June 6, 2017

When you think about retirement, what comes to your mind?

Do you see yourself going on a holiday to your dream city or you are at your workstation, working late hours because you can’t afford to retire yet?

Most of us have not given a thought to our retirement or we feel that things will fall into place if we just go with the flow. While this strategy might work for a few but everyone is not that lucky. Following are few myths that could be acting as hurdles to our secured future.   

Myth 1: Expenses will come down once I retire

This is a scenario which all of us desire, however it is quite unlikely. People tend to spend more when they have free time. There might be places that you wanted to see but due to work, you couldn’t travel much. There might be social events that earlier you could dodge due to busy schedules but post retirement you might not be able to do so. Even if we don’t come across these situations, all of us would like to maintain our current lifestyle. With a stop on your major source of income, how would you meet your expenses?

Myth 2: Savings today will be enough in future as well

Most of us feel that we will be able to survive on our existing savings corpus. What we tend to ignore is the impact of inflation. The necessities/luxuries of today will get dearer in future, while our current level of savings may not be sufficient to cover those expenses. Also, there might be some unforeseen expenses that we will have to take care of. While planning for retirement it is important to take the impact of inflation into consideration and also account for contingencies.

Myth 3: Mediclaim will be enough to meet medical expenses

Medical expenses would probably be the biggest future expense. Mediclaim does not guarantee full coverage of health care costs. It will help to reduce the burden to a great extent but who knows how expensive health care will get some years down the line and whether current coverage will be sustainable in future as well.

Myth 4: Too young to plan retirement

We tend to procrastinate planning for retirement. We feel we have enough time in hand to save for the future. However, that is not the case. As you near the age of retirement, it gets difficult to build the corpus that you will need to sustain the post-retirement days. To avoid such situations, one should start investing from an early age. Charting down a financial plan will give you an idea how much you will have to invest today, to enjoy the perks in future.

Myth 5: My family will support me

The social system in India is changing. Gone are the days when we used to live in joint families and support one another in need. You will find most of the families adopting the nuclear way of living. And people who are used to living an independent and self-sufficient life, relying on others doesn’t come easily to them.

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While some habits can pave the way to wealth and prosperity, others can lead to financial ruin. Moneymindz provides a guide to overcome  6 FINANCIAL HABITS YOU SHOULD GET RID OF.

Rolling over Credit Card Debt:

Paying only the minimum amount due leads you into a debt trap so always pay off the entire outstanding as quickly as possible. Remember, 36-45% is the annual interest unpaid credit card bills incur.

Overspending on Luxuries:

Outline a specific amount you can allocate to spends like eating out, catching a movie at the multiplex or going away for short breaks in your monthly budget and stick to it to avoid any severe dents in your savings. No more than 30% of your monthly budget can be used for luxuries.

Neglecting Product Maintenance:

Simple maintenance work on your car, AC or even the house can save you a lot of money on repairs and replacements. Putting off routine maintenance will only leave you with a fatter bill.

Using Credit Cards for Rewards:

Avoid swiping your card for every purchase just to earn reward points. List the spends you can make with a card and those you cannot. Purchases worth Rs 75,000 will probably fetch around Rs 450 equivalent of cash in reward points.

Using EMI options for Credit Card Dues:

This can cushion the impact on your cash flow but you are likely to end up paying more than the actual cost of the item, thanks to interest and processing charges. Too many EMI arrangements can also hit the credit score adversely.

Ignoring Credit Score:

Since an individual’s every financial step is recorded in his credit history, maintaining a good credit score is critical for availing loans when in need and at a good rate of interest. Anything below 750 is considered a bad credit score.

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India First Free Online Financial Advisory Portal, India First Free On-call Financial Advisory Portal, Best Free Financial Advisory Portal

India First Free Online Financial Advisory Portal, India First Free On-call Financial Advisory Portal, Best Free Financial Advisory Portal

According to the law of karma, whatever we put into the universe comes back to us. It applies even to the donations made towards charity. The act of kindness towards charitable donations comes back in the form of tax savings. Tax deductions by the government encourage more people to donate to worthy causes. Learn these important things before making a donation and save tax.

  1. All the charitable money donations are eligible for 50% to 100% deductions on the taxable income.
  2. The percentage of the deduction depends on the charitable institution to which the donation is made.
  3. Donations from the taxable or exempted income are to be made in the form of cheque or cash.
  4. A salaried person contributing towards the charitable fund is eligible for a deduction under Section 80G, provided the receipt bears the name of the donor and the company.
  5. Do not miss to take a receipt for the donation made for any social cause. The receipt should have your name, the trust’s name, donated amount, and the registration number of the trust as per Section 80G.
  6. Donations to any of the following are eligible for 100% tax deduction: Donations to Zila Saksharta Samitis; National Defence Fund; Approved educational institution or university of national eminence; CM’s Earthquake Relief Fund; PM’s Armenia Earthquake Relief Fund; PM’s National Relief Fund; The Indian Naval Benevolent Fund or Army Central Welfare Fund or Air Force Central Welfare Fund; State Blood Transfusion Council or National Blood Transfusion Council; National Foundation for Communal Harmony; The Africa (Public Contribution – India) Fund.
  7. Donations to following funds would be eligible for 50% tax deductions: National Child’s Fund; The Rajiv Gandhi Foundation; Indira Gandhi Memorial Trust; Jawaharlal Nehru Memorial Fund; Prime Minister’s Drought Relief Fund.
  8. The subsections under Section 80G include Section 80GGA and Section 80GGC. Under Section 80GGA, the donation made by taxpayers, without business income, to organizations in rural development or scientific research, is applicable for 100% tax deduction. Under Section 80GGC, 100% tax deduction is allowed for a contribution to a registered political party.
  9. Contributions made towards pre-approved projects under Section 35AC are eligible for 100% deduction.
  10. Donations made to NGOs involved in afforestation and natural resource conservation fall under Section 35CCB, which are eligible for 100% deduction.

In conclusion, ensure that the charitable institution is a registered organization before making a donation. Get the receipt after donating, to make the required tax claims and lower the taxable income. Continue to contribute your bit to the society and be the reason for spreading smiles, while saving tax.

Secure your Future by taking expert financial advice from certified financial planners, By leaving a missed call to 022-62116588 or visit Moneymindz.

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