TIPS FOR SMOOTH FINANCIAL TRANSFER TO LOVED ONES

1. List down 

a) All your tangible assets and other valuable assets you would like to be transferred to your loved ones after your death.

b) All your bank accounts and other financial investments, even of small amounts.

c) All your outstanding loans and open credit cards.

d) All your insurance policies that you have purchased to insure life, health and loans.

e) All your financial advisors and insurance agents.

2. Draw columns

Draw a few columns in the above list and write down all their essential details.

3. Collect

Collect their essential documents and keep them at one place.

4. Nominate

a) Register and update your nominees for every financial asset.

b) Make a column for them too in your list.

5. Make a will

a) Identify your beneficiaries for every asset - tangible and financial.

b) Avoid mismatch between beneficiaries and nominees to prevent disputes and hassles later.

c) By law, a Will supercedes nominations.

d) A Will can be made on plain paper, mentioning details of all assets and investments, mentioning their beneficiaries and individual proportions, and the Will's Executor.

e) Sign on each and every page of the Will, along with date and place, in the presence of two witnesses.

f) A Will need not be registered if you don't perceive any dispute after your demise.

6. Safekeep

a) Keep all documents and the Will in a safe place known to the Executor.

b) Review and update your list and the Will periodically to include any changes.

THERE'S NO FORMULA FOR PICKING WINNERS ALWAYS

1. A long-term investor knows that there is no formula for picking winners always, hence he keeps his return expectations normal to beat inflation and earn more than bank deposit rates.
2. This may involve a few loss-makers and a few multi-baggers, which is a normal process to build reasonable wealth without insisting that each investment should give high annual returns.
3. Investment is a long-term process-driven approach - and building wealth is a slow regular process - which mixes discipline, intelligence and experience that can extend for decades.
4. Earning wealth too quickly may make you rich, but it does not give you experience in acquiring it - which is vital for keeping and growing that wealth.
5. For a "process approach" investor, the focus is handling an allocated asset portfolio to deliver a goal-aligned return, with a defined level of downside risk it can take, and the intent is to make money from such businesses that holds the promise of strong future earnings, with constant checking, verifying and revisiting the initial assumptions made.
6. For an "outcome-approach" investor, the focus is capital alone, and the intent is to make money work hard and fast, cut losses and move on to running faster.
7. Therefore, he short-changes the "tough and long-drawn" process-approach and seeks to invest on the basis of "audacious tips and names", even resorting to frequent "churns and switches", for "maximum outcome" at all times, and thus becoming totally dependent on "getting lucky".
8. A shift is, therefore, needed in the investor mindset because investing cannot always be about making opportunistic short-term gains, and windfalls cannot be a regular, sustained event.
9. Risk in short-term investing for an unexpected windfall needs to be acknowledged, unless unlimited capital is available at low costs.

RELEVANCE OF A FUND'S MANAGEMENT TO INVESTORS

1. The fund management of MFs definitely does matter to long-term investors, and this is not a one-man job.
2. It is a team of professionals, including analysts, researchers, and the fund manager himself, and its inputs are necessary for investment ideas.
3. In addition, many fund houses have a process-driven approach and strict investment philosophies, within which the fund manager has to function.
4. Some fund houses allow a fund manager to play around the investment parameters, and his credentials are, therefore, critical to the performance of the fund.
5. While he is the lynchpin, any fund house with a process-driven approach, a well-defined philosophy and risk management practices can deliver sound performance without relying purely on the fund manager.
6. Such a fund house can even replace an outgoing star fund manager without affecting the returns.
7. So, you should give precedence to the fund house pedigree over the individual running the scheme, as he is rarely the sole driver of the fund’s performance, especially when investing for very long-term goals.
8. As a thumb rule, evaluating MFs through these 5 Ps is helpful - People, Process, Parent, Performance and Price(charged).
9. All other factors being equal, an inexpensive fund should be preferred over an expensive one.
10. Peer group comparison of funds with similar investment objective and style also enables a fair evaluation in the same category.
11. As it is a fact that none of our MFs are actually fully process driven in practice, hence the persisting importance of a fund manager and his changing positions too.
12. In a growing and emerging economy like ours, there is bound to be higher market volatility, and fund managers are able to utilize this situation for alpha returns.
13. Comparison of long-term performance of funds within the fund house and among peers, after changes in fund managers, through their ratings, expense ratio, etc. can throw a better light.
14. However, at the end of the day, it is the long-term earnings and ratings of peer funds which should matter for comparison by investors for selecting them in their portfolio.
15. The details submitted by MFs in public domain, as directed by Sebi are supposed to be ok as they can be subjected to scrutiny and penalty, leading to loss of customer confidence and clientele, and could therefore be depended upon.

DIFFERENTIATING BETWEEN ETF AND FOF FUNDS

1. As a DIY investor, differentiating between unique characteristics of Index Fund, Exchange Traded Fund and Fund Of Funds is necessary before choosing them, and Sebi's categorization is very helpful here.
2. An Index Fund is an open-ended fund that invests 95% min. of its total assets in "securities of a particular index" that it is replicating / tracking.
3. An ETF also has the same characteristics, but its units are bought and sold only in the stock exchange.
4. A FoF is an open-ended fund of funds that invests 95% min. of its total assets in "mentioned underlying funds".
5. There can be one or several mentioned underlying funds in a FoF, whether equity-oriented, debt-oriented, gold-oriented, etc., depending on each FoF's offering.
6. For a like-to-like comparison between an ETF and FoF, a DIY investor should, therefore, select an ETF and a FoF that invest 95% min. assets in the same particular index being replicated/tracked.
7. ETF is lesser expensive, has daily direct market access for transactions by an investor at market-related prices, and its tracking error is much lower, although an investor needs to open a trading account and a demat account, bear their charges, and also limited market liquidity at times.
8. FoF is more expensive, has no direct market access for transactions by an investor and a higher tracking error, although there is no need of a trading account and a demat account, while liquidity is assured as transactions are with the fund house directly, albeit at a NAV which becomes available only at the end of the day.
9. If the chosen ETF and FoF are fully comparable in their characteristics, a DIY investor should take a decision for including them in his portfolio by keeping his own brokerage fee, demat charges, TER, tracking error and liquidity needs in mind.

NFOs OR EXISTING FUNDS?

1. Sebi has mandated that each AMC can have only 1 fund in each of the various clearly spelt out categories, as far as Open-ended funds are concerned.
2. Therefore, AMCs can't offer NFOs where they already have a presence, under any pretext whatsoever.
3. But Sebi has allowed AMCs to issue NFOs in all categories where they don't have a presence yet, hence we can expect NFOs in most categories, as even the biggest AMCs don't have presence in all of them yet.
3. Therefore, it would be interesting to watch how these NFOs, offered in "pre-standardized" categories, but belonging to many reputed AMCs with star fund managers, would perform in the long term to become game-changers.
4. Currently, Existing Funds enjoy patronage by investors due to:-
a) Being tested products with past track record,
b) User experience feedback with fund ratings,
c) Known underlying portfolios to decide selection,
d) Known TER and AUMs, and
e) SIP facility from the first investment itself.
5. However, Existing Funds have often suffered due to:-
a) Accumulation of "baggage" with time, reflected in their NAVs,
b) Bad decisions of their previous fund management teams, and
c) Heavy cashflows (in and out) with occassional discomfort.
6. Only time will tell whether such NFOs will be able to offer a "cleaner slate" with no previous "baggage", although they would have no previously declared time-tested portfolio, nor any price advantage, and higher TER too due to their smaller AUMs.

WHAT ARE INDIA'S CAUSES OF ECONOMIC WORRY ?

1. Our hefty domestic demand growth, which always used to neutralise our perenially dismal export growth, has considerably weakened, with waning of our "animal consumption spirits".
2. This is a major cause of economic worry as we are, and will continue to be, a net importing economy - mainly due to edible and industrial oils - along with declining export growth as well.
3. Although inflow of foreign funds may have currently guided the stock market up, due to corporate-friendly announcements, it is to be seen whether we remain attractive for them when other markets would start catching up, during an improvement in the global economy.
4. As the financial sector, banking and non-banking as well, has not yet fully accounted all its bad loans, its credit growth also remains subdued, adding to discomfiture.
5. What is urgently needed are Real Reforms like:
a) Land and Labour reforms
b) Taxation reforms
c) Privatisation of Public sector banks, manufacturing industries and utilities
d) FDI and E-commerce liberalisation
e) Exchange rate management policy
f) Energy pricing reforms
g) Rural public works reforms
h) Fiscal Deficit reduction reforms
i) Agrarian employment reforms

FOLLOW "100 MINUS AGE" RULE FROM FIRST INCOME ITSELF

1. 25-yr young earners can easily implement "100 minus age" rule of long-term investment allocation from their first income itself.

2. So 75% of net surplus savings can be allocated to an Equity fund and 25% to PPF, EPF or a Debt fund.

3. During their earning years, they can rebalance them periodically as per their current age and risk appetite.

4. For simplicity, as an alternative, they can opt for a Hybrid Aggressive Fund with its auto-rebalancing mandate, to take care of Equity:Debt allocations, during their earning years as well as their retired lifetime.

DOES A LARGE CAP STOCK ALWAYS HAVE A LARGE EQUITY BASE?

1. For ensuring investment universe uniformity of Equity MFs, Sebi has defined Large cap, Mid cap and Small cap stocks, in terms of full market capitalization, as 1st-100th company, 101st-250th company, and 251st company onwards respectively. 
2. This list of stocks is prepared and uploaded by AMFI on its website, and updated every six months based on June and December end datas each year.
3. Market capitalization (market cap) refers to the market value of the outstanding share capital of a company, i.e. its share price multiplied by its share capital. 
4. It is, therefore, an indicator of the size of a company in terms of the current market price of its shares, but not necessarily of a large equity base in all cases.
5. Generally, large-caps are firms with steady and predictable growth rates, while mid-caps have higher growth potential, but with greater business risk.
6. While a large-cap stock's price normally reflects all the available information and is in line with the underlying value, in case of mid- and small-cap stocks, it’s possible to benefit from information not widely 
known. 
7. Share prices of large-caps tend to be less volatile than mid- and small- caps, and also have a higher liquidity. 
8. While stock prices of mid- and small-caps are likely to do better than large-caps in a sustained bull market, they also tend to fall more than large-caps in a sustained bear market.

ESTATE PLANNING CHECKLIST FOR EVERY WIFE

1. Are my Will and my husband's Will explicit and current?
2. Are my advisors competent and sincere?
3. Am I aware of greedy relatives and well wishers?
4. Do I have a complete documents file?
5. Am I aware of my financial profile?
6. If widowed, will I have a rightful place to live?
7. Have I analyzed my husband's existing life insurance policies?
8. Am I prepared to take up a job if necessary?
9. Are there adequate provisions for children's education and marriage?
10. Am I familiar with my husband's retirement arrangements?
11. If my husband owns a business, do I know what to do with it after him?

HOW SHOULD YOU INVEST IN A MID/SMALL CAP FUND?

1. For initiating systematic long-term investment in a mid-cap or small-cap fund, select one with high star rating and mid- / long-term past returns, which indicate a proven track record and performance history.
2. Choose a fund through peer performance ranking across a common time period, preferably from within the top 25%.
3. As no single fund stays in the top quartile at all times, check how soon it rebounded after slipping, and whether it continued to stay in the top 50% for over a year.
4. Review annually and replace a laggard if its ranking slipped for four consecutive quarters among peer funds, as it cannot recover such a downfall in ratings soon enough.
5. It is important to keep in mind that as per Sebi's categorization, a mid-cap / small-cap fund will invest 65% min. (going upto 100%) in mid-cap and small-cap stocks respectively, while the rest can be in other stocks and debt products, depending on the investment style decided by its AMC.
6. As per Sebi's redefined equity universe, in terms of market capitalization decided by Amfi monthly, the 1st 100 companies are large-cap, the next 150 companies are mid-cap, and all other companies are small-cap.
7. Investing in a mid-cap / small-cap fund requires patience, with 5-yr+ time frame, for allowing cost-averaging during a full market cycle, and is considered an aggressive style of investment.
8. A lesser aggressive investor may opt for a multi-cap fund which will invest 65% min. (going upto 100%) in equity stocks of any market capitalization, with the rest in debt products.
9. This allows flexibility in realigning its portfolio, for cushioning itself rapidly to changing markets, or redemption pressure, as it can suitably pick from a variety of stocks, depending on its fund manager's deft ability within the mandate given by the AMC.
10. A conservative equity fund investor may opt for a Hybrid Aggressive fund which will invest 65-80% in equity stocks and 20-35% in debt products, with built-in periodic rebalancing mandate.

HOW CAN A WOMAN BECOME FINANCIALLY EMPOWERED?

1. Inadequate financial literacy often creates financial insecurity in a woman, which can result in her facing disturbing social fallouts like abuse, cheating and mis-sold financial instruments.
2. As she is the best judge of her needs, she should fulfill them herself instead of letting or expecting others to do it for her.
3. To start with, an urban DIY working woman can optimally utilize her smartphone for her own banking and all utility transactions.
4. As a second step, she can focus on a 3-yr short-term goal, say a vacation, open an online mutual fund account on her phone and activate a monthly investment plan through her own bank account, to get a hands-on investment experience.
5. Thirdly, she can also utilize her smartphone for upgrading her financial and investment skills, by subscribing to suitable websites and blogs for regular reading, in her spare time.
6. This will suitably empower her to add medium- and long-term goals - like buying a house, investing for her kid's education and marriage, planning for her own retired life - for fulfilling them all by herself through growth-oriented mutual funds.
7. Before embarking towards these goals, she must build and maintain a contingency fund, with reserve cash equal to 4-6 months of her expenses, in a sweep-in savings account, which combines the benefits of liquidity with higher interest rates.
8. This fund should be adequate enough to take care of:-
a) Unexpected job loss,
b) Any overshooting of hospitalization expenses,
c) Any disability hampering earning abilities, and
d) Any matrimonial setback.
9. Being an earning member, it is essential to buy an online life term insurance plan covering at least 10 years of her income, so that her absence doesn't burden her family financially, and an adequate health insurance plan to take care of ever-escalating hospitalization expenses any time.
10. Last, but not the least, establishing ownership of her assets is critical for a working woman by:-
a) Having a disciplined portfolio with an asset allocation plan,
b) Proper documentation and its easy access,
c) Being tax-savvy,
d) Drawing up a Will, whatever the age, and
e) Avoiding getting cheated or mis-sold products.

DON'T RELY ON A SINGLE MUTUAL FUND HOUSE

1. Over-reliance on a single team of experts to handle your money can be reduced by selecting funds across different AMCs.
2. By doing so, your portfolio health can withstand any sudden downturn in performance of any AMC across its schemes, for own unique reasons.
3. Hence, selecting another peer fund of a different AMC within top 25% of a specific category is better. 
4. As no fund occupies top quartile always, it can be checked how soon it rebounded after slipping, to ensure that it continues to stay within top 50% for over a year.

HOW TO MANAGE FINANCIAL RISK WHILE INVESTING

1. A disciplined asset allocation is the key to financial risk management and control.
2. It starts with:-
a) Setting realistic goals at today's cost, with earmarked time frames,
b) Calculating future costs by factoring in inflation,
c) Changing our investment habit from normal ‘earning minus spending is investment’ to scientific ‘earning minus investment is spending’, and
d) Regular investment through compulsory savings plans and active investment plans.
3. Adhering to an asset allocation, based on the formula '100 minus age', for investing in equity products for long-term goals, regardless of market conditions, prevents us from being swayed by crowd psychology.
4. Factors which impact our ability to take investment risks are:-
a) Age - which should decide our risk-taking capacity,
b) Income pattern - whether regular or unstable,
c) Liabilties - our debts and commitments,
d) Dependents - whether a sole earner for an extended family,
e) Past savings and investments - how they are placed and faring, and
f) Industry of employment - as it decides our income prospects and risk factors too.
5. We should ensure that we hold a combination of assets, to prevent erosion of our entire wealth due to adverse impact on one asset.
6. We should never believe that there are risk-free investments, as risks exist in all, stop predicting future asset prices, avoid searching for best investments, and remain focussed on managing our own portfolio actively.
7. For this, our corrective action plan should be well-defined for managing risky events, by fixing our downside risk tolerance level, and also by admitting our judgement errors, as there is no merit in maintaining losing positions endlessely.
8. Such released capital can be utilized elsewhere to help recoup our losses, instead of our unrealistic, subjective opinion about them, which leads to taking undue risks, by ignoring merits of another sound proposition.
9. We can temper our overconfidence and over-optimism by:-
a) Making an investment plan after considering that past performances don’t always get replicated,
b) Taking rational decisions, devoid of intuition, by exercising due diligence with sufficient information,
c) Selecting products suitable to our own goals and risk appetite, and
d) Controlling our over-optimism by cutting out 25-30% from our euphoric growth estimates.

HOW TO MEET YOUR RETIREMENT EXPENSES

1. You can get rid of your retirement blues if you have accumulated a wealth of at least 150 times your monthly retirement expenses, i.e. 75 lakhs (excluding your residential flat) for 50,000 monthly expenses.
2. You can now reallocate your 75 lakhs wealth to create a simple, yet effective, investment portfolio, as below:-
a) Hybrid Aggressive Fund (HAF) - 45 lakhs
b) Short Duration Fund (SDF) - 15 lakhs
c) Senior Citizen Savings Scheme (SCSS) - 15 lakhs
3. While eligibility for SCSS is 60 years, you can even open it from your retirement benefits upon retiring at 55, else you can initially invest in SDF/HAF till becoming eligible for SCSS.
4. You can then withdraw your 50,000 monthly expenses as below:-
a) HAF - 32,000 (by SWP)
b) SDF - 8,000 (by SWP)
c) SCSS - 10,000 (32.6k paid quarterly)
5. Even with a conservative CAGR of 9% and 6.5% for HAF and SDF respectively, besides current 8.7% p.a. intt. for SCSS, you would still retain a healthy wealth corpus of 88 lakhs (or 95 lakhs) at the end of 45 years (or 55 years) of your retired life for bequeathing to your successors!
6. Since HAFs have an auto-rebalancing mandate, besides 80% max equity participation, they especially suit retirees with a moderate risk appetite.
7. If you have a higher risk apetite, you can even allocate up to 50% in a Multi Cap Fund (MCF), with periodic rebalancing yourself, for increasing your final corpus for bequeathal.
8. A tip:- If you are also able to save from your monthly withdrawals/ expenses, you can even start a monthly SIP in a separate HAF/MCF to grow the net savings from your retirement income too - a mere 500 SIP @9%CAGR would become 33 lakhs (or 79 lakhs) during 45 years (or 55 years) of your retired life - through power of long-term compounding !
9. Ideally, wealth corpus accumulation of 240-300 times of monthly retirement expenses is advisable during 30 earning years, i.e. 1.2-1.5 crores, for 50,000 monthly expenses, through long-term systematic investment. 
10. If this accumulation goal becomes difficult, monthly retirement expenses could be toned down suitably, or an additional revenue stream can be contemplated during retirement too.

STEPS TO REDUCE INVESTMENT-RELATED RISK

These 5 steps could help in reducing investment-related risk:-

1. Segregate life goals / needs by fixing time horizons for achieving each of them.

2. For each goal / need, assign a specific investment category, based on the risk, return and liquidity it offers, to avoid frequent churning.

3. Select sound products in each category after evaluating their strengths, unique features and associated costs and invest in them systematically.

4. Track, review and re-evaluate the performance of products periodically, and shift investments systematically to ones with lower risk when approaching a goal.

5. Maintain a debt-equity investment ratio as per age, working status and overall risk appetite.

TIPS FOR NEW EQUITY INVESTORS

1. For a new investor, equity mutual funds offer a range of options catering to various needs and goals depending on your risk profile. 
2. You could "test waters" in 5-star rated funds by initiating long-term SIPs of equal amounts of your investible surplus in a smallcap (7 years), a midcap (10 years), and a multicap (15 years) fund, as past returns in them have managed to reach levels aimed by you.
3. For investing in equities by entering the stock market, you should check if you're fit to be a stock investor, with the right attitude to be a willing learner during its volatility, as stock buying, holding and selling on your own can be a tricky business and is not meant for everyone.
4. How much you'll earn from your investments in the stock market will depend on the time and effort you put into your research because there's no such thing as a safe stock or a guaranteed multibagger.
5. In this regard, you should gain adequate knowledge about various sectors and be able to evaluate business aspects like operating margins, product mix, management quality, cash flow visibility, etc. of your identified companies before including them in your portfolio - a job which fund managers otherwise aim to do for you when you invest in equity funds.
6. You can reduce investment risk in the stock market to an extent by:-
a) Spreading your investments across stable blue-chip companies and evergreen sectors,
b) Understanding the difference between "price" and "value" of a stock,
c) Staying invested for the long term by "not timing the market" but "spending time in the market",
d) Monitoring your investments on a half-yearly basis for rebalancing the portfolio so that it remains at your comfortable level of risk, and
e) Recognizing that equity investing is a high-risk, high-return activity, based on several assumptions that can go awry, hence it will never give uniform risk-free returns on an yearly basis.
7. You could even invest regularly in the stock market through ETFs to get indexed annual returns.

EQUITY SHARES OR EQUITY FUNDS FOR A NEW INVESTOR

1. For a new investor, equity mutual funds offer a range of options catering to various needs and goals depending on your risk profile. 
2. You could "test waters" in 5-star rated funds by initiating long-term SIPs of equal amounts of your investible surplus in a smallcap (7 years), a midcap (10 years), and a multicap (15 years) fund.
3. For investing in equities by entering the stock market, you should check if you're fit to be a stock investor, with the right attitude to be a willing learner during its volatility, as stock buying, holding and selling on your own can be a tricky business and is not meant for everyone.
4. How much you'll earn from your investments in the stock market will depend on the time and effort you put into your research because there's no such thing as a safe stock or a guaranteed multibagger.
5. In this regard, you should gain adequate knowledge about various sectors and be able to evaluate business aspects like operating margins, product mix, management quality, cash flow visibility, etc. of your identified companies before including them in your portfolio - a job which fund managers otherwise aim to do for you when you invest in equity funds.
6. You can reduce investment risk in the stock market to an extent by:-
a) Spreading your investments across stable blue-chip companies and evergreen sectors,
b) Understanding the difference between "price" and "value" of a stock,
c) Staying invested for the long term by "not timing the market" but "spending time in the market",
d) Monitoring your investments on a half-yearly basis for rebalancing the portfolio so that it remains at your comfortable level of risk, and
e) Recognizing that equity investing is a high-risk, high-return activity, based on several assumptions that can go awry, hence it will never give uniform risk-free returns on an yearly basis.
7. You could even invest regularly in the stock market through ETFs to get indexed annual returns.

HOW TO BEAT INFLATION COST OF CHILD'S HIGHER EDUCATION

1. It's a fact that financial planning based on nominal inflation rate is very dangerous for meeting retirement goals, long-term healthcare and higher education expenses, even worsening as our earning years go by.
2. Just for info, 38-year CPI inflation has galloped at 7% CAGR, with last 5 years being between 4-9%.
3. On the other hand, higher education cost has been increasing at nearly double the general inflation rate, i.e. by one-sixth annually.
4. It means that a specialized course costing Rs.1 lakh this year would cost Rs.1.16 lakh next year, Rs.1.35 lakh two years from now, and about 6-7 times in next 15 years, which may not always be possible to meet with annual rate of increase in our salary.
5. However, a robust long-term financial plan, from child's early age, that can increase by at least 13-15% CAGR, would help meet this essential life goal.
6. Start with main earning parent buying a pure online life term plan, for covering 6-7 times of target course's present cost, and for a period equal to the number of years left for child to go for that specialized course, in order to ensure that there is no interruption if earning parent is not around.
7. Thereafter, start uninterrupted step-up SIPs in 1/2 multicap MFs for a similar period left for that course, and starting STPs into a short-term debt fund before 2 years, to safeguard accumulated returns from any short-term volatility, when the funds would be needed, 
8. In case you still fall short marginally, opt for an education loan for a convenient amount, with an EMI holiday provision, so that child starts paying it after getting a job (and with tax benefits too).
9. A Ready Reckoner to meet total course cost (E&OE):-
a) 4-yr B.Tech: 2018 - 25 lakh; 2030 - 75 lakh
- 22,000 SIP @13% CAGR for 12 years.
b) 2-yr MBA: 2018 - 40 lakh; 2033 - 1.6 cr
- 29,000 SIP @13% CAGR for 15 years.
c) 5-yr MBBS: 2018 - 40 lakh; 2030 - 1.25 cr
- 36,000 SIP @13% CAGR for 12 years.
d) 2-yr MD: 2018 - 45 lakh; 2033 - 1.93 cr
- 36,000 SIP @13% CAGR for 15 years.
(Starting even earlier will reduce SIP amount considerably, and step-up SIPs would help further)
10. Remember to apply entire procedure to provide higher education to BOTH the BOY and GIRL child individually, by clearly earmarking different sets of term policies and funds as required by the target courses.

WHY IS REVIEW OF FUND PORTFOLIO IMPORTANT ?

1. Reviewing each mutual fund of one's portfolio periodically helps to assess how it is doing, and whether it is suitable for meeting pre-determined needs and goals. 
2. Instead of monitoring its performance in isolation, comparing it over different time frames with category peers is more apt.
3. Switching should be considered only on consistent under-performance or undesirable changes in fundamental attributes like expense ratio, investment mandate, style or team. 
4. Keeping a clear time horizon in mind while investing, without bothering about intermittent volatility, is desirable as investing only to make money is a vague idea.
5. When all funds are linked with various goals in mind, it will give a better idea when to switch or exit them.
6. Even after the selection process, allocating money equitably is vital too at the outset.
7. A long-term SIP investment is desirable for cost averaging, instead of lumpsum investment (in three months), for all funds in one's portfolio.
8. This can be achieved by making a matrix and allocating resources at the beginning of the year through SIP mandates.
9. This method makes it easier to take decisions at the end of the year towards additional allocations, switches, weeding out, goal-based redemptions and even rebalancing.
10. It also enables one to shut out hasty decisions often taken on the basis of "daily market noise".

WHAT TO DO WHEN YOUR HEALTH POLICY GETS DISCONTINUED ?

1. While your discontinued policy will remain valid till its annual term expires, you can't take any legal recourse for its continuity as it's an authorised withdrawal.
2. According to IRDA rules, an insurer can withdraw or discontinue any product after seeking its permission by explaining the reasons for doing so, but has to offer existing policyholders a suitable alternative, which your insurer would have also done.
3. It is beneficial to avail of such an offer because:-
a) you will continue to enjoy benefits that have accumulated under earlier policy,
b) the features may even be more beneficial, despite a premium revision, due to its upgrade.
4. You can also discontinue the policy and buy a new one, even from a different insurer, although you will lose out on benefits that you have accumulated in your existing plan over the years, like waiting period for pre-existing illnesses, cumulative bonus, etc.
5. You can also port (transfer) your existing policy to another insurer, but it is easier said than done due to incidences of pre-existing diseases, any recent claims, critical illnesses, accumulated bonus, fresh underwriting, etc.

TIPS FOR MUTUAL FUND INVESTMENT AT 40

1. At 40, a well-diversified asset allocation plan that addresses your personal risk comfort foremost is desirable. 
2. You could allocate upto 75% of your monthly investible surplus to Equity MFs and 25% to a short-term Debt MF.
3. Activate your Equity MFs SIPs as:-
a) 10% in large cap fund,
b) 15% in large & midcap fund,
c) 50% in multicap fund, and 
d) 25% in small cap fund.
4. Utilize your short-term Debt MF for:-
a) Maintaining your contingency fund of 6 months expenses,
b) Investing your 25% monthly debt allocation,
c) Periodic rebalancing of your Equity MFs for retaining your debt and equity ratios,
d) Funding your short-term goals, and
e) Fulfilling your medium- and long-term goals by channelling redemption of your Equity MFs into it.
5. Aim for continuous SIPs up to 25% of your pre-tax monthly income during your earning years, say for the next 20 years, irrespective of market volatility and economic cycles.
6. Ensure that the portfolio is also diversified across AMCs, which helps to reduce risk if any of them go downhill for an AMC's own unique reasons.
7. Redeem only for fulfilling goals earmarked against each of your MFs.
8. While nearing retirement, you could moderate your age-related risk by shifting a part of your corpus to a Hybrid Aggressive fund, as a rebalancing exercise.
9. At 40, you should also review your contingency fund, term and health insurance, besides making efforts to start reducing your borrowings, if any.

UNDERSTAND AND SELECT WHAT IS RIGHT FOR YOU

1. Just as a menu card in a restaurant enables selecting what you "like", your investment approach should be to select what is "right" for you, as each product comes with its own nuances.
2. For instance, all debt instruments come with interest rate movements and all equity instruments come with market-related movements, and that's where your individual risk appetite comes in.
3. Therefore, what is right for you may not be right for someone else as it's never about the instrument but about a mismatch between it and your risk profile.
4.  Biases like "over-optimism" or "conservatism" also creeps in which influence investment decisions leading to "under-reaction" or "over-reaction" to market realities at different points of time.
5. As macro-economic variables are extremely dynamic, an investor's financial plan should suit his risk profile assessed through questionnaires, and its chosen products should take care of short-term and long-term goals as well as future expenses.
6. For building portfolios, key principles require you to ensure:-
a) product suitability with risk profile,
b) portfolio quality is never compromised,
c) diversification, as even best research isn’t error-free, and
d) provision of appropriate time to deliver performance.

10 FACTORS THAT HAVE BOOSTED INVESTOR CONFIDENCE TOWARDS MUTUAL FUNDS

1. Increasing awareness about mutual funds among novice investors.
2. Consistent lacklusture returns in traditionally preferred assets like gold and real estate.
3. Continuous fall in interest rates of banks and post office savings.
4. Growing favour among investing public towards equity assets, especially MF SIPs.
5. Introduction of big bang reforms more consistently than earlier, enabling spending of more money on developmental projects.
6. Consistently high GDP growth, moderate inflation, falling cost of capital, increasing foreign exchange reserves, increasing consumption and infrastructure investment driving equity returns.
7. Vast scope for MFs to tap the increasing Indian savings as well as global investment.
8. Increase in service-oriented and convenience-oriented innovations by the MF industry along with prompt servicing and transparency.
9. Comprehensive financial planning products offered by MFs by delving deeper into investors' needs at different lifecycle stages.
10. Focused product offerings in MFs by designing schemes that invest in stock markets, government securities and corporate papers catering to short-term, medium-term and long-term needs of investors through liquid funds, income funds and equity funds.

STEPS TO DEFINE AND CONTROL INVESTMENT RISK

These 5 steps immensely help in defining and controlling downside risk that an investor can take:-

1. Segregating goals / needs by fixing time horizons for achieving each of them.

2. Assigning a specific investment category to each goal / need, as per its documented risk, return and liquidity.

3. Selecting products in each category after evaluating their strengths, unique features and associated costs, and investing in them systematically.

4. Deciding one's debt-equity ratio for asset allocation as per one's age, income pattern and savings, dependents, liabilties and industry of employment.

5. Reviewing portfolio performance, and shifting to less risky / fixed income products on nearing a goal.