Friday Finance
Friday Finance

Plan that perfect vacation!

When you are on a vacation, it seems boring if someone tries to talk to you about personal finance. And, yet, there’s a close connection between the two. Vacations are discretionary expenses, which are not compulsory for anyone. Indeed, there would be lakhs of people who do not make this expense. However, vacations—especially when taken with friends or family—make us happy.

Now, any activity is much more relaxed and fun if we plan it beforehand. While it’s important to figure out where to go or what to buy and eat, it’s even more important to plan the finances in advance.

Proper financial planning should be done not just for big life goals such as retirement, property purchase, and education, but also for short-term goals such as taking a vacation. In fact, like the big-ticket goals, planning the finances of our vacations can help us have more fun! Instead of being constrained by money issues, saving and investing for a specific goal can help us by actually being able to spend more, while being mentally relaxed.

Investing successfully for casual, short-term goals, such as a vacation, also gives us the confidence to plan and invest for high-value life goals.

Take a cue from this issue of Samriddhi to know how you can plan your investments better. And, of course, also to have more enjoyable vacations!

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Friday Finance

Retire with a plan

Retirement means getting a lot of leisure time for yourself without the pressure of having to report to work. However, have you considered how much money it will take to be able to afford it? We all fear our retirement, but very few of us plan for it. During the entire tenure of our employment, we are never satisfied with our earnings, since they always seem to fall short of our desires. During retirement, it’s important to know that you are not only looking forward to a happy future with your family, but also a financially secure one.

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Friday Finance

Nivesh Paathshala

Nivesh Paathshala is an investor awareness initiative by Aditya Birla Sunlife Mutual Fund. This is your opportunity to learn about the various aspects of personal finance, savings v/s inflation, and wealth creation (short term / long term) through investing in mutual funds.

All instances have been portrayed through conversational scenarios played by characters like Jano and Mano. The animated display and use of real-life examples help make financial planning sound easy!

The video is available in 12 regional languages, and helps simplify topics such as equity & debt financial markets and related products. Learn how to manage risk in various asset classes or schemes such as equity fund, hybrid fund, liquid fund, debt fund and bond fund.

Most importantly, understand the intricacies of financial planning by mapping mutual fund investments to your life goals, be it retirement, child’s education, or buying a house.

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Friday Finance

Ultra short-term funds for SMEs

Here is a quiz question. Rishi Karmakar, a 35-year-old owner of a manufacturing unit in Pune, needs to spend on machinery-related expenses worth Rs. 10 lakh over the next one year. Where should he be keeping his money? Some of us would scoff at the “no-brainer” question and point out to a current bank account. Sure, a bank account is perhaps the most obvious and popular destination to park cash for small and medium enterprises (SMEs), but is it the smartest one?

Let’s take a close look. Unlike large companies, where specialised and experienced finance professionals anticipate and manage cash needs, SMEs don’t enjoy this luxury. The result: cash pile up in bank accounts. Now, cash is the lifeblood of every business, but given their size, operations in SMEs are particularly vulnerable to any disruptions in cash flows. For banks, this is a bonanza, since they typically pay no interest on current account, compared to 4 per cent for saving accounts. This money is then lent to borrowers at 9 per cent and above, depending upon the type of loan. So, while a bank loan of Rs. 10 lakh by the bank will earn for it Rs 90,000 in the first year, a person like Rishi gets nothing. That doesn’t sound too great, does it?

Enter ultra short-term funds

The good news is that SMEs have an earning option for their cash that typically vegetates in a current account. The alternative is present in the form of ultra short-term funds from mutual funds. They are an ideal cash management tool for SMEs to manage their cash, since they neither have a lock-in period nor an exit load. Along with the advantage of high liquidity, they typically provide higher returns of 8-9 per cent on an annual basis.

How they work

Ultra-short term funds invest in money market securities. These are basically short-term debt securities such as certificate of deposits, treasury bills, and commercial papers, which have very good credit profile and can easily be liquidated in the market. The investors can also redeem their investments in a day’s time.

Where to invest

Ultra short-term funds combine stable liquidity with competitive returns. All this is topped up with the ease of operation at low cost and no penalties or withdrawal charges.

Mutually Yours-Our podcasts on personal finance and investment essentials

Renowned market experts simplify investments for you. Here are some episodes:

  1. Caution, Wet Floor Ahead! How Mutual Funds can help you manage stock market volatility
  2. Mutual Funds as your best choice for retiring early
  3. Avoid 4 Behavioural Finance Traits while Investing
  4. Investments and Savings Go Hand-in-hand!
  5. Vacation time! Time to give your kids some practical financial planning knowledge
Friday Finance
  • An investor education and awareness initiative of Aditya Birla Sun Life Mutual Fund.
  • Mutual fund Investments are subject to market risks, read all scheme related documents carefully.
  • Investors should deal only with registered Mutual Funds details of which can be verified on the SEBI website under ‘Intermediaries/Market Infrastructure Institutions’.