How do you plan all the financial needs like paying for graduation, post-graduation or even marriage? How do you give financial education to your children?

As a base rule, I shall take three mandatory things are taken care of :

We shall approach this in two stages :

Let’s see what are the ways to provide Financial education:

1. PPF:  PPF is a govt back investment scheme started more than 50 years ago. And currently, the interest rate is 7.1% as of May 2021. It has a lock-in period of 15 years. This is a perfect time for the educational needs of your kids.   I have talked about the PPFin detail in my other episode/video/blog post - Do watch it. Link in description.

It’s always to start the investment as early as possible in fact you can open these accounts on the day of the birth or max at 1 year, so that time and compounding can work in your favour. Take these steps as soon as 3 points of - emergency funds, term + health insurance & retirement planning is done. Good luck with your preparation.

Give financial freedom to your daughter with Sukanya Samruddi account and empower her to achieve her goals. 

The Sukanya Samriddhi Yojana or  SSY  is a small savings scheme backed by the Government of India exclusively for the girl child as a part of “Beti Bachao, Beti Padhao Yojana” was launched in 2015.

Parents or the legal guardian can open upto two such accounts for their daughters in the family. The total tenure of this scheme is 21 years, of which 15 years of investment and 6 years of cooling period.

In the Cooling-off period you need not make any investment, just wait for the investment to compound and give a better corpus.

An SSY account also offers income tax benefits by way of deductions under Section 80C for up to Rs 1.5 lakh.

The maximum age you can open an account for the girl child is 10 years. As soon as a girl child attains the age of 18, partial withdraw can be done for the purpose of marriage or higher education.

The investment amount is very minimal at 250 rupees/year. The SSY model is preferred across India and especially beneficial for rural India so that the financial needs of the girl child can be taken care of.

To open an account in the post office here is the process :

You can also open SSY account in major banks such as HDFC, ICICI, SBI and other banks.

SSY investment provides more returns than other small savings scheme and backed by the govt of India. The interest rate is fixed every quarter and the amount compounded yearly. This scheme is strictly regulated for the welfare of the girl child to provide financial stability in future. The maturity amount is under EEE category here one thing you need to understand is final amount is tax-free.

Everyone needs a place to keep their savings it can be in a piggy bank or in a saving account. Today we will see how we can open an account for your kids and give them financial education.

About 80% population have a savings account where you park your hard-earned money. If you are one of the parents who want to teach their children the importance of financial literacy, the first step is opening an account in their name.You can open an account for your children as a parent or legal guardian. The age of kids doesn’t matter here as you can open an account from the zeroth day of their birth as long as you have documentation such as a birth certificate with kids’ name. As soon as they attain the age of 18, the status of a minor account should be converted to a normal account with full-fledged features. Several top banks offer exclusive Savings Account for Minors, such as SBI, HDFC Bank, ICICI Bank, Kotak Bank, and others. This account is specifically made for minors and also offers a wide range of benefits like a Debit Card, Cheque Book. The minor account with tied with the parent or guardian account and you can monitor any kinds of transactions.

These banks provide more or less the same features with zero opening balance or with the lowest average monthly balance. One thing to note is, always open an account for the minors where you have an account so that you get the majority of benefits.

For Example: If you have an account in HDFC, open the minor savings account in HDFC so that your KYC is already taken care of, and it’s only a matter of linking the minor account to your account. Save time and hassle of opening multiple accounts in various banks.

Let’s see what documents you need to open an account for your kids. But before that…

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Let’s dive back to the documentation…

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Children get some sort of monetary benefits (like cash) from grandparents, relatives, or even parents.If this pocket money had been invested in the right way it would have turned into a few lakhs when your children start going to college.

Do you see the importance of financial education to children?

It’s a habit that when elders visit the kids or even baby they give some monetary benefits (like money) to children as a token of love or gratitude. Even grandparents give some money as a token of love to their grandchildren. Parents are no exception, right from birthday the children are given with toys, dresses or some money. Usually, as a kid, we used to save that money in the piggy bankdecisions.

A study from the University of Cambridge has shown that children understand the concept of money as young as 7 years. But when compared to later years of their life the understanding of money seldom exists. It’s better to start a relationship with finance at a very young age so that as they mature they make a better financial decision.

My Final recommendations, let the children be exposed to a financial discussion at an early n age.

They will get comfortable with money and making them work in their favour. Have a conversation about money, stocks or SIP while having dinner.

Open a minor saving account as young as a 1-year-old kid. Put all the money that relatives or friends gave or birthday money into that account.

Open a Demat account, teach them to invest part of their pocket money in mutual funds SIP. Slowly it will grow into a huge corpus.

Public Provident Fund or in short PPF means an investment-cum-tax-saving instrument backed by the government. It was introduced more than 50 years ago and is quite popular even today. Since PPF is guaranteed by the government, it is completely secure with current interest at 7.1%. You can open a PPF account in a post office or a designated bank.

Let's see the main features of PPF which make it attractive even today:

Mutual Funds are an accumulation of many individual company stocks such as Infosys, Exide, TATA, and many other companies. When you buy a mutual fund for a certain amount, you buy a certain portion of those company stocks. In many cases, the mutual fund's investment return on average of 12% over the long term, as companies reinvest that money in projects which generate revenue.

We all aware of one famous line “Investment in mutual funds…(I will give you 5 second, complete the sentence in the comments section. ) ”

Let me complete for you, “Investment is subject to market risk. Please read the brochure for more details”

We have seen a glimpse of Mutual Fund's. We shall explore in future videos to come.

Let us see the features of Mutual Fund Investment and why it should be in your investment portfolio :

In long-term investment, long-term capital gains are levied on debt-fund investments,  here irrespective of your income tax slab, you need to pay 20% tax. Whereas short-term investments less than 3 years are taxed as per the income tax slab of the investor.

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Let’s dive back to the conclusion…

If the investment is for 15 years or more, equity mutual funds should be chosen ahead of PPF. On average, the equity investment has given double-digit growth for an investment made for a period more than 15 plus years. But there are different ways of minimizing one’s risk by splitting into 75:25 % profile or even 50:50% but it all depends on an investor risk appetite.

India’s most prefered investment tool is FD, but can it provide the inflation-beating returns

The concept of “My money is safe in my Bank account ” has been followed from generation to generation when Interest rates were 12%.

Given the current FD interest of hardly 4-5% and steep inflation rate @  6%, can your FD beat it to give you bang for the buck? Let's find out.

We all are aware of how FD works, For those who are starting out, hear me out… Let's say you have 1Lakh rupees and you keep it in the bank for a certain duration of 1 year for a 5% Interest rate. For banks to give 6% interest, what they do is take that money and invest in low-risk projects such as govt infrastructure projects or govt backed projects in a safe way. The small %ROI derived from such investment is passed on to consumers who park their money in the bank. Now you know how FD works, let's get into mutual funds.

Mutual Funds are an accumulation of many individual company stocks such as Infosys, Exide, TATA and many other companies. When you buy a mutual fund for a certain amount, you buy a certain portion of those company stocks. In many cases, the mutual fund's investment return on average of 12% over the long term, as companies reinvest that money in projects which generate revenue.

We all aware of one famous line “Investment in mutual (I will give you 5 second, complete the sentence in the comments section. ) ”

Let me complete for you, “Investment in mutual funds is subject to market risk. Please read the brochure for more details”

We have seen a glimpse on Mutual Funds. we shall explore in future videos to come.

We shall evaluate your investment in three factors - Returns, Liquidity, and Tax Returns. I will share another factor at end of the video as it determines your capability to invest.

1.Returns: As I explained in the previous section about FD & mutual funds and how it works, it's very clear that Mutual Funds return more bang for your buck. But why are people not investing in mutual funds?

As in FD, banks guarantee return upfront on your money invested for a certain duration. But where as in mutual funds there is no guarantee on your investment and is governed by stock markets up & down. But when investments are considered for a long term the ups & downs will average out and give a better return. Patience is a most important asset while investing in the stock market.

2.Liquidity: Mutual funds are highly liquid. The units can be redeemed at any time with a few clicks of the buttons and the money will be deposited to the bank account within two-three working days with almost no charges when selected debt funds are chosen. Whereas, if the FD is broken before the Maturity date then a penalty of 0.5 to 1 % needs to be paid back to the bank.  This penalty amount will be deducted from the return amount.

3.Taxability: A true investor will look into the return after paying taxes. In the case of FD, the amount generated will be taxed as per your tax slab. If you fall under the 20% income tax slab then  you will pay 20 percent tax on FD return. This applies to people falling under 30% as we

We shall consider two aspects :

In long-term investment, long-term capital gains are levied on debt-fund investments,  here irrespective of your income tax slab, you need to pay 20% tax.

Whereas short-term investments less than 3 years are taxed as per the income tax slab of the investor.

If you have made it to the end of the video, it means you really want to take control of your finances.

Hello Ramesh, It's Suresh here , Listen It's March, I got to save taxes and you suggest to me where to invest to save taxes?

Ramesh : Invest in GetRich scheme and LostMoney Scheme.You shall save Tax.

Suresh: Alright I shall do it. …

Is your life also very similar to this? Then let's start the financial journey from Start of April

New Financial Year, Let's take the right step ahead :

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Let’s dive back to the preparation for the financial year…

Summary,  Taking these steps will help you better your financials and ensure a smooth financial journey in the years to come.

We all make mistakes with money, especially in our 20s, and I was no different. Let's check out the top 6 mistakes I made during my college days and early on in my career.

As I graduated from college, getting a job was not easily combined with the recession that happened in 2008 was the worst year anyone can graduate.

Over these years, I have grown better with finance and learning new ways to make peace with past mistakes. This is a personal financial journey mistake that I have made and how you can avoid them.

Where there is a will, there is a way!

To sum it up, you cannot learn from your mistake alone. See others' mistakes and overcome them.  

Interview with Hariharan(@get_hariharan) on his journey on his financial journey. A young professional set out to achieve his personal financial goal. The idea of investing in the share market is quite a brave move for this age group. Hope this interview will inspire more people to take up investment rather than just savings. 

Visit www.bytherupee.com for more articles, podcast and youtube videos on the subject of personal finance. 

Investing is complicated...

Now What, Let’s correct these myths… and get you started with the right investment journey.

There are so many myths that are running around the internet. Thanks to Whatsapp university, Google fake guru tips, thus holding back the genuine person of interest from making the safe and planned investment in the market.

To sum it up, investing myths could hold you back from doing the right thing. So, do not let such myths drag you down. The next time you read one of these investment myths on a WhatsApp forward, you know how to avoid it like an informed investor!

Do check out www.bytherupee.com for more articles and podcasts on personal finance. Also, comment below on what topic you would like to know more about. Keep Subscribed to the channel