Calculator: Prepay Home Loan or Invest?

Use this calculator to  analyze if you should  pre-pay your home loan asap or invest instead. This is now republished after correcting a bug pointed out by Ankush.

I had posted an illustration of prepay vs invest in June  but did not post the associated sheet. I have now modified the sheet to include new tax rules. Future changes in rules can also be easily accommodated with user entry.

The money that is free for investments (inevstible surplus) is assumed to grow at some interest rate (can be modified). Whenever there is a need, withdrawals are made from the corpus.  This will work best if you use only long-term goals.

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Second Chennai investor workshop videos

Here are the videos of the second Chennai investor workshop which was held on June 14th 2015.

(1) Anand Balakrishnan,  Certified Personal Financial Adviser, IT Professional and blogger (who campaigned for direct mutual fund plans months before they were introduced), spoke on aspects of behavioural finance.

(2) Then I spoke on goal-based investing. The second part of the talk held in the afternoon is not yet ready.

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Video: R. Balakrishnan on “investing for keeps: in equities I trust”

Those who attended the second Chennai investor workshop had the privilege to listen to R. Balakrishnan – Crisil co-founder; former head of equity research at DSP Merrill Lynch, former executive VP of Edelweiss, Money Life columnist and blogger (to name a few!)

He spoke about “investing for keeps: in equities I trust”. The video was shot by my friend, Guhan Ramanan.

Here is the post referred to in the talk: Backtesting a three stock portfolio: L&T, ITC, Axis Bank

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More thoughts on the DIY investors’ community

Last couple of days have been mentally draining. The DIY forum took much longer than I thought to set up. Thankfully, the Chennai investor meet videos are ready which will give me a chance to unwind a bit over the weekend.

In this post, I would like to discuss some ways forward for the DIY community.

First, here is why Ashal Jauhari is held in such high esteem. Within 15-20 minutes of the creation of the forum, he posted this:

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The DIY investors’ community forum is now online!

I am delighted to announce that the community forum for DIY investors is now open for business! As of now it is a sub-domain of freefincal with an easy to remember url:

Here is an extract of the read me first page

DIY refers to ‘Do it yourself’. This forum is an online community of investors who would like to manage their money on their own!

The aim of the forum can be summed up the popular adage, which in its original form reads:

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Are all long-term financial goals the same?

Nearly three years ago, I was introduced to an interesting idea in goal-based investing by Chenthil Iyer, Horus financials.

You invest a monthly sum of X in a single portfolio for all financial goals. The portfolio is allowed to grow and when the time for each goal arrives, the necessary sum is withdrawn. The final value of the portfolio should be equal to the retirement corpus.

Ideally, the corpus will evolve with time like this

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The Art of idling!

I have fond memories of my BSc days. From the pressure cooker situation of 12th standard, we found ourselves suddenly having a lot of time in hand. A LOT of it

Thankfully, cable tv was at its infancy and there was no internet. So I had the most creative and productive years of my life .. until I did my MSc and found myself back in the pressure cooker.

For those 3 years, the one thing I did a lot was .., nothing! I took long walks and sat in my college ground thinking about life in general, god, reglion, astronomy etc.

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Report: Hyderabad Investor Workshop

The Hyderabad investor workshop was held last Sunday (28th June). Here is a report with a few photographs.

The workshop was co-ordinated by Phani Rambhatla along with his friend Vijay Shivaji Rao.

Thanks to their efforts we were able to get a four-star hotel at a pretty decent price.

Right from the day it was announced, I was filled with a sense of trepidation.  In all the workshops held so far, there were a couple of other speakers besides me. For Hyderabad, I could not find anyone who fit my requirements.

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How many stocks does a mutual fund hold?

How many stocks does an equity mutual fund hold? It is related to the assets it is managing? It is related to performance relative to peers (aka star rating)?

Let use see if we can get some insights into these questions. I started digging around in this direction because I would like to do (yet another!) series on understanding volatility and would like to treat this post as part 1.

There is much to discuss or conclude this post. Let us just stare at the graphs and see what we can make out of it.

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Money Kraft videos on Mutual Fund Taxation

Dr. Uma Shashikant speaks about lesser known aspects of mutual fund taxation.

Money Kraft is an educational initiative of Centre for Investment Education and Learning Pvt Ltd (CIEL) . Money Kraft aims to empower investors and intermediaries to make better personal finance decisions. The objective is to provide unbiased, simple, conceptually correct, practical and useful educational content. Moneykraft is not a producer or seller of financial products, nor does it undertake financial advisory or distributional services for a fee or commission.

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Value at risk (VAR): Would you buy a car with a faulty airbag!

Value At Risk (VAR) is a risk measure used to determine the probability of a certain percentage loss (or gain!) in the value of a security based on historical data.  Although widely used by risk managers to determine worst case scenarios and handle the risk a firm can take (in a bid to earn more!), it is deeply flawed.

Not because it uses historical data to calculate future risk, but because it assumes that the historical returns (daily. monthly etc.) fall under a normal distribution or bell curve – the one used to fix employee appraisals (another flawed application!).

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Update: Automated Stock Analyzer V 6.1 – Workaround for Moneycontrol Stock Price Issue

This is a bug workaround update for the automated stock price analyzer.

The automated stock analyzer

  • pulls annual (standalone/consolidated) and quarterly financials from Value Research online
  • pulls financials from morningstar and analyzes them,adjusted
  • pulls adjusted stock price history from money control, and
  • calculates intrinsic value five different ways!

Many users have complained that the Moneycontrol stock price download page either pulls the wrong price history or draws a blank.

The source of the problem is Moneycontrol. For many stocks, the id they use for financials differs from the one used for  price history. Unfortunately, I could tabulate stock ids for financials only.

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Equity Mutual Fund Investing: What to expect when you are expecting!

While recommending equity as an asset class or equity mutual funds as an instrument suitable for newbies, illustrations about the power of compounding, past returns and how they have comfortably beat inflation are typically used.

This is followed by caveats (besides past performance disclaimers)  that the investor must

  • be ready to stomach the ups and downs of the market,
  • ride the course,
  • stay invested no matter what,
  • get used to volatility etc.

These caveats are typically not quantified. Even if done  (as attempted here in the past), they do not help in preparing in the investor for the journey ahead as much as they should.

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Misconceptions about frugality

Here are some common misconceptions about frugality and frugal folk.

What is frugality?

Wikipedia makes a wonderful reference to a behavioural science research paper titled, “Lifestyle of the Tight and Frugal: Theory and Measurement”

The authors state,

“Frugality is conceptualised as a lifestyle trait reflecting disciplined acquisition and resourcefulness in product and service use. Frugality is sacrifice in denying a series of short-term purchasing whims and industriousness by resourcefully using what is already owned or available for use; all of this is in service of achieving longer term goals.”

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Investor Workshop on “Strategic Personal Finance” at Bangalore

I am delighted to announce that  Dr. Uma Shashikant, Managing director, Centre for Investment Education and Learning ( and will be conducting a workshop on “Strategic Personal Finance” at Bangalore on July 26th 2015.

Dr. Shashikant in my opinion is one of the best teachers in the country, in any discipline. Scores of financial advisors have been trained by her, including some luminaries like Subra.

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