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India’s Pension Problem lies within Pension System Itself

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The National pension system has now found some sort of settled down. The NPS has had a rocky time that was not being any barrier but a simple way of saving for retirement. But still, its secret for the government employees who have no other go to save for their pensions through it, however, the NPS not yet attained the kind of ubiquitous use that it should ideally have. The NPS is a situation that is changing slowly with the introduction of the Rs.50, 000 additional tax breaks that it provides.

There are many barriers and challenges in its path, the qualities of a retirement product are in place. The cost is low and most importantly an excellent investment track record has been built. It is crucial because the most critical aspect of a retirement system is how well off the retirees will be in their old age. If the pension will eventually fall into place.

The person who raised any doubts about the efficacy of the investment model of NPS no longer has a leg to stand on. The returns are excellent if you can visit vro.in/nps

The effect of low cost compounds strongly as the year goes by and therefore over the long periods of time that the NPS saver will stay invested the impact will be strong. however last year the tax problem for NPS has been sorted out. Till December 2018, the NPs had a split taxation structure than any other.

The situation is that when NPS members retired 40% of the accumulated value had to be compulsorily used to purchase the annuity and this amount was tax-free.

The Key to solving India’s pensions problems lies as much in the pension system as in reducing the need for pension systems in reducing the need for pension .when you look at the actual savings and the post-retirement finances a lot of people you realize that just as important as the NPS is low  inflation and a functional public health system. The success of Ayushman Bharat Plan will decide that NPS will reach its goal or not.

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WEALTH

30 Plus age Women should Invest Earlier For Future Finance Security

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There are no easy ways to generate the money we have to work hard and be focused on the goal always. There are no shortcuts to generate income. You not only need to get started as early as possible but you also have to be prepared for continuous and monitored investing.

The best time to start our investment once you take your first job right from your 20’s that’s the time for new beginnings. Many used to start building their asset portfolios in their 30’s.

The late 30’s burry one with more responsibilities that too for women she owes various responsibilities towards family, parenting, etc which hike’s up to the financial responsibilities and your prime focus is to build a comfortable investment plan. Especially it is important for women to ensure her financial security for herself and her loved ones.

There are some investments options for a working woman in her 30’s.

Public Provident Fund is one of the best retirement investment schemes which offer complete tax-free benefits as well as steady interest income. In this scheme, one can deposit up to Rs.1.5 lakh a year and earn an interest rate of 8%. However, the interest keeps compounding annually and credited at the end of every year. It doesn’t provide long-term stability and decent returns after a span of 15 years.

Another tax efficient long term investment option is the National Pension Scheme a concoction of equity, fixed deposits, corporate bonds, liquid funds, and government bonds. It offers completely tax-free benefits under section 80 C of the Income Tax Act to the tune of Rs.1.5 Lakh plus you can claim an additional tax-free deduction up to Rs 50,000 under Section CCD (1B).

Buying Mutual Funds are another method of investment. The equity-linked investment plan schemes a diversified equity mutual fund product that will allow tax saving under section 80c of the Income Tax Act.

In the last years, the average return from the top 10 ELSS stands at almost 20% so even the introduction of 10% long-term capital gains (LTCG) tax on equity earnings does not dent its appeal.

Life Insurance means protection against the risks in life. These risks also exist in a woman’s life, sometimes even more than a man’s life.

According to the data Insurance Regulatory and Development Authority of India show that only 90 lakh women bought life insurance policy in 2017-18 while 1.91 crore policies were purchased by men in the same period. So women should invest more on Life insurance so that she can manage her lateral financial stability.

As per the studies, the women not only live longer than man but they also use more medical services due to a greater likelihood of chronic disease and disability apart from reproduction. Expenses for normal delivery are about between Rs 15,000 and Rs 1.5 lakh, without accounting for unexpected occurrences that may need urgent medical intervention and, hence, further expenditure. Without a health policy in place, such out-of-pocket expenses can do a number on a family’s budget.

According to the analyst, the portfolio of a 35-year-old woman ought to be composed of 65% of equity funds and 35%%  should be in debt, insurance, and cash. But even conservative investors should not go below the 60% equity allocation mark in order to maximize returns at an age when you are able to afford more risk. The older you get, the safer your portfolio will have to be.

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Insurance with Mutual Fund SIPs is not a good idea

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Mutual Fund aims to come back by offering an insurance plan with mutual fund schemes. As the flow of the equity fund has been slowing, fund houses are restoring to the free insurance sale pitch to attract more investors. In a plain vanilla SIP, we have to invest a sum of money every month and the fund house will invest the money in a bond or equity market. But in insurance with SIP package, you get a life cover that is bundled with your investment.if the unit-holder dies the nominee get the sum assured.
The insurance cover increase during the 3 years of SIP investment, if you continue the SIP for three consecutive years it is actually yours. The hope of the mutual fund industry is that this free insurance offer would encourage SIP investors to opt for a longer tenor. and the SIP insurance scheme also acts as a means to attract more investors. Before enrolling for a SIP that comes with an insurance cover, check the extent of cover you’ll get. You might think the cover is for free since fund houses are not charging any extra from you. Your monthly SIP contribution is the thing you pay every month. SIPs that come bundled with the insurance feature impose higher exit loads up to 2% as opposed to the normal 1% for withdrawals made within a year. Look at the historical performance of a scheme versus its own benchmark index and peers, asset allocation, your own risk profile and your schemes and then decide which scheme you should invest in”.
The risk with an insurance cover of this kind has the chance of the cover being discontinued due to many reasons. If you do not continue the SIP for a minimum 3-year or for a tenure you have opted for in certain cases, the insurance cover may be void. And also any partial or full withdrawal and even switch out of mutual fund scheme before the completion of three years would make the insurance cover cease.
If the product is comparable with peers and the scheme is offering an additional insurance cover which fits your objective then there is no harm in opting for the insurance cover. But if the insurance cover should not be a decisive factor.
The scheme gets defeated if the scheme does not perform in the market. The insurance offered is nominal and does not offer much protection except as an additional cover, which is not sufficient by itself. So consider insurance as a bonus and it is not a reason for it to invest in a scheme.

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Money & relationships: Your money behaviour can affect your children

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Usually, children become the reason for the worst collateral damage between the spouses. Being a soft target they are treated as a punching bag or sounding bag for the parent’s insecurities and anxieties. it’s no different in case of financial problem a sudden job loss, debt accumulation, poor spending habits, kids often bear the brunt of a soaring financial situation. A certified financial planner and psychologist came with an idea for this money disorder among adults: financial incest or enmeshment.
Financial incest or enmeshment: it is said to be when the adult over-expose kids to their financial problems to reduce their own stress they are indulging in ‘enmeshment’. This is because the unhealthy exposure can be daunting for a child, even maiming his financial acumen.it can lead to anxiety over money, skewed attitudes and poor financial habits. Klontz described it as the “inappropriate involvement of a minor child in parental financial matters, including conversing with them about financial stress And also using children as messengers to pass along financial messages between adults”.
Here are some ways in which you are subjecting your child to money stress:
Making the kid guilty about the effort you are putting in to fund his requirements Blaming the spouse for a shortage of money, due to his poor spending habit or non-payment of maintenance after divorce. sharing your stress about loss job or lack of increment and feel better after venting on the kid .suspending his pocket money or curbing his spending.
It is good to have the money conversation with children without introducing negativity, aggression or blame games. Children are very smart and if you sit and explain the situation they will immediately understand.”.so as long as you discuss it without blaming the kid and encourage him to offer a solution to the problem in order to resolve it.

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