RupeeManager is a easy-to-use personal finance software to manage your money. It primarily helps organize one’s finances and keeps track of where, when and how the money goes and comes.

Measuring something has an uncanny tendency to improve it. And that’s what RupeeManager helps you to get started with.

Other than tracking your earnings and your expenses, it is important to see if your money is working for your future. We have a feature where you can allocate your income among fixed expenses, discretionary expenses, short term savings and long term investments. It’s like assigning goals for your money.

Also, you will get an idea how to balance your portfolio according to your risk profile. You will match the portfolio with your risk appetite and see if you can take more risk or go more conservative. In other words, you get to decide your asset allocation strategy.

It is always good to remember that the software can only be as good as the data it has to process. Garbage In Garbage Out. But if you have started thinking of even using a Personal finance software you are well on your way to making every Rupee count

The guiding principles behind the RupeeManager has been posted before. Link

You may like to see the Manual before you want to participate in the private beta.

I have some of my friends participating in the private beta. Would you like to participate too? Please visit this post

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From an investment perspective, 2009 and 2010 is going to offer remarkable buying opportunities for the long run.  Long-term investors will do well by loading up on equities in this period. The corporate bond market will also offer attractive propositions. But in the short term, this will be a daunting time. The greatest benefits will go to the discriminating speculator, who is able to thoroughly study firm fundamentals, make calls on which firms will prosper across the downturn, and choose good entry prices for buying shares or corporate bonds.

Read the full article

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A modified version of my personal finance e-book in the form of a bulletin has been uploaded here.

Check out the link below and let me know your feedback. Thanks

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Personal Finance ForumI

I have installed PhpBB Forum software on a subdomain of my personal finance website.

The success of the forum depends on users. Do take out some time and register. And then, share, discuss and ask personal finance questions & issues.

Thanks

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Financial Products in India

The database needs to be filled up and that will take time. But I am waiting for your suggestions on what information that you would like in the database.

My excitement at being able to do it is immense (Tweet)

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That’s why people have a natural tendency to avoid financial planning

Read the full details at RanjanBlog.com

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While some of the charges may stick, it is striking that apart from the sophistication of new financial products and the growth in disposable income, there has been very little effort at boosting financial literacy levels.

Financial literacy, going by the definitions adopted in some of the major economies, would mean the ability or understanding to make informed judgments about money or financial services that is suited for one’s needs. Recently, IIMS Dataworks, which had carried out an income and savings survey, said in its report that unwillingness on the part of individuals to save was the most adverse of financial literacy markers. Its data showed that of the over 320 million paid workforce in India, close to 60% do not set aside any money to save in financial instruments, including gold and property.

The data provider and analyzer also said that there is a major misconception on the primary nature of an insurance product with most people viewing insurance products as an investment (read Ulips). Many investment advisers have indeed attempted to dissuade investors from this but the success of Ulips demonstrates that such isolated efforts have not worked.

India’s pensions regulator PFRDA had said a while ago that mounting a campaign across the country to inform and educate the vast number of citizens on the need to save for retirement incomes would be a priority. That may well kick off sometime. It may be facile to suggest that regulators in the financial sector that also have the mandate to develop markets besides oversight ought to do this. Some have gone one step further to say that these regulators should be tasked with this job considering that their corpus built through fees levied from intermediaries is substantial enough to run financial literacy campaigns.

Some regulators have done a bit of that but not sustained enough or across the country to leave any deep impact yet. Several years ago, when dematerlisation of securities, especially shares, was being encouraged, India’s leading depository, National Securities Depository (NSDL), did a lot of road shows to push the concept. It was also helped in this effort by a few depository participants.

A point that IIMS made, and rightly too, is that it cannot be left to the government or the regulator alone to carry out such literacy campaigns. Rather, in the short term, it is the financial services industry which should take on the burden of this responsibility. Players in the financial services segment, be it insurance, pensions or mutual funds, have a stake, selfish as it may sound, in this endeavour considering that a better informed citizenry can help them grow their business.

According to RBI data, as a percentage of financial savings, mutual funds constituted 7.7% of the financial savings of the household sector while insurance accounted for 17.5% and provident funds and pensions funds made up for 8.2% of the total financial savings during 2007-08. The predominant share fo savings was still parked in banks (55%). This goes to show how much ground providers of financial products have to cover.

One way out, IIMS said, would be to revisit agent training and the certification process of agents in retail finance sales by individual firms and the financial sector and by financial regulators. The aim would be to thus promote greater financial literacy among the agents themselves and ultimately firms would reap the benefit of higher sales.

Financial regulators could also perhaps nudge the players whose activities they police to start investing in this endeavour. The benefits to be had are enormous for the industry.

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A stable annuity is definitely desirable in retirement. Who wants money/ cash-flow worries when one would rather sit back and relax? But, are pension plans the best avenue for retirement planning? Probably not, as we shall see here.

Pension plans from insurance companies
Pension plans are generally offered by insurance companies. These may be traditional products or unit-linked insurance plans.

The points to ponder over in such plans are as follows:

• Pension plans from insurance companies have high cost structures, which impacts the corpus growth.

• In traditional pension plans, the insurers have guidelines on where they could invest. This is both good and bad – good because it brings in stability and dependability to the corpus and bad because such avenues generally tend to give low returns.

• At retirement, pension plans tend to distribute about 5.5-7% (as on date) of the corpus as pensions. This again is lower than what a person would be able to earn otherwise. Indeed, this is a double handicap – the corpus tends to grow slowly during accumulation phase and tends to earn lower than market rates in the distribution phase.

• Once the pension starts, the corpus cannot be taken back even if one wants to. At vesting, one could withdraw at the most 33%. So, even if there is some very good avenue for investment, the investor is stuck.

• Pension annuities are treated as income and are thus taxable. All other insurance proceeds, apart from the pension annuities, are treated as tax-free. This is probably one of the most important drawbacks. Like I asked in the beginning, who wants to pay tax in retirement, after having done that all life long?

The important points to note in these plans are as follows:

• While they do not suffer from most of the handicaps that afflict pension plans, the income is not tax-free even in their case. Under the options available, one could either claim long-term capital gains on the amount received at maturity or opt for dividend distribution where the mutual fund (MF) pays the tax (amounting to 14.16%) and the distributed income is tax-free in the investor?s hands. Either way, there?s no wishing away tax entirely.

• Both these pension plans invest up to 40% in equities and the rest in debt securities. It may not be desirable to have such a conservative portfolio, especially if the investor has over 10 years to retirement.

• One would be better served by being more aggressive in the accumulation phase and progressively pare exposure to equities and MFs as he comes closer to the retirement date.

Does one have any other option?
There are all kinds of investment products available. Here?s what one should keep in mind:

• One could use a judicious mix of equity, MF, Public Provident Fund, fixed deposit (FD) and fixed maturity plan (FMP), etc to build the corpus in the growth phase.

• Before retirement, the investments can be deployed in avenues like FDs, senior citizens? scheme, Post Office Monthly Income Scheme, MF investments with a systematic withdrawal option, FMPs in the dividend distribution mode and monthly income plans, etc to get periodic returns.

• Also, rental income could be an avenue in retirement. Even reverse mortgage could be considered in appropriate cases.

• A good advisor could plan a proper portfolio, which takes care of the liquidity requirements, risk containment and reasonable return concerns.

Remember, you can have a comfortable retirement without pension, and still have no tension

The writer is a certified financial planner who runs Ladder 7 Financial Advisories and can be reached atladder7@gmail.com

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Read my interview at компютриCoffee with Sundar

I enjoyed answering those interesting questions.

Thanks Sundar

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