Across a number of my past articles I have spoken about the major benefits of investing in index funds. But there are a number of other benefits to holding index funds. These usually go unnoticed. But they contribute just as much to the effectiveness of index funds. Therefore in today's post I am going to be talking about these less apparent benefits of index funds in detail. Eliminates Uncompensated Risks Bearing investment risk is justified only when it is adequately compen

Sequence Of Returns Risk is born from the unpredictable nature of returns from market linked investments. In other words it is born from the fact that we do not know how returns would accrue to our portfolios in advance. This implies that sequence risk does not stem from the amount of returns that accrue to our portfolios. It rather stems from the pattern in which our returns accrue. Sequence risk majorly affects portfolios for long term goals. But its impact on retirement p

Adequate health insurance coverage is a foundational pillar of an individual's financial structure. Individual and family floater health insurance policies are usually purchased as a combination of two kinds of policies. These are base and super top up policies. This has become common knowledge today. But we usually do not fully understand the nuances behind base and super top up policies. Therefore I will be explaining how both categories of policies work in this post. The

Today most individuals understand that term insurance is the only product that is a viable option for their life insurance needs. But term insurance policies offer a variety of options and features within themselves. Most such features seem attractive and beneficial. But in reality, they are highly toxic and would prove to be an imprudent choice. Therefore I will be talking about these features and explaining how they work today. The TROP Trap Term insurance with Return Of

Most investors prefer to construct equity portfolios by selecting stocks that they feel will offer a higher return than the market. Doing this requires them to answer two fundamental questions : Which stocks to buy? How much of each stock to buy? Investors typically lack the knowledge and/or competence to answer these questions effectively. It is therefore widely advertised that investors are better off investing in equity through mutual funds. Mutual funds are managed b

The debate as to whether to opt for active portfolio management or passive investing is an age old one. It has raged on for decades and will continue to do so in the future. Proponents of both approaches can claim to have logical reasons in support of their stance. This is what makes the debate that much more intense. And today I will talk about the questions one must ask themselves and answer honestly before choosing either approach. Am I Willing And Able To Meet The Core D

In my past articles, I have thrown light on the way I view and perceive various aspects of financial planning. My approach to financial planning is also clearly explained here on my website. But I have never really spoken about the core principles that govern my approach to financial planning. So in today's post I will be speaking about those principles. I hope it offers a few insights into the way I think as a financial planner. Prepare For The Worst Case Scenario Financial

The state of being Financially Independent Retired Early (FIRE) is something that individuals the world over aspire towards. And it is a perfectly reasonable aspiration to have. But most people aspiring to attain FIRE today are doing so with a number of misconceptions about the concept. This invariably leads to individuals approaching the goal the wrong way. This invariably leads to people feeling unfulfilled even after attaining FIRE. Therefore I will be addressing some of t

Traditional asset allocation principles typically recommend having a balanced allocation to equity and debt prior to retirement. The focus then shifts to having an outsized allocation to debt post retirement. But the 2025 edition of a 2023 American research paper titled Beyond The Status Quo : A Critical Assessment Of Lifecycle Investment Advice advocates a 100% equity portfolio for retirement. It is recommended for both the accumulation and distribution phases in retirement.

There are a variety of mistakes that we can make when managing our money. Most of them are easily discernable. Their consequences are usually easily apparent. But there are some mistakes that are hard to notice and guard against. And it usually ends up being too late to change course by the time we wake up to them. But the silver lining is that it is largely or entirely in our control to not commit them. Therefore today I am going to talk about such mistakes and how we can ge

Making decisions related to money is at the heart of financial planning. It is aimed at making decisions that facilitate and optimise lasting satisfaction. It is an exercise that is meant to be centred around rationality. But it is carried out by human beings. And we are predominantly emotional by nature. Psychology and behaviour therefore pervasively impact money decisions and financial planning. These factors give rise to three major behavioural blind spots. They inhibit ou

The first sentence of the title of this article may seem scary or discouraging. But the harsh truth is that this is a fact. And there are a number of reasons why this is so. But the silver lining is that most of these reasons are tied to our general approach to retirement planning. So it is very much in our hands to tackle this challenge. Therefore in today's article I will be highlighting the major reasons why a comfortable retirement would be a challenge for most individual

A few months ago I wrote an article titled Responsible (And Therefore Unpopular) Answers To Frequently Asked Questions From Clients. It essentially offered my answers to some of the most common queries I receive from my clients. But my answers are always responsible and pragmatic. They are therefore typically unpopular with most clients. The article has since received a reasonably good response. I am therefore doing a similar article today. I will be offering responsible answ

A few years ago I wrote an article on this blog titled The Financial Planner's Role In Retirement Planning. It essentially laid out the role that financial planners play when helping individuals plan for retirement. Most of what I said in that article continues to remain true. But there have also been a number of pervasive changes in the ground realities within which today's individuals plan for retirement. Therefore it would only be fair to throw light on those changes. And

Retirement planning is the one financial goal that has the greatest number of unknowns attached to it. We have no way of knowing how long we will live, how much we would spend, what inflation would look like, the kind of return our portfolios would generate and what our income streams would look like post retirement. This is just the tip of the iceberg. And yet planning for retirement is the one goal that most of us tend to put off for the future. This is mostly true regardle

Leaving an inheritance for our loved ones is a common aspiration for most of us. But any inheritance brings with it a unique set of challenges. They crop up at every stage of creating, handing down and handling an inheritance. But we seldom recognise these challenges. As a result, most inheritances or any other form of generational wealth do not last long. Therefore it is important for us to recognise these challenges are. We also need to know how to tackle them. Only then ca

Most of us today realise the importance of creating wealth and passing it on effectively. But if there is one area where most of us are still severely lacking, it is that of talking to our families about our wealth openly. And this is even more true in the Indian context, where money management is almost always handled by a single member in the household. In most cases, our lawyers, chartered accountants and financial planners would know more about our wealth than our familie

Over the course of our financial journeys there are a number of aspects that are important. How prudently we save, invest, handle and behave around our finances are all aspects that are important. But there is one aspect that is more important than the others. And it is one that is often overlooked. It is the awareness to realise how much money is enough given our needs and circumstances. We humans are mostly wired to be part of a lifelong rat race. It could be one of having

Within the universe of debt mutual funds there are a variety of options available to investors. The nature and behaviour of each category of debt funds is heavily dependent on the tenure of individual securities held within the fund. Variants of debt funds such as liquid funds, ultra short term bond funds, corporate bond funds and gilt funds are well known to investors. But there is another category of debt funds which are relatively lesser known and therefore not clearly und

With regard to advice on money matters, there are two terms that are widely used. These are financial advice and investment advice. They are used liberally and often interchangeably. This creates the perception that financial advice and investment advice are the same. But there is a significant difference between the two. Understanding the essential differences between these two terms is vital. It would help us understand what kind of advice we need. It would help us identif