Why Estate Planning should be mandatory ?

Why Estate Planning should be mandatory ?

Do you know about Investing Expenses ?

The expenses that can generate (or) produce an income, so that we can save / invest a part of money, would be deducted from our Regular Salary or Business income like as other expenses.

We daily saving / investing for our Goal based information. We regularly seeing what about our yield to date (YTD) on Returns. Our Dream goals are better and far more, it may be 20 years or 30 years or more than that. We depositing in a bank, mutual funds, stocks, realty, gold, etc. We are telling these investment instruments  will for the future of our Children. But, would you know, it's exactly fit for our kids or will settle as 100 percent for our kids ? We can't know. That's why we are talking about, ' The Estate Planning'. It's not just like a simple as we are thinking a Real Estate Property.

The Estate Planning:

“What makes greatness is starting something that lives after you.”

So, we should mandate ourselves to do for our Children (or) After us.

Estate Planning… refers to the Organized approach to managing the accumulated assets of a person in the interest of the intended beneficiaries.

We can have Enough Money...

We can have Big Goals...

We can have Better Wealth...

But, we should direct that above to whom you wish. Unfortunately, Nomination and Heirs are creating trouble after our absence. So, we most concentrate and plan of our Estate Planning. 

• During the Life time:

1. Joint Holding
2. Family Settlement
3. Trust
4. Gift
5. Power of Attorney

• After Death:

1. Will
2. Nomination

Will:

Will is defined as, the legal declaration of the intention of the testator with respect to his property, which he desires to be carried into effect after his death. 

The person who making the Will is the testator. His rights extend to what are legally his own and this Will comes into effect only after the death of the testator.

The person who is named in a Will to receive a portion of the deceased person's estate is known as a legatee.

The person named in the Will to administer the estate of the deceased person is termed as an Executor.

Nomination:

It is the right conferred upon the holder of an investment product to appoint the person entitled to receive the monies in case of the death.

A Nomination is seen as formal bequest authorized by the holder of the asset, though in the event of a dispute the nominee's position is reduced to being the trustee of the bequest, the final owners being decided according to the applicable laws of succession.

Note that: Only an individual can nominate. Nominee can be an individual, company or trust, depending on the terms of the investment or asset. Nomination can be appoint either at the time of starting an investment or any time, and it can be modified any number of times. 

The Purpose of the Nomination is simplification of payment process in the event of the death of the holder and not the equitable distribution of estate.

Joint Holding:

It will ease to enable specific family numbers, such as the spouse / partner or children, easily access assets through the simple method of Joint Holding. It means that the property is held by more than one person and can be accessed by the Joint holders subject to the mode of operations.

Usually Demat Accounts, Mutual Funds, Stocks, and Bank accounts can be held as Jointly. We should remember that if there is any legal contest among the heirs, joint holders right to the asset can be superseded by laws of succession as they may apply.

Family Settlement:

This is an instrument used to achieve peace and harmony in the family when there is a dispute or claims to the property that can lead to a long drawn out litigation. 

The main advantages of a family settlement are, Family arrangements are not treated as transfer and so there is no worry about Capital gains tax. It's also not treated as Gift. (Gifts are taxable sometimes as income from other source, subject to exemptions provided u/s 56(2)(vii) of the IT Act.)

Power of Attorney (POA):

POA is an instrument method by which a person may formally authorize another person to act on his behalf or as his agent on all matters or for a particular type of transactions. POA can have Donor and the Donee. Both the parties should have attained the majority, be competent to contract.

Usually, it helps on managing the sale of assets and related on Court dealings.

Mutuation:

When a property or asset acquired by a person from another one, on becoming the rightful owner of the asset should ensure that all the titles of the asset are correctly transferred to his name. 

It helps in updating the Revenue records to ensure proper revenue collection from the person who owned the asset or property.

So, we needed it as Mandatory ourselves for the Estate Planning same like Aadhaar (Unique Identification), PAN, Voter Id and GST (Goods and Service Tax). May be the Government will put mandate this in future.

There are so many legal counters in the court regarding this Estate Planning, due to non-appointed of Nomination, heirs, proper Will and other settlements.

How to E-file ITR 1 online ?

How to E-file ITR 1 online ?

What is ITR- 1 ?

The Income Tax Return (ITR) - 1 is a document or form that required to file by an individual whose total income for the Assessment year includes,

• Income from Salary or Pension (or)
• Income from House Property (or)
• Income from other sources.

ITR- 1 also known as 'Sahaj' meaning easy in Hindi Language.

The following individuals who cannot file this ITR- 1:

• If an individual's total income exceeds Rs. 50 Lakhs
• If agriculture income is more than Rs. 5000
• If you have any foreign assets
• If you have any taxable capital gains
• If income from more than one House property
• If you have income from Business or Profession.

For Filing a return ITR- 1, we can get this form from online or offline, filled the details required and send it to your nearest Income Tax Department's office.

Here, we are going to see, 'How to file the ITR - 1 form online ?

Step by Step:

1.  Go to https://incometaxindiaefiling.gov.in/    (or) Google it, 'incometaxindia efiling' and follow the link

2. If you are not registered, you can register yourself. Go to the link: https://incometaxindiaefiling.gov.in/e-Filing/Registration/RegistrationHome.html

[ It showing in the right side top of the page ]

You can select User Type, as an 'Individual' and continue...

Enter your PAN following with your surname, middle name, first name and date of birth. Kindly note while entering the PAN, your surname and the date of birth is mandatory.

After registering the required details, you should be go to the next page with the basic information of you, your address, email and mobile number. On completion of registration process, you have to be verify your mobile number and email by the authentication sent by the Income tax India E-filing website.

3. Now, you can login:  https://incometaxindiaefiling.gov.in/e-Filing/UserLogin/LoginHome.html

[ It showing in the right side top of the page ]

Enter you userid, i.e. your PAN and the password and fill with the captcha and login now.

Now, you can view a Dashboard for you. you can see some menus in the top. Click the  'e-file' menu  >  Prepare and Submit online ITR 

After clicking that, you can now see an info... ITR - 1 - Assessment year - 2017 -18

Structure of ITR - 1:

you can read the 'General instructions' under instructions of the ITR - 1 and there are 5 parts in the structure of ITR - 1 form.

• PART A GENERAL INFORMATION
• INCOME DETAILS
• TAX DETAILS
• TAXES PAID AND VERIFICATION
• 80 G 

Kindly read everything on all the 5 parts in the ITR - 1 and fill the details, whatever you required and want. On Data entry, you can click 'save draft' to avoid the loss of data entered. Don't be rush to click the 'Preview and Submit'. Fill it everything and finally you can preview the information you entered and submit there.

After submission / uploaded, you must e-verify your filed returns. You can have more option to verify

On Successful upload of Returns, you can use your Aadhaar OTP receiving on your mobile number to e-verify for the easiest way. You can have also other options like sending the ITR - V by post, EVC, validating through your bank account.

After Completion of the above process or not, you can just go the 'Dashboard' in the left side top of the page. In the Dashboard, you can check it out the returns / forms, any pending actions, cash transactions 2016.

If you have any comments related on this article, you can share your views here...

Great Investing !

Rich Investing - An Investment Thought to create Wealth

How is my Budget Planning today - April - June 2017 - PQFR

How is my Budget Planning today - April - June 2017 - PQFR

As we had discussed the 'Budget Planning' in the past two posts. Here now, i am keen to submit my PQFR (Personal Quarterly Financial Report) for the Quarter - April - June 2017.

Set your own Budget Planning

How to set a simple Budget Planning 2017

The report below created by me, is based on the Super Budget 50:30:20

On the report, my fixed expenses are vary due to Medical costs and grocery items on my relative appearance :)  kindly note that i mostly maintain the savings / investing above the Super Budget terms with 30 percent plus. I believe in savings / investing for my child and for the Retirement. So, it would insist me to Retire Early :-)

You can also do the PQFR yourself and go further with honest :)

If you interest to share any comments, i wish to listen for that

Rich Investing with PQFR !

SIP vs Lumpsum Investing - The better choice

SIP vs Lumpsum Investing - The better choice

Which one can you choose, Rented Home (or) Lease (or) Buy it ?

This is the choice we have for a home, as for the savings or investing, we had a plenty of investment products like Bank Savings and Deposits, Bonds, Mutual Funds, Stocks, Realty, gold, etc. But, it's all about how we started it. As a traditional background in our country, we mostly choose our choice like Regular small savings from our grandparents. The old method of savings or investing are a collection box called as Hundial, Postal small savings, Bank fixed deposits, buying a gold in a very small quantity, purchasing a piece of land for our children. Nowadays, it becomes more fashion as the investment method changes slightly with a Regular savings frequency mode and a bulky amount of deal at once. That is what we called earlier, Recurring deposits and Fixed deposits. Now it comes with the word, "Systematic investment plan (Recurring) and a Lump sum investing (Fixed deposit). So, now we are talking about the fashionable SIP and Lump sum investing.

SIP (Systematic Investment Plan):

'SIP' is nothing but drink something by taking in small, like 'he took a sip of the Red wine'  :)☺

Systematic Investment Plan (SIP) is an investment method that usually given by the mutual funds to its investors, to invest their money in a fixed amounts as periodically. This frequency mode may be weekly, monthly or quarterly. This SIP investment method is a disciplined strategy that the investors can make 'Rupee Cost Averaging', while the market price is low or high, it benefits the investors.

It is usually recommended for the small and retail investors who don't have the large amount of money to invest.

Lump sum investing:

It is an investment method with a Single (or) One time payment of investing. When you have a large amount of money on your hand to invest and if you couldn't able to invest regularly, then this is your better choice of investing at once.

It benefits the investors especially for the medium - to - large, who can utilize the market when it is low or Market crash.

It also gives the benefit of the Power of Compounding gets itself from the first day of investing, but you should be aware about the Market fundamentals and its movements like Economic factors.

Have you made Investment Insulation ?

Have you made Investment Insulation ?

'INVESTING' means the act of committing money or capital to an endeavor (a business, project, real estate, etc.) with the expectation of obtaining an additional income or profit. This is what the Investopedia describes.

Most of us while listening the word, 'Investing' is about thinking themselves, just putting some money on any Assets (Financial or Physical) and make a profit without knowing the importance of Financial Education. If somebody have ₹ 10,000 /- or ₹ 1,00,000 /- they simply buying an asset (Thinking that are Investing) without knowing the Risk of Investing.

Prevention is better than cure.

As for the Financial Education, Securing your assets whether financial or physical is mandatory. Securing your Assets / Investments is nothing but, it's an Investment Insulation. Investment Insulation protects your investments through the Insulation factors. It protects your daily financial life while your investments may make loss or No Earnings on investments.

We can also compare the Investment Insulation with the 'Net worth' of an individual.

Insulation Factors:

If you are looking to buy a Stock / Real Estate Property / Business (those are Risky), then ask yourself the Investment insulation before you buy.

Insulation Type	Factors / Benefits
Have you Sufficient Coverage of Insurance ?	Take Proper Term Insurance, Health and Accident Cover – Protects unexpected accident or loss, Health concerned
Have you made the Emergency Fund ?	Savings of 6-10 months of income – Loss of an income / job, Medical Expenses, other Emergency required
Have you  Monthly Saving / Investing ?	Recurring, Provident Fund, Mutual Fund Systematic Investment plan(SIP) – Financial Goal Planning like Child Education, Marriage and Retirement Corpus

And some other Factors are...

• Save Water - Protects our Legal Heir
• Consume Less - Electricity Power
• Planting Tree - Save Nature

That is what, Dev Ashish of Stable Investor tells that, 'Buying Health Insurance protects Your Wealth, not Health' based on these Investment Insulation.

Investment Insulation is not only for an individual, but it's a Social Obligation. 

How to Calculate Annualized Return on Investments

How to Calculate Annualized Return on Investments ?

Previously, we had discussed about the Absolute Return on Investment, to calculate how our Invested money performing and seen how it differ from in terms of rupees as Absolute. Here, we can see to calculate the Annualized Returns on our Investments.

Annualized Return can be computed as Percent (% p.a) per Annum. We can measure the returns by these method, is the better and accepted way to measuring the Investment Return. The basic purpose of Annualized Return is to standardize the investment period as though each investment was made only for One year. It helps to ease comparison of investments across Time periods.

Annualized Returns can be denoted as [ % p.a ], otherwise, it is usually an Absolute Non-annualized return. 


Annualized Return on Investment:

(Return on Investment / Original Investment) X 100 X (1 / Holding period of investment in years)

Or 

in simple terms,  ((End value - Beginning value) / Beginning value)  X 100 X (1 / Holding period of investment in years)

To annualize, the absolute rate of return is multiplied by the following factor:

• 365 / Number of days that the investment was held
• 12 / Number of months that the investment was held
• 1 / Number of years the investment was held

If Akhil invests the amount of Rs. 1 Lac in a 6 month bank FD (Fixed Deposit) that the interest rate gives 7 % p.a. Then, the annualized return,

He receives the maturity amount with the investment:   Rs. 1,03,440 /- (Invt: Rs. 1,00,000 plus interest - 3440 yearly compounded for the 6 months)

 

(If compounded half yearly,  then it will be Rs. 1,03,500 /-)

What exactly happened here...

The annualized interest rate gives 7 % p.a and the holding period is 6 months i.e. 1/2 years. So, the absolute return is 7 X 1/2 = 3.5 %

Actually, the return gives 3.44 %  but, the rate is calculated by adjusting the return for the fractional period.  In general, for an 'N' month deposit, interest earned equals to Investment amount X (rate) X (N/12).

Mostly, Annualized Returns can be viewed for the Bank Fixed Deposits, Mutual Funds to see the performance on Returns.

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Rich Investing - An Investment Thought to create Wealth

How to Calculate Absolute Return on Investment

How to Calculate Absolute Return on Investment ?

Return on an Investment is a calculation to assess how the investment is performing. As every investment have a group of Inflows and Outflows. The Comparison of the inflows and outflows is the Return for the investor from making the investment.

Returns may be Positive (+) or Negative (-). A Positive denotes the profit on an investment and Negative gives the loss.

For eg:

• Akhil bought a Real estate property for Rs. 30 lakhs and sold it to Rs. 40 lakhs

• Suresh bought a 100 shares of XYZ Company with the amount of Rs. 20,000/- and sold all the stocks for Rs. 15,000/- 

The above example tells that Akhil had a profit of Rs. 10 lakhs i.e the return on investment is Rs. 10 lakhs. Suresh had a loss of Rs. 5,000/- from his stocks. So, it denotes the Negative Return on his investment. 

Measuring Investment Returns:

• Returns can be measured by comparing the amount of Inflows and Outflows for the investment made in Absolute Rupee Terms.
• Returns can be computing a rate of return by comparing the Inflows and Outflows.

On Absolute Rupee Terms, Akhil had a net return (Profit) of Rs. 10 lakhs, and Suresh had a Net return (Loss) of Rs. 5,000/-.  Here we are going to compute the rate of return by using the Absolute Term.

Absolute Return:

                                                             (Image Credit: licdn.com)

The Absolute Return on an investment can be computed:

(Return on Investment / Original Investment) X 100

Or 

in simple terms,  ((End value - Beginning value) / Beginning value)  X 100

So for the above example, Akhil had a profit of Rs. 10 lakhs,

Absolute Return =  ( 10,00,000 / 30,00,000 ) X 100  =  33.33 % 

Absolute Rate of Return for Akhil is:   33.33 %

Now, Suresh had a loss of Rs. 5,000/- and the absolute return is:  - 25 %

( 5,000 / 20,000) X 100  =    (25 %) i.e  net loss of     (-25 %)

If Suresh have sold his stocks for Rs. 28,000 /- with a Net return (Profit) of Rs. 8,000/- on his investment, then the Absolute Return is:

(8000 / 20,000) X 100 =  40 %

On this term, Akhil had a Rs. 10 lakhs profit on his hand with a Absolute Return: 33.33 % and Suresh had a profit of Rs. 8,000/- and the Absolute Return is: 40 %.  Comparing the two returns, it seems that Akhil had a higher amount of return in terms of Rupees, but he earns a lower rate of return(Absolute- 33.33 % ) than Suresh( Absolute - 40 %).

Absolute Rate of Return is a simple technique and formula for computing the exact returns on an investment, but it does not measure the investment on Holding period. Absolute returns can used to measure such as Sensex, Nifty about the performance of stock market for the period less than one year. For more than one year, we have to use Annualized, Holding period returns and CAGR(Compounded Annual Growth Rate).

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Rich Investing - An Investment Thought to create Wealth