Dilzer Consultants - Investments and Financial Planning

An ISO 9001 (2008) Certified Company

   SEBI REGISTERED INVESTMENT ADVISOR

Media

Dilshad Billimoria on #ETNow #TheMoneyShow

Watch me on ET Now, #themoneyshow answering queries from investors. #DilzerConsultants. Many thanks to #ETNow for the opportunity, looking forward to more such stimulating sessions!

 https://lnkd.in/fkfFAKM

 

Radio Ishq 5th march 2018

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Listen to Dilshad on Radio 104.8FM

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Listen to Dilshad’s Bre Budget Episode on Ishq 104.8FM

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Listen to Dilshad on 104.8FM Ishq with Sangy

Listen to Dilshad on 104.8FM Ishq with Sangy

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Listen to Dilshad on Radio 107.8 FM Ishq

Listen to Dilshad on Radio 107.8 FM Ishq

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Preparing for a baby

Dilshad’s comments in Outlook Money. November 2017

 

Planning for a baby

 

Preparing for a baby Outlook Money November 2017- Excerpts Dilshad B

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Importance of Financial Planning

Financial Planning is planning for the future. It involves preparing oneself and their family for important events like child education, retirement planning, cash flow planning, taxation, vacation, health corpus creation and just about any event in the future. The above mentioned components form goals or the structure of the planning process.

One needs to understand that Financial Planning is NOT only about investments. And it is definitely not just another fancy word for investing in stock markets. Financial Planning is a holistic approach to your Personal Finances which takes into consideration your Cash flows, Assets and Liabilities, Risk appetite, investment needs to meet your Financial Goals, Insurance needs after considering all existing assets and resources one owns.

Why is Financial Planning necessary

People haven’t still wizened up to the benefits of a professional advice, they are aware of the changing scenario and feel the need to plan for their long-term commitments. Such planning and investments are not made with adequate research and are very often done on an adhoc or push basis and people end up accumulating financial products that do not fit their need or worse have high costs but give low returns.

Unfortunately, majority of savings in Indian households lie in Fixed Deposits and PPF accounts which are low interest earning and sometimes don’t even cover inflation. Hence real returns are negative.

 

 

 

 

 

 

 

Hence, it is imperative that an individual seeks professional advice to get their finances in order.

What is a Financial Plan

A Financial Plan is a personalised detailed document, which helps the client to identify what their current financial condition is, where they would like to go and help planning and bridging the gaps if any, for helping the client meet their future goals.

Financial Plan Process

The Financial plan process starts from identifying the objective, needs and scope of engagement with clients. Data gathering is the first and most important step towards identifying one’s current financial condition. It is the most important step, because the data provided by the individual, should be accurate and up-to-date, for the planning process to be effective and meaningful.

This process involves gathering data of all aspects of finance of a client such as

  • Family details and background, including health condition.
  • Net worth Details.
  • Cash flow – Detailing All sources of income and expense of the client – Fixed and Discretionary, including any committed savings.
  • Analysis of Existing Loans and Liabilities and the best option for reducing and optimising the same.
  • Analysis of existing insurance policies and their need.
  • Analysis of additional insurance basis the family needs, goals, existing insurance and liabilities.
  • Analysis of existing financial assets and changes needed, if any.
  • Analysis of Non-Financial Assets and plan of action.
  • Asset Allocation based on the risk profile of the client.
  • Existing resource allocation for meeting goals of clients.

After the data gathering process is accurate and up-to-date, the planner, analysis’s the data provided based on the objectives, needs and goals of the client. Here the planner makes observations on the clients Strengths, Weakness, Opportunities and Threat (SWOT) of the client.

The next step is presenting the analysis and planning that is customised to the needs of the client to the client and discussing options, scenario changes like advancement or postponement of goals and their probability and providing a revised financial document to the client.

Every Financial Plan must have an action plan to direct the client- what next and how to go about meeting the goals. Implementation of a financial plan is the key to moving to the next level. If a financial plan is not implemented, the objective is defeated and the client cannot move to the next step towards financial freedom.

After implementation, an annual goal review must be planned and prepared for the client, considering factors changing data points in income sources, expenses, goal priority, and assumption rates, risk profile of the client and any special requirements or changes in client’s life.

This completes the financial plan process.

All financial plans consider the following

  • Assumption on rates of interest, rates of inflation, salary growth rates, life expectancy, current market conditions, basis discussion with the client.
  • Current Status of Financials- Every financial plan is as on date and is likely to change based on changing circumstances.
  • Understanding and documenting Risk- Risk profiling and tolerance of the client to enable him/her plan for their savings realistically to meet their goals.

Expert Advice

A Financial Planner has to undergo rigorous training and examinations to obtain the certification. They are certified in important aspects relating to personal finance like investments, insurance, taxation, Estate Planning. Further, the certification requires candidates to have practical experience of minimum three years to practice independently and keep abreast of latest developments on a continuous basis.

Clients must look for the gold mark certification – CFP or Certified Financial Planner, which is an accreditation given to planners by Financial Planning Standards Board of India  after completing 6 modules of learning and writing exams.

Further, to maintain this qualification, an annual criteria is required. This comprises of writing articles, or attending financial plan workshops/conferences, answering quizzes, or contributing to the financial plan journal of the Financial planning Journal published by Financial Planning Standards Board of India.

The initiation of such Qualifications and Certifications have been introduced to help protect investor interest against miss-selling and fraudulent advice.

There is a popular adage often attributed to Benjamin Franklin, the father of time management, “Failing to plan is planning to fail. So ensure every individual has a financial plan prepared by a certified and well qualified planner.

 

Dilshad Billimoria

(Originally written for Financial Planners Guild of India)

http://www.fpgindia.org/category/financial-planning

 

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Capital gains- Should one always invest in capital gains saving bonds?

When an investment property was sold by my client Ashok, in October 2016, he had 6 months to either pay tax on his capital gains or invest the gains in Sec.54EC capital gain bonds to avail tax exemption on the property purchased by him in June 2005.

Financial Planning standards board of India article

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Savings account vs liquid mutual fund: which is better?

Most savings bank account holders leave excess amounts in their bank accounts. Should they park their excess money in liquid funds instead?

(L-R) Surinder Chawla, Lovaii Navlakhi, Virat Diwanji, Dilshad Billimoria
(L-R) Surinder Chawla, Lovaii Navlakhi, Virat Diwanji, Dilshad Billimoria
 

Surinder Chawla, head–branch and business banking, RBL Bank

You should leave as much in your savings account as you are comfortable with. This amount will depend on many things like daily cash requirements and your own cash flows. Typically, we have noticed that for an individual’s savings account, the balance is usually just slightly higher than the monthly salary credit. Very often, individuals also transfer further money into their primary savings accounts, since that account is usually linked to their monthly recurring expenses and/or investments. Savings accounts offer liquidity and also a reasonable interest rate to the customers. Therefore, many customers park as much money as they can in their savings accounts; from which they meet their regular expenses and investments, and which also serve as their emergency buffer fund. Some of the other financial instruments, which offer higher returns, may not be as liquid as money in a savings account. In many cases, such instruments come with certain risk factors, which the individuals have to understand clearly. The primary reason of putting money in a savings account is liquidity and ease. In a deregulated savings interest rate environment, several banks are offering attractive interest rates (on savings accounts). Therefore, there is scope to get attractive interest rates while maintaining liquidity at all times.

Lovaii Navlakhi, managing director and CEO, International Money Matters

A savings account is just what the name suggests, and is not an investment account. Customers may see some amount of comfort in seeing a certain amount of money in their bank account, especially when they know that the money can be accessed or used as per their free will, at a time of their choosing. The reason why the money accumulates in bank accounts is that there is no known alternative. Wouldn’t it be wonderful to have the liquidity that one requires, and also make some returns? I recommend that one should keep 1 month’s expenses in the savings bank account, and 3-6 months’ regular expenses in a liquid mutual fund. You can also add the known immediate expenses to this figure. Earnings would be by way of dividends, which are tax free in the hands of the investor; and even after dividend distribution tax, post-tax returns are better than from a savings bank. The liquid funds can be exited overnight, with no exit loads. Their greater benefit is that they create the discipline of not keeping excess or unproductive money; and consciously looking at one’s long-term goals to invest for the future. If you haven’t tried such products earlier, take help; invest a part of the excess—and withdraw it—to validate the process; and sleep peacefully knowing that while you are idling, your money isn’t.

Virat Diwanji, senior EVP, head-branch bank-ing, business assets and NR, Kotak Mahindra Bank

Usually the rule of thumb that we tell customer to follow is to leave 2-3 months’ expenses in the savings bank—the amount for which you need absolute liquidity. Hence, that is the amount you should have in your savings account. Most people usually do that. Interest rates do not play a significant role in an individual’s decision to leave the money in a savings account but it does play a role. People do start comparing with the alternative options. Hence, the evolved customers would look at something where they can get more than what they earn in a savings account. But the bulk of customers are not so evolved. In that sense, the absolute interest rate in a savings account would make a difference. Hence, customers will tend to consolidate their idle balances in savings accounts, to one where the interest rate is higher. They would not say that since the interest rate is higher, I may keep 5 months’ expenses instead of 3 months’ expenses. They will not do that. But the tendency is to consolidate where the interest rates are higher. You can take the example of sweep facility, where there is a threshold on the amount. For instance, I have Rs300 and the threshold is Rs150 for savings account. The remaining Rs150 would be moved to a time deposit, which gives higher interest rate than a normal savings account.

Dilshad Billimoria, director, Dilzer Consultants

The rule or advice we give clients about keeping money in the savings bank account is to keep 4-8 months’ fixed expenses and the important commitments like equated monthly instalments, to protect the primary income earner and her family against unforeseen circumstances such as job loss, medical emergencies and financial emergencies. If both the spouses are working, we recommend 4-6 months of expenses and if there is only one breadwinner, we recommend 8-9 months. Anything more in the savings bank is an opportunity cost, loss of interest income, and negative returns; if inflation-adjusted returns are considered. The effect of interest rate changes on savings accounts and flexi-fixed deposits are neutral. A small change in the bank rate will not change the interest rates on savings account and short-term fixed deposits. Investing in a liquid fund will make sense only when the investable surplus is large. If investors seek to park funds for 1-8 months and want access to these funds in the short run, it is better they stick to short-term fixed deposits, since the post-tax implication on fixed deposits and liquid or ultra short-term funds for this tenure is the same. Hence, there is no benefit in a liquid fund over a short-term fixed deposit, if the amount is small and the period of parking is short.

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Building Blocks of a Financial Planning Practise

Practitioners often want to know how they can build an enduring and profitable Financial Planning practice. How to make an impression on clients and build a lasting relationship with them, what are the processes, systems and procedures required to set up a thriving Financial Planning practice, are some of the questions to which they seek answers. Based on my experiences I am happy to share some behavioural traits and decision-making tools that can help to start, maintain and grow a robust Financial Planning practice.

More Available Here

Dilshad Billimoria  CFP

Dilzer Consultants Pvt Ltd

SEBI Registered Investment Advisor

 

 

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