This summer I am spending quite a bit of time with my 16 year old nephew. He is a philosopher, writer, artist and entrepreneur! He makes money by doing chores for his parents. He makes money by doing drawing assignments and other odd jobs for his friends! When I asked him where this money goes…
Continue reading →Question 2: Name mutual fund types with near zero probability of money-loss? I am big fan of lowering risk and tax. Before I save and invest I try to choose instruments with minimum risk and tax out-go. Of course the type of risk differs: loss-of-money-risk when saving and loss-of-value-risk (or inflation risk) when investing. Choosing…
Continue reading →‘How much risk an investor can take’ and ‘how much risk he should take’ are two very different things. ‘Invest as per your risk appetite’ is half-decent advice. However it is not universally valid. A person who hates equity can choose to avoid it only if he can afford to regularly invest a sizable (often…
Continue reading →One of the first steps towards taking control of ones financial life is to list down all long-term and short-term goals that one needs funds for. The next step is to use a calculator to estimate how much one needs to invest for each goal independently. The results can often be frightening and sometimes even…
Continue reading →Beginning to invest for a long term goal in accordance with a plan is an important first step. Once the investing process is underway, performance of the instruments chosen have to be monitored the portfolio rebalanced the goal plan re-evaluated annually and a few years away from the goal-date a plan to shift funds from…
Continue reading →A recurring deposit (RD) is a terrific instrument for meeting important short-term goals. If I can claim to have some financial discipline it is because I observed my parents open RDs for meeting their short term goals ranging from paying insurance premium to my school fee. For the new generation of investors I guess the…
Continue reading →Use this suite of calculators to compute SIP and lump sum returns, compute SIP corpus and determine SIP amount needed for a goal. This represents an upgrade of my understanding of (a) excel functions and (b) the compounding process. The calculators also help illustrate a common error in converting monthly returns to annual returns. First…
Continue reading →“Applying for term insurance? Be sure to be honest when you apply and disclose all relevant facts. Your (nominees) claim cannot be rejected” Does this advice sound familiar? I have offered it to others myself. The question is, is this advice correct? The answer is ‘Yes’ but … there is no guarantee that the claim…
Continue reading →Recently subra wrote an article on Payoff Mortgage or Invest…continued. Here is a calculator to fortify the argument I have modified my financial freedom calculator to accommodate immediate lump sum investment to the lender to check if that option is better than investing the money for retirement (aka financial freedom) The excel file explains the…
Continue reading →Thanks to the untiring efforts of many personal finance bloggers, the message “Don’t mix insurance and investments” is spreading fast and creating awareness. The message is intended primarily for those who are thinking about buying a pension-plan, child-plan, ULIP, endowment plan etc. but have not yet done so. Unfortunately the message strikes fear and panic…
Continue reading →One of my teachers once told me, “stare at every graph and every equation you encounter. Milk all the possible information you can out of them before you move on.” This advice helps me on an everyday basis: to teach, research and learn personal finance. Most importantly it allows me to be a contented investor….
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 →Financial advisory can be divided into components. One which is generic advice, the kind available at the cost of only electricity and internet usage charges in blogs, forums and elsewhere. Then there is personal advice which can be obtained for a fee from a planner or free from your LIC agent uncle. Unfortunately, most confuse…
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