Baghban is a captivating and a heart melting hindi movie with a mix of all the bollywood masala, emotions and songs. You all might remember crying an ocean at the melodramatic scenes, fluttering at the peppy numbers, going awww at the fairy-tale chemistry between Amitabh and Hema Malini, but might not have looked at it from a financial point of view. In this article, we will review the movie from a financial angle. Although the film was critically acclaimed for direction, story, acting, etc., it also has a very important life message for it's viewers. The movie was a perfect example of “the backlash of no retirement planning”.

In Baghban, Amitabh Bachchan has four kids and he spends all his money on the upbringing of his kids and meeting his family needs, as many Indian families do, he even takes a loan against his gratuity for his sons, expecting that his sons will take care of the old couple after retirement. Amitabh retires, and then came the series of atrocities. None of the sons is willing to take responsibility of the poor couple, they finally decide to split them, with one parent living with one son for six months and then rotating to another son. Next lies a life of dismay for the couple, and the misery is accentuated because of the grief of living separately. Finally after six months, when the date of moving them to the other son came, the couple decide to elope, thus leaving their future to fate, since they have no money.

In the movie, fate was on the couple's side, and their adopted son, Salman Khan, bumps in to take care of his mum and dad. Luck favours them a little more, Amitabh had been writing a book on his plight during those six months in his son's house, the book gets published and it is a huge success. Amitabh gets immense appreciation and huge money from the sales of the book, to take care of the rest of his life.

This film has taught us a very important lesson for life, “Plan for your Retirement”

We all want to give the best education and quality of life to our children, but in the process many parents forget about their own future. Getting our kids into the best schools and colleges or foreign universities cost a bomb. And in order to pay for the skyrocketing fee and expenses, or to sponsor our kids' extravagant weddings, we sell our investments, property, we compromise on our present and even put our future on stake.

The idea is not discouraging you from spending on your kids, and saving for your retirement only, rather keeping both, your retirement and kids' future separate. The money that you have saved for your retirement is not meant for your kids' education and the kids' education money is distinct from your retirement money. Here, you must keep in mind that most times people withdraw from their retirement corpus because they have either not planned or under planned for their kids. You need to carefully plan for both goals independently. And this should be followed religiously at all times.

Secondly, nuclear families are becoming the norm. Parents wish to retire in a serene and quiet place, in the hills or along the beach and want to spend a peaceful life, away from the hustle and bustle of cities. While the kids want to have an independent life in the cities, some even move abroad for their careers. And the kids may not be able to afford or willing to take care of two families. So, if you want to live your dream of a peaceful retirement, you need to save & plan for your future financial independence.

The bottomline is, neither are we getting any messiah 'Salman Khan', nor are we becoming a celebrity writer. Sadly real life is different from reel life. There is an interesting dialogue between Amitabh Bachchan and his boss when he wants to take a loan against his gratuity for his son, the latter advises Amitabh “Retirement ke baad apna paisa hi sabse badi taakat hota hai”. And it holds absolutely true. So, during your working life, ensure that you are investing for securing enough strength for your post-retirement years. Love your children, spend time with them, give them a good education, but do not be a traitor to your own future. Manage your finances in a way that you are able to gratify your kids' future as well as yours.

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Mutual funds can help investors create wealth over the long term powered with disciplined savings and patience in the right asset class.

Equity mutual funds have been able to outperform all other classes of investment over a long period of time. Let's say you had invested R 1,00,000 in a fixed deposit 15 years back at an interest rate of 8% (half yearly compounding), it would be worth R 3,24,340* today. If you had invested the same amount in a diversified equity mutual fund, it would have been worth R 22,12,423* today, i.e. almost 7 times more than what you got in the Fixed Deposit. (* % returns in diversified equity schemes is 22.93% for 15 years)

“If you want to make big money, go for a large number of smalls”

Investing in Mutual Funds has become convenient and simpler with Systematic Investment Plan (SIP) option. SIP is a tool which enables us fulfill our dreams comfortably. SIP is a disciplined approach towards investing in mutual funds. Apart from being a disciplined & convenient approach to investing, SIP enables the investor to benefit from Compounding & Averaging.

So, those investors, who started believing in mutual funds, they gave it a shot with small SIPs, they started SIPs in the last 4-5 yrs to experiment as they were doing it for the first time. But the irony is, even after their incomes have increased, the SIP amounts are still the same. Neither have the number of SIPs increased nor their contributions. Their SIPs performed well over the years and have helped them get closer to their goals while creating wealth. With an increase in income, the savings should increase, and ideally this will lead to a proportional increase in investments. It means that you can target for bigger goals, with your present income. A right increase in your SIP, can help you achieve larger goals.

Let us see what a small difference can make to your wealth. Ram started an SIP of R 5,000, 5 years back in a diversified equity fund. His investment's worth today is R 488,149*, against his investment value of R 3,00,000. Shyam stretched his savings a bit and started an SIP of R 10,000 in the same fund at the same time. The value of his investment today is R 9,76,298*, against his investment value of R 6,00,000. The pains of saving extra R 5,000 monthly by Shyam is today greatly outmatched & compensated by almost R 5 Lacs of extra wealth he managed to create over Ram. (*% SIP returns in diversified equity schemes is 19.55% for 5 years: Source NJ Research)

You must also periodically review your goals and your income. You may now want to go for an international vacation, while your previous goal was a trip to Kerala. Or, you had started an SIP for your son's education, but now you have a daughter too. So, in order to meet higher goals and invest the extra savings, you must increase your SIP's periodically. You shall start a new SIP for your daughter's education, as it is a new goal, and the maturity date would be different and you can increase the value of the SIP for your vacation.

Today you might not be able to afford a larger SIP for your retirement, because of higher expenses and other commitments . Your retirement is due 20 years hence and you may want to have a huge corpus created at that time. You shall explain your requirements to your financial advisor & he will help you find your optimum SIP value which will help you in achieving your goal. He will guide you and will suggest a smaller SIP, in case you don't want to go for a higher SIP currently, so you can make the start and as and when you move ahead in life, with higher incomes, he will help you in gradually increasing your SIP amount. You will also be meeting your other life goals with time, and the amount used in SIP's aimed at achieving these goals can also be directed towards your retirement goal.

The master plan to long term wealth creation and actualization of distant goals is 'Increase your SIP regularly'. If you do more SIP today, probably you can retire earlier and buy a bigger house than expected and go for a Europe trip rather than South Asia. At the end of the day it is your money, in case of troubles you can always redeem it or stop the SIP, till such time, it makes more sense to increase your SIP for future rather than upgrading to an I phone 7.

So, the bottomline is although your present SIPs will help you achieve your present goals. But your saving will increase with increase in your income each year and it should be invested and secondly, the quantity and quality of your goals will also change, which will require more and higher SIPs. You must contact your advisor and ask him to review your goals and help you decide the right SIP amount for you. The review should be done periodically, so that you don't lose track. Increasing your SIP is not a hectic task, but it is very important and should not be ignored. It is as easy as shopping on an App, you just have to go to the NJ App, and do the needful.

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BIRDS AND THEIR YOUNG: You must have often seen a nest in the corner of an attic below the stairs of your house, or on the pot hanging in your balcony or on a tree in your backyard. You must have also noticed a bird or two fluttering around that nest, a cat on the lookout for food, the small eggs and the next generation of baby birds crawling and eventually flying out into the world. But have you ever thought of how the parent birds look for a safe place, make the nest, breed and hatch the eggs, protect them from wind, rain, storm and against the evil cats and raise their baby to the point when they can fly independently. It is because of their fostering, protection and the care that they offer to their young ones, are the latter able to carry on their legacy. The entire process is a challenge, and the birds invest huge efforts in winning the challenge. This story is an illustration for the readers to understand the importance of protection and care. It is very important to create wealth by investing your money wisely, yet it is all the more important to protect your wealth from evils. The assets that you have built can be blown up in a moment if you do not provide adequate protection. Changes and uncertainties are constant, and by protection we mean you should be prepared for and be able to shield your wealth from these uncertainties.

We have brought certain rules & strategies that you may follow in order to protect your assets:

Diversification: The Golden rule to protect your assets is “Don't put all your eggs in one basket” because if the basket falls, you'll be left with nothing. Having a heterogeneous portfolio doesn't mean you will achieve humongous returns. But is has the potential to improve returns at a given level of risk. The idea is to mitigate the negative impact of one asset with the positive ones. A well diversified portfolio is the one which will survive the jolts of the downturn. Let's say A has 60% assets spread across health care, technology, manufacturing, infrastructure and FMCG sectors and 40% spread across Bonds, debt funds and FD's. While his friend B has put all his money in health care and infrastructure sectors only. Let's say both these sectors were growing, but suddenly there is a sharp fall in the infrastructure stocks. A's portfolio of 10 different sectors and classes will cover the risk posed by infrastructure, but B's health care alone will not be able to make up for infra losses.

Beat Inflation: If you need R 50,000 a month to fund your household expenses today, you will probably be needing R 1 lakh ten years later to meet the same expenses. So, if you have put your money into Bank FD' s assuming that this money will fund your life expenses post retirement, then beware!, because the post tax returns that Bank FD provides will barely cover he inflation expenses, forget about increasing your wealth. So, you must invest in options where your savings increase at a faster pace than inflation. So if you are here for the long haul, you must allocate a certain percentage of your portfolio to equities, since equities have historically delivered good returns and has overpowered inflation.

Get Adequate Insurance: Mr ABC invested some money in a mutual fund scheme for the purpose of funding his daughter's wedding, which is expected to happen in the next 3-5 years, and suddenly his wife is detected with a tumor and she needs immediate surgery, and he is left with no choice but to meet the hospital expenses with the daughter's wedding fund. His plans of a grand wedding are shattered and he has no clue of how will he now finance the wedding expenses. Don't let this happen to you. Don't be Mr ABC, you need to protect the wealth that you saved for a particular purpose by not letting emergencies overpower your goals. If Mr ABC would have got himself and his family members insured with health insurance, the emergency medical expenses would have been taken care of by his insurance, leaving his wealth untouched. You must protect your family with an adequate term life insurance also, so in case of the unexpected, your family is able to survive and fulfill the goals that you dream of.

Save & Invest More: Never stop saving and investing. Make it a habit, it will build your wealth. Even if you have allocated money for all your goals or have accomplished majority of your goals, you should never stop investing. You can blow that money up in luxury, or you can build your wealth for your better future. The latter is a better choice, since all days are not the same. Save for a rainy day. When you don't work, your savings will work for you.

Don't be Emotional in Money matters: Emotions are an integral part of human beings. You are a big fan of Akshay Kumar, you would never miss his movie even if it deserves an Oscar for insanity. Nevertheless, it is sane enough to invest R500 on a weekend to spend some quality time with your loved ones. But when it comes to investments, do not go by your emotions. Rather seek professional advice. Do not respond to slumps or surges, you can never make money by reacting to market fluctuations.

Follow a Personal Financial Plan: An investor must always have and follow a plan. Your financial advisor will guide you and devise a pathway according to your requirements and goals. There are various hindrances which will come in our way, some expected while others unexpected, and these will try to deviate you from your plan. But you have to be prepared and provide for these events while moving on your path unbroken. We get up in the morning, and after our morning ablutions, we pray to God, it is a daily practice. Likewise, you must make it a routine to follow your financial plan.

The above rules are like illusionary walls
around your wealth and you have to keep
these walls strong and intact to ensure that
there is no leakage at any point of time.”

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With just two days to go for the income tax returns filing deadline, amidst the last minute hustle, chances of mistakes are high. Either the website won't work because there are many who have joined in the last minute rush, or you don't remember your passwords, or you end up filing the wrong return, etc., because of the commotion. So here are some quick tips to help you avoid the errors.

1. Gather your documents: First thing, get all the required documents together, like your Form 16 or business income details, your Form 26 AS (You'll get this from the e-filing website), Section 80C investment proofs, interest statements from your banks, statements of interest and principal paid on home loans, education loans, etc., statements of house rent paid where HRA isn't received, medical insurance premiums paid, documents detailing various expenditure that can be claimed like medical bills, etc.

2. Pay Self Assessment Tax, if any: Before filing the ITR, check if you haven't underpaid your taxes. Calculate the total tax amount that you ought to pay, the possible sources of omission are rental incomes, interest incomes, etc. A common case of underpayment of taxes is interest paid on savings or fixed deposits. The banks deduct a TDS @ 10% for any interest income paid above Rs 10,000. Now the possible disparities are:

• You fall under a higher tax bracket, but TDS is deducted @ 10%.
• You have more than one bank accounts and your total interest income exceeds Rs 10,000, but one or more banks haven't deducted TDS because interest paid by them was less than Rs 10,000.

Assess your total tax liability and deduct the total taxes paid by you (Refer Form 26AS for total taxes paid) and pay the difference as Self Assessment Tax, either through net banking or your bank branch. Add the challan number to the set of documents you gathered in Step 1.

3. Start Filing: Once all the groundwork is done, the next step is to get into action. Follow the following tips to avoid errors.

1. Select the correct ITR Form.

2. Check the general information section, make sure all your personal details like mobile number, address, employer category etc. are correct. If not, make the required changes.

3. Enter all your incomes, including interest income, rental income, business income, etc. and fill in the corresponding schedules.

4. Fill in all the deductions, your investments, health insurance premiums, interest paid on loans, donations paid, etc. One section that people often omit is Section 80TTA. As per this section, interest income of up-to Rs 10,000 from savings account is exempt from tax. So, if your interest income is up to Rs 10,000 enter that amount or if it is greater than Rs 10,000 then too you can claim Rs 10,000 as deduction under this section.

5. Fill in the details of the self assessment tax, from step 2

4. Review: Before submitting, review the ITR thoroughly, so that you can fix mistakes, if any.

5. Submit before 31st July: Finally, click the submit button, and remember to do it before the deadline.

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