Archive of Articles and resources for financial planning
Inflation – a gradual decrease in purchasing power with time – affects all human beings. The average inflation in India is more than twice the average inflation in the US. Will inflation in India ever increase? Many seem to believe that after a long time (say a couple of decades later) inflation will decrease, as…
Continue reading →No matter how often we mention/promote/advertise that equity investments if continued over a long enough period would generate handsome returns, many investors seem to require constant reassurance and encouragement to continue their equity investments. A person who wishes to remain anonymous made the following SIP rolling returns analysis with Sensex data to provide his friends…
Continue reading →This is a guest post by Aditya Veera. Aditya has studied and worked in finance, but this is the first article on investment he has written. Hopefully it is not the last. He holds an MSc from the London School of Economics and has an evangelical fervour for low-fee, passive investments! You can find his…
Continue reading →PPFAS Long Term Value Fund is advertised with a tagline: Only for “truly” long term investors! The funds scheme document states, “Investors should note that this scheme is suitable for investors who have an investment horizon of minimum 5 years”. Unfortunately,this can give investors the wrong notion that ‘long term’ implies duration of 5 years…
Continue reading →A long term investor should: recognise all the risks associated with the financial goal estimate the monthly investment needed (estimate not determine) understand the need for spreading the investment risk (asset allocation) understand the need for diversification within an asset class, choose investment vehicles wisely initiate investments as quickly as possible without worrying about perfection…
Continue reading →This intriguing question was recently asked by my friend. Intriguing because it can be answered in two ways: In one word! Or by considering all possible ways an emergency fund would see some action! By action, I of course refer to emergencies only! American financial coach Dave Ramsey, often says, “Christmas is not an emergency!”…
Continue reading →‘Conflict of interest’ is a concept poorly understood by most Indians: from the dislodged BCCI chairman for obvious reasons to a school teacher offering private tuition. Conflict of interest also looms large in the Indian financial advisory business. I would bet that more than 95% of financial advisors get remuneration of some sort from mutual…
Continue reading →Among the many methods available to safeguard ones investment from stock market volatility, the most popular is to invest a fixed amount at periodic interval irrespective of market conditions. This is of course known in India as systematic investment plan or SIP. One could add an aspect of market timing by gauging returns with respect…
Continue reading →There are times when we have a large sum of money to be spent, not in one-shot, but over the course of a few years. Retirement of course is the most obvious and most complicated example wherein the corpus has to last from a few years to decades. There can other situations: a person who…
Continue reading →He never said it! Said what? “Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.” “The most powerful force in the universe is compound interest” “Compounding is mankind’s greatest invention because it allows for the reliable, systematic accumulation of wealth.” Einstein’s discoveries…
Continue reading →I am not a fan of international women’s day (8th March). I think it is condescending and insulting to women. The biggest mistake one can do is to compartmentalize human behaviour in terms of sex, religion, ethnicity etc. That said, today gives me an excuse to acknowledge one of the most impressive personal finance blogs…
Continue reading →When you invest in a mutual fund a percentage of what you earn as returns is subtracted to pay for the fund manager, fund distributor, advertising and other expenses. This is referred to as expense ratio. For example if you invest Rs. 1 lakh in a fund and if the fund returns 10% in a…
Continue reading →This insurance with goal planner allows you to determine: 1. the insurance amount need to secure college and marriage expenses of two children 2. the amount need to save for college and marriage expenses 3. insurance amount need to provide inflation adjusted monthly expenses for the family and school expenses for two children It provides…
Continue reading →This calculator is inspired by a couple of posts (links below) on retirement by Subramoney. It allows you to guess how much you need for financial independence during retirement and computes the corresponding pension or how long the corpus will last if it has to match future expenses indexed to inflation. It also calculates the…
Continue reading →Portfolio rebalancing refers to the realignment of the asset allocation of a portfolio (% in stock/equity, % in bonds/debt) back to the original asset allocation planned for the investment. This is done to control risk and increase the potential for returns. You can read more about this here: http://invest-it-yourself.com/rebalancing.php I have developed a portfolio simulator…
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