4 Factors that Drive Estate Planning to Benefit your Future Generations

Estate planning is the process where individuals prepare for the transfer of their wealth and assets after his or her death. Assets, life insurance, pensions, real estate, cars, and personal belongings are all part of one's estate, which they may pass on to their future generations. When transferring wealth to successive generations, you need to have an efficient strategy at place. An ill planned succession risks negative financial consequences for the family fortune and could lead to unnecessary stress and conflict among family members. To avoid any mistake and ensure that the process goes down smoothly, you can hire a family office in India that provides specialized family office services. To get you started, here is a list of four factors that you must consider while planning an estate. Read on.

1. Asset Evaluation

In order to ensure everything that can be liquidated is included in your asset planning, you need to do thorough evaluation of your assets, whether they are real estate, life insurance, superannuation funds, investments, vehicles or any other prized possessions. Prepare a comprehensive inventory of all the assets so that it is easy for you decide what you need to pass to your future generations.

2. Will Preparation

Making a will is an important part of the estate planning process, as it provides for the division of your property and also, if applicable, the care of any minor children. In addition, you must also have a living will as a part of your estate plan. This document gives instructions, dealing with the medical care that you wish to have or not have in an event where you are unable to act on your own accord.

3. Reduction of Taxable Assets

Estate and income taxes could take a significant portion of the assets you allot to your beneficiaries. A family office has lawyers and investment bankers to identify profitable investment opportunities that are tax deductible. This would ensure that your future generations are are not left with significant tax payments and are only entitled to the returns.

4. Your Beneficiaries’ Needs

The whole purpose of estate planning is to ensure that your successive generations have enough to lead a comfortable life or have enough capital to start any business venture they want. When designating beneficiaries, consider their future needs and spending habits. For instance, you can earmark trust funds to cover the expenditure of college tuition or special needs expenses.

Family Office in India for Estate Planning

Estate planning is something that an individual must not neglect, and to ensure that all your private wealth is passed on to your generations, you must have a detailed estate plan, especially when the stakes are high. An integrated family office has lawyers, taxation officers, and investment bankers, all in one place to ensure that your estate planning is done so as to provide maximum benefits to future generations.

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5 Master Tips for Long-Term Wealth Creation in India

Wealth building is something that many people desire in India and across the globe, though only a few achieve the feat. The roadblock to wealth creation in India is probably not will, but the lack of right approach to investments. People believe that wealth building is a “get rich overnight” scheme, which is not the case given the fluctuating economy and volatile market conditions. Wealth creation in India is not a destination one can reach, rather it’s a path you need to traverse for years to accumulate the desired retirement fund or wealth. Continuing the discussion, the blog post discusses five strategies to incorporate in your wealth creation plans in India and elsewhere.

1. Focus On Diversifying Your Portfolio
When it comes to investments, avoid putting all your eggs in one basket. Doing so can put your financial future at risk as industrial revolutions come and go and you never know until what time a specific “industry bubble” is going to last. Invest your money in a range of financial products such as shares, mutual funds, bonds and bank FDs in different sectors. This one habit is certainly going to pay off. Once you have a diversified portfolio, you are in a position to get steady returns for years to come.

2. Believe in the Power of Long Term Investments
There is a good reason why it’s called “investment”, as it yields sizable returns in future. If you expect to get the profitable market ROI, you can’t expect your investments to boom and start showing results in three or say, five years. For investments to start yielding, you need to think about the broader picture, something similar as 10-15 years down the line. Wealth creation is a time-intensive process, therefore, you need to stop believing and investing in anything that promises four or five times returns in a limited period of 3-4 years as there is no such “get rich quick” scheme in the market.

3. Make Optimum Use of Tax Rebates
Paying income tax may feel frustrating at once, however, the rebates can help you in building long-term wealth in India. Tap potential sources in which you can invest and get a higher rate of interest. The key here is to invest more to get more returns without increasing the tax amount you need to pay. If, for instance, you are planning to invest in ULIP or endowment plans for tax rebates; switch to a PPF account or ELSS funds. By doing this, you will be able to make optimum use of your income tax exemption limit and still have a sizable portion of money left to invest.

4. Start Investing Early
Many people make the mistake of not investing until they feel the amount of investment is good enough to fetch desirable returns. Wealth creation in India or anywhere for that matter is a long term process. In other words, you need to start taking baby steps today to reach there tomorrow. Warren Buffett started this way and credits the investment success to his early start. In a nutshell, it goes without saying that to climb the wealth ladder, you need to start right now for achieving your financial goals. If you get stuck in two minds, consult a reliable financial planning firm and they will help you take more informed investment decisions.

5. Track Your Investments and Reassess Your Decisions
Though you should always look out for opportunities to diversify your investments, you also need to ensure that investment doesn’t end up as an expenditure. For that to happen, you need to pause at regular intervals and analyze your highest and lowest performing investments. Once you start the practice, you will get a better picture of promising investments to keep and drop the rest. Market conditions are volatile, therefore, always seek professional assistance from financial planning firms before deciding the future of investments.

The Bottom Line
Wealth creation in India or any other place for that matter requires more than wishful thinking. Whether you have a prior knowledge of investments or not, building wealth at once may appear a herculean task to you. Instead of taking amateur decisions, hiring a financial planner always pays off in the end. Once you have an expert working with you, there will be no guesswork and all your investment decisions will be aligned in the right direction through research and data.

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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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