We have our viewpoints about people, places, things and a variety of other stuff in life. Men look feminine in Pink, Chinese is better than Italian, or the other way round, hills are more serene than beaches, and vice versa, and likewise. We cling on to our ideas and perceptions, and over time they become fundamental to our existence. Our perceptions are influential in character and control our decision making ability. They become so inherent to our nature that it is difficult to think and take decisions from a neutral mindset. Likewise, many of us have also developed some perceptions about investing, which are mostly misconceptions, they have hampered our decisions and have undermined the growth numbers of our investments. In this article, we have listed and have tried to debunk three most common myths associated with investing:

1. My traditional life insurance policy not just saves tax, but also provides Life Cover as well as Creates Wealth: The primary reasons behind investors buying traditional life insurance policies is they fall under Section 80C of the Income tax Act, along with PPF, NSC, FD, etc. And secondly they serve the dual purpose of investment as well as insurance. But the irony is a traditional endowment policy practically doesn't serve the purpose, it isn't good at any of the above.

Facts:

1. Yes, the traditional endowment policy does save tax, but that's the only real return you get out of it. The return numbers are so petty that they may barely cover inflation.

2. The cover that these policies provide is again highly inadequate to take care of your dependents' needs for a long period of time, vis a vis the high premiums you pay. The modern term covers are much more affordable in terms of premiums and the cover provided also justifies the term 'life cover'.

3. And Yes, you will get your investment back if you don't die after a certain period of time, but as indicated above the returns are slim, so the corpus you will get will also be modest. The modern ones won't give you your money back if you don't die, but they will serve their purpose, provide Adequate Insurance.

The best way to Invest in Equity is through IPOs: Many investors believe that investing in IPOs is the sure shot formula of making big bucks quickly. And this is the reason why the markets are flooded with IPOs in bull market conditions, companies want to capitalize on the positive market sentiment. People have made tremendous money in IPO's, but we must remember that not every IPO is D-Mart. If some investors have made money, many others have also lost money in IPOs. Investors aim to enter at low prices, but the reality is the IPO stocks are already overvalued when they enter and they lose money when they list and the prices correct to reflect the true value of the stock. Investing in Equity is not based on profiting from a day's volatility, the right way of investing in Equity is by focusing on the fundamentals and profiting from the long term growth of the company.

Lower the Price, Higher the Returns: Investors want to Buy Low and Sell High. On this basis many investors believe that a cheaper stock is a better deal than an expensive stock. But the reality is a Rs. 10 rupee stock could be expensive and a Rs 1,000 stock could be cheap. The price of the stock is based upon it's fundamentals, it's management structure, it's past earnings and future earnings potential, the debt equity ratio, etc. If the fundamentals are strong, the Rs 100 stock is capable of growing spectacularly and vice versa. The same applies to Mutual Funds also, lower NAV's don't mean that the fund is cheap or expensive, it reflects the fundamentals of the underlying stocks and other securities. Do not base your decision of investing in a Mutual Fund Scheme on it's NAV, NAV is just the price of a unit of the scheme, concentrate on your needs and try to match them with the fund's characteristics and investment objective. Your financial advisor will help you selecting the perfect fit for you.

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To stand out among 1.35 billion people, to meet the growing needs, to build a career of their choice, students wish to pursue their higher education from premier institutions in India or abroad. But most often quality education comes at a very high price, and it may not be possible for parents to fund such expensive education from their existing resources. Education Loan offered by banks and NBFC's lays the way out, every year tens of lakhs of Indian students take education loans to pursue higher education and professional courses. Sometimes it is also not about affordability, many students take education loans because they don't want to burden their parents with their exorbitant education cost. Education loans brings higher education within students' reach, and also offers tax benefits on the interest paid on these loans under Section 80E of the income tax Act.

However, there are certain key points that you must take note of in context of education loan, that will help you better manage the loan:

Getting the Loan

• Compare before you choose: The rate of interest on education loan varies between banks as well as between the loan amount. The difference in interest rates charged by different banks on the same amount of loan can be as high as 4-5%. Also, your college may have a tie up with certain banks, and these banks may offer a discount on the interest rate. So, compare the loan terms of different banks including interest rates, processing fee, repayment terms, etc., before choosing the bank.
• Get the loan in tranches: Generally, the fee for higher education is payable in tranches, it can be semester wise or half yearly or quarterly, etc. It is ideal that you get the entire loan amount sanctioned, but withdraw only when your fee is due, since the banks will be charging the interest only from the time the loan amount is disbursed.

Repayment

We will first talk about the Repercussions of non repayment of EMI's

• Non Repayment of EMI's can result in imposition of Penalties.
• The Bank can seize the collateral attached to the loan.
• Credit score of the borrower as well as the co-borrower (usually parents of the borrower) gets tarnished, which hampers your access to any other loans, like home loans or car loans in the future.

Post the 2008 global recession, many students failed in repaying their loans because of lack of or underpaid jobs and have faced the above repercussions. Although the situation has improved, but still there are cases when students do not get jobs immediately after college. So, it is very important that when you take an education loan, you must have a repayment strategy in place.

The income in the initial years of your career is low, but the EMI's will be there, it is ideal to keep your expenses limited to make sure you don't miss your EMI's, also try to save some money after paying the EMI's and expenses and build an emergency corpus to ensure there is no disruption in the flow of EMI's in scenarios like a job loss, a sudden expense, etc. You can opt for the Auto debit option for your EMI's, so that repayment is taken care of automatically.

The Education loan EMI's generally starts after a year from the end of the course or six months after the job starts. This relief period is called the grace period or the moratorium period. The grace period is also a good time to start saving and creating a corpus for your education loan, since there will be no outflow of EMI's. This corpus will help you in filling any gaps in repayment that may arise in the future. You can invest your saving in a Liquid Mutual Fund, so that you get a better rate of return than what you will get in your saving account, you can make partial withdrawals plus it is highly liquid, so you can easily withdraw even one EMI from your liquid fund in case you are likely to skip one for lack of money.

Generally only simple interest is charged during study period, if you pay this simple interest during your course itself, it can significantly bring down your EMI's later.

What if you do not get a job? Before the bank starts penalizing you by levying heavy penalties for non repayment, and yours and your parents' CIBIL score is affected, talk to the bank representatives, a suitable alternative could be figured out and your loan repayment may be relaxed. The bank may either extend the moratorium period or reduce the EMI by extending the loan tenure, etc. You will find a job sooner or later, the idea is to keep the bank in the loop to avoid any negative consequences.

Before closing the article, we have a piece of advice for the readers, Start investing from Day 1 of your job, if the burden of Education loan EMI is too heavy, so is the need to get into the investing routine and securing your future. Start with a small amount, say with an SIP of Rs 1,000 and increase the amount gradually. Education Loan is probably the first loan taken by an individual, it teaches you a lot about money and debt management in the early stages of your career itself. We hope that the above passage will help you in managing your education loan well.

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What are your goals for your post Retirement Life? Pursuing all the things you wanted to but could not do over the last three or four decades, for there was no time. Learn guitar, knit socks for your grand kids, go for beach holidays, chill with your childhood buddies, make Pinnis for family, explore your spiritual side, do yoga, gratify your philanthropic spirit.

But wait, have you saved enough for your goals? Will you have a corpus big enough to accommodate your wishes?

No!

Then who is going to pay for the beach holidays, the guitar class?

Your Kids?

All the best in that case!

One of the major misconceptions which Indian society is living under until today is: There will be Reciprocal of Responsibilities. We believe that since we take care of our kids, invest in their upbringing, education, marriage, career; our kids will eventually return the favour by supporting us and funding our dreams in our old age. Based on this belief, and in our attempt to bestow the best upon our children and securing their future, we go so overboard that we forgo ours. There are instances when people break their retirement corpus or even take a loan in their old age for sponsoring their kids' education, these are clear signs of inviting trouble.

Do you want to work till 70 years of age? What if your medical conditions don't support your intention? It could be about survival, forget fulfilling the fantasies.

It isn't that your kids won't intend to, they might, but what if they aren't able to afford your dreams? They may be willing to chip in wherever they can, but then their kids education will be more important for them than your yoga class or your beach holiday, and in that case, your retirement life will not be as rosy as you thought. You will have to sacrifice the last few years of your life with your spouse, compromising. The holiday, the guitar class, the yoga class, these aren't your goals, these are your dreams, the real retirement goal is to ensure that you are able to provide for your dreams.

So, how do you go about planning for your Retirement goal?

For achieving a happy retirement life, you should do the following:

• Firstly, Invest for your Retirement. Helping your kids grow so that they can stand up on their feet is your responsibility, so is your responsibility towards yourself, helping yourself stand up tall during your old age. Your kids can get an education loan for pursuing expensive higher education, they can take a loan for marriage or save some money and tie the knot in the court, but there is no alternate source of finance available for your retirement, but your Retirement Corpus. Hence, if you haven't started yet, and are too busy with life and responsibilities, it's time to be a little self centered and start investing for your retirement. You must seek advise from a professional for guidance on the investment product you should choose according to your age and risk profile.
• Secondly, as you age, your medical expenses will rise, you'll be a vulnerable target for diseases and hospitalization expenses can dig a big hole in your pocket. Hence, it's essential to create an armor with a health insurance plan, so that you do not dip into your retirement corpus for your medical needs.
• Thirdly, make sure the loans you have taken are repaid before you retire, including the home loan, and there is no EMI obligation left at the time when there are no inflows. Your retirement life must be stress free, and a major step in this direction would be that you shouldn't be carrying the burden of your debts beyond your earning years.

So, to conclude, if you are amongst those set of parents who are spending every penny they earn on their kids, then this article is just for you. It's great if you are working towards your kids future, their education, their marriage, but if you are doing it at the cost of your own future, then you are opening doors to your ill fate. Preparing for your old age is your prime responsibility, and it comes before all other goals. And about your kids, it's important to raise kind and modest human beings. It is important to inculcate compassion, family values, love and respect in your kids; overseas education and a grand wedding are discretionary.

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