A Sneak Peek into 5 Smart Tax Saving Instruments

Choosing a tax saving instrument that’s optimal for you can be a little perplexing. The reason is you need to analyze everything from the returns, flexibility, liquidity to the cost of the investment. Simultaneously, you need to ensure that the investment meets your financial goals. To help, we decided to list five smart ways you can save more tax. If you are don’t have the time for tax planning or find it confusing, you can seek the assistance of a professional firm offering taxation Services India.

1. (Equity Linked Savings Scheme) ELSS Funds

ELSS funds are one of the most transparent and highly liquid tax saving instruments with a 17.8 percent average return record in the past three years. Although these equity schemes present a market risk equal to other diversified funds, they offer better returns than 3- to 5-year PPF investments.

2. (Unit Linked Insurance Plan) ULIP

Unit Linked Insurance Plan or ULIPs come in the form of stocks, bonds, and mutual funds. The tax instrument offers certain risk cover to the policyholder and greater flexibility over direct mutual funds. Another advantage is that you can use these investments before three years, and either as equity or debt, and vice-e-versa. ULIP investments cost less than direct mutual funds and are suitable for people across all life stages and all types of investors.

3. National Pension System (NPS)

The NPS or National Pension System now offers an additional of Rs 50,000 of tax deductions, which makes it an attractive tax saving investment for many people. NPS entails two types of accounts: Tier I and Tier II. Tier is like a pension product, whereas Tier II operates like a savings account, which means you can withdraw money from it when you want. Once you choose a pension plan, however, you cannot switch to another before a year.

4. Senior Citizens’ Saving Scheme (SCSS)

The Senior Citizens’ Scheme is an ideal tax saving instrument for senior citizens. Although it has an overall investment limit of Rs. 15 lakh, it offers one of the best interest rates, at 9.3 percent, in the list of post office schemes. The maturity period is 5 years, which you can extend by 3 years.

5. BANK FDS AND NSCs

If you are a senior citizen who has already used the 15-lakh investment limit in the Senior Citizens’ Saving Scheme, you can further use the option of FDs (Fixed Deposits) or National Savings Certificate. NSCs offer a rate of interest in the range of 8.5% - 8.8%. The interest rates of fixed deposits depend on the lock-in-period. If you don’t have the time for assessing other tax investment schemes, and the deadline is near, invest in FDs and NSCs.

There’s More!

There are various other investments such as PPF, VPF, and pension plans, which you can use to gain good returns and save a significant amount of tax. Speaking to a professional taxation service provider in India can help learn more about your options. In addition, such providers often offer other services such as wealth management, which you can use to multiply your wealth and protect your investments. 

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Avoid These 4 Pitfalls When Managing Wealth

Wealth management should top your list of to-do-things, whether you have millions stacked in your bank account or modest savings and resources. Following a private wealth management strategy, apart from helping you manage your finances, is also one of the effective ways to ensure a hassle-free retirement life. Wealth management industry in India offers a range of solutions for entrepreneurs, salaried individuals, and those with family wealth, to help them plan their finances and secure a secure future. You can, therefore, avail the services of a wealth management professional to chart an investment strategy. While designing the plan, make sure to avoid the pitfalls discussed below to get the most out of your investments. 

1. Cash flow mismanagement 
The most significant aspect of managing your cash flow is maintaining a correct mix of inflows and outflows. It is also advisable that you invest a certain percentage of your income every month to ensure you have significant funds stacked as savings by the time you retire. Invest in tax saving instruments such as ELSS mutual funds, PPF, NSC, and National Pension Scheme. Additionally, consult your wealth manager to devise ways to carry forward and offset losses that you may have incurred during the financial year.

2. Mismanaging debt 
Too much debt reflecting in your balance sheet is a disaster waiting to happen and can topple your financial planning strategy. To address this issue, you need to manage short-term debt such as credit card outstandings, student and personal loans, keeping it at a level lower than liquid assets you own. If you have too many short term loans pending, consider raising a debt consolidation loan with a low interest rate to pay off all the outstandings. 

3. Failing to manage windfall gains
Windfall gain refers to any unexpected income due to unplanned property inheritance, unexpected gains from the sale of property or shares, or a lottery win. They say make hay while the sun shines, similarly, using additional funds prudently can pave a path to financial freedom. To make optimal use of the funds available to you, first and foremost clear all outstanding debts. Next, consider investing in tax saving instruments and acquire additional assets. Set aside some funds for your emergency corpus and revisit your estate management strategy to change it according to your financial condition.

4. Not having an estate management plan
Many individuals consider estate management a futile exercise and an activity for the elite. The belief is as far from fact as imaginable. A dedicated estate management strategy is for everyone who owns any property (including a vehicle, a house or stock option). Many others who follow a dedicated strategy commit blunders such as forgetting to fund the trusts or changing beneficiary designations in their life insurance plan and failing to draft a power of attorney for health care and property. Avoiding these pitfalls is imperative to planning a successful succession strategy.

Conclusion
A carefully planned and executed private wealth management strategy is your doorway to financial freedom. Make sure you hire the services of an experienced wealth manager that can help you take steps according to fluctuating marketing conditions and business cycles. When you’re successful in finding one, communicate your financial goals and objectives to help them design a strategy unique to your needs.

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10 Quick Tips on Wealth Management

Everyone dreams of owning a big house, luxurious car, and enjoying a great retirement. An average person spends more than half of their life trying to earn and save more. The realization often comes too late that all the energy spent yielded less than half of what they expected. It's never too late to craft a promising future for yourself and family if you rope-in wealth management services. 

What is Wealth Management?

Wealth management, as the name suggests, is about managing your money with a view to improve your financial situation. The set financial goals are achieved by intelligently optimizing your financial assets using different methods and strategies, while taking potential risks and other factors into consideration.

Aren't Wealth Management and Private Banking one and the Same?

In India, people often confuse private banking with wealth management. Private banking is a personalized banking service given to account holders that have high net worth. Private banking slightly overlaps wealth management. Along with special banking services, it offers personalized financial and investment advice to privileged account holders. Together with financial and investment advice, the wealth management advisor utilizes the client's assets to procure as much profit as possible.

Professional help is advisable in case of a large financial portfolio, whereas, if your assets are minimal, you can easily manage your money and reach your financial goals with the following handy tips:

1. Always research and gather knowledge as much as possible

2. Invest where the probability is high and risk low

3. Before making any investment, know all the potential risks it entails

4. Invest less than you earn

5. In the beginning, invest small amounts

6. Invest in different places (don't put all your eggs in one basket)

7. Try different investment strategies to see what works best

8. If investing in shares, religiously follow stock market

9. Invest when you are comfortable and confident

10. Patience is the key to big returns

Conclusion

Don't confuse wealth management with private banking. Wealth management helps you to achieve the predetermined long or short term financial goals by optimizing existing financial assets. Private banking offers special banking services and financial or investment advice. Unlike wealth management, it does not go deep into planning and optimizing financial assets. You can easily manage small assets on you own, however, big financial portfolios require a reputed and reliable wealth management service provider or personal wealth management advisor. Some of their functions include finding the best investment trends and options in the market, managing different accounts, investing only after your approval, and keeping a tab on the progress. However big or small your financial assets are, these ten tips will always help you to craft an assured and secure future.

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Top 5 Tips for Building Wealth When You are Young

You may not believe this, but it’s actually not difficult to build wealth. It might not be quick and may take some time for you to build wealth, but it’s possible. Unfortunately, a lot of people are still unable to build wealth, reason being that they either do know what it takes to build wealth or they do not implement those wealth building principles in their life. While there is not much that can be done to motivate those who know how it’s done, we can certainly help you with a few wealth building tips. Let’s begin

1. Have a Strategy

Talk to any wealth manager or any person who has a first hand experience of making money, and they will tell you that building wealth begins with a well-planned strategy. While making a plan list down your long term and your short term goals, your current finances and the amount you expect to earn in the near future. This will help you get a realistic idea of what the amount of wealth you can expect to make out of your current earnings and savings.

2. Don’t Splurge

Credit cards have spoiled the spending habits of people. Many people spend more than what they can afford and then wait for their salaries to pay the pending dues. If you have this habit, you need to stop this immediately or else you will never be able to build a corpus that you would require at the time of buying anything big such as a car, a house, or for a vacation.

3. Segment Your Earnings

List down your financial goals and segment your earnings basis these goals. For instance, your goals may include saving for your child’s education, saving for a vacation, saving for your retirement. Keep aside money from your earnings for each one of these. This will help you save the burden of making a lump sum amount from your earnings and also help you keep a better track of your earnings.

4. Start Small

Most people do not save or do not start the wealth building process because they think the amount they can invest is too small. No amount is small, if you can save on a regular basis, or if you save the the same amount for longer time horizons. If you don’t believe what you just read then find out what’s the power of compounding. It will help you understand how a small saving can yield handsome returns if invested for regular intervals and longer time horizons.

5. Stay Informed

Lack of awareness of the investment options available is one of the reasons why people either don’t invest or fail even after they make an investment. As an investor your job does not end with hiring a wealth management consulting firm, you yourself need to find out more about the products that you are investing in. Before investing in a product find out as much as you can about its past performance. For instance if you are investing in shares find out the dividends, bonuses, and returns is has yielded in the past.

Last Few Words

Don’t let procrastination come in your way of building wealth. Now that you know what it takes to build wealth you must not procrastinate and get down to business. Take a pen and paper, make a comprehensive plan and start implementing it. If you think financial planning and wealth management is not your cup of tea, get in touch with one of the wealth management consulting firms in India who can help you with the process.

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4 Factors Why Wealth Management is necessary for Family Offices

Family offices are an outsourced solution for financial and investment management of affluent families or individuals. Primary factors to establish a family office include: need to preserve family wealth, consolidation of assets, ensuring transfer of wealth to future generations and dealing with unexpected liquidity influxes. Private wealth management advisors are employed by family offices to review and resolve issues pertaining to family finances, administration, legal and taxation. Wealth management has also gained prominence because of the aspirations of the affluent families to more control their investments, fiduciary affairs, and lifestyle management. Let’s partake in reviewing some factors which deem wealth management necessary for family offices-

1. Private Wealth Management

Wealth managers offer a financial diagnosis for family offices, defining strategic asset allocations according to aspirational needs and risk appetite. Based on this, wealth managers source most appropriate fund managers and investment ideas to the client. Once the client is onboard with the investment mandates and benchmarks, wealth managers allocate assets and complete the transaction. They also prepare a thorough report of the investment execution and performance, for the client to review and compare their investments in a uniform manner.

2. Asset Reporting

Family offices need to have a tab on their assets, acquisition costs, depreciation, and disposal. Wealth managers review and provide information such as the asset breakdown by type, and comparison of previous to current month data, depicting the percentages of holdings allocated to each asset class. They help in tracking fixed assets for financial accounting, preventive sustenance and theft preclusion. Moreover, wealth managers provide due diligence to the client regarding-

●    Assets listed in Access
●    Asset Chain of Custody
●    Asset History Report
●    Assets needing audit
●    Retired assets report

3. Estate Planning

Wealth managers manage an affluent individual’s assets, in the case of their incapacitation or death. They supervise the transfer of assets to heirs and settlement of estate taxes if any. Estate planning negates the possibility of a clash of interests amongst heirs. Wealth managers offer extensive estate management services like-

●    Creation of will
●    Setting up of trust accounts in the name of beneficiaries to limit estate taxes.
●    Establishing a guardian for living dependents
●    Reducing the taxable estate by establishing annual gifting
●    Setting up of the durable power of attorney (POA) to supervise other assets and investments.

4. Alternate Asset Classes

Alternative assets are gaining popularity amongst family offices, due to their unconventional nature in terms of the investment portfolio. These assets include rare coins and stamps, artworks private equity, trading strategy indices, venture capital and hedge funds. Investing in such alternate asset classes help diversify an investor's portfolio. Being non-traditional investments, they help in sustaining market volatility. Due to their lower liquidity and mispriced value, alternative assets offer excellent arbitrage opportunities. Investing in alternative asset classes isn’t appropriate for everyone. As a result, it is necessary to take the help of wealth managers, who review client’s risk tolerance and investment objectives before offering ideas to invest in new opportunities.

Last Few Words

Family offices are more than just one individual, and their wealth needs to be sustained to reap dividends over a substantial time period. To maximize their wealth management efficiency, services of wealth management firms is a necessity. Wealth managers understand your investment needs and goals, thereby providing appropriate investment guidelines to maximize wealth, and deal with unexpected liquidity influxes.

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5 Mistakes that You Must Avoid When Investing in Stock Markets

Many investors keep making the same mistakes without realizing what went wrong. The reason is simple - they lack a basic understanding of how investments work, and most importantly they do not have someone to guide them. In this blog post, we discuss some of the common mistakes that most investors make and ways to help you tackle these problems.

1. Lack of Proper Planning

“Failing to plan in planning to fail”. It’s your hard earned money and you can’t just lose it like that, and therefore, the most important thing to do, before you start investing, is to have a proper plan. Work with a financial advisor to discuss your investment goals, limitations, time horizon and more to get a realistic picture of what returns you can expect. Advance planning can also help you stay prepared for any untoward incidence, for instance, if the markets started crashing you will be in a position to take calculated decisions, instead of just randomly buying and selling stocks.

2. Getting Impatient, Too Early

Though people start investing with a long term view in mind such as their child’s education, their retirement, for buying a house, they often start getting restless when the stock markets behave erratic. People who invest in stock markets with a long term view of 10, 15, 20 or more years in mind should not be concerned about how the markets are performing in the near term. Historically, the stock markets have always delivered better returns as compared to most investment options, and therefore it is advisable to stay calm if the markets are not performing well in the near term.

3. Using too Much Margin

While the margin money (usually the money one borrows from the broker) can help you make more money, the downside is that it can also wipe out a substantial amount of your money, if the markets don’t move in the direction, you thought they would. You should use margin only if you have the time and knowledge to closely monitor your positions, or if you are sure that you will be able to repay the borrowed amount to broker in case an emergency occurs, and you afford selling your positions at losses.

4. Making Investments Based on Tax Consequences

Though you should be smart enough to keep yourself updated about the various tax benefits that the government has to offer, you should not base your investments on tax consequences alone. Instead, it’s more important for you to invest basis the underlying value of the stock. Similarly, while you must be concerned about the advisory fees and commissions, as they can eat into your profits, you must stop bothering about them and try to explore opportunities of cheaper broking services, once you think you are getting a good enough deal.

5. Failing to Diversify

You must have heard the saying “Don’t put all your eggs in one basket.” It means do not risk everything on the outcome of one option. Failing to diversify, however, is one of the biggest mistakes investors make. They invest in a single stock or sector hoping that they will be able to maximize their returns, but when the markets move against their position, they have to suffer huge losses. It is, therefore, recommended that you must diversify their portfolio even if that means investing in a few stocks that give lower returns. This will help you create a well-diversified balanced portfolio that gives you far better results than most of the other asset classes.

Last Few Words

Most investors due to lack of knowledge and time prefer hiring the services of a professional advisor. If you are also planning to hire a professional advisor the best option is to go with a multi family office firm that has been trusted by some of the biggest and wealthiest investors. These multi family office firms usually cater to Family owned businesses, Senior Corporate Heads, various entrepreneurs in India and others.

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The Importance of Professional Asset Tracking Services to Business

Defining Asset Tracking

The value of the assets that an organization holds at any given time plays a major role in determining its market valuation. Businesses should, therefore, take pro-active steps to monitor their assets to regulate performance, and take measures in time if they feel that the asset valuation is dipping at an abnormal speed. Businesses can count on professionals providing asset tracking solutions in India for monitoring assets movements. Businesses can then focus on their core activities.

The Need for Asset Tracking Services

Availing professional services helps businesses plan their processes smoothly and in-detail. Some of the other benefits of seeking expert services are;

1. Lower Administrative Costs

Businesses hiring the services of a professional asset manager, usually report a dip in their administrative costs as employees no longer need to track assets. A lot of man hours are freed, which the administrative team can invest in core activities or organizing other revenue-generating functions. An efficient plan also helps avoid wastage and losses.

2. Get More Accurate Results

Businesses can track their assets with the click of a button if they instal asset tracking software instead of using excel sheets to generate results. Using specialized tools also helps in streamlining the entire process to save time. Moreover, results generated by automated systems are more accurate than those which depend on humans to feed data.

3. Enhanced Accountability

Businesses run the risk of losing assets over time if they fail to manage them professionally. Putting together an asset management program helps the organization allocate assets optimally, and also makes it possible to keep a track of such allocation, increasing accountability of the system. In a nutshell, businesses can track losses as soon as they occur and also have better control over employee behavior, as they will think twice before misusing the organization’s assets.

4. Improved Overall Efficiency

An asset tracking program generates useful and actionable data which helps organizations optimize use of physical space available to them as an enterprise. The system also forecasts future trends to help business plan different processes in advance.

Conclusion

Investing in an asset tracking program should not be seen as a short term investment. The decision can yield favorable results for your business for many years, and also help prepare well in advance to meet future challenges and uncertainties. For best results, organizations should always look to the services of professionals specializing in providing private banking services in Gurgaon, Mumbai, Bangalore, and other cities.

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Common Mistakes People Make at the Time of Estate Planning

Estate planning is still at a developing stage in India. This is mainly due to the lack of awareness about the importance of estate planning. There is a common notion that only people, who have an abundance of assets can make a will, and their assets will be equally divided among their heirs. On the other hand, there are others, who procrastinate their estate planning thinking that they will do it at a later stage. In this post, we would discuss some common mistakes people that make when it comes to estate planning.

Mistakes People Usually Make

As mentioned earlier, a common notion people have that estate planning or making a will is only for wealthy families in India. While this may have been the case in the past, it isn’t necessarily same today. As India has been witnessing a thriving economy over the past decade, an increasing number of people are looking to make diversified investments and create wealth for themselves and their families. This is why estate planning is important so that assets can be transferred to your family seamlessly in the future.


Not Considering the “What If” Scenarios

People often feel that their financial situations are good enough, and don’t have to plan in advance. They commit the mistake of not considering different scenarios that may crop up in the future such as property disputes, health issues, bankruptcy and others. These circumstances are also a reminder that making a will is essential since your financial situation is likely to get affected by them. 

Putting it off for later

“Better late than never” is often used as a motivational phrase. Sadly, this does not hold true in the case of estate planning. Preparing for the worst case scenarios is essential for people, who have dependents. Keeping that in mind, it is recommended that you spend some time in evaluating your assets and then making a decision about how you want to allocate them equally with the minimum tax consequences. 

Overlooking Digital Asset Allocation

In today’s tech-savvy world, not just those from wealthy families in India, but others too have an online presence. Whether it’s in the form of your cloud-based bank accounts, or your digital assets, you should plan out well in advance to share the passwords and other important details with your spouse or your business partners, after you are gone.

Failing to Plan for Own Future
Planning for the future is not just limited to making a last will and testament to passing on the assets to your heirs. It is also equally important to ensure that in the case of any contingency, for example, health issues or otherwise so that your assets can be used for your own treatment and rehabilitation. This way there will not be any financial burden on your caregivers to pay back.

Last Few Words
Wealth creation shouldn’t be the only goal of property owners. Effectively managing wealth is an ideal way of ensuring future. Contingencies come up when you least expect them. Being prepared keeping an eye in the future is the best way to deal with it. This way, not only you take the financial burden off your family’s shoulders, but also get to decide how exactly you want your estate managed.

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Do You Know How ‘Power of Compounding’ Can Multiply Your Investment?

Very few investors realize that they can create a good corpus with as less as 10% - 12% annual returns. All it needs is a little bit of patience and a strong belief in the power of compounding. Simply put, gaining from compounding interests involve reinvestment of income and the principal, year after year. To get a better understanding of how compounding interest helps substantially increase the returns by a marginal increase in the rate of returns, we have this table listed below. It shows the difference in return if an amount of one lakh is invested at different rates (8, 10, 12, 15 percent) for tenures of 10, 15, 20, 25, and 30 years.

 Magic of Compounding

	Return on Investment (In Lacs)
Tenure (years)	8%	10%	12%	15%
10	2.16	2.59	3.10	4.04
15	3.17	4.17	5.47	8.13
20	4.66	6.72	9.64	16.36
25	6.84	10.83	17.00	32.91
30	10.06	17.44	29.95	66.21

As you can see an amount of 1 lakh if invested at 8% p.a. for 30 years yields a cumulative return of around 10 lakh, whereas the same amount if invested for a similar tenure at 12% and 15% yields a return of around 30 and 66 lakhs respectively, which are almost three to six times of what one would have gained at 8%. Therefore, a wise decision would be to invest in an asset class that gives you an average 12%-15% of return, and let it compound year on year for great returns.

Let’s take a look at some asset classes that have a historical record of yielding average returns of 12% and more.

Real Estate

The expectations that most people have from this asset class is sky high, and that’s because real estate has always delivered great returns when invested for longer periods. A study in 2013 showed how some areas in Delhi/NCR rose by 600% in a period of 7 years, the annual rate of return being a whopping 32%. Many people are not clear as to how gains from real estate investments are taxable, and this is why they delay their decision of buying and selling a property. In such a case investors should consult an established taxation services firm in India to clear their doubts.

Equity

There are periods when investments in stocks yield a return of more than 20%, and therefore, expecting a return between 12% and 15% is not unrealistic. Research suggested that any investment in equity for a period of seven years has a 64% probability of earning more than 15% and a 74% probability of earning more than 12%. All you need to do is not panic even if there are prolonged periods of no return.

Last Few Words

Now that you are aware of the power of compounding and the asset classes that you need to invest in to create a corpus for yourself start investing. However, before you invest it is advisable to consult a tax expert from any of the reputed taxation services firms in India to get an idea of the taxes that you will have to pay on your returns.

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