JUNE 2022 | VOL. 13
THE
ORANGE
BOOK
Leverage your FINANCIAL QUOTIENT
Thank you for your gift to us on our
first birthday!
We are delighted to share that The Orange Book (TOB)
celebrates its 1st birthday today. Over the last 12 months, it
has been our sincere attempt to simplify the concepts of
Personal Finance, and show just how simple and effortless it is
to save, invest and protect one’s money and secure one’s loved ones.
The overwhelming response you have given TOB has been the
biggest and best birthday gift we could have ever wished for - your
immense monthly readership of 12 lakh+, your suggestions, and
your stories of how TOB has helped you. Your feedback tells us
that we are headed in the right direction, and for that, we are
sincerely grateful.
READ CUSTOMER REVIEWS
Rated 4.31/5 by 4802 readers from June 2021-April 2022
Click to read the previous editions of The Orange Book.
In the coming year, we promise to bring you an even more simplified, incisive and
interesting take on Personal Finance.
JUNE 2022 | VOL.13
6 Yoga Asanas for Physical and
Financial Fitness
Make your body, mind and finances fit with these yoga asanas on the International Day of Yoga!
Virabhadrasana (Warrior Pose)
What is
this Asana?
This asana helps
build balance. It
energises the whole
body, yet relaxes
the mind.
What does
it teach us about
Personal Finance?
Learn to balance
risk and returns in
investing, to get
higher returns as
well as ensure the
safety of capital.
Surya Namaskar (Sun Salutations)
What is this Asana?
These are a series of postures
that when put together, benefit
almost the entire body.
What does it teach us
about Personal Finance?
Get all-round benefits of
diversifying your portfolio
with varied investments that
suit your risk profile and
investment goals.
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Dhanurasana (Bow Pose)
What does it teach us
about Personal Finance?
What is this Asana?
This asana gives one’s
body a good stretch,
and helps improve
overall flexibility.
In finances as well, we must ensure that
we have adequate flexibility i.e. prepare
for uncertainties that are out of
our control, like sudden changes
in income, health conditions,
economic or political factors
etc. One’s financial plan
should be equipped
with emergency
funds, liquid
investments,
insurance
etc.
Hanumanasana (Monkey Pose)
What is
this Asana?
This asana requires
daily practice over
a long period, before
it can be mastered.
It is the perfect
example of ‘slow
and steady wins
the race’.
What does it
teach us about
Personal Finance?
The same committed
and disciplined
approach is essential
for one’s overall
financial wellbeing.
Consistency and a
long-term approach
in investing can help
you reap the rewards
of investing.
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Chakrasana (Wheel Pose)
What is this Asana?
This is a difficult asana that requires
practice and guidance to get it right, but
yields rich rewards in the form of spinal
flexibility, increased strength and
enhanced lung capacity.
What does it teach us about Personal
Finance?
Do not get daunted by what seems to be
“complicated” or “difficult” in managing
money - be it filing IT returns and
claiming rebates, or investing in shares or
digital gold. A methodical approach, the
right guidance and practice makes things
easy and rewarding.
Shavasana
What is
this Asana?
A simple yet essential asana that requires you to lie down and relax all your
muscles. It helps the body relax, rejuvenate and reduces stress.
What does it
Most of us worry about money. Several of us work long and hard to earn and
teach us about secure our finances. However, it is equally important to take a break from
Personal Finance? the investment routine and take some time off to recharge and rejuvenate.
JUNE 2022 | VOL.13
Longevity risk: Are you financially ready?
June 21 or the Summer Solstice marks the longest day of the year. While a long day means lots of
time to do all the things we wish to do, it also means a smaller night to rest. Likewise, a long and
healthy life is a blessing, provided we have saved enough for our golden years. If we outlive our
planned years, we fall victims to what is known as a ‘Longevity risk’.
Longevity risk is increasing, thanks to better healthcare.
Average life expectancy at birth in India*:
47 years
In 1970
In 2022
*Source: ICICI Prudential Life Insurance Company
70 years
In 2020
? years
In 2070
In 2072
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Let us look at the pitfalls we should avoid and the steps we should follow
to ensure that our golden years are comfortable, worry-free and happy.
1. Start early
2. Don’t divert your corpus
Start saving early to make the most
of the power of compounding.
Do not divert your retirement corpus
for any reason other than a genuine
emergency. Also, ensure you never
withdraw your EPF while changing jobs.
START A SIP*
3. Try to beat inflation
4. Increase tax efficiency
Make sure that your investment grows
faster than the inflation. One way to do
it is by allocating a higher sum to riskier
assets (like equity), since risk comes
down with an increase in the investment
time horizon.
Invest in products that offer maximum
tax benefit while investing and on
maturity, e.g. VPF and PPF are fully
tax exempt and hence are good options
for conservative investors.
5. Have a Safety Net
Ensure you have adequate Health Insurance
VIEW A LIST OF TAX SAVING INVESTMENTS
GET HEALTH INSURANCE
T&C apply. ADV/14936
Make sure you have Life Insurance
GET A LIFE INSURANCE
For assistance in rebalancing your portfolio, please contact your relationship team on 022 4440 0000
*ICICI Bank Limited is an AMFI Registered Mutual Fund Distributor. Mutual Fund investments are subject to market risks. Read all scheme related
documents carefully. T&C apply.
**Tax benefits are subject to conditions under provisions of the Income Tax Act, 1961. Goods, Services Tax, and Cesses, if any, will be charged extra, as per the
prevailing rates. Tax laws are subject to amendments made thereto, from time to time. Please consult your tax advisor for more details.
JUNE 2022 | VOL.13
Why do FD and loan interest rates
change?
An interest rate is the cost of borrowing money or a fee earned for lending money - the
compensation paid to the lender for the service offered and the risk of lending money.
Deposits
`
Interest
`
Loan
Interest rates keep the economy moving by encouraging people to borrow, to lend, and to spend.
Conversely, they can also be used to reign in spends and control inflation.
Higher
inflation
RBI increases
Interest rates
More Savings/ Lesser money
to spend
Higher EMIs
Lesser demand Prices drop,
for goods and
i.e. inflation
services
is controlled.
JUNE 2022 | VOL.13
MPC Objectives
The objectives of the MPC are to spur
economic growth and to contain inflation
Low interest rates lead to higher growth
Major MPC tools are Repo / Reverse
Repo, Standard Deposit Facility
Demand/Supply of Money
Growing economy has a high demand
of money (credit)
Corporates borrow for expansion
Individuals borrow for house, car etc.
During economic recession, the
supply of money (liquidity) is
more than the demand (credit)
Primary
factors that
INFLUENCE
Government Borrowing
To fund a fiscal deficit, the
government resorts
to borrowing
The quantum of this
borrowing influences the
demand for money and
impacts interest rates
interest rates
Inflation
High inflation results in
higher interest rates so
that excess liquidity in
circulation is absorbed back
Lower inflation leads to
lower interest rates, and
the focus shifts to growth.
Global Interest Rates
Interest rates in India are set in line
with global trends in interest rates
For example, GFC of 2008, breakout
of Covid in 2020
MPC: Monetary Policy Committee or Reserve Bank of India (RBI)
Repo Rate: The rate at which RBI lends money to commercial banks.
Reverse Repo Rate: The rate at which RBI borrows money from commercial banks within the country.
Standard Deposit Facility: SDF is a liquidity absorption mechanism that aims to absorb liquidity
from the commercial banking system into the RBI.
Fiscal Deficit: A shortfall in a government's income compared with its spending.
GFC: Global Financial Crisis.
JUNE 2022 | VOL.13
All that you need to know about
nomination
Who is a nominee?
A nominee is the individual who will receive the investment proceeds in case of an investor's
demise. In other words, the nominee will be the recipient or the beneficiary of the investments,
assets and other funds when their owner passes away.
Who
can be
a nominee?
Given the nature of this position, a nominee should ideally be a family member who is close to you,
like your spouse, your children, or your parents. In some cases, you may assign the position of a
nominee to someone else you trust as well, like a close friend.
In case your nominee is a minor, you will also have to provide the details of the minor's guardian,
like their name, address and contact information.
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Why is nomination important?
In the case of a person's demise.
Nomination Done?
Yes
No
1
The beneficiary will only
have to provide their ID,
address proofs and their
bank account details to
get the investments
transferred
1
The legal heirs will have
to produce paperwork
like a legal will, a legal
heir certificate and other
documents to obtain the
deceased person’s assets
2
It makes the process of
transferring their
investments to their
nominee smoother.
2
All of this could delay the
process of obtaining the
assets and investments,
and this could cause
significant financial strain
for the surviving family
members.
What are the investments for which you can assign a nominee?
Life Insurance Policies
It is most important to have a nominee in Life Insurance Policies, because the whole
point of insurance is to make sure your family members are financially well-protected
in your absence.
Bank accounts and fixed deposits
The nominee is entitled to the amount in the bank account
along with the interest and principal amounts in the Fixed
Deposit.
Public Provident Fund
Mutual Funds
ADD YOUR NOMINEES NOW
JUNE 2022 | VOL.13
Now, it’s time to test your knowledge. Take a
short and simple quiz, based on what we have
covered in The Orange Book, so far.
TEST YOUR KNOWLEDGE
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JUNE 2022 | VOL.13