pick and how much to invest in each category varies from person to person. Right Horizons has years of experience in Financial Planning. We understand each individual is different, and so are his financial needs. We help you invest in the right financial instrument, the right amount, and at the right time. Our financial planning services track, monitor, and ensure your goals are always within your reach.

FAQs

  1. How to secure your family’s financial future?

You can secure your family’s future through proper financial planning. You should hire an expert that can help you organize your finances, create a roadmap of your financial journey and help you achieve all your goals with financial security.

2.  How to be financially stable with low income?

Low income is not an excuse for not investing or doing poorly financially. You can have financial stability irrespective of your income. Create a budget that works for you. Even if you can save a small percentage, do it. Invest in financial instruments that can grow your money by giving you high returns.

3. How to be financially independent at 30?

To become financially independent at 30, you should start your financial journey without delay. The first thing you need to do is get rid of all your debts. Then create emergency funds, secure your life by buying insurance plans and start investing in instruments that can create wealth before you turn 30.

Returning NRIs: Will my NRE bank fixed deposits be tax-free on return?

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Introduction

Indians staying abroad plan to make investments in India. However, when it comes to tax implications, they are clueless. Every investor should know the tax implications before investing money in any financial instrument. It helps them understand their actual or net returns. In this article, we discuss one of the least risk investment options for NRIs (Non-Resident Indians). We will also talk about the tax implications for such investments.

Who is NRI, and who all comes in the NRI category?

NRI stands for Non-Resident Indian. If you are an Indian citizen and live in a foreign country for more than one hundred and eighty-three (183) days in a financial year (FY) for work or business, you come under the NRI category.

NRI is different from PIO. PIO means Person of Indian Origin – an individual who is Indian by birth but lives abroad falls in this category.  A person who has taken foreign citizenship can also be a PIO.

What are NRE Fixed Deposits?

A fixed deposit is a savings scheme wherein you invest your money for a fixed period in return for a guaranteed fixed return. An NRE fixed deposit is a fixed deposit opened by NRI. An NRI can open an NRE fixed deposit in a single holding or joint holding format. 

After returning to India, your NRI status will change to RNOR (Resident but not Ordinarily Resident) status. Your NRE deposits can remain as it is – you don’t need to do anything till maturity.

Bank account options for returning NRIs

NRIs returning to India will have to go through different processes to transfer their assets and funds to the resident account from a foreign account. To help the NRIs in the process, the Reserve Bank of India allows the returning NRIs to open Resident Foreign Currency (RFC) accounts. The money in the RFC account is held as foreign currency. Hence, it is not open to the risk of foreign exchange fluctuation. Every NRI returning to India should open an RFC account for hassle-free transfer of assets.  

Why choose NRE fixed deposits?

A few features of NRE fixed deposits accounts are:

  • The deposits are to be made in Indian Rupee.
  • You can withdraw your funds into your NRE account in any foreign currency.
  • NRI does not have any NRI tax liability on his NRE fixed deposit account. It means the interest you earn on the deposits is non-taxable in India.
  • Tenure is between one year and ten years.
  • You can close the FD any time from the time of opening it.
  • Most banks give you loans against NRE deposits and allow 90% overdrafts on NRE deposit accounts.

What are NRE fixed deposit rates?

The NRE fixed deposit rates vary from bank to bank. The rates also vary as per the tenure of the fixed deposit. For example, Yes Bank offers 6.25% for one-year fixed deposits and 6.75% for five years and above duration. Other banks only offer around 5% for the same tenure. 

At present, the NRE fixed deposits rates vary between 4.50% and 6.75% depending on the bank and the tenure.

What are the benefits of NRE fixed deposits(FD) accounts?

  1.  Flexibility – You have to deposit money in the Indian currency, but most banks accept any currency for conversion. It means you don’t have to go through the conversion process. You can fund your account with any convertible currency and open an NRE fixed deposit account.

2.  Low minimum deposit account – You can open an NRE fixed deposits account for as low as Rs 25,000 with most banks (it can be different for different banks). It gives you the option to open multiple NRE FDs with small amounts.

3.  Higher rates – The NRE FD interest rates offered by the banks are higher than a regular savings account. If you are sending money to India and keeping the amount in a savings account, it is always better to open NRE FD and earn more interest.

4.  Hassle-free renewal – If you invest for the long term, you don’t have to worry about the documentation or form submission to renew your NRE fixed deposits. Your principal and interest are auto-renewed on maturity.

5.  Competitive exchange rate – As mentioned above, you can convert any currency to INR and open an NRE fixed deposit  accounts. The rates offered by the banks for conversion are one of the best in the market.

6.  Flexibility – You have to deposit money in the Indian currency, but most banks accept any currency for conversion. It means you don’t have to go through the conversion process. You can fund your account with any convertible currency and open an NRE fixed deposit account.

7.  Tax benefits – The interest you earn on your deposits is not taxable in India.

8.  Loan options – Most banks give you attractive loan options on NRE fixed deposits accounts. You can get a loan of up to 90% of your deposits at attractive interest rates.  

Tax Planning for NRIs Returning to India

Indian who are staying outside India continue to invest in India for a number of reasons. India is an emerging market, and the potential growth is better than other countries. 

NRIs invest in India, but the calculations get complicated when they return to India. Every NRI needs to do tax planning before returning to India. It will help them in ways they may not be aware of today. For example, the majority of NRIs are not aware of the benefits of filing taxes when they return to India. It helps them claim a refund, or in case they have losses, they can carry forward it for future years.

Right Horizons has years of experience in doing tax planning for NRIs. Tax planning is a bit complicated for NRIs, and Right Horizons’ goal is to make it simple for every NRI. Whether you want to reduce your tax liability or you have queries related to property taxation, Right Horizons helps you at every step for every category.

Right Horizons not only help its client with the investment but also with efficient tax planning services. NRI Taxation is one of the core areas of expertise for Right Horizons with Advance and Capital Gain Taxation.

FAQs

  1. How are NRIs taxed in India?

Different financial instruments are taxed differently for NRIs in India. Though NRE FDs are tax-free, other investment options are taxed. NRIs should check the tax implication before making an investment.

  1. Does NRI have to pay tax for interest on NRE fixed deposits?

No, interest earned from the interest in NRE fixed deposits is exempt from tax in India.

  1. Is the NRE FD taxable after returning to India?

As long as you are NRI, the interest earned by you on the NRE FD is exempt from tax. However, if you have returned to India, you should inform the bank about your NRE account and make a request to re-designate your account as a resident foreign currency (RFC) account. It is important to note that the RFC account bears a lower interest rate than NRE FDs.  Once this process is complete, the interest you earn on your NRE fixed deposits will be taxable.

  1. If NRI returns to India, should fixed deposits be closed?

The first step is to determine the right of residence every financial year. Once you have it, you need to go through the tax filing process. Things to consider while filing tax – choose the right ITR form, check the compensation against double taxation treaties, etc.

  1. How to file an Income tax return for NRI?

Once you return to India, you become an Indian resident. You can no longer maintain an NRI bank account or avail the benefits NRIs get on investment in India. Hence, convert or re-designator close your NRE account within three months of your return. Your fixed deposits can remain as it is till maturity.

5 Things to ask when hiring a financial planner

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The financial planning ecosystem is incredibly complex. The space is vulnerable to anyone with minimum qualifications. But, to glean out the financial planner who works best for you, make sure you are equipped with the right questions. Here are the five pressing matters you should be aware of before you hire your financial planner.

1. What are your qualifications and credentials?

The question is likely to cover how competent and knowledgeable the professional is in their field of expertise. Regulations require the person to be a Registered Investment Advisor (RIA) being licensed from SEBI. RIA regulations will ensure a certain standard of the advisor and various compliances are to be maintained. In terms of qualifications, they must ideally be certified by NISM Investment Advisor Certifications or hold a CFP from the Financial Planning Standards Board (FPSB) of India.

2. How do you ensure tracking of goals and data security?

Apart from executing a financial plan, it is critical to track your progress towards these goals. It is good to understand how the advisor tracks your portfolio, the reports they provide and at what frequency they will review progress towards achieving your goals. Further, they need to ensure that your data is secure. The last thing you want is for your confidential data to be leaked. Furthermore, with the wave of digital revolution, there are labyrinthine things that can go wrong in advertising, social media marketing, and communications. Take due note of each of these aspects before you make a decision.

3. How do you charge for your services?

Financial advisors are allowed to charge a fixed fee or a fee based on assets under management. You should focus not only on the fee, but the costs associated with their strategies like transaction costs, fund expense ratios, trading costs, and taxes.

4. How do you ensure that the engagement is aligned with my requirements?

While you are negotiating terms, it is important to find out what topics, decisions, or areas of advice are they not held to a fiduciary standard. You can ask the advisor to disclose any potential conflicts of interest. It may also help if you ask your advisor for a reference if you have not already approached them through one. You can talk to the reference yourself for a better understanding.

5. Do you have the secret ingredient?

Isn’t it ironic that transparency is the secret ingredient? It is important to be able to express your financial concerns and receive simple advice without jargons. You will need to have the negotiated terms signed in black and white and easily verifiable. It’s simple. Transparency breeds trust, two foundational experiences for a healthy working relationship with your financial planner. You can probe the advisor to get comfort on the transparency of their service.

Before you sign up, remember to knock these things off your checklist.

Ask yourself if the advisor is making you feel like your finances are too complex to be managed by yourself. The ideal financial planning professional would be one who gives you the flexibility to take back your finances into your own hands. However, be aware that professionals may be able to support you better in achieving your financial goals.

5 Healthy financial practices post-COVID

Financial Planning Solutions

New rules for the new world order
What’s the easiest, most certain way to achieve your financial goals even in uncertain times?
Healthy financial habits.

Any goal you want to achieve is reachable through a few key habits with a little bit of time. It’s really that simple. Here are a few of these practices that you can include in your financial habits.

Leverage the gig economy.

On-demand contract work and the gig economy was possible even before the pandemic. But the paradigm shift in corporate culture has caused several companies to transform almost overnight. Gig economy workers have the benefits of earning money on their terms. The flight to digital and remote models of working have opened up opportunities to

Review expenses and savings

Even if salary budgets have been slashed, the virus outbreak has influenced consumer expenses in every industry (think cuts in expenses like fuel, travel, entertainment, shopping, dining outdoors, etc). Spending behaviors are settling into a new normal with a shift to value and essentials. You may also try to further optimize your cash flows and treat the margins as impact savings.

Reprice or refinance your home loans

Interest rates have also taken a plunge over the last few months. If one has home loans, check your rates of interest, and approach your bank for lowered rates. It is an opportune time for homeowners to review monthly cash outlays and ease up financial strains. You may either refinance (i.e., take a loan with another bank with lower rates of interest) or reprice (switch to a more competitive loan plan with the same bank), depending on which works for you best.

Review your financial plan

You may use the time to also re-visit your financial plan. Take an inventory of all your assets and liabilities and check for optimal diversification. Re-evaluate your choices. See if you have financial plans that can balance out your risks and guarantee safer and more secure returns. Re-shuffle your investments. Consult a professional if it helps.

Review your insurance covers

COVID-19 is a wake-up call. Very low medical covers in the past have fallen woefully short considering the number of days one is likely to be hospitalized if tested positive and serious. Check for the family floater plan of Rs 10L/25L/50L. The good news is that incremental premium is much lower for these. Protection instruments like health and life insurances can leave your savings scot-free while retaining your family’s lifestyle and long-term financial goals without disruption.

As local and global communities re-orient themselves to the new norm at a time such as this, you can re-organize your finances. The proverbial rainy day is here, and if you’ve made it this far, you can secure the future for you and your family. Even amid a pandemic, you can identify the new rules of financial planning and optimize.

Planning for my child’s Overseas Education?

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* – Overseas education is becoming the first option for many people.
* – Research courses, fees, institutes and talk to other parents.
* – Start early- easier to achieve.
* – If possible, you can even have some assets overseas.
* – Plan for accommodation, apart from fees.

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How do I make money quick on markets?


Watch expert Financial advisor – Anil Rego, Founder and CEO of Right Horizons Financial Services give his views on making quick money in the market.

– Get Rich quick – Lose it quick.
– What is great about the market is that in the long run it delivers well.
– Speculating can also result in quick money.

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