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.
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.
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.
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:
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 The portfolio is allowed to grow and when the time for each goal arrives, the necessary sum is withdrawn.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
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.
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.
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.
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!).
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.
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.”
I am delighted to announce that Dr. Uma Shashikant, Managing director, Centre for Investment Education and Learning (ciel.co.in and moneykraft.com) 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.