Moving Beyond Resolutions: Power of Habits for Financial Well-Being
Moving Beyond Resolutions: Power of Habits for Financial Well-Being
A new year is a fresh beginning - a time when we can reflect on the past and look forward to the future with a fresh perspective and a desire for a positive change, which motivates us to make New Year's resolutions. While resolutions allow us to envision the best version of ourselves, most of them are abandoned in just a few weeks.
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To begin with, it is important to set financial goals. Everyone has the desire to be wealthy and financially independent. However, setting such vague goals brings ambiguity and uncertainty. In order to achieve a financial goal, one must set goals that abide by the SMART acronym - specific, measurable, achievable, realistic, and time-bound. Setting SMART goals can help build a practical plan through which you can set deadlines and derive an optimal investment amount to achieve your goals.
Creating a monthly budget is a systematic method to ensure the timely settlement of payment obligations and maintain a consistent trajectory towards financial goals. Just setting a budget, however, is not enough. One must track spending to ensure whether the budget is being followed. Moreover, regular tracking of expenditures provides invaluable insights into financial habits, allowing for informed adjustments to the budget as needed. This would not only reinforce discipline but would also allow strategic decision-making, ensuring the achievement of financial goals.
The only thing certain in life is uncertainty. Hence, one must always have a plan in hand to cater to these uncertainties of life. In the absence of an emergency fund, one might have to opt for loans or, worse, break the funds created for specific needs, bringing a hurdle to your wealth creation journey.

While an emergency fund is necessary for immediate liquidity for unexpected expenses, insurance is also essential to mitigate the long-term financial impact of significant perils of life, such as accidents, illnesses, or the unfortunate loss of the breadwinner. Both insurance and an emergency fund serve as a pillar to fortify your financial health and safeguard against unforeseen events that can potentially derail your financial stability.
"Do not save what is left after spending, rather spend what is left after saving." One must track all their expenses and ask oneself a question - 'Is this out of necessity, or is this something that can be avoided?'. Upon doing this, one can cut down on unnecessary expenses and make changes to lifestyle. For instance, if you spend a total of Rs 10,000 monthly on leisure activities, then just cutting down by 10% and investing that Rs 1,000 can make a huge difference. To give you a perspective, an SIP of Rs. 1,000 in equity mutual funds started 15 years ago would have helped you build a fund of Rs 5,64,120, a gain of 14.01%. (Source: Sensex TRI)
Unsecured loans and unpaid credit card dues can be detrimental to wealth creation and are often categorised as 'bad debts'. It is crucial to clear these bad debts or any other overdue payment obligations in full as and when they arise. This not only impacts your overall financial health but also plays a pivotal role in establishing and maintaining a good credit score. Untimely payments and delinquencies can be toxic for your credit score, making it difficult to bag good interest rates or, worse, get a loan in the future.
Setting up automated investments like an SIP in mutual funds can empower you with financial discipline and consistency. With an SIP in mutual funds, you can invest small amounts towards your financial needs and build a fund methodically over time. Moreover, SIPs relieve investors from the need to remember to invest each month consciously. The convenience of automation allows you to stay on track with your financial needs without having to intervene in the procedure. The inherent benefits of SIPs, such as rupee-cost averaging, power of compounding, accessibility, and affordability, furthermore make it an attractive investment option.
As per a survey conducted in 2020 by Nielsen for PGIM Mutual Fund, 51% of Indians do not have a retirement plan ready, and barely one in five takes inflation into account while planning for retirement (Source: Business Today). This sheds light on the unpreparedness of Indians for retirement. Moreover, many still rely on their children for retirement. With the shifting mindset and growing trend of nuclear families, it is very important for every individual to plan for their retirement. Retirement planning is a cornerstone of financial freedom, which is of utmost importance to make you self-reliant and ensure a dignified and stress-free lifestyle during the golden years of retirement.
Making the right investment decisions might seem like a daunting task. To get guidance in this journey, one can consult a financial advisor. A financial advisor can understand your financial needs and risk profile and support you in your wealth-building journey. When opting for the mutual fund route, one can leverage the knowledge of a mutual fund distributor.
Cultivating positive habits for your financial health can prove to be pivotal for your financial success. Even subtle adjustments in lifestyle and savings practices can make a huge difference, for one good habit can create a ripple effect. Bringing discipline and consistency to your investment pattern and following fundamental financial health practices such as goal-based investing, budgeting, timely payment of debt, and insurance planning can lead you to a financially prosperous future.
NJ E-wealth
How have different assets performed? The Asset Allocation Dilemma
How have different assets performed? The Asset Allocation Dilemma
Everyone wants to invest in the best-performing asset class every year. But, the thing is, it is nearly impossible to choose the best asset class consistently. That's why diversification is key.
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The choice of asset allocation is heavily influenced by the particular financial objective that an investor seeks to fulfil. Aspirations can be very different, ranging from short-term goals like saving for a down payment on a home to long-term ones like building wealth for retirement. Different investment strategies and asset allocations are needed to achieve different goals. For instance, you might devote a bigger percentage of your portfolio to equity if your main goal is to create wealth in the long run.
Before choosing the asset allocation, determining the risk profile is of utmost importance. An investor should define his risk tolerance, i.e. his willingness to withstand market volatility and the level of risk he can comfortably bear. The investor must then define his risk capacity, i.e. the capacity to absorb potential losses. By identifying the risk tolerance and the risk capacity, an investor can form his risk profile based on which he can allocate his investment to different asset classes.
Different asset classes have different tax implications. Understanding the tax efficiency of different asset classes can have an impact on the post-tax return. For instance, dividends and capital gains of different asset classes can be taxed differently. By understanding the tax implications, an investor can efficiently plan and manage his investments.
The time horizon remaining for different financial goals must be considered before making any asset allocation decision. When you are a few years away from your financial goal, your portfolio is considered to be in the transition stage. Most experts suggest you should move towards an asset allocation that is weighted more heavily towards low risk assets like bonds than stocks.
Typically, younger investors with a longer investment horizon may have the capacity to withstand short-term fluctuations and may opt for a more aggressive asset allocation that includes a higher proportion of equities. However, as an investor approaches retirement age, it would be wiser to follow a more conservative asset allocation.
Now, let us look at the performance of different asset classes.
Period Gold Silver Real - Estate Bonds Crisil T-Bills Sensex TRI
30 Sep 22 - 30 Sep 23 17.67% 30.09% 4.88% 7.72% 6.74% 16.15%
30 Sep 21 - 30 Sep 22 7.15% -10.76% 7.36% 1.03% 3.18% -1.64%
30 Sep 20 - 30 Sep 21 -8.27% -2.28% 2.68% 5.83% 3.89% 56.96%
Source:
Property: https://residex.nhbonline.org.in/ (Composite HPI for 50 Cities)
Bonds: CRISIL Composite Bond Index
T- Bills: CRISIL 1 Year T-Bill Index
Gold and Silver: RBI Monthly Average Price of Gold and Silver in Mumbai
Sensex TRI: Ace MF
To judge the performance of an asset class, any investor's go-to would be to look at its return on investment. However, data shows that every year, the winner amongst asset classes varies since the market is at the confluence of multiple variables. In the year Sep 2022-23, silver was the best performing asset, however, in the years Sep 2021-22 and 2020-21, silver has given negative returns. Similarly, different asset classes have performed differently in different market phases. So, investors should create a well-diversified portfolio in which their money is spread across a range of asset classes in accordance with their investment objective and risk profile.
Conclusion: The quest for an optimal asset allocation must be based on the factors above rather than just picking top performers. Equity can provide long-term growth, and the stability of debt and gold can help safeguard the capital for the long term. Choosing the right asset allocation may seem like a challenging task, and hence, an investor should opt for the guidance of a financial advisor who can help investors make informed decisions.
NJ E-wealth
Modernisation in Car Insurance
Modernisation in Car Insurance
In major cities, people prefer to travel by train or 2-wheeler even when they own a car to avoid traffic and reduce fuel expenses. However, irrespective of the kms you drive your car, the car insurance premium still remains the same. Moreover, there are no incentives given to the people with better driving skills. It is not rational, right?
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In 2022, IRDAI permitted Telematics / Usage-based insurance that permits Pay As You Drive (PAYD) and Pay How You Drive (PHYD) car insurance covers. Earlier, Motor Insurance in India, did not consider how different client' categories possess different degrees of risk, thereby not penalising rash drivers with higher premiums.

By using telematics devices fitted in the car, insurers can now take a client-specific pricing approach. I.e. Depending upon the distance driven, how efficiently the vehicle is driven, time of driving, braking patterns, lane discipline, etc, the premium can be charged to a client. Telematics is a technology that uses telecommunication & informatics to analyse risks related to motor insurance. There is a device that consists of a GPS that tracks the location of the vehicle. It also gives information about the car's speed, fuel consumption, braking, etc.
Pay as you Drive car insurance allows the client to pay for insurance based on the distance driven, rather than standard car insurance policies that depend on geography, make-model, and age of the vehicle to determine premiums. It means that those who rarely drive their cars will pay less premium for their car policy. For people who are not out on the road often, their risk of an accident is also low, and hence, their car insurance premium should reflect this.

Insurance companies have made slabs of different kilometre limits that the client can select at the time of policy buying/renewing. For example, limits of 5000 km, 7500 km, 10,000 km, etc. If they exhaust the limit, they can top-up additional kilometres of 500 km, 1000 km, and 1500 km.

There are several advantages associated with PAYD like:
  • Monitoring speed and tracking real-time location of the car.
  • Premium discount for good drivers and customisation of policy.
  • Such devices help in theft protection and break-down assistance, i.e. location updates on a real-time basis, which helps in better customer service and higher customer satisfaction.
Unlike other motor policies, these newly introduced coverages/add-ons are styled to give the clients more control and better savings on their motor insurance premiums.
If you raise a claim against the policy, the vehicle should be within the declared (selected slab) distance. For instance, if you selected a 7500 km limit, then the car should not exceed this distance limit at the time of the claim. If your car is within the limit, your claim will be processed as per normal policy terms & conditions, similar to the standard comprehensive car insurance policy.
If you have more than 1 car, then you can buy the Pay as You Drive insurance for the car that is used rarely or has the least distance travelled, ideally less than 7,500 km or 10,000 km in a year.
If your yearly car usage is less than 7,500 km or 10,000 km, or if you commute to work/office using public transport, or if you travel out of town frequently and use your car rarely, then Pay as You Drive is the optimal choice of car insurance policy for you.
loans
Process for Unpledging Non-Demat Securities
Ans: The client can unpledge the securities anytime after Partial / Full Repayment of the loan. The client needs to post a query from the NJ E wealth account.
Ans:
Partial Unpledge of Non-Demat Securities :
Post a request from the NJ E-wealth account
Module Path: Login to NJ E- wealth > Transact > Loans > NJ Capital Loans > Reports and Utilities > Release Securities > Post Request > Select the securities that the client wants to unpledge > Pay the Unpledging Charge >Submit Request.

Full Unpledge of Non-Demat Demat Securities :
Post a request from the NJ E-wealth account
Module Path: Login to NJ E- wealth > Transact > Loans > NJ Capital Loans > Reports and Utilities > Release Securities > Post Request > Select all securities > Pay the Unpledging Charge >Submit Request.

TAT for processing the above request: Once a client posts a request on the E-Wealth account, securities will be unpledged within T+7 working days.
Fund Manager INTERVIEW
patner Interview
Mr. Rakesh R. Shetty
Fund Manager - Fixed Income Motilal Oswal Asset Management Company
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"We have taken due care and caution in compilation of this E Newsletter. The information has been obtained from various reliable sources. However it does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions of the results obtained from the use of such information. Investors should seek proper financial advise regarding the appropriateness of investing in any of the schemes stated, discussed or recommended in this newsletter and should realise that the statements regarding future prospects may or may not realise. Mutual fund investments are subject to market risks. Please read the offer document carefully before investing. Past performance is for indicative purpose only and is not necessarily a guide to the future performance."

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