When seeking financial assistance from an experienced financial planner, Generation Millennials (Gen Y) should first discuss their financial capabilities, family needs, current tax structure, and wish list for purchasing a home with a lower EMI burden, accumulate wealth for family needs such as a son or daughter's education, marriage, medical needs, etc. and lastly, accumulate wealth for Post Retirement Monthly Income (Retirement Corpus Planning). They should be aware of the advantages and disadvantages of each requirement and anticipate that the planner will provide them with a well-thought-out, all-inclusive financial plan that is broken down into sections that can be fulfilled or achieved with the aid of their own savings and potential future savings during the remaining 15 to 30 years of service or working period until retirement. Establishing goals that are categorised as Near Term, Short Term, Medium Term, and Long Term requires looking at the excess monthly earnings over the typical monthly household expenses. Millennials are prone to making mistakes because they may have high incomes and rising expenses. However, with careful planning, they can use the POWER OF COMPOUNDING to build a very substantial corpus within 15 to 30 years until retirement without having to worry about their monthly income. Thus, at this point, careful financial preparation is necessary. They should talk to the planner about their goals, wish list, and financial needs to understand or make clear the following: :
1. Whether the goals are attainable within the remaining service period, and how much should be contributed for each goal?
2. Will it result in increased tax payments since any additional income will be subject to the highest Slab tax rate?
3. In comparison to other comparable possibilities, is it possible to plan differently to meet the goal of generating a larger income with less tax? (Saving taxes is just as good as making money.)
4. Is it a result of ignorance, over-consciousness, conservatism, or extreme aggression to deal with needless burdens?
A competent planner will assist them in guiding the aforementioned necessary parameters and aligning them when preparing for Generation Millennials in order to achieve the Wishlist, Goal, and Financial Requirements more effectively. In order to prevent the plan from becoming overly enthusiastic or nervous or from failing to produce the desired outcome due to a lack of practical expertise, the planner should also present the practical/actual work path to implement their plan and review it on a regular basis. In light of all of this, we have developed a calculator that takes into account all of the aforementioned factors so that you may verify and be aware of the specifics beforehand. Millennials may enter their own potential data to plan for their goals step-by-step, obtain the complete financial planning outcome online, download the report for their own use, and seek additional advice by scheduling a meeting or consultation with professionals for a very low price.
The first and most important step is to write down and calculate the prudent regular monthly expenses, which should be set aside in a bank account with a sweep-in-sweep-out facility. This way, financing the immediate need for monthly expenses will be accomplished immediately, and there won't be any idle money because it will also earn interest similar to FDs. If you have excellent planning skills, use a credit card that offers a 50- to 60-day credit facility for your daily expenses. Then, pay the credit card company on or before the credit period expires. This will assist you in accomplishing two goals: first, you will receive free credit for 50 to 60 days; second, you will collect interest on the sweep-in amount for the credit card costs you incurred during that time. For assistance setting up a salary account with sweep-in-sweep-out, and other features, Click Here.
To determine your financial capability, add together all your monthly earnings and subtract the total monthly expenses from the total earnings. Since this excess earning will continue to increase each month, it will be wise to start with a slightly higher income financial product or instrument than the revenue from swipe-in and swipe-out. Keep the money in your bank account with swipe-in and swipe-out capabilities until you find a higher income option. This will ensure that it earns at least 6% at the FD rate.
Second, depending on your excess monthly earnings, build one or more Smart SIP Plus, SIP Plus, or a Smart SIP cycle, or in combination. This will yield an annual average of 15% to 18%. Only these can guarantee a higher return than standard SIPs and Recurring Deposits (RDs) since they can automatically react to market ups and downs. To avail the benefits of these advanced SIP Techniques free of cost, please register with our partner organisations RANKMF and FUNDSINDIA.
Thirdly, even after creating the necessary number of monthly investment cycles using the aforementioned tools, if you still have some excess monthly earnings or if you already have some excess earnings from prior months and you want to park or invest once for a short period of time, it is advisable to park in ARBITRAGE FUND because it is more tax-efficient, has comparable safety and liquidity, and pays slightly more than Liquid Fund, FDs, RDs, Swipe-in and Sweep-out and when market is down switch from arbitrage fund to equity fund of the same company.
Click Here to access the basket of Arbitrage Funds and later on switch to Equity Mutual Fund when the market is down. To know when to switch (Timing) and to which particular Mutual Fund(s) to switch, go to our tools menu and check through the DASHBOARD of MF to get a clear bird-eye view of 41 suggested Mutual Funds.
Click Here for Switching from an Arbitrage Fund to a suggested Equity Fund of the same company. Instead of doing it manually, if you want the system to do it for you, you can use the Power STP Technique, which will switch the money kept in the arbitrage fund to the equity fund each month, adjusting the amount as per the market ups and downs.
Click Here if you want to keep the money in Corporate FDs from Shriram Finance with a higher Interest Rate (up to 8.15%) than the Bank FD rate.
Investing in equities mutual funds during periods of extreme stock market decline is advised. This can be accomplished by transferring the funds you have invested in the ARBITRAGE FUND or by using any additional funds you may have. After switching, wait a year to make it long-term so that you can take tax advantage on the same (as per current law).
Developing the habit of investing (with whatever money is available at the moment) when market sentiment is down for a long period of time and selling or redeeming equity funds that have been invested for at least a year when the market is high for a long period of time, using the First-in-First-out (FIFO) method. In addition to lowering market risk and allowing you to pocket the profit, this will save you Rs. 1,25,000 in annual Long Term Capital Gain (LTCG) tax. Second, when you invest the sale money, your initial investment will be raised to the extent of the profits.
Click Here To access the basket of the best-chosen equity funds with a minimum CAGR of 15% to 18% in each of the following categories: (a) very new funds within a year of NFO (New Fund Offer) but doing well; (b) new funds completing 1 to 4 years but doing well; (c) 5 years completed funds; (d) 10 years completed funds; (e) 15 years completed funds; (f) 20 years completed funds; (g) 25 years completed funds; (h) 30 years completed funds; and (i) more than 30 years completed funds. You can choose any item from the basket without going through the hassle of doing market research. If you are unable to do this, Click Here to use our partner entity's specially designed SMART switch, which will take care of it automatically based on market ups and downs.
Choose medium-term to long-term objectives, such as visiting a foreign country with your family, having children study abroad, purchasing a car, marriage of children, purchasing a home, and, lastly, building a retirement corpus. For each of these plans, create a TIP (Target Investment Plan), Smart SIP, or SIP Plus cycle for long-term (at least five years) or until you retire. Remember that even though the cycle's intended objective might not be fulfilled, funds can be taken out of the connected fund at any moment in the event of an emergency or other circumstances.
To reach the required amount, use the following calculator to determine how much must be contributed each month for a specific time. Use the corpus calculator below to plan your medium- to long-term objectives. For a small token fee, you can also use our other Interactive Comprehensive and Additional Specialized Financial Planning Tools from our menu to better understand, plan, and download a report for further action and consultation as needed.