Posted on

What To Do With Your First Salary?

First salary is special for everyone. It establishes an individual’s earning footprint and we all only hope that it goes uphill from there. The sense of freedom that comes with a first salary is unparalleled. So, it is only right that we make the best of our first salary. Fun fact: We have too many plans with it! So, if you are feeling like a deer in the headlights, you are not alone. That’s why we have put together some ideas that would make you make the most of your first salary.

 1. Save 20% of Your First Salary (and every salary thereafter!)

First things first. Of all the dreams that you have with your first salary, going broke isn’t one. And the smartest people around you would ensure that their savings account is filling up and zipped tight right from their first salary. But how much to save? Make the math easier and save 20% of your salary. Contact the bank that holds your salary account and set up an automated transfer of 20% of your monthly salary to a separate savings account. As long as you do that, you never have to worry about going bankrupt again.  And oh, if you want to grow it further, try investing in Debt Funds that could provide a relatively low growth but steady enough with lower risk. You can even start small.

2. Buy Something For Your Parents (Or Even Better Give Them The Rest Of The Salary)

Remember all that you have put your parents through growing up? It’s payback time honey! Needless to mention, your parents deserve it. Most parents are fine just knowing that their child has a job now that doesn’t involve being chased by police, but you should know better. They have sacrificed enough for you. Perhaps, you can part with some of your salary to buy some thoughtful gifts for them? And while we are on the topic of parents, if you were day dreaming while they dutifully imparted financial lessons to you, here’s your chance at a refresher.

 3. Pay Off Debt (And Make a Habit of Staying Out Of It)

I know it’s not easy to pay off education loan with your first salary but you can make a start right away. Make your parents proud and start paying it off without asking your Dad to do it. And if you have borrowed money from anyone else, paying them off is the best thing you can do with your first salary. You will be proud, stress-free and guess what, all ready for the best part of earning your first salary. Oh, and did we mention about making a habit of NOT taking any more unnecessary debts?

 4. Spend On Yourself (But Don’t Get Credit Card Debt!)

After all the good deeds you did with your salary, now is the time to finally pay yourself. Remember those million odd dreams you had with your first salary? The ridiculously expensive phone, that designer bag, or that Bose speaker that you probably won’t have time to listen to are still at the closest mall around you. They are waiting to come home with you. Free the reigns and treat yourself. You totally deserve it! Just don’t get into Credit card debt, will ya?

Posted on

Should you save and invest for your child’s education?

If you did your MBA from IIM Ahmedabad back in 2007, you probably paid somewhere around 4 lacs. Your younger sibling would have paid somewhere around 21 lacs this year. That is 4 times of what you must have paid and a staggering 23% annual increase in the fees.

If the cost of education rises at this pace, after around 18 years, your child will need a whopping Rs. 8.7 crores for the same program at IIM-A. Even at a 10% annual increase in cost, that amount would be close to Rs. 1.2 crores.

Education costs have been increasing at a rate higher than the usual inflation. And the same is true for elementary, primary and secondary education.  Not to mention the additional cost of coaching that you have to incur at different stages of education. The above numbers clearly indicate a need to focus on how you intend to fund your child’s education.

This article seeks to help you formulate a plan for your child’s dream education no matter how old your child is.

For the sake of relevance, let us have 3 categories:

Category 1: If your child is under 10 years of age

Your child in his early years of schooling and has a long way to go in terms of pursuing his education. Planning for children in this age bracket is the easiest simply because you have more time to save and invest. The earlier you start, the more corpus you create. Following are the 3 things you should be doing if you fall in this category:

  1. Start a monthly SIP in a portfolio of mutual funds with predominant exposure towards equity. The time horizon is long term so you may have decent allocation towards mid and small cap funds, if you risk appetite permits that. This will enable you to create a substantial amount of wealth over the long run (Over 7 years).
  2. Every year, try and estimate the corpus you need to fund the education at both graduation and post – graduation stage. Accordingly, increase your monthly SIP every year to ensure that you are able to garner the required corpus. While SIPs in equity mutual funds will help you create wealth, increasing them every year will ensure that you don’t fall short of the amount you require.
  3. Park a small sum of money in a debt fund for any short term requirements. This will ensure that you have surplus funds available for any contingencies.

Category 2: If your child is between 10 – 15 years of age

Your child is probably nearing completion of school and will soon be ready for graduation years. This means that while you do still have time for post – graduation, you might not have enough time for saving to fund his graduation. Following are the 3 things that you should do:

  1. Park your surplus money in a portfolio of debt equity funds. The split between the two categories will be determined by how many years are you still away from completion of school.
  2. Start a monthly SIP in a portfolio of mutual funds and asset allocation is key for such investments. You may keep an allocation of 30-40 percent in debt funds and the remaining exposure should be in a diversified basket of equity funds. The asset allocation should be monitored regularly and should be shifted entirely towards debt as you approach the time when you would need the fund. This will enable you to create a pool of wealth over the long run (Over 5 years).
  3. Increase your monthly SIP every year simply because you have relatively lesser amount of time to save for the post – graduation requirement.

Category 3: If your child is between 15 – 20 years of age

Your child has grown up is perhaps nearing his post – graduation years. As such you have only a few years before she completes graduation and goes for higher education. Here is what you should be doing:

  1. Park your surplus money in a portfolio of debt funds. The split between the two categories will be determined by how many years are you still away from completion of school / graduation.
  2. Start a monthly SIP in a portfolio of mutual funds and asset allocation is key for such investments. You may keep an allocation of 60-70 percent in debt funds remaining exposure should be in a diversified basket of balanced equity funds. The asset allocation should be monitored regularly and should be shifted entirely towards debt as you reach towards the year when the funds are required. However, your exposure should not include the risky category of mid and small cap funds.
  3. Increase your monthly SIP every year simply because you have relatively lesser amount of time to save for the post – graduation requirement.

How do we help?

At CAGRfunds, we help you estimate the amount of money you will require at every stage of education. We also help you define your most suitable portfolio. As you start investing, we ensure that our tools continue to review and re-balance your portfolio whenever the need arises.

Contact Us NOW!

Posted on

Abhilash talks about his financial planning journey

When I first decided to pursue MBA, I assumed it to be synonymous with 6 figure salaries. Well, I wasn’t wrong about that. Yet my life was a perfect live telecast of a “hands to mouth” living. I had no control over my expenses and at the end of every month, I had absolutely no idea where my money was being syphoned off to. Financial Planning was definitely not luring me enough. But somehow that wasn’t even bothering me. Maybe because I thought such is life for everyone who is approaching his late 20s.

This (Read: Mid 20s) is also a time in life when taking risks gives a lot of thrill. So I started investing in stock markets. I now realize I was betting on circumstances which I could not predict. But I think I was lucky since I had invested a small amount in 2 stocks. By the way, that was my only “savings cum investment” so to say. And oh, also the annual allocation I used to do for the 80C deductions.

Life went on and I forgot about the amount parked in the two stocks. On one such day, I met my friend Vikash who has started a wealth management company called CAGRfunds. As I told him about my inability to save, he told me about investing, mutual funds and the stock market. Boom. I just remembered my stock investments. I went home, logged on to the site and there it was. A substantial reduction over what I had invested. Complete disbelief overtook me.

So I called back Vikash and asked him about what should I be doing with my money. And that is how I started my investing journey with them. Vikash gave me the following two pieces of advice that day.

  1. Redeem all my stock investments. This was because I neither had the expertise nor the knowledge to identify and monitor the right stocks. And my portfolio pretty much made that clear to me.
  2. Start a small SIP.

At that point, I had no idea of what a mutual fund is or what does SIP mean. But the next few sessions with the CAGR team clarified a lot of misconceptions I had about “money” in general and at the same time, opened up a huge number of possibilities of wealth creation.

But that is not what I liked about them. It was the fact that they asked me to start small. Simply because I was new to this domain and they felt it was important for them to educate me along the way. Now, I have met a number of relationship managers from various banks, but no one has ever asked me to start small.

I, therefore, started with a small amount as my monthly investment. Within 6 months, I started a few more SIPs and then kept on adding to it. Life couldn’t have been this simple had it not been for the CAGR online platform (www.cagrfunds.com). Online investment, monitoring and redemption – all in just a few clicks. And because it is a few clicks, it is much easier to manage investments regularly. Although I pretty much manage my investments myself, I owe it to the CAGR team for making me more responsible and now wealthier.

The story has been contributed by Abhilash Sethi who has been a CAGR client for over a year now. Abhilash is a 28-year-old MBA graduate from IIM – Bangalore and is married to Rachana Dongre (also a CAGR client).

Call / WhatsApp us on +91 9769356440 for a free financial consultation!

Posted on

Four ways to make your vacation pay for itself

We can totally understand your excitement when a long awaited vacation is approaching. Likewise, the post vacation depression! How we wish we could guarantee ourselves one vacation every year without it making a big hole into our pockets?

Well a bit of planning and discipline can make a guaranteed annual vacation a reality! Here are 4 ways to achieve this dream.

Have a vacation fund amount in mind well in advance

If you are planning one high value vacation every year, it is best to start pinning down the fund you will require in advance. This is because an estimate of the amount required gives you enough time to create the fund.

Invest surplus lumpsum in a debt fund

If you have any surplus lumpsum amount in hand, invest the same in an ultra – short term debt fund. This will ensure liquidity so that you can withdraw as and when required. At the same time your money will grow at modest returns. This strategy should ideally be followed for a vacation that you want to make within 1 year.

Start a monthly debt investment to fund the balance amount

If you have an estimated amount required for vacations that you want to do next year or the year after that, you can start a monthly investment in a debt fund (this method is also known as a SIP). This will enable you to allocate a certain amount every month for the trip.

Start a monthly equity investment to fund trips after 3 years

Since you know you want to travel every year, why not start creating the fund for the vacations you will be doing after 3 years. For such vacations, you can start a monthly investment (SIP) in a balanced equity fund. This will not only enable you to park a certain amount of sum every month but will also grow your corpus over time. So essentially, a part of your trip can be funded by the returns you generate on your equity investment. Isn’t that great?

How do we help?

At CAGRfunds, we help you plan your annual vacation fund by identifying the asset allocation required for the same. Asset allocation is the split of investment required in debt and equity. We help you create your investment portfolio so that you can just plan your travel while your vacation pays for itself!

For planning your travel fund, call / whatsapp us on +91 97693 56440 or leave a message here