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By:

Kaustubh Kale

10 September 2024 at 11:37:15 pm

Four Pillars for a Strong Financial Foundation

Investing for your financial goals is not just about choosing the right investment or earning the highest return possible. It is about building a well-rounded and strong financial foundation. A strong financial foundation helps you invest with greater confidence, remain disciplined and avoid disturbing long-term investments when unforeseen expenses arise. There are four important pillars that support this foundation. 1. Life Insurance The first pillar is adequate life insurance. If there is...

Four Pillars for a Strong Financial Foundation

Investing for your financial goals is not just about choosing the right investment or earning the highest return possible. It is about building a well-rounded and strong financial foundation. A strong financial foundation helps you invest with greater confidence, remain disciplined and avoid disturbing long-term investments when unforeseen expenses arise. There are four important pillars that support this foundation. 1. Life Insurance The first pillar is adequate life insurance. If there is an earning member in the family, his or her income supports several financial responsibilities, including household expenses, children’s education, loan repayments and future goals. An unfortunate death can therefore create not only an emotional loss but also a significant financial loss for the family. A suitable life insurance cover, preferably through a term insurance plan, can help replace this lost income and provide financial security to the dependants. Life insurance is therefore primarily about protection against the financial impact of losing an earning member. 2. Health Insurance The second pillar is health insurance. Hospitalisation is unpredictable. A major medical emergency can arise suddenly and potentially consume a sizeable portion of a family’s savings. Having adequate health insurance ensures that an unexpected hospitalisation does not force you to withdraw money from investments created for other financial goals. Your savings and investments can then continue doing the job they were originally meant to do. It is important to have comprehensive personal health insurance with the necessary product features rather than depending entirely on your employer’s health insurance. 3. Contingency Fund The third pillar is an emergency or contingency fund. Ideally, a family should keep approximately six to twelve months of household expenses plus EMIs in a highly liquid and conservative avenue such as a bank account, fixed deposit or suitable debt mutual fund, where capital safety and liquidity remain the priority. Think of this as your financial piggy bank, money that is kept aside specifically for emergencies. Knowing that this reserve exists can give you the confidence to invest the rest of your money with a longer-term perspective, without constantly worrying about short-term emergencies. 4. Asset Allocation The fourth pillar is proper asset allocation. Every financial goal has a different time horizon. Some money may be required within a few years, while other investments may be meant for goals several years or decades away. The investment product chosen must therefore match the time available for the goal. A mismatch between the investment and the time horizon can create unnecessary complications in the portfolio. In simple terms, short-term goals should generally be invested in assets that offer a greater degree of capital safety and liquidity, such as bank FDs, RDs or debt mutual funds. Long-term goals, on the other hand, need exposure to assets that have the potential to beat inflation and create wealth over time, such as stocks, equity mutual funds, hybrid mutual funds and gold. (The writer is a Chartered Accountant and CFA (USA). Financial Advisor. Views are personal. He could be reached on 9833133605.)

Bad Roads, Ugly Politics

Suyash Padate
Nov 1, 2024
2 min read

The pathetic state of roads in Mumbai city as well as its suburbs has made daily commute a dangerous affair. The residents are miffed with the BMC over its lackadaisical attitude. Mumbaikars tweet photos, post videos to grab attention, but everything is in vain. Who cares for the common people. Backbreaking journeys have become part and parcel of life. Political leaders are busy mud-slinging.


This year the monsoon took a break after almost four and half months. During this time some of the roads virtually became non commutable. It may be recalled that the Chief Minister Eknath Shinde first announced to make Mumbai roads pothole free.


Its almost two years now the BMC has concretised only 9 percent of roads it planned to concretise. This decision was taken when it came to light that due to the properties of bitumen in asphalt roads, potholes are a regular occurrence due to contact with water during monsoons.


Hence, to solve the problem of potholes, the corporation has adopted a policy of cement concreting of 6-meter-wide roads in phases. The decision was taken but the dilly-dallying affair made things more difficult.


Mumbai’s traffic does put a lot of strain on roads which is not the case in the other developed countries. Second most important aspect is concretisation of roads is done partly and in phases.


The worst problem which is faced is repeated digging for cables and drainage, which weakens the roads. Above all corruption in BMC makes matters worse as a result everything comes to grinding halt.


According to experts, repairing potholes is a reaction with symptomatic treatment. By and large we are dispensing superficial treatment without addressing the root cause. The long-term solution will be to have roads with no potholes but what we need is the means and technology to achieve this. But for this political will is necessary which we lack on every step.


Mumbaikar’s are convience that corruption in the municipal corporation is the main reason. Contractors have had a monopoly over the last 20 years and this is the reason why reputed companies never come ahead for these projects.


As a result, in the name of attendance and repair, the BMC does shoddy work. Crores are spent but the end result is nothing. The BMC is not paying attention to the crust. If the crust is weak, potholes will see an increase. Without any thought or technical know-how, potholes are filled with cold mix.


This is the reason why the city and suburbs continue to have craters on the roads.


Craters, a serious threat to the safety and security of people. Mumbaikars fade up from their repeated visits to orthopedic surgeons.


They are in a mood to teach a proper lesson to those who were at the helm of the affairs.

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