books on personal finance

 Here are some excellent personal finance books I'd recommend:

For Beginners:

• I Will Teach You to Be Rich by Ramit Sethi - Practical 6-week system, great for millennials
• The Total Money Makeover by Dave Ramsey - Step-by-step debt elimination plan
• Your Money or Your Life by Vicki Robin - Connects money to life goals and values

Investment Focus:

• The Bogleheads' Guide to Investing by Taylor Larimore - Simple, effective index fund strategies
• A Random Walk Down Wall Street by Burton Malkiel - Classic on efficient market theory and passive investing
• The Simple Path to Wealth by JL Collins - Straightforward approach to building wealth through index funds

Mindset & Behavior:

• The Psychology of Money by Morgan Housel - How emotions and behavior affect financial decisions
• The Millionaire Next Door by Thomas Stanley - Research on how wealthy people actually live
• Rich Dad Poor Dad by Robert Kiyosaki - Mindset shift about assets vs. liabilities

Advanced/Specialized:

• The Intelligent Investor by Benjamin Graham - Value investing bible (more technical)
• The White Coat Investor by James Dahle - Specifically for high-income professionals

Quick Start: If you want to jump in immediately, start with I Will Teach You to Be Rich - it's actionable and covers all the basics without being overwhelming.

What's your current situation or main financial goal? That might help me point you toward the most relevant one!

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Why You Should Invest in NPS: Complete Guide to Tax Benefits and Investment Advantages

Introduction: Understanding National Pension Scheme (NPS)

The National Pension Scheme (NPS) has emerged as one of India's most attractive retirement planning instruments, offering exceptional tax benefits alongside long-term wealth creation opportunities. Whether you're an employee seeking additional retirement security or an employer looking to enhance your benefits package, NPS provides compelling advantages that make it a cornerstone of smart financial planning.

What Makes NPS Investment Attractive?

1. Triple Tax Benefits (EEE Structure)

NPS follows the Exempt-Exempt-Exempt taxation structure for Tier-I accounts:

• Exempt at Entry: Contributions are tax-deductible
• Exempt during Growth: Investment returns are tax-free
• Exempt at Exit: Partial withdrawal benefits (60% lump sum withdrawal is tax-free)

2. Low-Cost Investment Option

With expense ratios as low as 0.01% to 0.25%, NPS offers one of the most cost-effective investment platforms in India, ensuring more of your money works toward building your retirement corpus.

3. Professional Fund Management

Your NPS investments are managed by experienced Pension Fund Managers (PFMs) including HDFC, ICICI, SBI, and others, providing professional portfolio management services.

Detailed Tax Benefits for Employee NPS Investment

Section 80C Benefits

Employees can claim tax deductions up to ₹1.5 lakh annually under Section 80C for NPS Tier-I contributions. This benefit is available alongside other 80C investments like EPF, PPF, and ELSS.

Additional Section 80CCD(1B) Deduction

Beyond Section 80C, employees can claim an additional ₹50,000 tax deduction exclusively for NPS investments under Section 80CCD(1B). This means:

• Total NPS tax benefit potential: ₹2 lakh annually
• Maximum tax savings: Up to ₹62,000 per year (for 30% tax bracket)

Section 80CCD(2) - Employer Contribution Benefits

When employers contribute to employee NPS accounts, these contributions are:

• Fully tax-deductible for employees (no upper limit)
• Not considered as perquisite income
• Additional to the ₹2 lakh individual contribution limit

Employer NPS Investment Benefits

1. Tax Deductions for Employers

Employer NPS contributions are fully tax-deductible as business expenses, reducing the company's taxable income while providing valuable employee benefits.

2. Enhanced Employee Retention

Offering NPS benefits helps employers:

• Attract top talent seeking comprehensive retirement planning
• Improve employee satisfaction and loyalty
• Demonstrate commitment to long-term employee welfare

3. Flexible Contribution Structure

Employers can contribute:

• Fixed percentage of salary (typically 10-14%)
• Matching contributions based on employee investment levels
• Lump sum annual contributions

4. Reduced Administrative Burden

Unlike traditional pension schemes, NPS requires minimal administrative oversight from employers, with PFRDA-registered intermediaries handling most operational aspects.

Strategic Investment Approach for NPS

Asset Allocation Options

NPS offers multiple investment choices:

• Equity (Class E): Higher growth potential, suitable for younger investors
• Corporate Bonds (Class C): Stable returns with moderate risk
• Government Securities (Class G): Lowest risk, steady returns
• Alternative Investment Fund (Class A): REITs and InvITs for diversification

Auto Choice vs Active Choice

• Auto Choice: Automatic age-based asset allocation reducing equity exposure over time
• Active Choice: Self-directed investment allocation across asset classes

Withdrawal Benefits and Tax Implications

Partial Withdrawal Rules

Subscribers can withdraw up to 25% of their corpus for specific purposes:

• Children's higher education
• Marriage expenses
• Medical treatment
• Home purchase/construction

Maturity Benefits (Age 60)

• 60% Lump Sum: Completely tax-free withdrawal
• 40% Annuity: Provides regular pension income (taxable as per income tax slab)

Premature Exit (Before Age 60)

• 80% Annuity Purchase: Mandatory
• 20% Lump Sum: Tax-free withdrawal allowed

Who Should Invest in NPS?

Ideal Candidates for NPS Investment:

• Salaried employees seeking tax-efficient retirement planning
• Self-employed individuals without EPF benefits
• High-income earners in 30% tax bracket maximizing deductions
• Young professionals starting early retirement planning
• Anyone seeking low-cost, professionally managed investment

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Why PF?

Why to Invest in PF ?

To be frank, most of us, especially the salaried, PF gets done by the company where you work. Government has now made it compulsory, for companies to provide Provident Fund  for all employees.

The good part about PF, is that one doesn't have to do it manually. Its mostly deducted from your salary and invested in your PF account.  Normally, its 12% of your basic component which you invest and 10% is paid by the Company. The best part of this investment is the Interest Rate and the power of compounding which acts on this investment

Even if your Basic Salary is 15,000/- INR, then your PF will be 1800/- from your side and 1500/- from the company, each month. That adds up to 3300/- per month. Though your salary would increase every year, I will still consider the same amount for 40 years of your working life and see how it adds up.

Use a compound Interest Calculator and you will realise that the amount comes to 10,657,413/- which is more than 1 crore. Its but obvious that everyone's salary will increase with time and hence the amount which gets added into the PF account will increase every year and hence you can expect a good return during retirement.
Please make sure to check your PF accrued amount from the PF website, where the passbook is updated in a very detailed manner.

Apart from this PF, there is another instrument, which is Public Provident Fund, which one can invest apart from PF. You will need to open a PF account in one of the Banks, I would suggest SBI. You can invest, upto 1,50,000/- each year and all of this can be used against Tax Deductions under Section 80ccc.
The point to be noted here is that , investment in PPF gives you benefit during investment. There is no Tax applicable on the accrued interest and also, no Tax applicable, when you withdraw the money. Thats a huge bonus. Hence in most of my investment talks , I would strong advise investing in PPF for your retirement planning.

However, just like PF, this amount cannot be easily withdrawn. Only after 7 years, you can take a loan against your PPF account. And some part of the money can be withdrawn for any emergency purposes, which are listed.

Hope you will take up the right step in investing and start investing in PF . Thanks for reading.

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NPS - Should I Invest in it ?

The National Pension Scheme, or the NPS, which its commonly called, has gained more and more popularity over the past few years, is indeed a very good way to save your money.
For one, its a scheme pushed by the government, but It would still be investing the funds in the different investment avenues, which the traditional government driven initiatives, would keep away from. In short, apart from many debt funds, based on the option one chooses with the NPS partner bank, one can invest in many of the Equity Based Funds.
So, the next question would be, how is it different from investing in Mutual Funds ? More than one, to be precise.

1. This is meant to be a Retirement Fund
2. There is Tax Benefits under section 80CCD (80 CCD(1) and 80CCD(2))  while investing the amount.
3. These Tax Benefits are over and above the Tax Benefits under section 80CCC, which currently(Budget 2017), is pegged at 1.5L only. Mutual Funds investment come under this 1.5 Lakhs investments.

Now coming to the NPS itself, the investment can be done in two forms, under section 80CCD(1) and 80CCD(2), or in layman terms, from Employee and Employer. 
If the investment is done by the Employer, then the maximum investment, that one can do is 10% of your basic salary and  capped at 1.5 Lakhs per annum.  While the Employee's contribution can be a maximum of 50,000/- per annum.
So if your basic salary is 10Lakhs, then under section 80CCD(2) you can invest up to 1 lakh per annum and get tax benefits, while under section 80CCD(1) you can get additional benefits of 50,000/- .
A bit of clarification, on the so called Employer's contribution. Its not that the Employer might be adding further investment, and this might still be taken as a part of your CTC.
Now, coming to the Tax on the Returns from NPS.
The contribution made towards the NPS scheme, could be withdrawn on Retirement or by Surrender of the Policy.  As per the Budget 2016, 40% of the returns from NPS would *not* be taxed. However, as per the Budget 2017, if the entire returns from the NPS be converted into a Annuity Plan in the same year, then there would be no tax applicable at all.
In Summary, those who have to plan for their retirement and still save taxes, this is an excellent way on both the counts. And more so, for those, who have ran out of all further options to save taxes after the section 80CCC is all filled up by your Insurances/ULIPs/Home Loan etc.
Each NPS account will have an unique PRAN Card and that account number will be associated with your PAN and hence it would be likely that only one PRAN account would be applicable per person.

Few Pointers to keep in mind 

1. Investment in NPS is meant for Saving for Retirement
2. 50,000/- can be invested on Section 80ccc, above your 1,50,000/- in other instruments. Well, you can also invest the whole 2,00,000/- in NPS.
3. Apart from the above , you can invest upto 10% of your basic in NPS, capped at maximum of 1,50,000/- per year.
4. These investments can be converted into an annuity, which can make it tax free on withdrawal. If not, then it will taxed based on your taxable bracket.
5. This investment instrument is not just for Salaried Class, and can also be availed by those in business or self-employed
6. The age limit for investing in NPS is from 18 to 65 years of age.

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Clear your debts by part payments

Every one of us, most likely has one or the other type of loan. Those who dont, I must say that, they are indeed blessed
Loan is not a bad thing to have. It gives one the ability to buy something(preferably an asset), at a earlier time, and slowly pay over a period of time.
Though it's a good thing, but at the same time, you need to understand that, it's from  the interest which you pay, which gives banks all the profits and also manage to pay the salaries of all their employees. Not a small amount eh ?

So the earlier you reduce you loan amount, the better for you, from your savings point of view.

Let me give you an example, which will tell you, how much you can save by doing a early part payment.
Assume you have taken a housing loan of 20 lakhs and your monthly EMI is roughly 20,000/-. An EMI will have a principal component as well as an interest component. In the initial years your principal component will be very less, while your interest part very high, and this will change over the years.

So, if you happen to make a part payment of say 25,000/- or 50,000/- it will make a big impact on the number of EMI's which you have to pay, if done in the early years. While the same amounts will not have the same impact in the later years. Nevertheless, its always beneficial, whenever you do the payments, it always helps to reduce to total out go from your accounts

Here is the table below, which shows the EMI for 20 Lakhs for 20 years at 11.75% Interest.

S.No	Monthly Installment	Interest	Principal	Balance
0				2000000
1	21674	19583	2091	1997909
2	21674	19563	2111	1995798
3	21674	19542	2132	1993666
4	21674	19521	2153	1991513
5	21674	19500	2174	1989339
6	21674	19479	2195	1987144
7	21674	19457	2217	1984927
8	21674	19436	2238	1982689
9	21674	19414	2260	1980429
10	21674	19392	2282	1978146

Only the first 10 Installments are shown above. But you an see, that even though in the Initial months, you are paying 21674/- as EMI only 2091/- is used to pay up the Principal amount, and a huge amount of 19583/- is used up for the Interest.

So, practically, close to the end of 1st year, if you pay up 25000/- as part payment, close to 10 EMI's worth of Principal, you would be paying in a single transaction. (its an approximation as 10th months principal is 2282/-. and 25000 divided by 2300 will be approx 10.

So technically, the effort required by the next 10 EMI to pay up that 25,000/- has been taken care.
Which means, by paying 25,000/- you have saved up paying 25000 x 10 = 250,000/- ie Two Lakh Fifty thousand. Thats quite a saving and you also end up completing the EMI's earlier :)

So whatever be the case, always try and pay up as much as possible. Try for 25000/- per quarter to pay up and it will help you a lot.

Money saved is also money earned.

If you like this article kindly share with others.

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Tax Planning for New Financial year

April, this is the time, when we need to declare the Tax Declarations which we would be doing in the coming year. Some of us declare few investments and only hope to do them sometime in the year. But not all are able to meet that commitment. Here are a few advices, which I would suggest to use as a guiding tool, rather than for planning.

Lets look at the Simple Tax Investments which we can use.

80ccc

1. Upto 2 Lakhs under Section 80 ccc.  In this 2 Lakhs, 50,000/- is only meant to be invested in NPS(National Pension Scheme). 
2. The Remaining 150,000/- can be invested in Insurance Plans, Mutual Funds , NSC.
3. From this 150,000, since you would also have been paying PF from the company itself, it would be also considered as an investment. You will need to do it and you dont have a choice. 
4. If you have a home loan, the Principal from the home loan, will also be considered as a contribution towards the 1.5 Lakhs. 
5. After subtracting the PF amount which you are paying and the House Loan Principal component, the remaining amount will need to be invested, in other instruments like Term Insurance, ULIP Policies, Tax Savings Mutual Funds, NSC etc.
6. If you dont have any Insurance Policies, its a good time to start. Maybe smaller amounts is a good start. 
7. If you dont want to invest in a hurry, then plan to invest in Mutual Funds. So that, that commitment doesnt become a recurring one every year. But make sure, you dont leave any room for saving taxes.

80D

The other Tax Savings, which most of the folks dont do, is the Medical Insurance. You get deduction upto 25,000/- per year under section 80D. Its always good to have your Medical Insurance plan of your own, even if your company provides you with one.

NPS is something, one should start investing, as those in the private sector will not get any pension during their retirement life. Its only your own investments and the PF's which will come to your rescue during your retirement life. 

Out of the 2Lakhs under 80ccc, 50,000/- should be from NPS only. Though you can and should try to invest more. 

House Loan Interest

The principal component of the house loan, will be considered as an investment under section 80ccc, while the Interest  component will be getting full tax exemption upto 2 Lakhs.

Also, those having second homes and given on rent, from April 2017 onwards, the maximum loss one can claim from the house loan interest is also limited to 2 Lakhs, which didnt have any limits until the last year. 

Another exercise one needs to do, at this time of the year is also to get the Home Loan Interest Certificates from your respective banks, as you might need to submit them , while filing your returns, if there is a difference in the amounts, in the Provisional Tax Document and the Tax Certificate. 

If you have any queries, kindly put them in the comments section below.

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Smaller Savings Add up

Its always the smaller Savings which add up. when I mean small savings, its about putting those smaller amounts in a place, where, it will grow up to be a larger value.

Was reading this article on Quora and I thought that I should be sharing it.

1) Small purchases add up. In the place where I live, a coffee will cost about $4. Drink a coffee every day and you are dropping well over $1,000 a year on your coffee habit. That's the price of a vacation to a foreign country or a couple tailored suits. Make the coffee at home and save BIG!

2) The true cost is not what you paid today, it's what you give up in the future. I can spend $1,000 on coffee this year. Or, I could put that $1K in an S&P index fund and let it sit till I retire. If I could have earned say 8% annual returns and plan to retire 30 years later, my coffee habit this year reduced my retirement by $10,000.

Understand these basic concepts and you'll be able to to become much wealthier by making some simple, small changes to your life.

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