Q&A: Financial Planning For Seafarers

[RAJEEVE]

You can invest in ICICI TAX PLAN , Growth option with a SIP of Rs.12000 pm in case you do not have any other plan for claiming your 80C.
To invest in ANY MF, my suggestion is to go through a bank (if your bank is a distributor).This will help in getting you your KYC done.
After you have generated the Folio No. of the plan , go to the site of the MF you have invested in and start your DIRECT investment by way of SIP,STP or bulk investment.
I have only suggested you ONE plan for tax planning.For future plans or long term planning I will be discussing in future issues.
Please start educating your selves about MFs more through valueresearchonline.com
All tools and free data is available to you on the site. Do familiarise yourselves with it.It will pay you very rich dividends.

[pradeep]

Thank you sir, checked the site, info provided is very helpful. Eagerly waiting for your next article.

[RAJEEVE]

The net is a wonderful thing.Just below the Aticle on INSURANCE , I saw this advertisement of a Insurance Co.
For a 22 year old Coverage of 10.0million INR and including a Accident coverage of 2.7m INR the premium is INR 7501.
You can access all this information and check for your on profile too.

[RAJEEVE]

As I can see, the topic of insurance has not generated much interest or response.
It is quite understandable considering the misinformation spread by so many vested interest.
However to my colleagues at sea, I wish to advise that your process of future planning and Financial independence will not be complete till you have covered all the risks.
Covering of risks only- is called Insurance...that too at cheap and reasonable rates.
Hence please go through the article again and do post some questions if you have, before I can start my journey with you on SAVINGS AND INVESTMENTS.

[RAJEEVE]

Hi Mr. Rajeeve,
Thnx for advising the DIRECT route of investment.
I have a few queries about the data provided by valueresearchonline.com, have attached a Fund card PDF from their site for easy reference (ICICI Focused Bluechip).
The terms for which I require some clarity are highlighted.
- On page 1, the Net Assets of this fund is 8815 Crores and on page 2 under Portfolio Characteristics - Avg Market Cap mentioned as 101,546 Cr usually market cap is = cost of share * no of outstanding shares ..... and the market cap of the individual companies in the fund are way above 101,546 Cr could you please throw some light on this ... Net assets and Market cap of the fund.
- On page 2, RISK ANALYSIS
I have understood the volatility measurement terms, but would like to know what is the duration of these measurements .... are they for a 1 year period, 3 yr period or 5 yr period, i couldn't locate this info anywhere on valueresearch.
Rgrds/ Prajay Gaba

*******
ANSWER:
Congratulations, Prajay.
In such a short time , you have managed to learn more than a financial analyst of comparable experience.
Your questions are most impressive and so far none of the over 300 people that I have introduced to, have ever posed to me.
a) Net Asset of a Fund means the total value of funds invested by the investors as principals. This is also called ASSET UNDER MANAGEMENT (AUM) of the fund.
b) Market Cap is the TOTAL latest value of ALL the shares and securities held by the the fund.
This will make you understand that the latest value of all the securities can be much higher than the amount that investors put in.This is is what is called appreciation of the assets, this is why you should invest in the Capital market, but since we seafarers cannot be in touch with the market directly, MFs are a better route.

RISK ANALYSIS:
Frankly I have never though about the time frame.
However since all the Risk Analysis ratios like SD, Sharpe's R-squared are measured against the category of some benchmark, it does not really matter what is the time frame.
Since it will keep changing with respect to the market.
You can put your questions directly to VR also, that will help me also enhance my limited knowledge.

[RAJEEVE]

bb says March 23, 2015 at 8:07 pm
first of all, i completely disagree with Rajeeve regarding what he has mentioned :
1. MFs are all subject to market risks and are entirely market dependent, ofcourse when markets crash the nav values are not so badly affected proportional to the crash value they do give you a time to get out, but the question is how. Being in the middle of the atlantic inside soup of a storm it is impossible to redeem your precious investments.(unless you have pre-signed a redemption receipt and submitted to your broker before joining and that too the signature does not get rejected)
2. MF cos invest your Rs.100 and make 70 bucks out of it and give you max 10 to 5 bucks rest is their pockets minus their salaries and your account maintenance.
3. Ofcourse they are highly regulated bodies, but lack transperency meaning in the middle of the ocean i do not know what is the fund manager doing during his office hours with his female colleagues.
4. SIP is a complete farce and rip off in a bull market, meaning if the market is rising with a SIP calculate what units you will get instead of a one shot investment. Yes SIP is great in bear market. But can you predict who is out there a bear or bull ? and by the way SIP is difficult to stop it takes more than a month to stop it.
5. MF cos are currently playing only in the equity and debt segment, not in derivatives, commodities etc
6. I feel it is better to invest directly in the stock through a reputed investment firm rather than purchasing MFs

REPLY:
Well BB, as it is obvious that you are well equipped with the knowledge of financial markets, and are quite successful at it.
The article is for the people who know less or nothing about the markets and those who are unable to pick stocks like you do .
So enjoy the articles if you can.

[RAJEEVE]

Ashish says May 7, 2015 at 9:41 am
Thanx sir for the informative post.
I had couple of doubts. Can an NRI invest in MF through the same route as that of a resident or there is some different process for NRIs. Some times when seatime is less then the status changes from NRI to residents. What to do in that case.
Pls also throw some light on PIS

REPLY:
Sorry Ashish , had overlooked your mail, since the comments are normally arranged by the editors to be put in the Forums.
As I have mentioned in my & secrets; you can invest in MFs in the same way as a resident will.
The only difference is that while filling in the form apply as a NRI instead of as a Individual.
You can invest from your NRE account, in which case you have o tick the REPATRIABLE column on the form.
OR
If you are investing from your NRO account you will have no choice except to tick the NON-REPATRIABLE column on the form.
Since we have a special status for a NRI, as in we leave the country FOR employment as against the normal NRIs who visit the country while on leave.
If for a certain F.Y you do not retain the NRI status, you need not change the status of your MFs or the bank account as in the succeeding year you may again be a NRI.
However the interest on your bank accounts will become taxable.
Whereas there is no special tax treatment for MFs when you temporarily or otherwise become a resident, since for a NRI any capital gains incurred on Equity or Debt funds is always DEDUCED AT SOURCE.
This tax may be claimed by filing your tax return (which I advise must be filed even if you are not in the taxable range).
Being on the right side of the law is another advantage of MFs for us, The Seafarers.


Please clarify what is PIS.

[sam.2211.sam]

Hello sir, Good day. I would like to ask about not really financial planning but something about career. Sir I have completed my 3 years course BS in Marine Engineering from Manila, Philippines. My concern is that I am not allowed to go onboard a ship from Philippines because of certain laws and rules. My college is suggesting me to apply from India. Sir am I eligible to apply from India and if yes then how? Sir please reply me as I am really in a confused situation. I have even tried to contact DGS, Mumbai but no response.
Thank You sir.

[RAJEEVE]

I will ask the editorial staff to answer your query.
Sorry to have overlooked your mail.

[RAJEEVE]

VINOD SHARMA saysJune 20, 2015 at 2:41 am
Dear Sir, Mr Kaushik….
Thanks for excellent articles. I m also ce in a HK based company……i bought my own house …hv abt 50L land and invested in abt 1.5cr in mutual funds and some cash as fds…Pls advised am i on right track.
My expenses are 50k/per month and want to retire at 50 i.e another 3 yrs.
Can you pls tell me am i on track for financial freedom and can i afford to retire. I hv two kids in cls12 and 10.

REPLY:
Dear C/E Vinod, many thanks for entrusting me with your financial health and your query which is also the question that a lot of my other colleagues are having.
Your query is straight forward and I will be equally direct.
1. You do not have a Insurance plan that I can see. If it is not too expensive please get two policies from different insurers for Rs.50 lacs( 5 million INR) each,
2.Your both children will be in college when you plan to quit sailing. In your own interest I would suggest that you sail till at least one of them has settled down into a career.
3.The above extension will also give you an extra cushion for your retirement corpus, as also the mental satisfaction that there is at least one child who can look after himself/herself.
4.Please increase your exposure in MFs to about 3.0cr ( INR 30 milllion) before you retire. 80% of this corpus should be equally distributed in 5-7 MFs of Large, Mid and Small cap.
5.Please share your MF holding with me so that I can guide you better. You may also consider sharing your other saving and investment avenues. I am not a big supporter of real estate as investment , nonetheless one piece of land is not too much.
6. Please read my article No.7 on Mutual Funds to have a better distribution of funds.

Once again, I regret late reply.It is more of delay due to technical reasons than personal.

[Aman Jay]

hello sir
thanks for introducing us to finacle market
ur all article r gr8 and will helps us alot
i am new begginer just a cadet joining in jan 16 ,
wanted some help to start saving at early age i dont hav any loan so thought of starting saving at early age
and ur articles are easy to understand some what except some finacial terms
keep helping sir
pls write a basic planning article for beginners
THANKS A LOT!!!!!!!!!!!!!!!!!!!!!!!11

[raunekk]

In order to answer individual questions properly, please make a new post.