Transform Your Finances: 4 Resolutions for 2018

Before we begin this article, all of us at Team Quantum would like to wish you a very happy new year. As Jan 1 is here, we begin the year with a slew of resolutions. Type in ‘Common New Year resolutions’ in Google and you get the usual suspects: losing weight/joining the gym are typically at the top, while a few not so regular ones like learning a new language or hobby also find a mention. Have you ever made a New Year resolution and failed to keep it? Don’t worry, you’ve got company: just 8% - that’s right, EIGHT percent! – of people stick to their resolutions for the entire year.

Spending less and earning more typically winds up somewhere on these lists of common resolutions, but should be higher! On that note here is a list of 4 financial resolutions we think you ought to keep and follow (we certainly try our best to!):

1. Avoid Bit-Cons!
2. Save Tax
3. Plan for Short Term Exigencies
4. Plan for the Long Term

Avoid Bit-Cons!

Arguably the story of the latter half of 2017 is the rise and the fall and the rise (we could go on here) of Bitcoin. At the time of this article, one Bitcoin is a whopping US $14,470, and by the time you read the article the price will almost certainly have undergone a massive change yet again.

The history books are full of widespread fascinations/manias that covered everything from stocks to tulips. This takes us back to college, where the bespectacled economics professor taught us that when fascination (rational or irrational) with something increases, the demand for that good increases, but if the supply is relatively static then the price ends up pretty much going through the roof. If you’re not familiar with the tulip reference, something similar to the current Bitcoin craze happened with the humble flower in Holland in the early 1600’s, when a single bulb of the tulip or the Semper Augustus was worth 5,500 guilders in 1633. 4 years later, the sum had nearly doubled to 10,000 guilders. By now you’re wondering: is that a lot? One historian noted: “It was enough to feed, clothe and house a whole Dutch family for half a lifetime, or sufficient to purchase one of the grandest homes on the most fashionable canal in Amsterdam for cash, complete with a coach house and an 80-ft (25-m) garden – and this at a time when homes in that city were as expensive as property anywhere in the world.” All this for one flower!

At least the flower is something tangible which one can hold – unlike the Bitcon (oops, meant to type Bitcoin!) – which no one knows who owns, and as of now no one regulates. [It’s not that we don’t know, we do – there IS no regulator]

Bottom line: there will be many such stories and manias that you’ll encounter in your investing lifetime. Don’t fall for these cons or stories. Keep your financial goals in mind, your discipline intact and stay invested. If you want to have a little fun and participate in the Bitcoin mania, fine – there very well may be a place for it someday – but don’t talk yourself into believing you’re making an “investment” of any sort. At least be emotionally prepared to lose 90% of your value before it ever rebounds. Investors tend to cling to the latest examples and have a bad habit of forgetting history. Just remember: after the dotcom bubble crashed, it took 15 years for the Nasdaq to recoup its former heights. Use that as a guiding example if you want to put money into Bitcoin at these levels.

How can Quantum help:

Typically, when a friend gets overexcited about something, what do we tell them? Something on the lines of “take it easy, here’s a SIP of water…” We need to do the same thing for our investments. Know what your investment goal is, plan for it, do your homework and start a Systematic Investment Plan (SIP) and work towards achieving it. When markets go crazy or a bit tries to con you, don’t jump onto the bandwagon because everyone and their neighbours are doing so...relax and continue SIPping. We have SIP options in 7 out of 9 funds. Do take time to go through them and see which fund suits you the best, given your risk appetite.

Our Relationship Managers will always guide you to taking your investment decisions only after checking your risk appetite. If someone has a high appetite for destruction (read: risk) then Bitcoins are great! But most of us have a normal risk appetite and would not like to see our hard earned money going up in smoke. Hence trust your RM to keep your investments on the right track.

Save Tax

A no-brainer right? Why should we pay more tax when we can invest and ensure that we actually use more the money we earn! The surprising fact is that most people tend to ignore the tax planning aspect (TDS hai na) or leave it till the last minute (29th March usually) to invest in tax saving instruments.

As an investor you can invest in Tax Savings funds or ELSS (Equity Linked Savings Scheme) and avail of a deduction of Rs. 1,50,000 under Section 80C. While this doesn’t reduce the tax you pay, it does reduce the amount on which your tax is finally calculated. Don’t worry, we fully agree that paying tax is a patriotic duty, but there’s nothing at all wrong with investing in securities, promoted by the Government itself, which will help us save tax.

How can Quantum help:

The Quantum Tax Saving fund is an ideal investment option for those who wish to save tax. It is an ELSS fund through which you can avail the deductions under section 80C, the fund invests in equities and has a lock in period of 3 years, which allows the fund manager ample time to help convert your savings to wealth.

Plan for Short-Term Exigencies

Be it repairing severe damage to your car, handling an emergency medical expense, or a variety of unforeseen circumstances, most of those who live ‘cut-to-cut’ with their salaries and expenses are often stumped as to what they should do when the unforeseen expense hits. Often we have friends and family members in dire need of money and when they ask us for help, we have to stretch ourselves financially to do so (again something which wasn’t really planned). God forbid those expenses are medical – with the medical line becoming more a business than a profession, any good hospital in the country will charge a massive amount for tests and treatments.

How can Quantum help:

At Quantum we have a thumb rule for something like this. Be conscientious and make a list of all the expenses you make on a monthly basis. Multiply that total by 6 to know a rough estimate of your expenses for 6 months. That should be the balance in your savings bank account, or – if you want better returns than a savings bank account – in a Liquid Fund. Therefore, at any point of time, you are prepared with 6 months of expenses as reserve, which you can call upon in an emergency.

Investing in the Quantum Liquid Fund helps here as it is an ideal investment option for those investors who want a savings bank account type of investment, but with a reasonably higher interest rate. Quantum Liquid Fund is ideally meant for a shorter duration of investments as it is easy to invest and redeem from this fund, which means your money is there when you need it most and unlike an FD you don’t have to pay any penalties on withdrawal. Nevertheless, investments in Liquid funds carries the inherent market risks.

Plan for the Long Term

This tends to be one of the easiest resolutions to break. Many of us invariably tend to procrastinate what doesn’t affect us immediately. “Plan for retirement, pah, that’s 30 years away!” or “Sonu is just 10, why should I plan for foreign education or marriage from now?” That there are many immediate expenses that need to be resolved first, and long term goals can therefore take care of themselves later, seems to be the mentality that most of us tend to harbour.

That’s what we need to resolve to change. Retirement planning ideally should start from one’s first salary cheque and continue to the last. A fund for the child’s education or marriage needs to be created in year 1. That way, when we do reach that goal there are zero worries on the financial front. We can therefore look towards the future with confidence, as we have the foresight and have planned for that huge expense. Remember: you’re thinking 10+ years down the line. It only takes minimal effort now to pay massive dividends in that long a period.

How can Quantum help:

Through the Quantum Long Term Equity Fund. The Quantum Long Term Equity Fund (QLTEF) is dedicated to ensuring that we pick  companies that can take advantage of the India growth story. An investment in QLTEF will primarily help investors give their investment an equity exposure with the potential to achieve long-term capital appreciation. Investors looking to park their investments to achieve their long-term financial goals can invest in this fund.

So no matter what your New Year resolution Quantum can help you achieve it. While we are not fitness consultants, we can hopefully manage your money well enough to help you afford the best trainer in the business!

Once again, wishing you a very happy and prosperous 2018.

Name of the Scheme & Primary Benchmark	This product is suitable for investors who are seeking*	Risk-o-meter of Scheme
Quantum Long Term Equity Value Fund An Open Ended Equity Scheme following a Value Investment Strategy	• Long term capital appreciation • Invests primarily in equity and equity related securities of companies in S&P BSE 200 index.	Investors understand that their principal will be at Moderate Risk
Quantum Tax Saving Fund (An Open Ended Equity Linked Saving Scheme with a Statutory Lock in of 3 years and Tax Benefit)	• Long term capital appreciation • Invests primarily in equity and equity related securities of companies in S&P BSE 200 index and to save tax u/s 80 C of the Income Tax Act. Investments in this product are subject to lock in period of 3 years.	Investors understand that their principal will be at Moderately High Risk
Quantum Liquid Fund An Open Ended Liquid Scheme	• Income over the short term • Investments in debt / money market instruments.	Investors understand that their principal will be at Low Risk

* Investors should consult their financial advisers if in doubt about whether the product is suitable for them.

Disclaimer, Statutory Details & Risk Factors:

The views expressed here in this article / video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The article has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of this article should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments. Please visit – www.quantumamc.com/disclaimer to read scheme specific risk factors.

Above article is authored by Quantum.

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