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2017 – I Wish

i-wish

Finally, we have made it… with Modi’s demonetisation and Trump’s victory, last quarter had been the most shocking, surprising or rather adventurous for an average Indian, as well as for entire globe.

Like any start of new year, we have high hopes, we write resolutions, promises & look forward to a great year. I don’t want to spoil the party by being negative or projecting some fancy numbers, growth etc. Also, I don’t want to be an analyst today.

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Demonetisation effect

demonetisation-effect

With demonetisation almost nearing its completion & 80% of the old notes back with the banks, most of us are questioning, what next?

Well, to start with, we are moving in the phase where quite a lot of individuals & families have either declared or will start operating with white money now. In short, we have more people having white money in hand going forward, which will soon start demanding white investments.

Real estate & gold, which used to be the main source for black-money, now will (more…)

Child education – How much will college cost in future?

child-education

To send our child to the best of the colleges, is always top of our wish list. A good college education can open door to many opportunities. But college degree doesn’t come cheap and if we don’t start planning it right now, we will have a sorry face, when our child is ready to go. Therefore, the best thing to do is to start saving early.

How much will it cost?

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Black or White – what do I do?

black-money-tax-scan

Our dear Prime Minister is known for surprise, and the biggest was on 8th evening, when he announced to demonetize INR 500 & 1000 currency notes. It’s a known fact, that in India we have a parallel economy running on black money, also known as shadow economy. Whatever measures & schemes offered by government, still they were not able to control or stop the flow of black money. Finally, the masterstroke!!!

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My Wife’s Treasure Chest

Hidden Treasure

With our PM Modi’s bold move to phase out old INR 500 & 1000 currency notes, we have a new crisis at home today. I am checking my wallet, bags & hidden areas to weed out any notes, suddenly we have bundle of notes, popping out of kitchen cabinets, dressers &areas we wouldn’t even imagine.

And guess, who’s behind this, my dear “Wife” … all these years she’s been keeping or stacking notes in some place or the other, which comes as small change, shagun(gifts) or any other savings. She would not even bother to look back to check, whether it’s there or not, or how much is stacked.

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The Best Gift Ever Received

best-gift-ever

We have heard stories, where kids from their pocket money savings, have purchased an expensive music system or gifted an expensive wrist watch to their parents. If it’s my generation, i.e. 80’s, we were saving this in our piggy banks, whereas today same gets parked in a real bank savings account (kids).

I have not come across any parents till date, who would have started a culture of kids saving same in equity mutual funds. Why?

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5 Days of Diwali or 5 Mantra for Success

unnamed

Diwali, or Deepawali, is India’s biggest and most important festival of the year. The festival gets its name from the row of clay lamps that Indians light outside their homes to symbolize the inner light that protects us from spiritual darkness or the festival marks the victory of good over evil.

On the first day of Diwali, better known as “Dhanteras”, people consider it auspicious to spring clean the home and shop for gold or kitchen utensils.

1st Mantra: Let’s open, clean & organise all our files, papers, mails related to financial or investments. It’s the time to declutter, throw unwanted papers, duplication & be organised.

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My dream – How to become Rich?

My dream - How to become Rich?

I thought of writing something differently this time. I asked this question, what is one common dream, most of us look forward to. I didn’t have to scratch my head, “how to become rich” is everyone’s dream, but very few live to live this dream.

It’s not about the dreaming, but it’s all about the efforts put to live this dream.

My best analogy is old DD comedy show of “Mungerilal ke haseen sapne”, where Raghubir Yadav used to dream big and while dreaming, will elaborately get into details & hard work, but only in his dream, and towards the end when he wakes-up, he is back with nothing in hand 😉

As a matter of fact, there is nothing wrong in dreaming and more so, absolutely nothing wrong to think that one day I will become rich. But what is important is that how many of us actually chart out that dream or write it on a piece of paper, write down how one can reach same, get into detailed working on time, deadline, resources & efforts.

One has very few options to reach this destination of becoming rich, which are, your talent & your savings. Your talent can fetch money, whatever you can command from the market, and whatever you earn based on your talent, how much you can save will decide your future.

Being specific, below is my simple guide:

  1. Start Saving Early:

Start your savings from your first salary… don’t wait. Typical answer here is that, I will start after sometime or let me at least cover my basic requirement first or my salary is small. My logic, even if you can save few hundred or few thousand per month, please start NOW. Any amount which will not hurt or one can compromise with, one should ideally start. Power of compounding works well over long period rather than short.

Example: Let’s say you start investing at age 25 till your 50th birthday with just INR1000 monthly, @15% CAGR. You will receive INR27.5lacs on your 50th birthday.

Now if you delay this monthly saving by just 5 years, you will receive INR13.2lacs on your 50th birthday.

  1. Start Saving More:

Whatever one earns, idea is to save more. Simple suggestion is to keep increasing the saving each month, which could be from few hundred rupees to few thousands, which will not hurt anyone ideally.

Example: If we take cue from above & add just INR100 to monthly savings of INR1000 each month, which will look like this; month1=1000, month2=1100, month3=1200 … month24=3300 till 50th birthday (starting from 25th). With 15%CAGR, you will receive INR2.37crores on your 50th birthday. One can look at multiple ways to increase monthly commitment.

  1. Invest Savings Fast:

Whatever surplus funds in hand or savings you have in hand, immediately park it into any of the best available funds, else one ends up using same.

  1. Track & Manage Funds:

To learn, understand & mange funds based on your liquidity, risk & returns periodically. In short hook to platforms who offers such services, where you can map, track & manage your investments, all under one roof.

Finally, it’s not about dreaming “how to become rich”, but all about your efforts on when to start, how much to save, how often & the discipline, one follows.

Investments – too much clutter in the marketplace!

cluttered marketplace

On one hand, we have Investment product sellers; like banks, brokers & individual consultants, who sell investment products, claiming to offer the best solution with detailed research reports.

On the other hand, we have manufacturers, like mutual funds & insurance companies, offering mouth-watering deals with smart TV & print commercials.

Who do we believe & trust?

As once a product is sold, one gets to know or understand the actual value of the product only after few years or later, that too when one meets a new advisor or spends some time on knowing the product 😉

Now if one tries to correct the mistake, by calling the seller or the manufacturer, customer is shown the “terms & condition agreement” or various “disclaimers”, one would have signed at the time of purchase. Which in most likely scenario, one would have not checked or read, and simply gone ahead based on the sweet talk or the projection shown based on the positive market trend.

Who to blame?

Without getting into pros & cons, based on my understanding, its “us” or the customer, who needs to draw a line & have to spend some quality time on what he wants, how he wants & where he wants? before getting into any investments.

Step 1: What one wants? means, as a first step, what are your goals, for which you want to make investment, like retirement, kid’s education, buying a house, business venture etc. or portfolio management. One has to define same with clear future value or expected value & time.

Step 2: How one wants? means, as a second step, what kind of risk is one ready to take or preference & understanding one has towards various category of investment products available in the marketplace. Which in turn will give an idea on the products availability (or shortlist) in those categories.

Step 3: Where one wants? means, as a final step, the platform or the execution of products which is shortlisted, based on above two steps. And off course the review mechanism/ platform as well.

Now comes the bigger challenge; how do we get all three at one place?

Again, we have a clutter here, with many new & old companies now offering these services. But the catch is, at what depth or how do we differentiate? My evaluation process is simple:

First, is it free or do they charge fees/ disclose charges? if the answer is free or nominal sum, my suggestion, don’t go further. Nothing comes free and in case you want good advice or service, it will cost.

Second, how detailed or comprehensive they are? Which can be gauged from the website, teams background, blogs, FAQ’s & best, an interaction with the team. I guess, I don’t have to explain same.

One such platform, which follows above practice is www.moneyfrog.in, where customers are guided based on their data & analytics, and investment products comes out only as an output, on their goals & various other data points.

Insurance in India; what it means? – Investment series 2

Insurance

A recent survey conducted by an international agency on India’s financial literacy:

  • 67% of the Indian prone to think insurance as investment

  • ONLY 7% people have taken term insurance, out of all who pays insurance premium

  • ONLY 5% of people have health insurance

  • 92% people after their retirement depend on the children and 8% who plan for retirement, 61% of them resort to insurance as retirement plan

I am sure, most of us will not find it surprising, as we are also part of it. I don’t even have to validate this data, as this is a common occurrence with most of the customers I meet.

Insurance is the most preferred “Investment avenue” by Indians, after bank FD’s. This is where the problem starts, we treat or understand Insurance as Investments. We have Insurance agents floating around virtually everywhere; family, friends, office colleagues, neighborhood agents, and lastly, relationship managers from banks & brokers… hammering same!!

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