Jun 26, 2016

7th Pay Commission payout nears amid Brexit fallout worries: 10 tips that would help you while dealing with the money

If you are a central government employee awaiting the implementation of the 7th Central Pay Commission report, you would have been worried over reports that the recent Brexit decision might force the government to delay the payout date due to fiscal implications.
Financialexpress.com was the first to report that payout under 7th Pay Commission is likely to begin fromAugust 1, 2016. While it is unlikely that the Indian government would have taken such a swift decision to postpone the payout date within hours of Britain’s referendum choosing to leave the European Union, even if it does delay the implementation of the report, you should rest assured that the money that is due would be given to you soon.

The key question is what should you do with the money when you get it in hand as arrears and higher salary? As part of our efforts we have been bringing you valuable tips from financial planning experts how who to deal with additional money that would come your way through the 7th Pay Commission. The total payout as arrears and increased salary is estimated at Rs 1.02 lakh crore to 47 lakh central government employees and 53 lakh pensioners.

“Consider the arrears received as an accelerator for your goals and utilise the same optimally,” advises Arvind A Rao, founder, Arvind Rao & Associates.

Here are ten things that Arvind A Rao and Rishi Kohli, MD & CEO, ProAlpha Systematic Advisors suggest you keep in mind while managing and investing the additional money inflow.

Arvind A Rao’s prescriptions:

–Do not use this money towards vacation costs or for electronics purchases

–Modify allocation of monthly savings towards various goals based on the higher surplus now available

–Allow these additional savings to take higher risk while deciding on the investment vehicles as this money was not originally factored-in the plan for various goals

Rishi Kohli’s prescriptions:

–Have a clear understanding of the time horizon that you are investing for

–Analyse the risk in the instrument that you purchase and understand your own risk profile

–Have an understanding of the return that you expect from your investment

–Be realistic on the estimates, don’t have unrealisable targets

–Understand the tax implications on the instrument

–Do not panic or make decisions based on rumors

–If need be, take advise of a professional financial planner

SOURCE - financialexpress