Just About Money: 2007

New Year Resolutions

Its that time of year when everyones down to making resolutions for the new year and plan not to stick to them by the first week of the next year. But Resolutions do need to be made, and if you by any rare chance end up sticking to them you might just come out a winner. I am here jotting down some of my "New Year Financial Resolutions" and just like everyone else i vow to see them through next year(at least i hope to).

1. I plan to make a contingency fund in my savings, for any emergencies and keep at least 15% of that amount at home at all times. Just one thing the money i plan to keep in the bank, will be kept in a savings account linked with an Fixed deposit account, this way i will earn interest as well on the amount.

2. I plan to stop keeping revolving credit on my credit card, i am just paying too much interest on it. Just plan to pay of everything on time and try to minimize the use of credit card.

3. I don't have a PPF account yet and plan to open one in the new year and start putting money in it every month.

And one very important financial resolution apart from the all the other that i have

I PLAN TO LOSE WEIGHT,
I AM SPENDING TOO MANY HOURS THINKING ABOUT FOOD AND TO MUCH MONEY ON FOOD

HAPPY NEW YEAR TO EVERYONE
AND
BEST WISHES

Mutual Funds

Not everyone can research the equity markets and invest and sell when required. Some of us are just too busy or just don’t have the aptitude for it. Some people have the money to hire a specialist to take care of their investments. Well Mutual Funds give everyone one of us the specialist support that we need. Mutual Funds are run by professional fund managers, who take care of a corpus of funds gathered together from the money of several individual investors. Now day’s mutual funds come in a wide variety of forms, some invest only in blue chip companies, some in debt funds, some in sectored funds. Many type start a bigger confusion, so don’t be confused, to invest in any mutual fund you need to make research at least and can have peace of mind then. Take out a little time jot down on a piece of paper what you are looking for, are you able to take little bit of risk(Calculate what is your risk profile here), Are you looking for a pure equity exposure or debt equity mix, You could also start buy looking at a fund which invests in one sector for example technology, banking or even the latest craze of investing in infrastructure companies. Personally I feel in today’s scenario where there is a boom in the infrastructure industry and any fund, which has a good track record of managing a fund and has a great mixture of funds should be where to invest in.

In the following series with the same topic i will discuss about good investment Mutual funds and some fund details.

Investment Oppurtunities - 2

I am here continuing my article on Investment Opportunities, those who are closely following this article i am also starting a survey on what type of opportunities do you invest in, so please do take the same at the bottom of this page

5. Equities : Just Dive into the Market, their are a lot of opportunities out their, but since not many of us have the time to study through the market, start investing small, and please don't turn into a day trader from day 1. Get a Demat Acccount, with any trading company preferably a big name and start researching the market. I do a lot of my search on moneycontrol.
Initially only invest in some good blue Chip Companies. Then Probably move onto some failrly unknown names. Some Websites can also give you trade calls. You can subscribe to that as well but one piece of advice be very careful and don't invest too much money in a single stock. Keep it across sectors.

6. Gold : The sparkle of Gold has always been a great attraction for most Indians and India is one of the largest consumers of Gold in the world. Gold always seems to shine out, its a good investment. I am not talking about jewelery that Girl's love to wear. If you are thinking of investing in Gold, you can either buy pure Gold from the Banks like ICICI, SBI, Indian Bank among others. They all sell pure gold in tamper proof seals. One thing although banks sell gold they don't buy them back an RBI ruling forbids it. Also there are Exchange trading funds available in the market in which you can invest as a form of gold investment like any other equity. They invest in gold and reflect the international price of the commodity in the market. Some of these are Kotak Gold ETF, UTI Gold ETF etc.

Keep reading this column i am going to discuss more about some Mutual Funds in the next part.

Investment oppurtunities

Everyone i meet wants to find out where to invest to be included in my blog, although i was avoiding this topic from a long time. Well to be frank i can only say that i will have to put up a disclaimer here, that what ever options i give below are purely my opinion and my research and that please invest based on your own judgment. The below are not in any particular order,

1. ULIP's : Unit Link Insurance Plans, they provide protection, investment, some people don't approve them as a good investment as there are too much loading involved as compared to a mutual fund but what the heck why are you even comparing it with a mutual fund. Just let it be for what it is and its an investment option which normally you have to pay for a period of three years and after which you can leave it there to grow untill you need the cash, at least it is better then the endowment policy from which you cannot withdraw for the period it is left.

2. Term Insurance Policy : You have got dependents and when you take insurance plans, the basic purpose in mind is that they need to be secured, well most of the insurance policies are just too costly, for a 10 L mortality cover ULIP, you could end up paying Rs. 1L as premium per annum, but then there are term policies, although there is no return from this policy if you survive the period insured for, but what you do get is a big coverage say for a premium of Rs 6000 approx. per annum you could well be insured for Rs. 20L for a period of 20 years. So do look at this as a pure insurance and not an investment.

3. PPF : Public Provident Fund, you keep investing Rs. 70000/- for 15 years and the interest rate is 8% per annum. Its good retirement planning kind of an investment and you can also take a loan of 25% of the value against it after staying invested in it for 3 years. The interest rate is compounded annually. And dont forget the fact that it carries a sovereign guarantee.

4. Mutual Funds : If you cant follow the market and cant make heads or tails out of it then let the experts do it for you and for a fees of course, they manage your money as a part of a huge corpus of several investors. There are just too many type of mutual funds and recently there has been a splurge of New Fund Offers (NFO's) in the market. choosing the right fund is an issue. My only advice here is dont go into a fund just because you can buy it at a lower NAV, but study its year on year performance and what kind of returns it is giving, make your decision then and if it is an NFO, try to study funds in the similar market profile, see what returns they are offering, or even if you cant find any similar funds then study the profile of the Company which is offering it and the fund manger, it helps.

I am going to continue this article next time and also am planning to write an article on Mutual funds so please do keep reading.

Property Investment Hot Locals

Property Investment is the hot new topic in personal finance circles. Real Estate seems to be getting hot by the day. People are buying property if for no other reason then just to give it on rent and start earning an additional income. The builders are coming up with new projects everyday. Some property investment areas are really hot and coming up. I am listing down some very hot areas below for investment in 2008.

1. Delhi : One very costly place but always worth an investment. It pays to invest in Delhi. Anyone who doesnt have a property in Delhi can tell you that. People owning property in Delhi dont very much appreciate this fact but its a good investment.

2. Mumbai : Hot but costly beyond any one mans reach but a good investment no doubt.

3. Pune : Some good companies have come up in Pune as well and the property scene in this place is hapening right now. With more industries lining up to set up their office on Pune. Its a good place as well.

4. Greater Noida : One International Airport and an F1 track apart from a lot of industries, an export zone, a National highway, a express way and the likes, what more would can you ask for in an investment oppurtunity.

5. Chennai : A good place to invest with very good connectivity to a lot of industrial zones and a hapening town is not a bad place for investment at all.

6. Jaipur : 4 hours drive from Delhi, National Highway, A not very populated township, very good historical spots in and around the place, industrial zones, an airport and tourist attraction. Just one town where you can invest and bear fruits of your investment later.

How to Ensure a Stable Portfolio

This is a very volatile Market and dreaded investors like me can't make up their minds whether to stay invested, to buy more or to sell everything off. The Stock Market is very volatile, one day news comes in that it has shot up by so many points and sometimes it has suddenly fallen flat on its face. Well just to be careful in these eventful days we should keep the following in mind...

1. Invest Systematically.

2. Invest for the Long term

3. Invest, no matter at what level the market is, you should only keep in mind the basics of the company that you are investing in and nothing else. If that is inline then you have nothing to worry about.

4. Maintain your asset allocation, Keep a good Debt to Equity Ratio at all times.

Get Rich before you get Old.

Retirement Rules

Everyone OF us Should Start thinking about their Retirement as soon as they start Earning, just to have some security in your mind about the Future. With the way things are going on India and the globe, these high paying high stress Jobs, Cost of living getting costlier with every passing day. Health Of people deteriorating faster. People do need to keep retirement planning in their mind. I myself have been thinking about it a lot lately, earlier whenever i cam across such a issue i would just say i will think about it when the time comes. And Now when i am 30 i have started to get the feeling that i am late and i should have done something about this earlier. Any ways with this post i am not trying to tell you where to invest (which i will try to do in the near future). I am just going to give you some simple rules for the same...

1. Never Spend More then you earn.(As i told earlier i have already been accused of doing the same)

2. Start Saving Early, (I just started thinking but i know i am Late), it helps build a corpus over the years.

3. Make A goal about your Retirement Planning (Like how much you need to save before you can retire) and then try to achieve the same.

4. Try to make financial stability a bigger priority then show off. Theres no need to buy that costly Mobile if you don't need it.

5. I was reading somewhere and i found this Quote it really gets its point across " no matter what, you don’t want to be old, weak, ill and poor." Need i say anymore.

6. Always keep some savings at hand so that you dont have to dig into your retirement savings in case of financial crisis.

7. Buy your Own home.

8. Consider the tax implications of everything you do.

9. If you are starting your business make some one else pay for it, and you can put in the work required.

10. Always keep acquiring Business skills that are in demand and this way you can always be employable.
5.

A book for NRI's

I was going through this book on Investments for NRI's i would like to share it with everyone. I found it on a website called personalfn. I have uploaded the same on my Rapidshare account and am now sharing it with you. Here's the link

http://rapidshare.com/files/70326004/MSNri08.pdf

Its a worth while download for all those who can use it.

Marriages

Hey Everyone,

I was out over the weekend attending a marriage ceremony in Jaipur. And as you all know i am Punjabi, and some how punjabis tend to overspend on everything. Somehow i feel this is not the problem of Punjabis alone but all over India, people go overboard as soon as the topic of Marriage comes up. You can even begun to imagine the expenditure some people can do on a marriage. Talk about Crores of money and i am not even going to start talking about the lavishness. Most of the people i have spoken to about their expenditures on the marriage and they have told me that it was over budget because of some unforeseen expenditure that came up at the last moment. And please done think i am any different, i had a great wedding with all kinds of show off stuffs(Don't forget i am a punjabi) but a the end of it all i tend to think was it really worth it. I could have done a lot with the money, i ended up spending. Anyways i am not going to tell you to have simple marriages and the stuff cause frankly my punjabi heart wont let me but what i am going to tell you here is how you can make it better

1. PLAN PLAN PLAN : Plan for your wedding try to keep the marriage date at least six months away from the date you decide on the date. It helps, Don't make it a rush rush project. Planning it well in advance can help you save a lot of money, like for airline tickets for your honeymoon and maybe even hotel bookings. Go into detailed planning of each task and if you have your family members helping you out delegate some tasks to them, and keep a record of your planning. It always helps.

2. Make your bookings in Advance : Like i said earlier the APEX fares help if you plan in advance. Same is the case for hotel bookings and also if you are planning to have your marriage in a Banquet hall they might give you a good discount for booking them well in advance.

3. Shop early : If you have enough time to your marriage date, you can start shopping early, look for good deals, maybe sometimes even a discount sale would be coming up in a month or so, make use of it. Maybe if you plan to pay up your credit card in time, you can use it and earn a lot of point which can be later redeemed to get you a holiday package for your honeymoon.

4. Gifts : The good thing about the Indian culture is that most of the relatives who come to the marriage would gift you cash, bank on that opportunity, don't go about reinvesting it until and unless you already have a very strong bank balance, Use it to pay of your credit card bill or maybe even the loan you might have taken. But do something with that money, don't leave it lying around.

5. Contingency Plan : Plan for all contingencies, i know you can plan for major problems but for small issues like your wedding dress getting spoilt on the day of the marriage, A second car to carry you to the venue in case of the first one breaking up. and all such things , sometimes they really help out and you dont end up spending money at the last moment.

So be carefull and plan your marriage. And ofcourse best of luck.

How to Retire a Millionaire

There are really only four variables you need to understand to figure out how much money you need to save each year to retire a millionaire:

Your current age.
The age that you will be when you retire.
The return you think you'll get on your investment.
The money you have saved to date that counts towards your goal.

Everything else being equal, the earlier you start saving the easier it is to hit that Crore Pati mark. That's because you've got compounding interest on your side.

Budgeting for you

Budgeting????????.........Oh my god, i plan to do it every month but nothing actually ever happens. Is it the same story with you as well. I guess its everyones story. No matter how boring you think the task is is but it really is useful, it helps you to control and enjoy money, it protects you from financial problems in the future and of course last but not the least it helps you save money.

If you want to start saving here are a few tips...

1. Set targets : If you plan to buying something costly like a camera now and think of paying by a credit card(a sin i did very recently), it upsets your budget for the next few months but if you had budgeted and started putting aside some money for that expense and held on to your will power, you would have saved a lot of money(Interest on the card) and a lot of heart burn. So plan ahead and budget accordingly.

2. Don't make it a rocket science : The one reason we avoid it is because when ever we try doing budgeting we go into detail of every last paisa. Don't do that. Just try to cover the main expenses, some rupees spend on minor indulgences shouldnt count and shouldnt matter that much. So dont make it matter.... indulge your self.

3. Surprise yourself : There's no need in making budgets on your study table, get out there on a picnic and get your family together and then do the process, it can be more fun then and you might actually do it instead of thinking of it every month.

4. Value everything : You want to buy something, value it, think how much you really need it? do you really need it? And can you wait to buy it? Talk to your spouse about something they need and how much they really need it and maybe they will understand the need to wait for the right moment to wait for it. This way you can plan well and also give you a peace of mind.

5. Do something extra : Sometimes there is a real cash crunch and you actually start to think of using your credit card. Dont do that like i did. Just try to save some more money. Sometimes you can get something cheaper and maybe even reduce some expenditures you normally do. Something like maybe every weekend you go out, dont go out or try going to a cheaper place maybe some road side food, its cheaper and sometimes you can get really good food.

6. Be flexible : Just be open to flexing your budget once a while this way your family will not think you as a miser. The only reason i am saying this is, this way you do not stop budgeting but you stay within your budget and go into minor diversions and maybe next time you are more better prepared.

So go ahead and budget next month and please do let me know..........

Becoming Rich

There is a good book on creating Wealth called ""Winning at the wealth Game" by Sanjay Mehta. It has something to do with teaching everyone the ideas of wealth through cricket strategies. Its a nice book, and i will not go into much details about what the book says but there are some points that the book stresses on, these point's a very well explained with reference to the game of cricket and i will try to explain some points to you...

1. Build you wealth bit by bit, just like a player builds up scores. Don't lose wickets.

2. Make sure you have a solid foundation. Prioritize your investment - First look for Liquidity, then go in for security and then go in for maximizing returns.

3. Know your financial goals clearly. Write them down and keep updating them in the different phases of your life.

4. Keep long term goals in mind, keep creating wealth dont ever stop.

5. Keep a watch on your investments. Know when to exit and when to enter a particular type of investment.

6. Always keep a lookout for oppurtunity, never miss one.

7. Always know your strengths and weekness.

8. Your assets should always be balanced.

9. Always have a winning mindset, know what you want and go for the kill.

10. Diversify, Diversify, Diversify..., need i say more.

NRI's and Money

I personally know a lot of NRI's, One being my own real brother. And the one thing that i have found as a common problem among NRI's is the investment, what and where to invest money. How to secure their future and how much they can have to return to India and live a secured life and this is especially true for all those NRI's living in the gulf.

They tend to have a lot disposable income and don't want to misuse it. Most of them seem to be looking at property as a convienient way of investing. With people living abroad property investment has a lot of hassles involved like who will take care of the property, when is the right time to sell property, monitoring Government policies in the areas of your investment etc....
NRI's need to keep in mind, what are their real needs, why do they want to transfer money to India. Do they wish to relocate to India in the near future. Would you rather feel at ease if you had money in rupees instead of some foreign currency? Or you just want to diversify your portfolio by cashing into the Indian booming market?

Once you are clear on the objective, you should see whether your present asset allocation is in line with your requirement. Never shy away from using an expert opinion about your asset allocation since you are not in the country and might not be able to keep up with the current affairs.

Indian Currency is expected to depreciate by 3 to 5 % every year, with this decline in mind all the returns should be calculated also keeping in mind the fact the cost of living at the point of time when you plan to start digging into your savings.

Also a lot of times, it is noticed that NRI's tend to do investments in India through one of their family members who are living in India. The reason usually being that the interest rate for NRI deposits. So they feel investing in India through relatives bypasses this drawback

This is a wrong strategy, firstly the interest on NRO deposits is not capped. NRO deposits is the same thing as investing in India through relatives, since your money is converted into Indian rupees. NRo deposits are available up to 9.5% interest rate.

Their are certain risks involoved in investing through relatives :
1. The money belongs to the relative and their is no proof of the money being yours.
2. The relative could be taxed for receiving the money from you

Also one more thing the restrictions to investing your money is only applicable to FD's and they can very well invest in any other form of investment instrument. So when ever you NRI's think of investing in India be careful.

Inflation and Beating It

Inflation??????

Heard it too many times. Know what it is but just cant define it in Words huh...., Well Let me first try to explain it to you in very General terms it means

"" A rise in the Cost of Living"".

See You already knew that but in more technical terms it is defined as

"" An Increase in the amount of money or credit available in relation to the amount of goods or services available, which causes an increase in the general price level of goods and services. Over time, inflation reduces the purchasing power of a Rupee, making it worth less.""

How does inflation effect you?... Well Simply said, When Ever you go out to buy your household grocery and you find out the rates have been increased, you know it is high inflation rate. For that sake even whenever you fill fuel in your Car and the rates have risen you have just been stricken by a high inflation rate.

Those of us living on fixed salaries are usually the most effected by inflation, since although your monthly intake remains the same, your expenditures rise and hence directly effecting your household budget and savings.

How do you calculate Inflation? Well thats a somewhat complicated process and i will not go into the details of the same it has something to do with Consumer Price index "Something like Calculating how much an Apple Cost in XXXX year compared to how much it costs now". I guess you get the idea. The Formula for Calculating the Inflation rate is something like this :

((B-A)/A)*100

where B stands for Current Index and A stands for last Years Index.

Inflation is one of the main reasons why the Consumer Debt market is at an all time high. The same reasons we see all those farmers doing suicide in some parts of the country, since they cant afford to buy anything and they end up taking loan and then cant repay the loan. Its a sad story.

Beating Inflation

Whenever we are about to make some fresh investment or even reviewing our existing investments, we need to keep two thing in mind during these high inflation times

1. The possibility of getting higher interest rates.

2. The devaluation of the Rupee.

To beat inflation we should avoid investing in fixed deposits and relief bonds. Also try to avoid any debt fund(Any investment pool in which the focus is on fixed income investments, the main objective being preservation of the Capital) that has a long term.

Try investing in the following : -

1. Property : The star Performer, 9/10 times usually property bought with sound research will give better return then any other investment type.

2. Short term deposits : These can provide the much needed liquidity for you money in the times of inflation, also you always have the option of reinvesting the money in a better return giving investments.

3. The Stock Market : A Careful investment with a great deal of research usually gives very good returns. The last three year returns from the sensex alone are proof enough of the value that this kind of investment can give you.

4. Commodity trading : I am not very much aware of how this functions but the people i know who do invest in commodity trading are usually earing well, especially with inflation always on the rise.

In Conclusion, i can just say that diversify your portfolio, keep it balanced and always take into account what are your needs and aspirations are.

Select Good Insurance Agents

The people who give us the cover we require and actually are the main interface between any insurance company and yourself. Selecting an insurance agent now seems to be a big area of concern. They not only know your inherent details but also should be a person whom you can call up if an emergency arises and you need someone to take care of the money part. Choosing an insurance agent has become more or less like choosing a spouse. You need to meet a lot of them until you can find the person you think can fulfill your requirements. Can be friend in bad times and a helping hand.

With all these new companies entering the insurance sector selling insurance has become like any other FMCG product, the person who sells you the product can show you the moon and not even deliver a grain of sand. These people tend to misrepresent the companies. I was reading the news the other day that IRDA(Insurance Regulatory _____ Authority, the main body which regulates the insurance sector in india)., had pulled up a company for misrepresentation by its agent. But with So much Competition the companies cannot monitor all there agents. The agents want to close the deal and can sometimes go over board in making promises to the customer.

So one piece of advice be very careful while selecting an Insurance Agent. Ask your friends about their experiences ask around ask your neighbors. Try researching on the net. Always try to buy policies from Corporate agents. They are more professional in their approach and have more accountability. Try to find out about their qualifications and where they stay. Before buying any policy do adequate research. Try to call up some of his old customers and ask around for his credibility. Also don't forget the Company itself matters more then the Agent so always do your research on the company as well before buying any insurance.

What I am and this blog

Hey Everyone,

I am an Engineer by profession and sometimes the financial jargon is just too much for me. So i will try to keep this blog as simple as i can and nothing to technical or financial. (Dont worry its just that i dont understand them sometimes as well).
Recently i was surfing the net for some useful information regarding investments and saving and found thousands and thousands of links all over the net. Some will tell you how to spend your money and some how not to. Some will tell you how to save your money and some how not to. I mean i could go on and on. It just got so confusing that i ended up going to the market place so that i could buy some magazine to find out about the same but the same old story.

You know it just so happened that i was reading this all famous money magazine about which was telling about how to save your money when you are getting married and how to invest the money you get as gifts from the families(Such a nice Indian culture). And the same magazine went on to say how to spend money by going to awfully expensive honeymoon destinations. I mean how more confusing can you make it. Why would i save the gift money and invest it and then end up piling up my credit card bills with huge expenditures i made on the Honeymoon(Can you say NO to your newly wedded wife).

Any wayz BLAH BLAH BLAH..........., i could go on and on, so then the idea struck me that why not make new place for all those looking for money advice. Where not only could you get the information you needed). Of course based on the Authors experience) but also find the links of the some the most useful related info on the net.

So here i am trying to compile all information that i could collect in one place. One place to find it all. Not only information but some of the best links that can be found on the net. And anything else related to Money Matters. So guys please do support my Blog.

Thanks