Till now, you have been getting the so-called free advice from your investment agents (more specifically MF distributors, insurance agents and IFAs).
So why am I telling you that ‘Fee-Only Investment Advisor’ or ‘Fee-Only Financial Planner’ better for you?
Because, when you go to a doctor, you want him to give you the right medicine and not those medicines which allow him to earn maximum commission. Right?
The people who sell you Regular Plans of mutual funds (be it MF agent, MF advisor, Robo Advisor or anybody) are basically product sellers. They sell Regular Plans of Mutual Fund schemes which helps them earn commissions.
So if they are product sellers, is it that they may not advise you properly?
Yes, it’s possible.
Suppose, that a Mutual Fund Distributor decides to sell only 5 schemes which give him following commissions every year:
If you invest in schemes A and B, how much commission the distributor will get?
He will get 0.50% and 0.75% on your investments.
Now look at it from the perspective of Mutual Fund Distributor, who is a businessman and wants to earn more. He knows that schemes D and E give him more commission (1.25% and 1.50%). So naturally he would want to sell you those schemes.
Isn’t it? He will want to maximize his earnings by selling you higher-commission schemes.
But whether schemes D or E are suitable for you?
The answer is No as you already know (assumed earlier) that A and B are better suited.
And that is the problem.
The advice or recommendations given by the regular-plan selling mutual fund distributors is biased. Biased because they want to earn high commissions. And at times, this earnings-maximization conflicts with what the right investment advice is.
So even when the right funds for you are A and B, chances are very high that the MF distributor will push you to go for schemes C, D and E. He will not tell you why exactly (which is due to high commissions) and instead, try to convince you using redundant and useless arguments.
Whether the schemes the MF distributors sell are suitable for you or not is something that they may not be worried too much about. They will convince you to buy whatever they are selling; and which without a doubt is what offers them the highest commissions.
And you are smart enough to know what is right here and what is wrong.
They will try to convince you and force-fit all your requirements with the products that they sell. And that is not right. It’s possible that the products or schemes which they are ‘not’ selling may be better suited to you. And they won’t tell you that because they will lose potential commission income then.
It is for these reasons and to ensure that you get the right financial advice, which is conflict-free and suitable for you, it must be ensured that you only take investment advice from SEBI Registered Investment Advisors (SEBI RIA) or SEBI registered Fee-Only Financial Planners.
They are not product sellers (or distribute products) and they do not earn from commissions. Instead, they only earn from the fee paid directly by clients. Since no sale of commission-generating products is involved, the inherent conflict of interest is avoided. This means that the suggestions or advice from SEBI RIA and Fee-Only Financial Planners will be best suited for you and your goals.
It’s obvious that a plain product seller (like mutual fund distributors) will not be deep-diving so much to try and understand your financial life. He will simply try to sell a product (that gives him solid commission) rather than understand your financial needs.
Did you land on this page searching for Fee Only Financial Planners in India?
Then one thing is very clear – you already know Fee Only Financial Planner or Fee Only SEBI-registered Investment Advisor is the best option when it comes to taking financial advice in India
Now let me tell something upfront. I, Dev Ashish is a Fee-Only SEBI-registered Investment Advisor (SEBI RIA) and Finance Planner.
But irrespective of whether you make me or somebody else as your financial advisor, please do understand that it is in your best interest to take financial advice only from Fee-Only SEBI-registered Investment Advisors.
And I don’t want to get into the debate of who is the best Fee Only Financial Planner or the Best Fee Only Investment Advisor in India. Because what is best for someone may not be best suited for someone else. I have written about it here at Best SEBI Registered Investment Advisor – How to Find?
But first and if you have doubts, then understand the who exactly is a fee only financial planner and what is the difference between Fee-Only Financial Planners and Fee-Based Financial Planners?
As the name suggests, a Fee-Only Financial Planner charges a fee from clients for making financial plan and providing investment advisory to them. He does not receive any kind of commissions/incentives from mutual fund houses, insurance companies or any other financial company. Fee-only financial advisors only earn money through the fees their clients pay.
And since he is in no way associated (or dependent for income) on Mutual Fund Companies, Insurance Companies, etc. you can be sure that the advice is conflict-free and unbiased.
On the other hand are those self-proclaimed financial advisors who in reality, are just sales-driven bank relationship managers, mutual fund distributors and insurance agents. They may seem to offer free financial advice. But fact is that they receive commissions from mutual fund houses and insurance companies to sell their products. And when you work with such fee-based planners, you can be sure that their fee advice is tailored to push their products mindlessly without trying to understand the client’s real financial requirements. The commissions these MF distributors and Agents get leads to an obvious conflict of interest. These people will always push products that earn them the best commissions.
And to give you a taste of how comprehensive a proper Fee-Only Financial Planning engagement can be and how much better it is from the free advice you get often, I suggest you do check Stable Investor’s Financial Planning Service.
Not everybody needs a Financial Planner. But if you do need one, then I suggest you work only with SEBI Registered Investment Adviser (SEBI RIA). And be reminded that a Fee Only Financial Planner or a Fee Only Investment Advisor is better for you. Don’t get tempted by so-called free (wrong and biased) advice given by the Bank Managers, Mutual Fund Agents or Insurance Agents.
Are you looking for a List of Fee-only Financial Planners in India? Or are you looking for:
Fee Only Financial Planner Mumbai, or
Fee Only Financial Planner Bangalore, or
Fee Only Financial Planner Hyderabad, or
Fee Only Financial Planner Pune, or
Fee Only Financial Planner Chennai, or
Fee Only Financial Planner Delhi, or
Fee Only Financial Planner Gurgaon, or
Fee Only Financial Planner Noida, or
Fee Only Financial Planner Kolkata, or
Fee Only Financial Planner Near Me
Then you can contact Dev Ashish, who is a SEBI Registered Fee Only Investment Advisor and Financial Planner who works with clients from across India. Due to the use of Technology (online and telephonic), distances are no longer a barrier. Investment Advisory and Financial Planning can easily be delivered online. So if you want to really take control of your finances, maybe its time to contact me.
And let me remind you. Or rather ask you.
Do you really understand why you should not take free advice from Banks, Mutual Fund or Insurance agents?
Because they are just product sellers who want to earn the highest possible commissions. So they will sell you the product which gives them achieve their sales targets and help them earn the highest possible commission irrespective of whether the product suits you or not. For example – If they have two products A (gives 1.5% commission) and B (gives only 0.5% commission), then you can be sure that they will convince you to buy A – as it gives more commission. And that is even if they know (and chose not to tell) that B is better suited for you. It is for this reason that there are so many cases of misselling.
Another important aspect is that if you take random so-called advice from bank RMs, MF agents and Insurance agents, your portfolio will be scattered and directionless. And that does not help you. At the end of the day, you want your money to help you achieve your financial goals. Plain and simple. Right? And that is what Goal-based Investing is all about.
The MF Agents, Banks RMs and Insurance Agents all give biased advice in their fields (and concerning only the products they are selling). But once you take proper advice from Fee Only Financial Planner, he will help you see the big picture of your overall financial life and help fit all the pieces of the financial jigsaw puzzle.
Finding an investment advisor or financial who acts in your best interests is really important for you.
Dev Ashish is a ‘Fee-Only’ SEBI Registered Investment Advisor and Financial Planner. Dev or StableInvestor.com only gets paid by the client and there are no hidden commissions or sales incentives to influence investment recommendations and financial plan. So if you decide to engage for:
then you can be sure that you will get the proper advice which is best and customized for your unique financial situation and more importantly, unbiased and conflict-free (as there are no commissions or sales incentives) and most importantly, tailored to help you achieve your real financial goals.
Our personal finances can be full of tough questions. And one such tough question is:
How much money do I need to retire in India?
Most people are yet to start planning properly for their retirements. The reason is obvious. In terms of chronological order, the goal of retirement comes last and hence, gets postponed for as long as possible.
This is the reason why many young people who are early in their careers tend to ignore the importance of retirement planning.
Coming back to the question of how much money do you really need to retire?
You may be able to find out a decimal-accurate answer using some retirement corpus calculator. But that may not be as accurate as you think. I will explain why in a bit.
Fact is that it is not easy to determine how big a corpus do we need to save up to call it a day. And that is the reason why the Nobel Prize-winning economist William Sharpe has called retirement planning for people as “the nastiest and hardest problem in finance”.
Before I explain why this problem is so nasty, there are a few things that we need to be aware of to understand the problem in real terms.
Planning for retirement is a fairly new concept.
In earlier decades, people used to retire at 60 and then not survive much due to low life expectancies. So, practically there was no need for such a planning as most people did not live long after their retirements. And a large number of Indians had government jobs that provided a pension after retirement. So some risk of running out of money before dying was taken care of by pension.
But things are changing now.
Life expectancy is increasing day by day. Here is what the data from World Bank suggests about our increasing life expectancies. The graph below shows the life expectancy of Indians at birth in years between 1960 and 2015:
So for example, someone who was born in 1980, their average life expectancy would be about 53-54. On the other hand, the average life expectancy for the kids born in 2015 is expected to be about 68.
It can be safely said that future generations would have even higher life expectancies. Assuming medical advancements keep helping our species’ case.
What these data points clearly indicate is that the number of years we will live after our retirement will be much higher than what our previous generations did!
Imagine joining a job productively at 25 and retiring at 60. And then living upto a 100. So that means you work for 35 years and don’t work for 40! Interesting.
This is good as well as bad news.
Good as you will live longer. Bad as you need to ensure that your retirement corpus lasts for more number of years. So you may need a bigger corpus! And this means saving more.
So if you ever had the question that how much money is enough to live comfortably in India?
Then a simple answer is … MORE. 🙂
Plain and simple.
A similar risk comes from the possibility of forced retirement. We don’t know when we will be forced out of jobs due to some reason or the other and with little possibility of joining back the workforce.
So for many, the (forced) retirement might be closer than what they think. They too will be having a very high number of years in retirement.
Many believe that basic salary deductions (via EPF, NPS, etc.) made by their employers are enough. But sadly, that is not true. Many know this and also understand that they need to do something about this. But the case of most people is like this that when you ask them they would have enough money to retire some day, they will tell that they don’t know exactly… but they hopethat things will work out somehow.
I get a lot of emails asking me how much to save for retirement and how much money is enough to never work again in India(!) and how to do early retirement planning?
On receiving such mails, I feel satisfied that atleast some people are giving importance to retirement planning that it deserves in the current scenario.
In very simple terms, retirement planning is done to accumulate a retirement corpus sufficiently large enough to replace the retiree’s income and sustain a stable standard of living throughout the retirement.
So coming back to the accusation of retirement planning being one of the nastiest and hardest problems in finance.
Why is it so?
That is because when forecasting what you will need in retirement, there are just too many things that can change. There are several interrelated sets of variables to be considered to reach an optimal answer to the question – How Much Money Do You Need to Retire?
And to be fair, none of the factors is especially complex. But when you have to combine all of them to build a mathematical model, the dynamics goes into another orbit! Seriously!
Here I am listing some of the factors:
How long will you live?
How long will your spouse need support?
What will be the inflation?
What will be the returns from debt investments?
What will be the returns from equity investments?
How much will your basic expenses be?
How much will be your lifestyle-related discretionary expenses?
Will you need additional health care support?
Do you want to leave some corpus as a gift for your children / grandchildren?
That’s not all. Below factors also play a big role:
How much longer do you plan on working before retiring?
Your current and future income levels until retirement?
What are the expected investment returns until the time you retire?
Your ability, willingness and need to take risks?
How your perception of risk will change over time?
Many advisors use rules of thumb (like 30x of your annual expenses, 4% withdrawal rate, etc.) and call it retirement planning. But these thumb rules can be helpful as a baseline for setting expectations but they require context and nuance to be effective in the real world.
And this is especially true for something as complex as retirement planning.
All online retirement planning excels and calculators also carry this risk. If you are using retirement savings calculator or how much do I need to retire calculator, then you need to understand their shortcomings. Else, get in touch with an investment advisor who can work out a solid financial plan for you which will take care of retirement planning as well.
Many people fail to notice but retirement planning is a mathematical problem quite different from investing for all other financial goals.
The problem has two basic parts:
First is that you need to estimate the corpus that you need to fund your retirement. Among several other factors, this depends on your expected expenses in retirement, the years you expect to live in retirement and the rate of return that your corpus will generate.
The second part is more about now. It is to determine the periodic contribution that you have to make between today and the day of retirement to create this corpus. This depends on the target corpus, the years that you have to build it and the expected rate of return.
Another interesting dynamic is the play between the two durations in the retirement equation. 1) Years TO Retirement and 2) Years IN Retirement.
The longer is the ‘years to retirement’, the lower will be the monthly investment that you need to make. This also means that if you start early, you have a longer time to save enough for your retirement. On the other hand, the longer the ‘years in retirement’, generally larger will be the retirement corpus needed. And generally, this means having to save more on a monthly basis.
I feel that it is essential to get a reasonably correct answer to “how much money I would need to retire?”
Because targeting too much would compromise your lifestyle today. And having too little is not something you would want to think about.
As for the nastiness of the problem at hand, we must do what we can do.
We should make intelligent and reasonable assumptions without trying to be too adventurous. We should try to account for as many variables as we can. Once the financial plan is created and put into effect, we need to continuously monitor it and update it with new information as and when it becomes available. Eventually, real life events and data points will replace the plan assumptions in years to come.
This is why retirement planning or financial planning is a process and not an event.
We can do all the retirement planning calculations and use excel models for retirement corpus estimation and what nots. But it’s possible that some of the assumptions will not work out as expected and hence, we will have to do course corrections.
This is the reason why financial plans should be open-ended (and not water-tight) to allow for corrective actions, updates or changes in strategy.
Now before I end, I will like to address another question that many people have.
At what age should one begin planning their retirement?
Or let’s say…
Who should plan for their retirement?
To be honest, retirement planning is for everybody as retirement is not optional. 🙂 You may call it something else in initial years. But ideally, everybody should have started yesterday itself!
If you are not in a pensionable job, then you are in any case on your own. This applies to all of you in the private sector atleast.
And please don’t think that you can retire with just Rs 1 crore.
I see a lot of spam emails and articles with catchy headlines like Retire with Rs 1 Crore, etc. For most of you who are fairly young, this won’t work. It just wouldn’t!
A crore is nothing in today’s retirement scenario context.
Having said that, is Rs 2 crore enough to retire in India? Or is Rs 5 crore enough to retire in India?
There is no perfect answer here. Everyone’s answer will be different depending on the values of factors (mentioned earlier) that drive retirement planning calculations.
Starting early will mean your money will have longer to grow and benefit from compounding as well as participate in market upturns.
Retirement Planning is not rocket science. But it isn’t as simple as what many people think it to be. If you have your doubts, then feel free to contact for professional advice.
In absence of any proper social security system in India, the importance of retirement planning increases a lot more. We Indians, in general, are under-invested when it comes to planning for our retirements.
It might seem that the issue of retirement is not urgent, but the fact is that it is very important and delay can cost you a lot of money. And let me tell you something. Do you know what is the biggest worry for people who are nearing retirement or are in retirement?
And you really don’t want to be in that situation. Isn’t it?
In developed economies, the concept of reverse mortgage is prevalent. In this, the borrower receives money against the mortgage on his/her self-owned house. The amount that can be borrowed depends on factors like the value of property, age of the borrower, interest rates, other costs, etc. and can be easily calculated using reverse mortgage calculator tools. This idea of reverse mortgage is beneficial for senior citizens as it provides them with an additional source of income or lumpsum amount in their retirements. The idea of reverse mortgage has been floated in India too but its yet to find too many takers.
But to cut a long story short – Retirement Planning means saving enough money to provide for a comfortable and chosen lifestyle after retirement. That’s what it really is. It can really answer the question of “How much money do I need to retire?” for you.
If you are in your 30s or 40s, please don’t think that it’s too early to plan for your retirement.
If you are financially smart, you can actually aim for an early retirement and get out of the race that you don’t want to run for long.
In fact, if you are able to talk to a decent investment advisor, you can get some really good pointers to your questions like how much money is enough to never work again in India? Or how much money is enough to retire at 40 in India? Or how much money is enough to retire at 50 in India?
I am sure many of you reading this are looking for some real answers to these questions.
Recently, a client of mine completed a year with me. Since I clearly remembered his first interaction with me (will share details later), I thought it would be useful for me to understand his view about financial planning and its benefits after one year of experience.
Before I share what he had to say, I must give you a bit of background about our first interaction.
When he approached me about a year back, he clearly told that he was not very enthusiastic about taking any financial advice whatsoever! 🙂
This surprised me as he was the one who approached me in the first place.
On enquiring further, he told that even though he was interested in having more control over his personal finances, taking advice on money matters from someone outside his family was something that he wasn’t very comfortable with. And therefore, a full-fledged engagement for financial planning was a long shot for him then.
So I understood where the real problem was – and it was about TRUST.
Some online research led him to the concept of investment planning and more importantly, the need for financial planning.
He then shortlisted and interacted with few financial planners and investment advisors and came to know that some have fee-only model while others had commission linked model. Logically, the fee-only model made more sense to him as the advisor does not have any vested interests or client-unfriendly incentives.
It’s like both the client and the advisor are sitting on the same side of the table and not on opposite sides!
To make it more relatable, imagine having an option to go to two different doctors.
One charges you fee upfront and writes a prescription. You have the freedom to accept or reject his advice. Other doctor does not charge you anything upfront but most often than not, will be compensated by medicine manufacturers to prescribe certain medicines via his prescription.
I hope you understand that there can be a conflict of interest in the second case. Not always but the risk is always there.
The idea of goal-based investing is to take your real financial goals and build a plan around it. It’s not just about beating markets, indices or others in investing. It’s about making money available as and when needed for important life goals by proper investing and regular review and monitoring.
In our initial conversation, I was able to address most of his concerns about why this approach could work and what were the possibilities.
He told me that till then, his savings and investments were general in nature and mostly directionless. Some savings here and some there.
Some products purchased just to save taxes without understanding what they were or whether they actually delivered what they promised or not.
The process of financial planning is a structured process where there are several but simple stages. So after Financial Data collection and Risk Profiling, I delivered an elaborate financial plan to him.
After going through the financial plan, he got the reality check about where he stood then. It came as a bit of shock to him to see how he had been managing his money till then when compared to what had been advised in the plan.
This ‘reality check’ was stressful at first but more importantly, it prepared him for the future course correction.
He saw the problem, he related to his goals and more importantly, after going through the plan he knew what was to be done to take him from where he was to where he wanted to be.
A realistic view of his personal finances and life goals – this is what the financial plan presented him with.
To his credit, he diligently put the advice in action and took necessary steps over the next few months.
He now… feels he is in a much better place financially after he began consulting – and that’s because he now has a more structured and disciplined approach to managing money – something that was missing in his early years.
“Before the financial plan was implemented, my financial life was really all over the place. In trying to be smart with money, I ended up losing a lot of time in terms ofwealth creation… which I realize now. But better late than never.”
“I was apprehensive earlier but financial planning has helped me get rid of my insecurities and more importantly, I feel more in control and I know that if I need money, I know I will have it. And that is what allows me to sleep peacefully at night.”
To confess here, I as an investment advisor was happy to hear these words from my client. It feels good to make some impact no matter how small it might be. And let me tell you one thing. And I am not saying this because I am an investment advisor and I wish to have more clients (obviously). 🙂 🙂
A real advisor goes much ahead and deeper than plain numbers.
A good advisor can help the client understand what is important and what is not. Markets have and will remain volatile forever. So what events should be ignored and what actually matters is what a good advisor can tell you. He or she can bring the discipline into people’s financial lives – and that is extremely important.
Finding the right investment advisor or financial planner is the next key question.
To be fair, these days it is easy to find online excel financial planning calculators and robo-advisories which can create a financial plan on the fly.
But real advisory goes much beyond just the numbers in a spreadsheet or an algorithm. Relying on numbers is very important. But there are some things that should not and cannot be quantified. Subjective understanding of the context of the numbers, current scenarios and client’s real risk appetites is something that cannot be captured in excel calculators or the online robo-advisory’s data-driven model. Please don’t assume that I am saying that these are bad. I am just saying that these are good to begin with. But most often than not, they may not be suitable for everyone eventually.
Coming back to the point of hiring an Investment Advisor.
The best investment advisor or financial planner should be knowledgeable, unbiased and have the wisdom necessary to chalk out a solid, well thought-out and goals-driven financial plan.
Ofcourse, its easier said than done.
There are many who fit that description. It is best to shortlist a few and then reach out to each one of them and then – understand their philosophy, analyse what kinds of questions they ask and whether they are really unbiased or not. You will get your answer after talking to a few of them.
If you are confused whether it’s worth paying for financial advice when you can easily find things for free on the internet, remember that knowledge and advice are two very different things. You don’t know what advice (that is doled out freely online) is suitable for you or unsuitable. You will only know when the damage is done or when it’s a little too late.
As I say, it’s your money and hence, your responsibility to protect and grow it.
And here is something that some smart investors have told me – a few important pieces of financial advice can offset many years of the fee charged by advisors.
That is 100% true.
Remember that a good financial plan can put back your financial life on track and help you achieve your financial goals. And a good financial advisor can be the difference between meeting and missing your financial goals.
If retiring early OR having enough money to live a life that you truly want is your aim, then let me tell you one thing.
Tax Saving alone will not help you much.
I agree that no one wants to pay taxes if given a choice. So, people try to avoid it to the extent that it’s legally possible with better and ultra-smart tax planning. But unfortunately, some people become so focused on saving taxes that they fail to see the forest in search of trees!
I know that for most people, trying to minimize tax obligations is like an annual pilgrimage. 😉
Investing to save taxes by itself serves a limited purpose. It’s best to align the idea of tax-saving with the overarching plan for your financial goals and then get the maximum benefit from the available tax-saving products. My general advice before proceeding would be to not focus too much on the best strategies for tax-saving products.
Tax saving should be a result of proper investment planning and not vice versa.
Making Tax Saving part of a Bigger Plan
Planning for financial goals and that for tax savings should not be a stand-alone exercise.
A goal-based financial plan gives investing a perspective and helps track one’s progress towards those goals. Such a plan will consider the income and savings capabilities of the individual, their financial goals and their risk profile. And then arrive at a tax-efficient plan to help achieve those goals.
Let me try and simplify it for you.
First, you need to be aware of your income. I know most people know all that stuff. But some still have confusion about how they end up getting the so-called ‘in-hand’ salary that is much lesser than what the company tells them as their annual CTC. 😉
Estimate your total taxable income for the year (including salary, rent, etc.). Don’t forget to deduct the exempted income (like HRA, LTA, etc.) from the total income while calculating taxable income.
Find out your tax liability for the year. Different people have different tax liabilities depending on which tax slab they belong to. You can take help of a CA or use income tax calculators that are easily available online. Do this even before you begin your search for best tax saving products or your actual investments.
Now you know few important things: Your tax liability and your ability to save (after basic expenses are taken care of).
Some tax saving can happen automatically via certain expenses. Like insurance premiums, home loan obligations, school fees, etc. Your mandatory contribution to EPF is also eligible for tax saving. So all these expenses and mandatory savings reduce the need to look for tax-saving products (partially or fully).
With the basics out of the way, now comes the important part.
Once you are clear about your goals, you need to identify which investments options to choose to assign to each goal so that you can save taxes too.
Sidenote: Do note that I am focusing more on financial goal achievement and not just on tax saving. And that is the way to go. Do you wish to retire quickly or you wish to maximize your tax-saving by randomly investing in wrong financial products?
With goals identified and rationalized, use goal-based investing to choose correct investment products that can help you reach your financial goals. Tax efficiency is a secondary. Remember that. At best, it should be linked to the process of identifying suitable investment products.
There are several products that also offer tax benefits – like PPF (Free PPF Excel Calculator), ELSS funds, NPS, traditional insurance plans, NSC, some FDs, home loan repayment, EPF, VPF and whatnots… Evaluate the features of these products – risk vs return, tenors and lock-ins, flexibility in making investments and receiving amounts on maturity, etc. Also important is understanding the tax treatment – whether it’s EEE, EET or something else. Here again, you can use some tax guide or take help of an advisor to understand the nuances of these products.
Please remember that the actual product should be chosen in alignment with your unique circumstances in terms of ability to take risks, need for liquidity and investment horizon. One size doesn’t fit all. You cannot copy-paste someone else’s financial plan in your own life. That would be a huge mistake to commit.
And as far as possible, your tax-oriented investments that are already part of your existing portfolio should also be aligned with your financial goals.
As an example, if you are young and have the ability to save about Rs 1.5 lac, then it makes no sense to utilize it fully via EPF+PPF combination. Being young you should have a significant investment in equity – which here can be utilized via ELSS funds. Read more about how young earners should plan their investments.
The purpose of investing is to achieve your financial goals and not just tax-reduction.
Read that again please.
A well thought out investment strategy is the core idea of a good financial plan. Some people know how to figure out a good tax-efficient strategy on their own. But for others, it’s best to seek proper advice from investment advisors (and avoid free investment advice).
A well thought out financial plan can help investors achieve their financial goals in a smart and tax-efficient manner. You can read more about smart financial planning to clear your thoughts.
Talking about your tax-saving battles and victories can be glamorous. 🙂
But if that victory, i.e. maximization of tax saving comes at the cost of choosing wrong financial products, then you will lose out in the long term. And by the time you will realize about your mistake, it will be very (if not too) late.
Do yourself a favor and put in place a proper investment plan for yourself – so that your tax saving investments can contribute more to the overall portfolio and help you achieve your financial goals.
Last minute tax saving efforts will almost always lead to unwise decisions. So avoid waiting to bunch your investment decisions to the end of financial year (Jan-Mar).
However, if you are already late and you realize that… then make sure you don’t repeat this mistake again next year.
Find yourself a good financial advisor and talk to him. Engage him to put in place a good financial plan that you can implement when the next year (or financial year) begins. Give yourself a head start. Or if not now, put a calendar reminder to get in touch with an investment advisor as soon as possible.
Good tax saving investments are no doubt an opportunity for you to start your wealth creation journey. But remember that personal financial goal planning should precede your tax planning. Keep your financial needs in mind and then link your tax saving plans with your financial goal related investments.
Or drop me a mail if you are unable to do so. I will send it to you directly.
Please note that the worksheet will help you:
List down all life goals
Identify important ones out of them
Identify which are ‘Needs’ and which are ‘Desires’
Categorize them into short term goals, medium term goals and long term goals
Prioritize each of these goals
Rationalize goals and costs if need be
The worksheet already contains several pre-populated examples of personal financial goals (short-term, mid-term and long term goals). You can either use them as your own (if relevant) or fill the sheet with your own unique goals.
Whether existing investments can be earmarked for these goals?
You can answer these questions on your own or take help of trustworthy and professional investment advisors. But whichever approach you take, the final decision in goal setting process will be yours.
After all, its your life and your goals… and ofcourse your money. 🙂
But this worksheet won’t help if you are not convinced about the whole idea of saving money for future. If that’s your case, I suggest you also read this article on Save vs Spend. It will help clear your thoughts. And by the way, tax saving is not a financial goal. So don’t list it as a goal. 🙂 Though it should be a desirable side effect of a good financial plan.
So download this free financial goals excel worksheet. I hope you find it useful… atleast as a first step towards putting your finances in order.
The two words ‘Financial Goals’ are fairly simple to understand.
It’s the ‘WHY’ of your investing(s) and saving(s). It’s the reason why you are ready to cut down your spendings today and put aside a part of your hard earned income for tomorrow. (Remember Save vs Spend debate?).
But… a lot of people invest without having a clear idea about what they are saving for.
They do have some idea about their major life goals but investments are mostly random. Or in many cases, driven by the need to save taxes (big mistake!).
But let me tell you one thing.
If you are aiming for beating the market or your friend’s portfolio returns, then you need to get a reality check. No doubt you will get emotional high and increased bank balance when you beat the market. But will that ‘beating’ be sufficient to help you achieve your goals?
Many people have no idea how to answer that question.
And this is one important reason why goal-based investing makes more sense for most people. I have already created a detailed guide on goal based investing. But I wanted to delve deeper into something that is at the core of goal-based investing.
You guessed it right, I am talking about…
And more specifically…
When it comes to planning your finances, one of the most critical things that you would be doing is identifying your financial goals.
This is ‘the’ first step.
If you have no specific goals that you are targeting, then you will be investing randomly in different financial products without knowing whether it is helping you get closer to your goals or not.
Its just like travelling without knowing your final destination or taking random paths. See below:
And this not advisable for most people.
But if you think that you are still ‘too young’ to bother about setting your goals or financial planning, then you are mistaken. Starting early on this path has eye-popping rewards. Don’t believe in the myth that goal setting is only for old people or for people in a certain age group or income bracket. It can be helpful for people at all stages of their lives. After all, everyone has financial dreams and needs.
So lets move on…
Life Goals –> Financial Goals
As humans, we are not born thinking about our financial goals.
As kids, we had various goals in life and we didn’t care what realities were and whether we were capable of achieving those goals or not. Its only when we grew up that reality sank in.
When I was a kid, I wanted to be an astronaut. That was the goal of life then. But as you might have guessed, that didn’t work out :-). And for me, it was like coming to terms with the reality that in life, we can have anything but not everything.
But lets leave my childhood and come back to the present.
We can have several goals in life. And sadly, many of these life goals require money – Yes…. can’t do away with that.
Goals like buying a house, children’s education, their higher education, their marriage, good retired life, early retirement, living a good life even before retirement, travelling, etc. — all require money.
And hence, these life goals are also your financial goals.
So when referring to financial goals, its mainly about the ‘significant goals’ of your life that require money. By significant, it is meant that these are important as well as cannot be met through regular income. So you need to save for these goals.
For example – Your kids’ school education is obviously important. But you can manage the monthly school fee through your salary. But when it comes to children’s higher education, you cannot meet the requirement from your regular income/salary. You need to save for it for years. So that is how we identify a significant financial goal – which in this case is your child’s higher education.
Goals must be S.M.A.R.T.
This is a very popular acronym used in context of goal-setting everywhere (including financial planning).
S = Specific
M = Measurable
A = Achievable
R = Relevant
T = Timely
Without using a lot of words to explain this theoretical concept, understand it like this – when these 5 requirements (i.e. S, M, A, R and T) are taken care off while setting your goals, it becomes a well-defined and strong target and not just a weak wish.
Here is the difference:
Wish – “I think I should have a big house in future”
Goal – “I have to buy a 3BHK in Mumbai for about Rs 40 lacs in next 3 years.”
The difference is clear.
Unlike a wish, a goal is:
Specific: Its clear what type of house is to be bought where
Measurable: Its not using general words like ‘big or small’. It’s a 3BHK.
Achievable: Ofcourse its achievable. We are not planning to buy a Taj Mahal here.
Relevant – Its relevant for the person who has this as goal. It is what he wants.
Timely – A clear deadline is set to achieve the goal
So…without doubt, your goals must be smart. Now lets move on and see how to go about setting your actual financial goals.
List down all Life Goals
Goals tell you where you want to go. And its only when you know where you are headed, you can decide what path to take. Isn’t it?
So when listing down your life goals, its imperative that you think hard. Take time to reflect on all the goals that come to your mind.
Ofcourse major ones are obvious, which include short as well as long-term financial goals – like buying a house, children’s education and marriage, retirement, etc.
But depending on your exact situation, you might have other goals that might be important for you. Like a good friend of mine is saving to gift his wife a big diamond ring on their 5th anniversary. 🙂 (I hope my wife doesn’t read this).
Please understand that as of now, you are just listing down all your goals. It doesn’t mean that all of them will be planned for and invested towards.
Having several goals doesn’t increase your chance of achieving them. Its better to focus on fewer goals instead to get the best result. Its also because your income is limited and you want to use it to save for the important and correct goals.
Also, some of the things that need to be done (like reducing your unmanageable credit card debt, paying off your brother’s small personal loan, etc.) might not be your life goals. But nevertheless, they are your financial goals.
So your list of life goals gets converted into list of financial goals. Here is a list of financial goals derived from life goals (with additions and deletions where necessary):
By the way, I have used a simple excel to list down these goals. You may call it setting financial goals with help of a Financial Goals Worksheet. Though I find it easier to do it in excel, if you want, you can use simple pen and paper to do it too.
Now once you have listed down all the goals, you need to identify which are worth planning for and which aren’t.
Tag all Goals as ‘Needs’ or ‘Desires’
Next step would be to tag each of your goals as either NEEDs or DESIREs. You can use other words too but idea is simply to differentiate between essential goals and non-essential (or lets say good-to-achieve) goals.
For example – Saving for your retirement is a NEED. You can’t do away with it. But saving for a foreign trip next year is a DESIRE. It can be postponed, have its budget reduced, etc.
Here is a sample tagging for goal list that was shown earlier:
Some goals might seem like both a need as well as desire. I can quote a personal goal of mine here – Travelling. Its a DESIRE for most people no doubt. But for me, Travelling is also a NEED. 🙂
If you too are facing such a dilemma, don’t worry. Its not a big problem. Just be reasonable in tagging. Don’t tag a goal like ‘Purchasing SUV’ as a need when you are unable to even pay your bills on time.
Ideally, the goals that are NEEDs (or Essential goals) should get priority over other ones. But that is easier said than done. We are humans and we need to simultaneously take care of multiple goals. You cannot keep saving for just one important goal (like retirement) and not do anything for others. You will screw up big time.
But tagging your goals like this can help clear your thoughts about what is important and what is not.
Categorize all Goals as Short, Mid and Long Term Goals
All goals are not similar and neither have to be achieved on the same day.
So now categorize all your goals (both NEEDs and DESIREs) according to their time horizon. One way to do it as follows:
Immediate Financial Goals (in next 1 year)
Short-term financial goals (1 to 5 years)
Medium term financial goal (5 to 10 years)
Long term financial goal (10+ years)
So this is how goals of previous points can be categorized as per time available:
This time period based categorization of your financial goals gives a lot of clarity when doing financial planning. That’s because a major factor that decides where you should be investing in (i.e. which assets and financial products), is time available for the goal.
Assign Priorities to Your Goals
Now you need to assign priority to your goals. It might look similar to the earlier differentiation of Needs Vs. Wants. But its not.
If it was possible to achieve all your life goals at once with the resources you had, then financial planning would be unnecessary. And it would be an ideal world where your needs as well as desires would be satisfied on demand. Instant gratification would rule. 🙂
But it’s the real world we live in. And we do not have unlimited supply of money.
We simply cannot have everything we want and whenever we want.
We need to accept tradeoffs, as the resource available (i.e. money to be invested) is limited. So you need to prioritize your goals.
It helps to identify important goals even within the categorization we made earlier (Needs and Desires). Once identified, resources will be allocated accordingly. This ensures that important goals are taken care off first. But this also means that money may not be left to satisfy all other less priority goals.
This is the tradeoff that prioritization of goals helps in dealing with.
You decide what goals will be satisfied first and which will be second, and which won’t be done until till very last.
Ultimately, the key may not merely be to give clients a comprehensive list of recommendations, or to tell them what steps they should take next, but instead to help them make the choice of what’s most important to them and then hold them accountable to follow through on it.
Here is a sample prioritization of the goals we are discussing as example:
The prioritization can be different for different people.
Some goals can have similar priority for some people while different for others. For example – many people are of view that children should take care of their marriage expenses. Some think otherwise. So priorities can be different.
Now what if your goal priorities change later on?
That will definitely happen in real life.
Nothing to worry. You will need to adjust your investments later on, so that they remain relevant as per your priorities then.
Now goals have been listed, categorized and prioritized. So are we done now?
Aren’t we missing something?
Yes we are.
What is the cost of each Goal Today?
You cannot move ahead without knowing the costs. Isn’t it?
What is the cost of these goals today? When you answer that question, only then you will be in a position to know the real cost of the goal in future (after adjusting for inflation).
A engineering degree that cost you Rs 5 lac about a decade ago can easily cost Rs 15 lac today. Fast forward another 15 years when your child might be starting his higher studies, the cost might have gone up to Rs 50 lacs or even more.
So knowing a goal is fine. But you also need to anticipate how much it will cost in future. And the only way to know it is to realistically assess two things:
Cost of Goal today
Inflation applicable to the goal’s cost in future
If you fail to account for inflation, you will end up saving woefully less than what is actually required in future. And that will be a sad as well as scary situation to be in.
So here is how one can assign costs to various goals. The figures are hypothetical:
Chose Your Final Goals Wisely
Now comes the tough part. Your income is limited and it might not be sufficient to fund all your goals.
So you will need to pick the goals you want to go after.
You might consider saving for some goals first as these are important. Other goals can be saved for (or postponed) later on. For example – You might want to postpone your plan to go for a foreign trip every 2-3 years till you have bought a house (and obviously cleared off the loan).
You might also consider reducing the targets for some goals. For example – In current example, instead of saving Rs 15 lac each for two children’s marriage, you can save Rs 20 lac combined for both of them.
Here is an example of rationalization:
But How much to Invest for my Financial Goals?
You have listed your goals. You have identified which are NEEDs and which are DESIREs. You have categorized them into short, mid and long-term buckets. You have prioritized them. You know their costs today. You have further rationalized them.
If you are good with numbers and understand how to read numbers from real-life perspective, then you can carry out goal based financial planning yourself. Or else, you can take help of trustworthy and competent financial advisors who can help you do just that (I can help).
So after going through all the steps, your financial goals worksheet will look something like this:
Or here is another sample of how you will get an action plan to achieve your financial goals:
Be Careful about Where you Invest for different Goals
I want to highlight this point, as this is what most people get wrong when trying to do things on their own.
Different goals require different investment plan and strategies.
Using single asset allocation and risk tolerance for all your goals in the investment plan can be a big mistake. Infact, it can be disastrous.
But question is how much should you invest and how should you distribute it across various assets? Goal-based financial planning helps people understand exactly how to invest and where to invest to achieve most (if not each) of their goals.
So lets see which assets are suitable for which types of goals:
Short-term goals (Upto 5 years)
Risky assets like equities are best avoided for such goals. More so if goals are high priority or critical. Some people might still be interested in investing a small part in equity for these goals. It might work for them. But everyone should understand that any losses that you incur on the way may not be easy to recover from in time, given the short-term horizon of these goals.
Medium-term goals (between 5 and 10 years)
Investments can be made in both risky as well as in safe assets in a balanced manner. The idea is to balance the safety of capital with the need for higher returns.
Long-term goals (more than 10 years away)
One can invest in assets that have a higher long-term return potential for the long-term goals. Best suited asset for this is equity. Even then, most people fail to realize the potential of equity and invest primarily in debt instruments like EPF / PPF / Pension etc. for their ultra long term goals like retirement planning.
It is important to understand here that a long term goal will not remain long term forever. As the goal date approaches, it will effectively become a short-term goal.
For example, when you are 35, your retirement is 25 years away, i.e. its a long term goal. But when you turn 55, it will only be 5 years away, i.e. its changed into a short term financial goal. When this transition begins, you should ideally start the process of slowly reducing the riskier equity component of your goal-specific portfolio. This will reduce the risk of large losses as you near goal completion.
Note – These are general and broad goal-specific asset allocation suggestions. The exact allocations will differ from one case to other depending on several other factors.
If you are reading this and already feeling a little overwhelmed with the big numbers being thrown around in name of these personal financial goals, then please relax.
Its true that financial planning is generally focused on dealing with larger financial goals. But I don’t want you to be overwhelmed and demotivated at the sight of these seemingly big numbers. They may seem distant or unachievable.
But this is where smart financial planning based on concept of goal based investing can help.
It can breakdown large financial goals into smaller and manageable pieces. So for example – you get a simple, easy to implement retirement plan that will tell you exactly how to go about building up (with small monthly investments) that multi-crore corpus you need for your retirement.
With Goals Clear, Start Working to achieve them
Its only logical to put your efforts in something that you really want to achieve.
Since now you already know what your goals are and how you need to invest for each one of them, there is only one thing left for you. And that is to take action.
You might have noticed that I have not mentioned much about saving taxes or chosing the right products (like specific mutual funds names, etc.). It is because things like tax saving are secondary. More important is ensuring that you are investing correctly for your goals. Tax saving should not come in way of proper investing plans.
Similarly, once you have finalized the goals, you can start putting in place separate investment portfolios for each of them (or group similar ones) with proper asset allocation. Goals come first and products come later.
So you are looking for the Best SEBI Registered Investment Advisor in India? Or you are looking for Sebi Registered Investment Advisers list 2020. Or maybe you are just looking for fee-only Investment Advisors or Fee-only Financial Planners near you?
But to be fair, there are several good investment advisers and it may be difficult to say who is the best among them.
Why? Because it’s quite possible that one SEBI Registered Investment Advisor may be good for someone but another adviser may be better for someone else. So it also depends on the investor or the client’s requirements which decides who is the best SEBI registered Investment Advisor for them.
I, Dev Ashish am a SEBI registered Investment Advisor. I provide fee-only investment advisory and financial planning services to small investors and HNIs.
But why should you only consider SEBI registered Investment Advisor to take investment advice? After all, there are many others who are ready to give advice – like bank relationship managers, mutual fund distributors, IFAs and insurance agents.
Why is it that its best for you to go only to a SEBI registered Investment Adviser?
A good or the best SEBI Registered Investment Advisor will always give you proper, conflict-free investment advice which is customized as per your unique requirements and financial goals.
Why conflict-free and unbiased advice?
Because the best SEBI Registered Investment Advisor does not receive hidden commissions/charges (like distributors, IFAs and agents get) which can bias their investment advice.
Instead, these Investment Advisors get fees directly from the clients.
This means that the unbiased advice which SEBI registered Investment Advisor give is the only source of income for them and they are not dependent on any other company (AMC, Insurance Company, etc.).
And who doesn’t want to have a sorted and relaxed financial life?
I think everyone does want that – as it is rightly said: You must gain control over your money or the lack of it will forever control you.
Now you may ask that How is a SEBI Registered Investment Advisor different from Agents and Distributors who (wrongly) seem to be giving free financial advice?
In India, when it comes to getting financial advice, people feel that free advice is good enough. But that is a mistake and which costs a lot in the long run. Why? Because when agents and distributors give you their so-called free financial advice, then they are only pushing products which give them big commissions. They are not concerned whether the product is suitable for you or not. They are just product sellers and not real financial advisors.
I repeat as this is important – the insurance agents, mutual fund distributors, IFAs don’t charge you any fees. But they do get fat commissions by selling various financial products like mutual funds, insurance, structured products.
And they will use random terms like personal finance advisor, financial advisor, etc. to seem legitimate. But the fact is, that SEBI only allows RIAs to give comprehensive advice to investors. Others (like distributors, IFAs, agents) are just product sellers who should only be giving incidental advice, i.e. they just sell their products.
I suggest that you also read a note where I wrote in detail about Is Your Financial advisor really on your Side?
If you are looking to choose the Best SEBI Registered Investment Advisor, you first need to know that for all RIAs, i.e. Registered Investment Advisors, it is mandatory to get SEBI registration. So you should always check if the investment advisor is registered with SEBI or not on the list of SEBI Registered Investment Advisors on SEBI’s website.
But since you need to pay the fee, you might ask whether these SEBI Registered Investment Advisors really worth the fee they charge?
Since SEBI Registered Investment Advisors charge fees directly from investors, it can be said that the probability of them giving unbiased, conflict-free and proper advice is very high. And that is important. You may want to save a few thousand by trying to take free advice of agents and other such people. But this is the case of being penny wise pound foolish.
Remember, a good investment advisor can be the difference between meeting or missing your financial goals. And it won’t be wrong to say that a few important pieces of financial advice from a good investment advisor can offset many years of the fee charged by them.
As a SEBI Registered Investment Advisor, I can help you build a proper Financial Plan for your financial goals. In addition, I also work with affluent and HNI clients to create a proper investment strategy for their large portfolios.
I am sure that as an investor, it doesn’t matter whether you are a big investor or a small investor. You would naturally want to and would look for the best SEBI registered investment advisor in India to help you with your financial goals and portfolio. Isn’t it?
There are several good investment advisor working in India and to be fair, you need to do the due diligence to find out which one is best suited for you. You can check the list of SEBI Registered Investment Advisors. If you are searching for investment advisor near me, then understand that the nature of investment advice is such that it can be given via online or telephonic mode as well. I myself being a SEBI registered Investment Advisor (SEBI registration number INA100005241) handle clients from across India.
If you are interested in discussing with me to take look at your portfolio or help you with your financial goals, you can use this form to contact me.
Wrong financial advice can put you in a seriously bad situation. And you don’t want it. Right? What you want is to get proper investment advice which is unbiased and not influenced by commissions. In the interest of the investor community, SEBI insists that all investors only deal with registered investment advisors. Stable Investor by Dev Ashish is a popular SEBI Registered Investment Advisor.
In your search for the best SEBI registered investment advisor in India 2020, you must find out the one which is trustworthy, competent and who shows you the real picture instead of telling you only what you want to hear. How to check SEBI registered investment advisor or advisory company? Just check this alphabetical list of registered investment advisors on SEBI’s website.