The ultimate goal of every investor is collecting a big corpus to secure a peaceful Retirement. So, you invest throughout your life and once your retirement approaches, you have your retirement corpus in your hand. Now what do you do, is it the end of investing? Shall you keep the retirement corpus in your bank account and keep nibbling at the big piece of cheese inch by inch? No, you can't do that, you can't let your life long perseverance die in your saving account. You need to have a post retirement investment plan to deliver justice to your money. Also, you may live long, so the next 3-4 decades are at the mercy of your retirement corpus, you don't want to run out of money in the last 10 years, so your nest egg must be utilized in a way that it lasts you until your D Day.

There'll be no new addition to the corpus, hence you must spend and invest wisely. So what should be your approach to investing after you retire?

There are various approaches that you can follow, depending upon your risk appetite. The Risk Appetite is dependent upon a number of factors like:

- Passive income source if any, like pension, rental income, interest income, and the amount of income;

- Whether you live in your own or rented house;

- Other assets that you may own like property, gold, stocks, etc,;

- and your attitude towards Risk.

Your Portfolio Allocation between Equity and Debt will largely depend upon your Risk Appetite, the sum of the above factors. Although we suggest retired investors to concentrate on limiting risk, yet if you have a stable financial background and a high risk appetite, then you can expose a major chunk of your retirement corpus to market linked products and vice versa.

There may be various approaches to Portfolio Management after retirement, which are different from the way you have been managing your portfolio during the working years. Some investors prefer securing their basic monthly expenses first by investing a portion in products which may give them a monthly income at least equal to their expenses and dedicating the rest to products with a high growth potential. While there are some investors who break their Portfolio into parts, the early, middle and last stages of retirement and invest accordingly. And there may be some who invest largely in Equity initially and as they age, gradually increase the Debt component by selling of Equity. And likewise there are many approaches, depending upon individual needs and preferences.

We suggest you to sit with your advisor and figure out your Portfolio Allocation and Investing Approach, which is in line with your financial position and Risk Appetite. Devise a financial plan and review it from time to time like you have always been doing.

Whichever approach you choose, you must be mindful of certain key points, which are as follows:

> In absence of a regular source of passive income, do not expose your money to excessive risk. A large chunk of the Portfolio should be invested in products where money can be withdrawn easily, without incurring any loss to the Principal.

> If you have any outstanding loans, then before investing, secure your mental peace by paying off your debt.

> Increase your emergency fund, an emergency can lead to a serious financial crunch since now there is no hope of a monthly pay cheque coming in to rescue you. Plus medical emergencies are also likely to rise.

> Do not limit yourself to traditional investing products, explore newer options like bonds, debt mutual funds, company deposits, etc., even if your risk profile demands you to limit yourself within Debt. The modern products are capable of delivering better returns, better flexibility, liquidity and investing convenience.

> Don't invest in products where the volatility is more than you can tolerate.

The bottomline is, Retirement isn't the end of investing, Investing is important, even though if you have a very large corpus or limited expenses, it is likely to be exhausted if not invested. Your Retirement is the beginning of a new life, now is the time to do things that you've always wanted to do. It's the time to pursue your passions, and you can live your entire retirement life to the fullest by planning for your future and investing right.

Young adults are perhaps the richest among all of us. They have something more than all of us - "time" at an age when the possibilities are unlimited. In case you are an young adult in 20s or 30s or a parent / guardian with children approaching or in their 20s, this article is for you. The article tells us few things which perhaps we were never told when we were young. We bring to you six valuable tips that can literally make a huge impact in lives of young adults going forward.

Learn about Personal Finance & Investing:
Knowledge about personal finance topics and investing at an early age is a great asset. Young adults must know about different asset classes, investment products, insurance, loans & credit, time value of money, inflation, savings, taxation, financial planning, etc. Such knowledge, especially during early years of career can really help someone take great decisions for future. If you are a guardian, be sure to involve the young adults in your own investment decisions. There are many ways in which young adults can gain financial knowledge. Some of the ways are...

• read books, finance magazines and watch TV shows on investments
• interact with financial advisors, accountants, experienced family members
• attend investment seminars/ camps by regulators, participants in financial services industry
• enroll for any certification from the many offered by NSE/ BSE on the subject matter

Control your spendings
Young adults are perhaps the most valued consumers hunted by every big brand ranging from cars to shoes to laptops to even holiday packages. With the newly gained earning power and lack of big responsibilities, it is natural that spendings on entertainment, gadgets, accessories, hanging out / parties, etc. form a big chunk of the spendings. Surely it is a time to enjoy life but young adults are advised to control their urge to spurge and not make impulsive decisions. It would be great if one can budget such spendings and avoid taking big decisions like buying of motorbikes, cars, laptops, etc. without adequate thinking and research.

Start investing immediately:
We have often spoken on this topic. The benefit of saving early can never be under estimated. Even if the savings is small, due to the power of compounding, the wealth created by you can be enormous, as seen from the following matrix.

In above e.g., Mr. Lazy would have to invest thrice the amount or Rs.3,000 monthly saved by Mr. Smart if he wants to match the wealth created by him at age 35.

Get PAN & start filing tax returns:
If you have started earning, it is best to start preparing & filing income tax returns (ITR) except when you are exempted to do so. There is a perception that if the taxes are paid, there is no need to file ITR. This is a misconception and it is essential to know that it is our constitutional obligation to file ITR when you are required to do so. Further still many believe that their incomes are too small to attract the attention of IT authorities and get tax scrutiny and hence may indulge in not filing returns or understating income. You may note that IT authorities uses a system whereby cases are picked up randomly on certain criteria. You may never like to be the one to get short-listed and invite unnecessary hassles. Remember that you are permitted to save taxes but not evade taxes.

Filling of ITR has many advantages as they are considered standard income proof globally and they help you while applying for loans, visa applications for jobs abroad, requesting tax refunds, etc. The PAN issued by IT authority is a prerequisite for filing ITR and is also mandatory for all financial transactions. So it makes sense to get yourself one even if you don't have much income to talk of.

Get health & life cover
Getting adequate protection in young age, where people tend to be more adventurous, is highly advised, even if there aren't any dependents on you. Buying health or life cover at a younger age is also considerably cheaper than buying the same after few years. Such protection can really help one in case there is any unforeseen emergency and financial burden on parents will be avoided.

Start thinking about home
The average age of home & car buyers has decreased dramatically in the last 20 years. Powered by easy availability of loans, fat pay packages & growing aspirations, the first time home buyer today is often around the age of 30. The first time car buyers are even younger. It would thus be best advised that young adults keep these goals in mind and start saving as much as possible for home & car goals, if any, from now onwards. It would really benefit you a lot when the time comes for purchase in near future. Often young adults delay saving for the goal and end up paying lesser down-payments and taking higher amount of loans which should be avoided. Lastly, even if you have a home of your own, it is advisable to think of buying a home as an investment for future and also enjoy tax benefits on same.

Conclusion:
Having time on your side is a great advantage and never to be missed. Few young adults may choose to ignore & not act on 6 tips shared above at their own peril. Experience has shown that wise decisions, actions and discipline in these formative years go a long way in securing a better financial future down the line. Simple actions taken today can help you avoid taking tough decisions at times when you have family to support and lot of responsibilities on your hands. So go ahead and make the best that this time has be offer, smartly.

“Set your goals high and don't stop till you get there” ~ Bo Jackson

There is a strong correlation between your investments and your goals. To make life simple, every goal must have an investment attached to it. To justify its presence, the investment must qualify in two tests viz. it must mature at the time of attainment of the goal and the maturity value of the investment must be adequate to meet the goal.

We have spoken a lot about the investment options that are available and how they can be customised according to your goals. Today we would talk about the latter, i.e. the basis of investments “your goals”.

Most people do not invest because of lack of excitement to achieve or lack of knowledge. “Plan for your retirement” may not excite you, but “Having Rs. 5 crore at the time you retire” or “Getting Rs 50,000 a month even after retirement” would definitely excite you. It's just a matter of choosing the right set of words. You have to make your goals simple and exciting and your financial advisor will take care of the need for knowledge.

Personal finance, saving and investments are terms which might scare you off, but a little modification in your perception and presentation of these terms can make things smoother to understand and apply. As a part of the simplification process, you must make your goals exciting, as the thrill will motivate you to invest for them and work to achieve them. Following are a few key points which can help you make your goals exciting:

Pen down your goals: We do remember what is important for us, what do we want to achieve at the back of our minds, yet it is prudent to write down your goals along with the target date. Writing down your goals will remind you constantly that you have to work hard to achieve them, you can go on check-marking the ones you've accomplished. You can review the list to track your status and edit them as per your requirements. So, whatever short and long term goals you have set for yourself, just write them down irrespective of how and when you'll achieve them.

“Written goals have a way of transforming wishes into wants; cant's into cans; dreams into plans; and plans into reality” ~ Michael Korda

Step by step: If you are the one who is averse to investments, try your luck with investing for one short term goal. Start with a thrill, you may go for a one year debt mutual fund to actualise your dream of going for a vacation with your wife, the one which you have been postponing for dearth of money. After one year, when you come back from the vacation, you will not be the hesitant investor anymore, but an investment fanatic. The contentment of achieving one goal will help you in setting and working for the next goal. The joy which you will imbibe from this vacation will motivate you to invest for your next goal, and this motivation will set you on track.

Challenge yourself: If you feel you may not be able to conserve money from your income, to provide for your investments, “Challenge Yourself”. Your income is limited and you have a lavish lifestyle. Due to maintenance of your standard of living, you have not been able to own a house and it is your dream to have your own house. However, you feel setting a goal to buy a house is of no point since you will not be able to achieve it. It is only you who can help yourself at this point. Provoke yourself, start with a short period, say a month, develop a conviction that you will not waste money in parties, fine dines and shopping, and for this month you will limit your expenses to necessities only. After a month, when you see the extra money, you'll realize that your dream can be actualized. And at that point, the goal of buying a house occupies a place in your mission list.

Process driven: Make a list of short and long term goals. Break down your longer term goals into short term goals. Let's say you want to leave certain assets for your kids to inherit. This is a very long term goal. But before that you must provide for their education, marriage etc, these are relatively shorter goals which also in a way form a part of the former. Or you may want to be debt free five years down the line, paying off your credit card debt is a short term goal and is a part of your long term goal. Achieving your short term goals one by one will set you on the path to reach your long term objectives.

Achievable: The goals that you set for yourself must be exciting but attainable, else they will loose their charm. If today, you are hardly able to make both ends meet, you have other important objectives to fulfill, like your children's education, owing a house and you set a goal of owning a BMW after five years. You are most likely not achieving this goal. So, by exciting we mean goals which are thrilling and realizable.

Now, keeping these points in mind, once you are through with setting your goals, approach your financial advisor, who will help you in prioritizing your goals, allocating budgets and developing a portfolio to help you achieve your goals.

We have all made mistakes in past and most likely would also make mistakes in future. Making mistakes is not crime but is something human in nature.However, we must learn from past mistakes and failure to do so is most undesirable. When it comes to personal finance decisions, the best way of learning is by analysing the opportunity cost for our bad decisions.

Opportunity Cost:
But before we start, let us first understand what is 'opportunity cost'. The opportunity cost can be understood as

• the cost of doing any action measured in value terms of the best alternative that is not chosen or is foregone.
• a sacrifice value of the second best choice available to someone who has picked among multiple choices

Opportunity cost is a key concept in economics, and is used in decision making where there are scare resources to be optimally utilised. The concept can be applied beyond financial costs: you may apply it for lost time, pleasure or any other resource that provides some benefit. Thus, opportunity cost can not only help us in evaluating investment decisions but also can be universally applied to any decision that we take.

Analysing Wrong Decisions:
Let us now attempt to analyse our decision using opportunity cost and a few case studies. The case studies are random examples of what most of us usually are or have ended up doing in past.

Above is for illustrative purpose only. Assumptions: MF Equity returns: 15%. Debt returns: 10%. MF Cash: 7%. Inflation 6%. Post Retirement Inflation 4%. Returns on Kitty: 8%. Some figures are rounded off.

Including the above instances, we can short-list the following very common types of action / inaction that have lost opportunity costs attached to it...

• Planning for financial goals: Here the opportunity cost is often in nature of inability to meet the targeted value fully if we either delay savings for goal or invest in wrong asset class.
• Retirement planning: This is highlighted here since it has huge impact involved which are not very apparent to us and is often ignored. There can be huge opportunity costs in terms of the required savings to be done and the retirement kitty created if we delay or invest in wrong asset class. The biggest risk is that the kitty becomes insufficient to meet our expenses during retirement.
• Ignoring Insurance: Ignoring, delaying or taking inadequate insurance is very common. Lack or inadequate life insurance is something very scary since the idea of our loved ones left without any money in itself is unimaginable. Still most of us take inadequate cover without finding out actual cover required and instead directly start looking at products. The opportunity cost in absence of medical insurance is something which would now be very obvious.
• Idle money not invested: Due to financial indiscipline, we often ignore investing less substantial money on time in appropriate avenues and money is often left idle in form of hard cash or current / savings account balance. We must invest idle money, beyond that required for emergency, running expenses, etc., into liquid MF or similar schemes / products for the small durations of time available. A regular practice of doing so actively can help you good returns on idle money which is not visible to us now.
• Common investment related bad decisions.: If we can summarise, there would largely be 3 types of bad decisions w.r.t. investments:
  • Investing in wrong asset class as per investment horizon
  • Delay in starting investments or SIP
  • Investing inadequate amount
• Other bad decisions: Apart from above we also have many other common instances of bad decisions like...
  • Investing in 'Ponzi', 'Get Rich Quick' or 'Chain Marketing' schemes with hopes of making huge money!
  • Taking personal loans for avoidable reasons
  • Making cash withdrawals from credit cards
  • Not paying credit card dues on time inviting very high interest costs
  • Making delayed payments of utility bills, etc. attracting additional money for every instance

The famous and the most successful investor – Warren Buffet has said that “you only have to do a very few things right in your life so long as you don't do too many things wrong” to be successful. Indeed, many small things ignored add up and become significant enough to impact our lives. And bad investment / financial decisions are no different.

The following are the suggested ways that will help us go a long way in improving our financial situation over long term.

• Always remember that every financial action or inaction has some opportunity costs
• Procrastination or laziness is a big enemy for wealth creation
• Small things make big impact over time. Discipline, awareness and active decision making are the right habits to adopt
• Prepare comprehensive financial plan at the earliest. Do not shy away from seeking advice on small financial matters.

The idea behind this article is to make you aware that every financial decision has costs attached to it and that proper planning, discipline and timely action in our financial matters can help us ensure that we keep the wrong things to the minimum in our lives. A few wrong things are enough to overshadow the benefits from many rights things that we may have taken.