Just About Money: November 2007

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