Category: General

How to live like a Millionaire?
The word Privilege brings out various emotions and the true emotion toward it changes from person to person. For some, it might be enjoying the basic amenities i.ie., needs whereas for others, it might be worldly luxuries i.ie wants.

The lifestyle and expenses that come along with privilege are universally classified into NEEDS and WANTS. This concept plays a major role in how we live and how we aspire to live.

What is a Privileged Life?

When someone is more than happy with what they receive and when they receive those privileges easily, compared to the rest of the population, then we can say that they are privileged.

It is a perspective that changes from economic status to caste barriers. For example, people who are living pay cheque to pay cheque, the act of dining outside once or twice a month is a privilege.

On the other hand, if someone has the chance to start saving more than 20% of their income, then for them, the act of purchasing an iPhone or Samsung is deemed as a privilege.

The biggest form of privilege is the feeling of financial security that lets you take care of your NEEDS and your WANTS without any distress. It is very much possible for individuals to feel that way when they can plan their personal finances or their cash flows smarter.

What does it take to live a Privileged Life?

The secret sauce to living a great lifestyle with little to no stress lies in the act of how you let your money make more money for you. People who are living the privileged life today, have created their own recipe for success using this secret sauce.

The effect of compounding in combination with patience is the secret sauce to most of the people that we end up looking up to. No one can deny that and it will stand as a universal truth.

Managing your money smartly and investing it in the right avenues is the biggest lesson that you will get to learn from successful people. They never did this alone and they never did this out of luck.The privilege of financial freedom comes when you are consistent and this consistency in success is curated by personalized financial plans & strategies.

The Priviledged Life

The struggles faced by Millionaires in India

A Lifestyle is created out of sweat and blood. The success stories are spoken out loud by everyone, but no one really knows the struggle behind these success stories.

Few inspirational stories that made it to the list are
1. Dhirubhai Ambani
Mr Ambani is known for his business conglomerates and he had a very humble beginning. He started by selling Bhajias and also worked at a gas station before creating a powerful company that is managed by his family today.
1. Dharampal Gulati
The Masala King of India is none other than Mr Gulati and he is not just popular here in India but has numerous export tie-ups with countries like Europe, USA, Canada and UK. He started his journey in a 14ft X 9ft shop at Karol Bagh in Delhi.
1. Gautham Adani
Mr Adani has been making the news for the past 6 months. He came to Mumbai at an early age of 18 years to fulfill his dream. The Adani Group was started with a few hundreds that he had with him at that time.

There are many more such stories and every single one of them has one thing in common. They were hardworking in their efforts and smart working in managing their personal finances.

When you read these stories in depth, you will learn that they got the right loan and made the right investments with the help of financial advisors.

A few right decisions turned their life into a privileged one. So, it is not difficult for us all to seek support from Financial Experts to start our money story.

Discipline in your Financial journey gives you great returns and it is never too early to follow it. The opportunity to create wealth starts from the moment your parents start giving you your pocket money.

Great minds such as Warren Buffet & Charlie Munger started early and planned out their financial journey. A journey that is a great example for us all to follow.
October 12, 2022
Cash Flow Management For Individuals
Everyone applauds a company for various business milestones that they achieve. It could be their seed round of funding or it could be their first Million. The top gun companies of the world celebrate being the best by following the habit of managing their money better.

Cash Flow Management is a scientific art of understanding and optimizing the amount of money that is moving into and out of a business. When a company can manage this with maximum accuracy then, you can truly find purpose driven products and services coming out of them.

A venture capitalist finds immense pleasure in knowing that their portfolio companies are able to manage the invested money better. They end up calling these companies as companies with brilliant balance sheets. In a way, these companies would know how to plan and manage their money for sustainable long term growth.

Why aren’t these ideologies used when it comes to financial planning for individuals? No one really considers looking at an individual’s cash flow at a comprehensive level, except for managing the money held by the super rich. This disparity shown towards the HNIs (High Networth Individuals) by the Financial Advisors has made it difficult for the commoners to build wealth in the most optimized manner.

What needs to happen?

The best financial advisors in the world need to start managing everyone’s money in the most comprehensive manner and this comprehensiveness will come when they start optimizing their cash flow.

The thinking has to move away from just working for commissions to working for what is needed for the customer. The certified advisors learn the art of financial planning which includes these comprehensive steps of understanding the customer and then, optimizing the best plan for them. Unfortunately, all those hours of learning simply becomes diluted scripts that will help the advisor earn extra commissions.

It’s time for a customer first approach and start with working on an individual’s cash flow to get them a great balance sheet

What is Cash Flow Management for Individuals?

When an individual’s personal finance is broken down into layers, you will notice four layers that play a strong role in their Life’s Balance Sheet.
1. Income
What we all earn as salary becomes the primary source of income for all of us and then, there are other passive income sources such as side hustles, rental property income, royalties etc.
1. Expense
What we spend on, be it the needs or the wants. They all fall under our expenses. In practice, expenses are divided into personal, household and family expenses. This level of segregation is common among all.
1. Investment
What we save is what ends up being invested. Normally, our savings are sitting in a savings bank account and earning interest of less than 4% per annum. Some of us take the smart path to save it in tools such as mutual funds, bonds to earn higher return rates.
1. Loans
What we owe falls on us as a liability. Loans play a good role in our lives if we plan to get one keeping our future in mind. There are so many avenues to get loans today starting from loans against securities to loans against gold aka gold loan.

When these layers are understood and optimized with personalized suggestions then, there is continuous positive growth. The advisory team needs to do this for every single individual and help them with not just investment suggestions but also on how to budget better for themselves and their families etc.

Why is this very crucial?

The market always has its ups and downs. When there is a recession, it is important to have a balance sheet that is protected to withstand the tough times. It is hard to understand the impact of recession in India but it is easy to understand the need to have your balance sheet managed better.

The survey conducted by The Week emphasized the need for cash flow management. It stated that the urban population is saving and investing less, while allocating 59% of their income for their expenses. Only 31% of the respondents planned for retirement and the results are shocking as people were dependent on their insurance for their retirement spending.

Further, people are heavily dependent on personal loans to make their ends meet post pandemic and this is merely because of lack of discipline in their financial plan. More of these red flags were highlighted by Mint in their survey.

The Future Ahead

The Indian economy is strong and taking on every other country along the way. Recently, we went past the United Kingdom and if we have to be a 30 Trillion Dollar Economy, then, we have to uplift the commoners to practice sustainable Financial Habits.

With the help of a team of advisors who can guide them, they can easily start making smart decisions around their cash flow management starting with budgeting, goal planning, and even, with getting an insurance or loan that fits best for them.

When fitting solutions find an individual, it reduces leakage of funds from their Life’s Balance Sheet.
September 16, 2022
Impact of Recession on India’s Growth Story
Off late you must’ve heard talks of recession and how it could affect our country. It’s not just you, the entire world is talking about it, including leading economists, global news channels, big investors and major investment banking companies. Before we talk about impact of Recession on India, let’s first understand what it is.

What is a Recession?

By definition, a Recession is when a country’s economic growth slows down or shows a negative trend for two continuous quarters (GDP). In simpler terms, people have less money to spend, which leads to reduced business activity and eventually more people lose their jobs.

COVID lockdowns have affected every single country on the planet. It’s been two years now and we are still fighting to get back to normal. Adding to this, we now have the Russia-Ukraine conflict, which has impacted the entire supply chain of the global economy, further increasing the inflation in every country.

Major factors which lead to Recession
1. High Inflation
2. Excessive Debt
3. A sudden disturbance in the economy like covid, financial crisis – 2008 etc.
A recession doesn’t happen due to a single factor, and also it doesn’t happen overnight. Various factors influence a recession. For example, COVID and the war have affected every single economy. Countries like Srilanka, Argentina, Japan, and Italy are under excessive debt.

We live in the era of globalization and the world is one big family. If one country goes down due to recession, then there is a domino effect affecting several other nations. Financial experts from Deloitte, Morgan Stanley, Citigroup, JPMorgan Chase, Credit Suisse, S&P Global Ratings, Goldman Sachs and Deutsche Bank have predicted that the US will go into recession in the upcoming quarters.

As we speak, the US is the largest economy. If the US goes into recession, then it will have cascading effects on almost all the countries. We have seen this in the past. For example 1933 – Great Depression and the 2008 – financial crisis.

As unemployment rates are one of the key indicators for an economy to be under recession. The figures are showing positive in the US, but the two-quarter GDP result says that the US is technically under recession.

Impact of Recession on India

Source – Economic Times

India’s GDP growth forecast is above 7.4% for FY 2022-2023. This is enormous when compared to other major economies like the US, China etc. The average inflation rate in India for the past 10 years is from 5% to 6% which is slightly increased to 6.71% (as per June 2022 data). At the same time, average inflation for countries like the US, and Europe is between 2% to 4%, which has now drastically increased from 7% to 9%.

As Federal communities started increasing their interest rates in March 2022, and it is believed that the rate hikes are expected until the end of next year to ease the inflation in the US, which will make every other country increase the interest rate including India. As per LiveMint Federation of Indian Chambers of Commerce & Industry (FICCI) says Inflation in India is predicted at 6.7% for FY 22-23, and it is expected to come down to 4% in June 2023 considering the upcoming repo rate hikes in India.

The major impact of the recession will be on India’s exports if countries like the US, and China go under recession as India stands in a better place in terms of food security, forex reserves etc, According to Trading Economics china takes care of 16% of total imports in India, whereas the US takes care of 6% and United Arab Emirates (6 percent), Saudi Arabia (5 percent) and Switzerland (5 percent).

At the same time, this will get offset by lower commodity prices like crude oil. India’s major import is crude oil & gold which occupies 85%. If a recession affects the major countries the crude oil price will ease. For example – in the 2008 financial crisis, the price of one barrel of crude oil was US$147 and due to the recession, it came down to around US$36 per barrel.

USD/INR and Unemployment

Recent factors have led INR to trade at an all-time low against the USD, affecting our imports. RBI is taking necessary steps like increasing interest rates, controlling inflation and swapping US currency for INR to increase the demand for INR in the global market.

Although the pandemic has impacted global economies, India has a different story to tell, especially on unemployment. As per Economic Times, India’s unemployment rate was at 6.1% in 2017-18, 5.8% in 2018-19, 4.8% in 2019-20 and further reduced to 4.2% in 2020-21.

In all honesty, the data shows that even though we are in the middle of a global crisis, India is in a better position when compared to developed and developing economies.
September 1, 2022
What are GOLD ETFs? When should you buy them?
For centuries gold has proven to be a safe investment bet. Indians, when compared to people in the rest of the world, have felt great comfort when investing in this yellow metal. Often, this investment is in the form of jewelry and not other digital forms like Gold ETFs or Bonds. Although, investment in physical gold has created other challenges for us. As India does not produce gold in significant quantities, we have begun to rely on imports.

People began to accumulate Gold for safety purposes as their Long-term investment strategy. Some professionals today say that Gold is a great tool to hedge against inflation. Large scale gold imports, especially for investment created a higher Trade Deficit (this happens when imports far exceed exports). When this happens the rupee comes under pressure and tends to weaken. This sets off many more problems for the Indian economy.

To avoid this situation and push people to look beyond investing in just Physical Gold, the Government of India came out with Gold Exchange Traded Funds (ETFs) apart from Sovereign Gold Bonds (SGB).

Now….What is a Gold ETF?

A Gold ETF is an exchange-traded fund that aims to track the domestic price of physical gold. In other words, Gold ETFs are units representing physical gold either on paper or in dematerialised forms. Typically, one Gold ETF is equal to 1 gram of gold. Meaning, 1 unit of Gold ETF is backed by an equivalent quantity of physical gold. Gold ETFs give you a combined benefit of investing in Stocks as well as Gold.

They are listed and traded on the National Stock Exchange of India (NSE) and Bombay Stock Exchange Ltd. (BSE). And just like the stock of any company that can be bought & sold continuously at market prices, Gold ETFs can be treated the same way.

However, when you actually sell your Gold ETF, you don’t get physical gold, but receive the cash equivalent of the market price.

How are Gold ETFs Beneficial to you?
- Transparency – The biggest benefit is the transparency in pricing as it is directly linked to the price of gold.
- Cost – ETFs incur far lower expenses compared to physical gold where one ends up paying wastage charges, making charges, safe storage cost etc.
- Safety – Unlike physical gold the investor need not worry about the investment’s safety. ETFs not only fetch the same return as physical gold but are also a lot safer than its physical form as there is no fear of theft or depreciation.
- Loan – Gold ETFs can be placed as a collateral to secure loan from any financial institution.
Where can you purchase Gold ETFs?

Gold ETFs can be purchased through a stock broker like Zerodha, Sharekhan and other investment apps. You will have to pay a small brokerage or fund management charges while buying or selling Gold ETFs. As mentioned earlier the overall cost is much lower than what an investor incurs in buying physical gold and there is NO better time to invest in Gold than today.

Gold ETFs Vs. SGB

Many of you might have a pondering question on how Gold ETFs are different from SGBs. Well here’s our take of the same.

The advantage that ETFs have over SGB is that they are more liquid. They can be sold at any given time like stocks. An investor need not hold onto their investment for a fixed period. Although ETFs are taxable.

If you prioritize your investments based on safety and liquidity, then Gold ETFs are your safe haven.
July 30, 2022
6 Reasons to Choose Personalized Financial Plan
Many customers are left disheartened by the financial products that they have purchased. It could be anything from Fixed Deposits to Term Insurance. Everyone has their own reasons but the majority of the problem stems from the fact that products don’t meet customers’ requirements.

For some, Impulse buying is the main reason and a reward based credit card is a good example of this. For others, it is the same old enemy – the concept of motive-driven selling by financial agents.

Clearly, society longs for a better solution, and web traffic on financial planning & financial advisory, suggests the same. Adding to it, the pandemic has made customers realize that the world of VUCA is here. They were in dire need of help from financial experts to guide them through these confusing times.

What is VUCA?
- V – Volatility
- U – Uncertainty
- C – Complexity
- A – Ambiguity
If someone shouts “it’s crazy out there” then, we can strongly believe that they are talking about the VUCA world. It is predominantly used to describe a situation that is difficult to comprehend. Predicting the outcomes of our decisions is tricky during this situation. More on VUCA here.

What are the advantages of a personalized financial plan?

→ Creating a Sustainable Financial Plan

It is very important to start with a plan. Without understanding your current situation and caliber of risk, it would be fruitless to plan your financial journey. The Rich capitalizes on advisory service by providing their goals and targets so that they can enjoy life without falling short of funds.

→ Delighting with Customer Satisfaction

The feeling of being listened to is something that everyone loves. Through personalization, the best financial advisor in town would concentrate on listening to the customer and then, providing them with customized financial solutions. This curated solution helps with steady growth and will certainly leave a smile on your face.

→ Building Corpus for Goals

Financial security is a reality when there is little or no stress about our monetary situation. To get into this secure headspace, we have to find ways in which our money can make money to help achieve our goals. Power of compound interest along with the guidance of a financial planner will do wonders in this world.

→ Attaining Mental Peace

Confidence and the positive mindset to tackle the day comes from feeling mentally secure. Overthinking about money will push everyone’s mental health to the edge. Personalization can certainly help in passing over the burden of stressful decisions to an expert.

→ Maintaining your portfolio

Getting a customized financial plan is just the beginning of personalisation. The plan should always include regular check-ins and restructuring of the plan so that your money story is moving in the right direction. A good financial advisor will recommend reallocation or restructuring every 3- 4 months.

→ Higher ROI

It is easy to start your financial journey with the content from generic news and also, free advice on YouTube or MoneyControl. But this is not going to be as powerful as the one that is designed through personalization. The return on investment is higher because you are connecting your hard-earned income to your needs and wants.

Why is a Personalized Financial Plan crucial?
- To steer the customers through the right financial journey, they require an expert who can understand their needs and wants. Someone who can shine a light on their financial plan by personalizing it to their needs and wants. Someone who will guide them to see their financial success.
- A combination of understanding and listening to the customer is the inception of personalization. Today, there is less listening and more selling that is happening.
- Pampering the consumers with misfit solutions that have short-term benefits. Clearly, there is a lack of sustainable planning because products like credit cards, buy now pay later, instant micro-loans, etc. are helping them with their short-term needs and wants.
- Sustainable financial planning will always be a customer-first approach and will be completely designed to help the consumer get the best mutual funds, best ELSS funds, best bonds, etc based on their goals. A certified financial advisor creates a higher level of trust, comfort, and comprehensiveness.
In a nutshell, people who are hunting for the answers around best mutual funds or best way to invest in gold can tweak their habit to include personalization and get themselves a strong advisor. When they do so, they will not only find answers for their questions but also find that wealth creation is easy with more people working together hand in hand.
June 23, 2022
How To Escape From Motive Driven Selling
A busy yet gloomy Monday morning filled with chaos to get to work in time right when the phone rings and an unknown number flashes on the phone screen. From experience, you know you shouldn’t pick upt, yet, you do with the hope of it being relevant and useful. The first few words that you hear might sound like this, “I am calling to inform you that you have a pre-approved loan…” or “you have been approved for a free credit card…” The intent of the call might be different every day but the general tone will give you a picture of the person on the other side.

Why Sales people want you to buy their product?

In the Banking, Financial Services, and Insurance sector, “cold calling” is used as a sales method to sell loans, credit cards, or insurance products. A process that is very important in the sales cycle of an Insurance Agent, Loan Agent, or Credit Card Agent. This call that you happen to answer is their opportunity to convince you to try their product. If you contemplate buying one of these, then, that gets them excited. You might wonder why? Some of you might already know the answer to this. The answer is that you helped them get a hefty commission by just agreeing to take the product that you might not truly need.

What is a good financial product sale?

There is nothing wrong with getting a reward for a good sale. A good sale is nothing but understanding your needs and goals before suggesting the product to you. The trait of a good sale would be to give you options: these are the best credit cards out there for you or this insurance covers all your medical needs for the next 10 years. If they listen to you and understand, they can suggest better financial products.

What is going wrong with their sales pitch?

Unfortunately, their scripts find themselves bunched up differently. The sales team’s script needs to start with understanding your situation and then, recommend the product that fits well in your financial plan. Instead, they are in a rat race to mis-sell term insurance or health insurance, or even a loan, just for the sake of commission.

Do we truly have an option to find the right financial product?

There is a growing trend for people to look for a financial consultant to guide them with the right financial advice. This is to stay filtered from the ones who are behind those calls with an elaborate script to persuade and sell the highest commissioned product to you.. This mis-selling behavior in the banking sector or BFSI sector has been reported several times in the past. The study conducted by The Economic Times clearly talks about how dealing with them is the only option. This is indeed reality as your personal data is being pushed even into the smallest banks, where you have never had any transactional relationship. These make you highly exposed and vulnerable and are cornered by your own trusted banks/NBFCs.

Going Above and Beyond for a smarter Financial Decision

A good sale always leads to more referrals and definitely helps the financial institutions to supercharge their growth. But now, the opposite is happening where customers are warning their friends & family about the annoying, daily sales calls. Until the sales agent realizes the secret power of value selling, you as a consumer have to be smart with your filtering process to get the best financial products.

These are a few tips that can help us decide what product to get.
- Research on options that will match your needs – Be it Insurance, Loans, or Credit Cards, today we can quickly access the information on the internet and get extensive research done on key metrics needed to buy a suitable financial product.
- Find the one that is affordable – Always understand our appetite and find the product that we can afford without hindering our lifestyles. It wouldn’t be wise to compromise on other life-altering decisions based on a bad financial decision.
- Learn about the fine prints – It is crucial to read between the lines and understand the hidden and invisible conditions associated with the chosen financial product. If we don’t know what to ask, we can start learning from communities that promote financial literacy. There are plenty of educational resources available to help us cultivate this best practice.
- Seek Assistance from Financial Experts – Always have some trusted individuals who are preferably experts in this field. This could help us benefit and sometimes even exploit (in a legal way of course!) our financial system and achieve your goals. An expert who can provide guidance in everything ‘money-related’.
In time, such customers will evolve to take right decisions on their own with experience and/or with external guidance from advisors. When that time comes, most of these insurance brokers, loan agents, and credit card resellers would find it challenging to trick customers into purchasing a product unsuitable for their financial needs. Until then we have to protect ourselves with knowledge that will help us distinguish the good from the bad. A good place to start would be on vittae.money, where we can learn from your own community The content shared will help us upskill and stay informed on the products and other regulatory methods proposed by the Reserve Bank of India.
May 24, 2022