tag:blogger.com,1999:blog-280260422024-03-14T07:47:30.291+05:30Random RamblingsI write little bit about miscellaneous topics. Ranging from personal finance to short stories to poems to random musings!Nikesh Rathihttp://www.blogger.com/profile/02208012080532357303noreply@blogger.comBlogger234125tag:blogger.com,1999:blog-28026042.post-57435195782130514672019-06-29T11:04:00.002+05:302019-06-29T11:04:22.550+05:30Get cashback while doing online shopping<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-family: Trebuchet MS, sans-serif;">Originally published on <a href="https://beingfinwise.com/how-to-get-cashback-on-online-shopping/">BeingFinWise</a></span><br />
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<span style="font-family: Trebuchet MS, sans-serif;">Cashbacks are an amazing way to save money while shopping. More so while you do online shopping. In addition to regular deals and discounts, you can get cashback if you go via <a href="https://beingfinwise.com/use-affiliates-to-get-cashback-on-ecommerce-shopping/">affiliates</a>. This way you can get cashback on your online shopping, over and above your regular deals.</span><br />
<span style="font-family: Trebuchet MS, sans-serif;">Some of the popular affiliate networks offering cashback on online shopping in India are <a href="https://cashkaro.com/r=451557">Cashkaro</a>, <a href="https://www.gopaisa.com/">Gopaisa</a>, <a href="http://pennyful.in/">Pennyful</a> etc. <a name='more'></a></span><br />
<span style="font-family: Trebuchet MS, sans-serif;"><img alt="cashback on ecommerce shopping" class="alignnone size-full wp-image-1728" height="1253" src="https://beingfinwise.com/wp-content/uploads/2019/05/pexels-photo-1114376.jpeg" width="1880" /></span><br />
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<span style="font-family: Trebuchet MS, sans-serif;">I, for instance, use <a href="https://cashkaro.com/r=451557">Cashkaro</a> for my online shopping as far as possible. It is the Indian arm of UK based <a href="https://pouringpounds.com/">Pouring Pounds</a>. Most of the times, one can manage to get cashback on some popular eCommerce sites like <a href="http://www.amazon.in/">Amazon</a> & <a href="http://www.flipkart.com/">Flipkart</a> (and many more places!). These cashbacks are not just limited to shopping. You can get cashback on things as diverse as travel booking, credit card applications, online gaming etc!</span><br />
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<span style="font-family: Trebuchet MS, sans-serif; font-size: small;">How can you benefit from <a href="https://cashkaro.com/r=451557">Cashkaro</a> (or any cashback sites)? </span></h3>
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<span style="font-family: Trebuchet MS, sans-serif; font-size: small;">Here are few ways:</span></h3>
<ul>
<li><span style="font-family: Trebuchet MS, sans-serif;">Before doing regular ongoing shopping, visit the website via <a href="https://cashkaro.com/r=451557">Cashkaro</a>. Read terms and conditions before proceeding to be aware of inclusions and exclusions in the deal. For instance, in some cases a particular payment method may not be eligible for cashback!</span></li>
<li><span style="font-family: Trebuchet MS, sans-serif;">Sometimes their emailers share really good deals. Be on lookout for that. Now you can also get deals via WhatsApp!</span></li>
<li><span style="font-family: Trebuchet MS, sans-serif;">Be on lookout for deals where you can get close to 100% cashback (and an occasional cashback of more than 100 percent!). A combination of website based deals and cashback can add up to that number. </span></li>
<li><span style="font-family: Trebuchet MS, sans-serif;">Once you have enough cashbacks, get the money in your bank account (or as gift voucher)</span></li>
<li><span style="font-family: Trebuchet MS, sans-serif;">They have a referral system, which allows you to get a small percent of cashback which your friends earn. You can keep earning these cashbacks as long as your friends shop!</span></li>
</ul>
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<span style="font-family: Trebuchet MS, sans-serif;">Few caveats-</span><br />
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<span style="font-family: Trebuchet MS, sans-serif; font-size: small;">You should keep few things in mind while chasing cashbacks on online shopping:</span></h3>
<ul>
<li><span style="font-family: Trebuchet MS, sans-serif;">Most of these cashback work on desktop/ mobile website but usually not on Apps. Be aware of that. </span></li>
<li><span style="font-family: Trebuchet MS, sans-serif;">Most of the times you should start with an empty cart when you visit from <a href="https://cashkaro.com/r=451557">Cashkaro</a> to the eCommerce portal and then add products to your cart</span></li>
<li><span style="font-family: Trebuchet MS, sans-serif;">Getting cashback on shopping is good. But beware of doing shopping only for the sake of cashback! If you get Rs. 500 cashback on shopping for Rs. 1000 - you can view it as saving Rs. 500 or spending Rs. 500!</span></li>
</ul>
<span style="font-family: Trebuchet MS, sans-serif;">Happy shopping. Happy saving!!</span><br />
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<em><span style="font-family: Trebuchet MS, sans-serif;">Note- This is not an partnered/ guest post. I have been a user of this (and similar services) and find them good to get cashbacks and save money! However, this post contains referral link(s).</span></em><br />
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Nikesh Rathihttp://www.blogger.com/profile/02208012080532357303noreply@blogger.com2tag:blogger.com,1999:blog-28026042.post-61286588059389942182019-06-29T11:01:00.003+05:302019-06-29T11:01:41.995+05:30Rich, yet bankrupt<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-family: Trebuchet MS, sans-serif;">Originally published on <a href="https://beingfinwise.com/rich-yet-bankrupt/">BeingFinWise</a></span><br />
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<span style="font-family: Trebuchet MS, sans-serif;">Tennis legend Boris Becker is in news - for wrong reasons. He is <a href="https://www.bbc.com/sport/tennis/48754760">having auction off his trophies to pay off his debts</a>. Even then, the debt will not be fully repaid. To think of it, he was the youngest Grand Slam champion & considered one of the greats in tennis. He won Wimbledon when he was just 17!</span><br />
<span style="font-family: Trebuchet MS, sans-serif;">At that level, tennis does pay a huge amount of money! So we can safely assume, that he would have had no dearth of money.</span><br />
<span style="font-family: Trebuchet MS, sans-serif;">Boris Becker is not the only celebrity to be rich, yet bankrupt. There are ample examples. For example, Michael Jackson died, he was in huge amount of debt.<a name='more'></a></span><br />
<span style="font-family: Trebuchet MS, sans-serif;">It is often said, maybe correctly to a great extent - It is not your income but your savings that make you rich. The celebrities with high earnings and net worth becoming bankrupt are such examples. While there can be multiple reasons for bankruptcy - bad investments, divorce, frauds, extravagant lifestyle etc, bankruptcy of it can be avoidable with good <a href="https://beingfinwise.com/basic-principles-of-handling-personal-finance/">personal finance</a> habits.</span><br />
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<span style="font-family: Trebuchet MS, sans-serif;"><img alt="Boris Becker - Rich yet bankrupt" class="alignnone size-full wp-image-2100" height="638" src="https://beingfinwise.com/wp-content/uploads/2019/06/Boris-Becker-Rich-yet-bankrupt.jpg" width="960" /></span><br />
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<strong><span style="font-family: Trebuchet MS, sans-serif; font-size: small;">Can you be wealthy in long run even with not so high income?</span></strong></h3>
<span style="font-family: Trebuchet MS, sans-serif;">While you need a decent income to begin with, income alone doesn't guarantee wealth over a period of time.</span><br />
<span style="font-family: Trebuchet MS, sans-serif;">For instance, may be earning just $40,000 dollars a year (or equivalent on your currency) but if you are able to save a chunk of it - say, 25% consistently, over long run you can build a sizable corpus. With low expenses, it can last for a good amount of time.</span><br />
<span style="font-family: Trebuchet MS, sans-serif;">At the same time, even if you earn 10X of $40,000 a year - i.e.. $400,000 and blow it up, you will soon end up using your income. (Not difficult to - a fancy house, upgrading fancy cars, luxurious vacations, expensive food & alcohol will suffice to blow up this money!). Or maybe, land in a debt soon. To get out of this trap, you'll need substantial course correction in your lifestyle. Else you may soon end up being rich yet bankrupt!</span><br />
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<span style="font-family: Trebuchet MS, sans-serif;">Having some money is a good start. But beyond that, it is you savings and subsequent investments that make you rich.</span><br />
<span style="font-family: Trebuchet MS, sans-serif;">Thoughts?</span></div>
Nikesh Rathihttp://www.blogger.com/profile/02208012080532357303noreply@blogger.com0tag:blogger.com,1999:blog-28026042.post-87989859109078314782019-04-04T12:02:00.000+05:302019-04-04T12:02:01.565+05:30Financial tips for a 25 year old<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-family: Trebuchet MS, sans-serif;">Originally published at <a href="https://beingfinwise.com/2019/03/29/25-financial-tips-for-a-25-year-old/">BeingfinWise</a></span><br />
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<span style="font-family: Trebuchet MS, sans-serif;">If you are 25 year old, there is a good likelihood that you would have started working or are likely to start soon. And hopefully start(ed) managing your own finances.</span><br />
<span style="font-family: Trebuchet MS, sans-serif;">So, what do you do next?</span><br />
<span style="font-family: Trebuchet MS, sans-serif;">The good news is that having a profession can soon lead to cash flows which perhaps wouldn't have seen in your student days. And that can be empowering in many ways.</span><br />
<span style="font-family: Trebuchet MS, sans-serif;">The bad news is that, if you are reckless with spending money, it can soon lead to a downward financial spiral.</span><br />
<span style="font-family: Trebuchet MS, sans-serif;">Managing your finances well can be a good first step towards a healthy financial life. And it starts with small steps.</span><br />
<a name='more'></a><br />
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<span style="font-family: Trebuchet MS, sans-serif;">Here are some (unsolicited!) tips to manage your finances as a 25 year old.</span><br />
<ol>
<li><span style="font-family: Trebuchet MS, sans-serif;">Spend less than you earn.</span></li>
<li><span style="font-family: Trebuchet MS, sans-serif;">Invest. It's OK to start small. But do start investing. Increase as your income grows.</span></li>
<li><span style="font-family: Trebuchet MS, sans-serif;">Start reading about what are the possibilities in investing. Don't take everything at face value. Look beyond glossy sales brochures when evaluating an investment.</span></li>
<li><span style="font-family: Trebuchet MS, sans-serif;">The younger you are, more can be your risk taking ability. Hence, invest in equities/ mutual funds. They have given good returns in past (better than most asset classes). And as economy grows and hopefully does well over long period of time, they can be expected to give good returns.</span></li>
<li><span style="font-family: Trebuchet MS, sans-serif;">Money is important. But learning is more important at this point of life.</span></li>
<li><span style="font-family: Trebuchet MS, sans-serif;">Avoid <a href="https://beingfinwise.com/2019/02/06/10-lifestyle-traps-that-you-should-be-wary-of/">lifestyle trap</a>. Running after the latest iPhone or bike or car or gadgets may not be worth it, especially if you can't afford it.</span></li>
<li><span style="font-family: Trebuchet MS, sans-serif;">Don't buy a car/ bike on EMI (unless not owning it seriously hinders your day to day life). If you can't afford it, consider buying a used vehicle.</span></li>
<li><span style="font-family: Trebuchet MS, sans-serif;">What everyone around you is doing may not always be right. Think for yourself before copying someone's lifestyle.</span></li>
<li><span style="font-family: Trebuchet MS, sans-serif;">Don't rush to <a href="https://beingfinwise.com/2019/01/18/when-you-should-invest-in-home-and-when-you-shouldnt/">"invest" in a house</a> immediately. It is a huge financial (and often emotional) commitment & may tie you down.</span></li>
<li><span style="font-family: Trebuchet MS, sans-serif;">While you may want to upgrade your lifestyle with every raise/ switch, don't overdo it.</span></li>
<li><span style="font-family: Trebuchet MS, sans-serif;">Avoid things which may be harmful for health - Smoking, alcohol, drugs may not just potentially ruin your health, but also come at a huge financial (and sometimes legal!) cost too.</span></li>
<li><span style="font-family: Trebuchet MS, sans-serif;">Excessive partying and eating out too frequently may not be the best lifestyle choices. And expensive too.</span></li>
<li><span style="font-family: Trebuchet MS, sans-serif;">Get insured - Health insurance and term plan to begin with.</span></li>
<li><span style="font-family: Trebuchet MS, sans-serif;">Insurance is not investment. It is a risk management tool. Don't mix investment and insurance.</span></li>
<li><span style="font-family: Trebuchet MS, sans-serif;">Understand inflation. And <a href="https://beingfinwise.com/2018/11/28/how-can-lifestyle-inflation-derail-your-financial-plan/">lifestyle inflation</a>. And try to mitigate lifestyle inflation (avoiding may not always be possible!). Inflation needs to factor in your financial plans, especially over a long time horizon.</span></li>
<li><span style="font-family: Trebuchet MS, sans-serif;">While keeping yourself updated with latest trends and having good, marketable skills is good, don't assume job security forever, even if you are a rockstar. Factor that in your financial plan.</span></li>
<li><span style="font-family: Trebuchet MS, sans-serif;">Have an emergency corpus ready & readily accessible.</span></li>
<li><span style="font-family: Trebuchet MS, sans-serif;">Stay away from unnecessary loans and EMIs.</span></li>
<li><span style="font-family: Trebuchet MS, sans-serif;">Pay off your entire <a href="https://beingfinwise.com/2018/11/29/why-you-should-avoid-credit-card-debt/">credit card</a> bill on time. Don't fall into part payment trap.</span></li>
<li><span style="font-family: Trebuchet MS, sans-serif;">Understand compounding. <a href="https://beingfinwise.com/2018/12/07/how-can-compounding-work-wonders-for-your-financial-life/">Compounding can work wonders for your financial life.</a></span></li>
<li><span style="font-family: Trebuchet MS, sans-serif;">Understand compounding. If it goes wrong, <a href="https://beingfinwise.com/2019/03/15/how-compounding-can-work-against-you/">compounding can work against you</a>.</span></li>
<li><span style="font-family: Trebuchet MS, sans-serif;">While <a href="https://beingfinwise.com/2018/12/29/what-is-financial-independence/">financial independenc</a>e (and early retirement maybe) is a good goal to aspire for, you may need to avoid romanticizing early retirement, unless you have a "what to do next?" plan in place. It is usually a long life ahead.</span></li>
<li><span style="font-family: Trebuchet MS, sans-serif;">While it is too early, retirement is something that you should think of.</span></li>
<li><span style="font-family: Trebuchet MS, sans-serif;">You and your life partner (now/ future) must be at least somewhat in alignment about attitude towards money.</span></li>
<li><span style="font-family: Trebuchet MS, sans-serif;">Having financial goals in mind can help. In fact, that may be the best starting point of your investing journey.</span></li>
</ol>
<span style="font-family: Trebuchet MS, sans-serif;">Have something else in mind?</span><br />
<span style="font-family: Trebuchet MS, sans-serif;">Do share.<br />__</span><br />
<i><span style="font-family: Trebuchet MS, sans-serif;">There are lot of things in the above which I didn't follow when I was 25, and nor was aware of. And I wish, someone had told me about them! I am hoping that few people read this list and benefit :)</span></i></div>
Nikesh Rathihttp://www.blogger.com/profile/02208012080532357303noreply@blogger.com0tag:blogger.com,1999:blog-28026042.post-23238866327589263422019-01-25T12:18:00.002+05:302019-01-25T12:18:48.876+05:30How to make best use of credit cards?<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-family: Trebuchet MS, sans-serif;">You can also read this on <a href="https://beingfinwise.com/2019/01/24/how-to-make-best-use-of-credit-cards-in-india/">BeingFinWise</a></span><br />
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<span style="font-family: Trebuchet MS, sans-serif;">Credit cards can be an amazing tool to manage your finances, get good deals and some excellent rewards. All you need to do is understand some credit card hacks and be on lookout for deals!</span><br />
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<span style="font-family: Trebuchet MS, sans-serif;">However, before starting on how can you make the best use of credit cards, you need to be sure if credit cards really suit you or do you tend to lack financial discipline if you have access to credit cards. If this is the case, it may be wiser to avoid credit cards altogether.</span><br />
<span style="font-family: Trebuchet MS, sans-serif;">(You may also be interested in - <a href="https://beingfinwise.com/2018/12/22/you-should-stop-using-credit-cards-now-if/">You should stop using credit cards now if ...</a> )</span><br />
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<span style="font-size: 18pt;"><span style="font-family: Trebuchet MS, sans-serif;">Here are 5 ways you can get the best out of credit cards.</span></span></h1>
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<span style="font-family: Trebuchet MS, sans-serif;"><img alt="How to make best use of credit cards in India" class="alignnone size-full wp-image-530" height="640" src="https://beingfinwise.com/wp-content/uploads/2019/01/How-to-make-best-use-of-credit-cards-in-India.jpg" width="960" /></span></h1>
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<span style="text-decoration-line: underline;"><span style="font-size: 18pt;"><span style="font-family: Trebuchet MS, sans-serif;">1. Have multiple credit cards in family</span></span></span></h1>
<span style="font-family: Trebuchet MS, sans-serif;">Having multiple credit cards can help you make the best use of the offers that may come on any credit card. For a family with moderate credit card usage (a 5 digit number, in Rupee terms), 2-3 credit cards should be good, though you may go for 1-2 more if you can manage so may cards & get the best deals.</span><br />
<span style="font-family: Trebuchet MS, sans-serif;">For example, I use an <a href="https://clnk.in/hmSl">ICICI Credit Card</a> & an <a href="http://amex.in/refer/nikesrvkfu?XLINK=MYCP">American Express/ Amex</a> card. In addition, there is a HDFC Credit Card being used by my wife. The Amex (Gold) card which I use gives me extra 1000 reward points on using it 6 times a month for Rs. 1000. The value of these 1000 points is like Rs. 400, if I redeem it for statement credit using their 18 or 24 Karat gold as statement credit. And they have some good joining offers too!</span><br />
<span style="font-family: Trebuchet MS, sans-serif;">ICICI and HDFC Bank credit Card often have tieups with eCommerce portals like <a href="https://clnk.in/gRsU">Amazon</a>, <a href="https://clnk.in/gRsY">Flipkart</a> etc., especially during sale period & you can get some good cashbacks/ discounts. In addition, there are good offers on SBI, Axis & several other cards which often have exclusive deals. Some cards by Standard Chartered/ HSBC/ Citibank give discounts/ deals on Uber/ Grocery shopping/ movie tickets/ fuel etc.</span><br />
<span style="font-family: Trebuchet MS, sans-serif;">(You can explore cards and benefits in depth <a href="https://clnk.in/gVIy">here</a>)</span><br />
<span style="font-family: Trebuchet MS, sans-serif;">I do miss out on some offers by not having some types of cards, but given the moderate spends that I think I have, I don't feel the need to have more than 3 cards. <i>(or maybe 4 or maybe 5 - the debate can continue!)</i>. Some of my reasons (as of now) are - limited usage of cabs/ availing other offers in supermarkets/ watching movies or travel relatively infrequently etc. In addition, usage of other cards may lead to me making sub-optimal usage of my <a href="http://amex.in/refer/nikesrvkfu?XLINK=MYCP">Amex</a> rewards (and hence, not much incremental benefits overall).</span><br />
<span style="font-family: Trebuchet MS, sans-serif;">However, if these realities change, so may my card usage.</span><br />
<span style="font-family: Trebuchet MS, sans-serif;">You can<a href="https://clnk.in/gVIy"> compare & choose which credit card best suits your needs</a> and choose your card mix accordingly.</span><br />
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<span style="text-decoration-line: underline;"><span style="font-size: 18pt;"><span style="font-family: Trebuchet MS, sans-serif;">2. Maximize credit free period on your credit card</span></span></span></h1>
<span style="font-family: Trebuchet MS, sans-serif;">Most credit cards have typically 45-50 day credit free period. So, on an average you can pay your bill around a month after your expense (approximately average of 15-45 day period, when you may need to pay your bill)</span><br />
<span style="font-family: Trebuchet MS, sans-serif;">If you have multiple cards you can choose your card usage based upon which bill you need to pay off last. This, subject to all other factors (offers, reward points etc.) remaining same. So if your Card 1 has billing cycle from 1st to 30/31st of a month & your Card 2 has billing cycle of 15th to 14th (of next month) then you can majorly use Card 1 from 1st -15th and Card 2 for rest of the month. This, assuming, the rewards & other factors being same.</span><br />
<span style="font-family: Trebuchet MS, sans-serif;">However if reward structure is different across cards, usually using the card with better rewards may be a better choice.</span><br />
<h1>
<span style="text-decoration-line: underline;"><span style="font-size: 18pt;"><span style="font-family: Trebuchet MS, sans-serif;">3. Evaluate reward points on your credit card</span></span></span></h1>
<span style="font-family: Trebuchet MS, sans-serif;">Getting reward points is one of the major reasons why people go for credit cards. Different credit cards may follow a different convention for reward points. Typically 2 reward points for Rs. 100 spent (with 4 points = Rs. 1) is the most common construct.</span><br />
<span style="font-family: Trebuchet MS, sans-serif;">While evaluating cards, look at the cash equivalence of the rewards rather than just points. Also be on lookout for bonus points (typically associated with a particular type of usage). And yes, be on on lookout for exclusive brand/ retailer tie-ups. They may be much more rewarding than rewards!</span><br />
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<span style="text-decoration-line: underline;"><span style="font-size: 18pt;"><span style="font-family: Trebuchet MS, sans-serif;">4. Look out for co-branded credit cards</span></span></span></h1>
<span style="font-family: Trebuchet MS, sans-serif;">If you are a major user of a particular service you can go for co-branded cards. These can be linked to travel, fuel, entertainment etc. Citibank - Indian Oil Card or American Express - Jet Airways cards are some examples of co-branded credit cards.</span><br />
<span style="font-family: Trebuchet MS, sans-serif;">You can get some really good deals and rewards on using co-branded credit cards.</span><br />
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<span style="text-decoration-line: underline;"><span style="font-size: 18pt;"><span style="font-family: Trebuchet MS, sans-serif;">5. Never, ever default on your credit card payment</span></span></span></h1>
<span style="font-family: Trebuchet MS, sans-serif;">If you are using credit cards to get rewards and other associated benefits, last thing you would want to do is ruin the benefits by defaulting on your credit card bill. <a href="https://beingfinwise.com/2018/11/29/why-you-should-avoid-credit-card-debt/">Credit card defaults</a> are expensive & the interest rates are high (often to the tune of 3 percent per month or so). Keep doing this consistently, you can ruin your credit score and lose a good chunk of money.</span><br />
<span style="font-family: Trebuchet MS, sans-serif;">_</span><br />
<span style="font-family: Trebuchet MS, sans-serif;"><br /></span>
<span style="font-family: Trebuchet MS, sans-serif;">If used judiciously, credit cards can help you save good amount of money via interest free credit period, reward points, cashbacks and discounts etc. And if you are a savvy user, this all can just add up!</span><br />
<span style="font-family: Trebuchet MS, sans-serif;">Have any more credit card hacks in mind? Do share!</span></div>
Nikesh Rathihttp://www.blogger.com/profile/02208012080532357303noreply@blogger.com0tag:blogger.com,1999:blog-28026042.post-90397312979104814272019-01-21T17:14:00.002+05:302019-01-21T17:14:22.022+05:30Expenses that can set your financial plans back<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-family: Trebuchet MS, sans-serif;">Originally published on <a href="https://beingfinwise.com/2019/01/18/things-that-can-set-your-financial-plans-back/">BeingFinWise</a></span><br />
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<span style="font-family: Trebuchet MS, sans-serif;"><br /></span>
<span style="font-family: Trebuchet MS, sans-serif;">It is good to have a financial plan. It enables you to have financial resources ready when you may need them. At the same time, it enables you adapt your lifestyle in alignment with the desired goals.</span><br />
<span style="font-family: Trebuchet MS, sans-serif;">But the ride is not always as straightforward as the excel sheets with projected expenses & rate of returns suggest.</span><br />
<span style="font-family: Trebuchet MS, sans-serif;">There can be several factors that can set back your financial planning, even by several years. While one may not have a foolproof mechanism against all eventualities, one can definitely mitigate the impact of several uncertainties by having proper safeguards in place.</span><br />
<h2>
<span style="text-decoration-line: underline;"><span style="font-family: Trebuchet MS, sans-serif;">Here are some factors that can set your financial plan back by several years</span></span></h2>
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<span style="text-decoration-line: underline;"><span style="font-family: Trebuchet MS, sans-serif;">1. Major Health Issues</span></span></h3>
<span style="font-family: Trebuchet MS, sans-serif;">Arguably the biggest thing that can wreck your finances. A week's hospitalization can probably set you back by few lacs of Rupees in India or few tens of thousands of Dollars if in US (healthcare in US is really expensive). Add to that need for medical intervention needed in case you need to undergo treatment for a heart condition (say, angioplasty) or surgery post accident or hospitalization for dengue fever or cancer treatment.</span><br />
<span style="font-family: Trebuchet MS, sans-serif;">Major illness or serious chronic conditions can wipe off your savings. And they usually come without prior warning.</span><br />
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<span style="text-decoration-line: underline;"><span style="font-family: Trebuchet MS, sans-serif;">2. Death in family</span></span></h3>
<span style="font-family: Trebuchet MS, sans-serif;">In addition to the emotional toll it takes, such unfortunate event can have financial implications - immediate as well as long term. More so, if there are dependents and/ or the person dying is the sole breadwinner in the family.</span><br />
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<span style="text-decoration-line: underline;"><span style="font-family: Trebuchet MS, sans-serif;">3. Unexpected expenses like house repairs</span></span></h3>
<span style="font-family: Trebuchet MS, sans-serif;">If you own a house for long (and live in it also!) you are likely to have some regular maintenance & repairs that need to be taken care of. And sometimes these can be more than what you budget for. Oftenz this is not just a financial decision but an emotional onez which can lead to cost overruns.</span><br />
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<span style="text-decoration-line: underline;"><span style="font-family: Trebuchet MS, sans-serif;">4. Expenses like kids education</span></span></h3>
<span style="font-family: Trebuchet MS, sans-serif;">While this should be a part of your financial plan, you may sometimes be in a situation wherein the actual expenses may more than the projected expenses (e.g. MBA from an expensive foreign university, or medical education from an expensive private university - which may be more than what you have budgeted for.</span><br />
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<span style="text-decoration-line: underline;"><strong><span style="font-family: Trebuchet MS, sans-serif;">5. Loss of income</span></strong></span></h3>
<span style="font-family: Trebuchet MS, sans-serif;">Hearing of layoffs is not uncommon. Layoffs can put an immediate strain on your finances, as suddenly you can be left without a paycheck, especially if you are unable to get any suitable job later on. If you are in business, you will need to deal with increased uncertainty. The lack of consistency in income can be daunting, especially during the "slow" times</span><br />
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<span style="text-decoration-line: underline;"><span style="font-family: Trebuchet MS, sans-serif;">6. Taking Debt</span></span></h3>
<span style="font-family: Trebuchet MS, sans-serif;">With debt, you can make compounding work against your rather than for you. More so in case of debts like personal loans or credit card debts. At the same, the fact that you have taken a debt indicates that there may not be enough savings to dip into (or you are in a <a href="https://beingfinwise.com/2019/01/17/are-you-in-a-virtual-debt-trap/">virtual debt</a>).</span><br />
<span style="font-family: Trebuchet MS, sans-serif;">Avoid debt. And if you have debt, try clearing it off as soon as possible.</span><br />
<span style="font-family: Trebuchet MS, sans-serif;">(You may also be interested in – <a href="https://beingfinwise.com/2018/12/07/how-can-compounding-work-wonders-for-your-financial-life/">How can compounding work wonders for your financial life</a>)</span><br />
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<span style="text-decoration-line: underline;"><span style="font-family: Trebuchet MS, sans-serif;">7. Legal issues</span></span></h3>
<span style="font-family: Trebuchet MS, sans-serif;">Got in trouble with law? It may be an expensive proposition. Unfortunately, fighting legal battle can drain you and your finances. And this worsens if you have (financial) claims to settle.</span><br />
<h2>
<span style="text-decoration-line: underline;"><span style="font-family: Trebuchet MS, sans-serif;">How can you prevent financial setbacks?</span></span></h2>
<span style="font-family: Trebuchet MS, sans-serif;">Well, there may not be any foolproof method. However, some of them can be (partly) addressed by means of proper planning.</span><br />
<ul>
<li><span style="font-family: Trebuchet MS, sans-serif;">If you have good health insurance, you can probably avoid medical condition from poking a major hole into your pocket. By having a proper term plan, death may not have major financial implications on your family.</span></li>
<li><span style="font-family: Trebuchet MS, sans-serif;">If you do goal based planning, an event of major cash outgo (e.g. buying a car, house repairs, kids' education etc.) is unlikely to be a financial shock for you.</span></li>
<li><span style="font-family: Trebuchet MS, sans-serif;">Having a handy contingency fund can help you tide over any unforeseen emergency.</span></li>
</ul>
<span style="font-family: Trebuchet MS, sans-serif;">Financial planning is not just about aligning your finances to your financial goals, but also planning out for various eventualities that may arise. To draw analogy from football, it is not just about scoring goals but also saving goals!.</span><br />
<span style="font-family: Trebuchet MS, sans-serif;">__</span><br />
<span style="font-family: Trebuchet MS, sans-serif;">Have something else in mind, which can have adverse effect on your financial lives? Do share.</span></div>
Nikesh Rathihttp://www.blogger.com/profile/02208012080532357303noreply@blogger.com0tag:blogger.com,1999:blog-28026042.post-89391063873139020032019-01-02T11:03:00.001+05:302019-01-02T11:03:41.716+05:3019 financial mistakes to avoid in 2019<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-family: "trebuchet ms" , sans-serif;">You can also read this on <a href="https://beingfinwise.com/2019/01/01/19-financial-mistakes-to-avoid-in-2019/">BeingFinWise</a></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">As the new year begins, I wish everyone a very Happy New Year. </span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">I am hoping that this year, I'll make better financial decisions & hopefully people reading this will also do so. One good first step can be to avoid making bad financial decisions and keep improvising. </span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">Here are some financial mistakes one can do well to avoid in 2019 (in no particular order):</span><br />
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<ol style="text-align: left;">
<li><span style="font-family: "trebuchet ms" , sans-serif;">Spending more than what you earn. (<a href="https://beingfinwise.com/2018/12/24/basic-principles-of-handling-personal-finance/">Rule # 1 of personal finance</a>!)</span></li>
<li><span style="font-family: "trebuchet ms" , sans-serif;">Not investing the saved money, and letting it be idle in savings bank account or worse, as physical cash.</span></li>
<li><span style="font-family: "trebuchet ms" , sans-serif;"><a href="https://beingfinwise.com/2018/12/27/worst-loans-and-debts-that-you-should-avoid/">Taking debt</a> like personal loans or keeping credit card outstanding - consequently unsustainably living in present with your expected future income. (with an inflated cost, thanks to high interest rate!)</span></li>
<li><span style="font-family: "trebuchet ms" , sans-serif;">Leveraging/ borrowing for speculating (speculations often masquerading as investments, e.g. speculating in stocks, or worse, derivatives, crypto currencies etc.)</span></li>
<li><span style="font-family: "trebuchet ms" , sans-serif;">Not having a risk management plan. In other words, have a health insurance (must have) and term plan (if you have dependents).</span></li>
<li><span style="font-family: "trebuchet ms" , sans-serif;">Chasing get rich quick schemes.(As a rule of thumb I view anyone offering over 12% per annum with suspicion. Evaluate things before jumping into it, especially if there is a financial commitment needed)</span></li>
<li><span style="font-family: "trebuchet ms" , sans-serif;">Chasing a investment category because everyone else is chasing it.</span></li>
<li><span style="font-family: "trebuchet ms" , sans-serif;">Taking claims at face value. (e.g. "assured" returns from stock markets, as brokers claim or buying the apartment you "deserve", as the glossy brochures proclaim)</span></li>
<li><span style="font-family: "trebuchet ms" , sans-serif;">Addiction - excess of alcohol, smoking, gambling (ideally, keep off them altogether!)</span></li>
<li><span style="font-family: "trebuchet ms" , sans-serif;">Impulse buying to an extent that it drains your finances by month end.</span></li>
<li><span style="font-family: "trebuchet ms" , sans-serif;">Not paying enough attention to your health. Cost is more than just financial. </span></li>
<li><span style="font-family: "trebuchet ms" , sans-serif;">Being a signee/ loan applicant for someone else (You may not want to repent few months/ years down the line!)</span></li>
<li><span style="font-family: "trebuchet ms" , sans-serif;">Jumping to buying home for "investment" by taking home loan soon after starting to earn. (It can constrain your flexibility & and keep burning hole in your pocket)</span></li>
<li><span style="font-family: "trebuchet ms" , sans-serif;">Failing in basic budgeting and tax planning. (and wondering where the money goes!)</span></li>
<li><span style="font-family: "trebuchet ms" , sans-serif;">Not having an emergency fund. (Have at least 6 months of emergency fund accessible to you)</span></li>
<li><span style="font-family: "trebuchet ms" , sans-serif;">Lending money to friends, especially for frivolous expenses. </span></li>
<li><span style="font-family: "trebuchet ms" , sans-serif;">Chasing the latest smartphone, bike, gadget, and so on. (see how easy it is to fall into <a href="https://beingfinwise.com/2018/12/18/are-you-falling-into-a-lifestyle-trap/">lifestyle trap</a>, and if your income doesn't support this, into a debt trap</span></li>
<li><span style="font-family: "trebuchet ms" , sans-serif;">Not having any financial goals (Corollary- groping in the dark as far as your investment philosophy & approach is concerned)</span></li>
<li><span style="font-family: "trebuchet ms" , sans-serif;"> Underestimating the power of inflation & not realizing the cost of living in future. </span></li>
</ol>
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<span style="font-family: "trebuchet ms" , sans-serif;">This list is mostly based upon my observations and readings. </span><span style="font-family: "trebuchet ms" , sans-serif;">Disagree with the list? Have anything more in mind? Do share :)</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;">Wishing you a happy and healthy 2019 again! </span></div>
</div>
Nikesh Rathihttp://www.blogger.com/profile/02208012080532357303noreply@blogger.com0tag:blogger.com,1999:blog-28026042.post-4768250792076064942018-12-31T17:04:00.002+05:302018-12-31T17:05:42.346+05:30What ROI you should be chasing while investing?<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-family: "trebuchet ms" , sans-serif;">You can also read this at <a href="https://beingfinwise.com/2018/12/30/what-roi-you-should-be-chasing-while-investing/">BeingFinWise</a></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">__</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">When you look around for investments, there is a glut - of investment products, of products packaged as investments and products masquerading as investments.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;">However, when it comes to spending real money you need to have a right mix of investments. There is no one right approach towards investments, and there can be several approaches one can take. However, eventually it boils down to one number - what is the expected return on investment (ROI)? </span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;">For some products - like fixed deposits, it is fairly straightforward, and probably a good number to benchmark. </span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;">Currently, </span></div>
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<ul style="text-align: left;">
<li><span style="font-family: "trebuchet ms" , sans-serif;">Most of the banks offer 7-8% rate of interest for 1-2 year duration fixed deposits (actual returns can be lower depending upon tax you need to pay). </span></li>
<li><span style="font-family: "trebuchet ms" , sans-serif;">PPF (Public Provident Fund) is currently offering 8% rate of interest</span></li>
<li><span style="font-family: "trebuchet ms" , sans-serif;">Employee Provident Fund (EPF) offers 8.55% rate of interest. If you are a salaried employee you can also top up your EPF (Employee Provident Fund) by your own contribution. </span></li>
</ul>
</div>
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<span style="font-family: "trebuchet ms" , sans-serif;">After the initial lock-in period, withdrawals from EPF and PPF are tax free. </span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;">Debt & liquid funds (at current rates of interests) can be expected to give around 8 percent rate of interest. Fair assumption?</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;">So, if the interest rate doesn't deviate much, you can expect around 8 percent rate of returns from a mix of debt instruments (depending upon the mix of products). If you are evaluating other investments, it may be a good idea to benchmark it against this 8 percent rate of returns and seek higher rate of returns. And you need to account for risk too. So an expected 8% returns on a risky asset may not make the cut, but an expected 10% returns may make it. Do your own math, align your expectations and act.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;">Here are my thoughts on some of these investments. </span></div>
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<b><span style="font-family: "trebuchet ms" , sans-serif;"><br /></span></b></div>
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<b><u><span style="font-family: "trebuchet ms" , sans-serif;">Equity/ Mutual Funds </span></u></b></div>
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<span style="font-family: "trebuchet ms" , sans-serif;">Historically equities (including equity mutual funds) have been the best performing asset class and have given early double digit growth rate. If the prices keep pace with earnings, it will hopefully give a good (hopefully a double digit) growth rate in future too. But, it may not always be the case. You need to also consider the price/ valuations you are looking to buy at, especially for medium term. SIP may help to mitigate the risk, but you can do well to consider valuations if you are considering a lump sum, medium term investment. (in long term, it may, hopefully not matter much)</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;">Also, leave aside trading & potential money you can make through it if you are looking to calculate ROI. Anyway, very few people actually make money via trading, and even lesser make money consistently. </span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;"><b><u>Real Estate</u></b></span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;">If you expect a rental yield of 3%, you'll need to look at an annual growth in its value at 5% percent to match the 8% ROI above. Now, when you account for maintenance (monthly maintenance & repairing regular wear and tear as the building becomes older), non occupancy, illiquid nature of the asset, cost of registration etc. expected ROI ought to be higher. On the other hand you get tax benefits also (in addition to Section 80C benefits, which you get with PF, PPF etc. also). If it were up to me, I'll look at a ROI of at least 10% on the landing price (price including registration/ stamp duty) to consider real estate as an investment. Suggest that you make your own assumptions, do your own math and arrive at a number. </span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;"><b><u>Insurance</u></b></span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;">Insurance is not investment, It is a risk management tool. look at it that way. An insurance product offering risk management and growth will be inefficient vis a vis corresponding mutual fund + term life cover. </span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;">At the same time, ROI yardstick may not be applicable to health insurance or term plan. If situation demands, they may be immensely helpful. But if you don't need to use it, it is probably a good situation to be in!</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;"><b><u>Gold/ silver</u></b></span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;">If recent history is anything to go by, gold or silver as a n investment may not be a very great idea. But some day, who knows, it may work. But do you expect it to give > 8 percent annual returns?</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;"><b><u>Crypto currencies</u></b></span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;">No idea ... I never understood it!</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;">It is good to diversify your investments & different investments can give different rate of returns. The fixed deposits/ PF/ PPF returns above may also not be sacrosanct and change over a period of time, depending upon the direction of the economy. </span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;">At the same time, once you have a basic degree of diversification, there can be one go to investment product for you if you have surplus money. What will that be?</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;">___</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;"><i>Disclaimer - The purpose of this post is not to provide any investment advice, but highlight the importance of calculating expected ROI while investing & review the assumptions. One is supposed to make own judgment while investing. </i></span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><i><br /></i></span>
<span style="font-family: "trebuchet ms" , sans-serif;"><i><br /></i></span></div>
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Nikesh Rathihttp://www.blogger.com/profile/02208012080532357303noreply@blogger.com0tag:blogger.com,1999:blog-28026042.post-65349888516410788922018-12-28T09:55:00.001+05:302018-12-28T09:55:29.213+05:30Loans you should avoid<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-family: "trebuchet ms" , sans-serif;">Originally published at <a href="https://beingfinwise.com/2018/12/27/worst-loans-and-debts-that-you-should-avoid/">BeinfFinWise</a></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="color: black;">Giving loans is a risky
business. Business of banks and financial institutions rely on people taking loans and then
repaying it, thus giving them profits. Many have built a
fortune based upon giving loans. Loans also serve an important function for the
economy by being a facilitator to businesses, housing, automobiles and other
elements of consumption. </span><span style="color: black;"><o:p></o:p></span></span></div>
<div style="-webkit-text-stroke-width: 0px; font-variant-caps: normal; font-variant-ligatures: normal; margin-bottom: .0001pt; margin: 0cm; orphans: 2; text-decoration-color: initial; text-decoration-style: initial; widows: 2; word-spacing: 0px;">
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;"><span style="color: black;">However, what is good for financial institutions may not necessarily
be good for you, especially when it comes to loans. While some loans may be
good loans and help you prosper, there are several others which may derail your
financial plans, if any! Taking loans can also lead to compounding work against
you - a situation which anyone with long term financial goals would like to
avoid.</span><span style="color: black;"><o:p></o:p></span></span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;"><i>(Lot of the below is based upon Indian context. However, variants of this will be applicable to many places across the world)</i></span></div>
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<b style="text-indent: -18pt;"><u><span style="font-family: "trebuchet ms" , sans-serif;">1. Credit card debt</span></u></b></div>
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<span style="font-family: "trebuchet ms" , sans-serif;">Credit card defaults cos t a lot in terms of interest payments - which are typically in range of 2-3 % per month, and can even be worse. How
much can it cost you annually? - Do the math!</span></div>
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<div style="-webkit-text-stroke-width: 0px; font-variant-caps: normal; font-variant-ligatures: normal; margin: 0cm 0cm 0.0001pt; orphans: 2; text-decoration-color: initial; text-decoration-style: initial; text-indent: 0px; widows: 2; word-spacing: 0px;">
<span style="text-indent: -18pt;"><span style="font-family: "trebuchet ms" , sans-serif; font-weight: bold;">2. Personal loan</span></span></div>
<div style="-webkit-text-stroke-width: 0px; font-variant-caps: normal; font-variant-ligatures: normal; margin-bottom: .0001pt; margin: 0cm; orphans: 2; text-decoration-color: initial; text-decoration-style: initial; widows: 2; word-spacing: 0px;">
<span style="font-family: "trebuchet ms" , sans-serif;"><span style="color: black;">Personal loans typically carry an interest rate of upwards of 10 percent per annum. And they are usually packaged so well that they seem
irresistible. However, the fact that you are taking personal loan is
usually an indication of the fact that you haven't managed your finances
well enough to have buffer money when needed. There can be several reasons
for taking personal loans like medical emergency, wedding expenses,
foreign holidays, home repair, speculating in stock markets or derivatives etc.
Which of them are not worth it? - figure out!</span><span style="color: black;"><o:p></o:p></span></span></div>
<div style="-webkit-text-stroke-width: 0px; font-variant-caps: normal; font-variant-ligatures: normal; margin-bottom: .0001pt; margin: 0cm; orphans: 2; text-decoration-color: initial; text-decoration-style: initial; widows: 2; word-spacing: 0px;">
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span></div>
<div style="-webkit-text-stroke-width: 0px; font-variant-caps: normal; font-variant-ligatures: normal; margin-bottom: .0001pt; margin: 0cm; orphans: 2; text-decoration-color: initial; text-decoration-style: initial; widows: 2; word-spacing: 0px;">
<span style="font-family: "trebuchet ms" , sans-serif;"><b><u><span style="color: black;">3. Consumer Loan</span></u></b><span style="color: black;"><o:p></o:p></span></span></div>
<div style="-webkit-text-stroke-width: 0px; font-variant-caps: normal; font-variant-ligatures: normal; margin-bottom: .0001pt; margin: 0cm; orphans: 2; text-decoration-color: initial; text-decoration-style: initial; widows: 2; word-spacing: 0px;">
<span style="font-family: "trebuchet ms" , sans-serif;"><span style="color: black;">Consumer loans also fall in too attractive to resist category. It
is not uncommon to see youngsters, who just joined their first job, getting an
expensive phone (worth 3 times their monthly salary) and then paying EMIs over
next few months. Few months down the line they may go for another gadget and so
on. The vicious cycle continues till realization happens. this is not limited
just to youngster thought. The problem with this, like personal loans, is that
you are paying usually upwards of 10% per annum as rate of interest and
spending money on something that you could have done without, and is probably
losing value every moment. </span><span style="color: black;"><o:p></o:p></span></span></div>
<div style="-webkit-text-stroke-width: 0px; font-variant-caps: normal; font-variant-ligatures: normal; margin-bottom: .0001pt; margin: 0cm; orphans: 2; text-decoration-color: initial; text-decoration-style: initial; widows: 2; word-spacing: 0px;">
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<div style="-webkit-text-stroke-width: 0px; font-variant-caps: normal; font-variant-ligatures: normal; margin-bottom: .0001pt; margin: 0cm; orphans: 2; text-decoration-color: initial; text-decoration-style: initial; widows: 2; word-spacing: 0px;">
<span style="font-family: "trebuchet ms" , sans-serif;"><b><u><span style="color: black;">4. Payday loan </span></u></b><span style="color: black;"><o:p></o:p></span></span></div>
<div style="-webkit-text-stroke-width: 0px; font-variant-caps: normal; font-variant-ligatures: normal; margin-bottom: .0001pt; margin: 0cm; orphans: 2; text-decoration-color: initial; text-decoration-style: initial; widows: 2; word-spacing: 0px;">
<span style="font-family: "trebuchet ms" , sans-serif;"><span style="color: black;">Ran out of salary by 25th of the month and wondering how will you
survive the next week or so. Don't worry, there are payday loans. Payday loans
seem to be recent fad, catering in to people who tend to run out of salary
before end of the month. Like personal loans, the issue with them is that in
addition to paying a high interest rate, it is symptomatic of the fact that you
are unable to control your expenses.</span><span style="color: black;"><o:p></o:p></span></span></div>
<div style="-webkit-text-stroke-width: 0px; font-variant-caps: normal; font-variant-ligatures: normal; margin-bottom: .0001pt; margin: 0cm; orphans: 2; text-decoration-color: initial; text-decoration-style: initial; widows: 2; word-spacing: 0px;">
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<div style="-webkit-text-stroke-width: 0px; font-variant-caps: normal; font-variant-ligatures: normal; margin-bottom: .0001pt; margin: 0cm; orphans: 2; text-decoration-color: initial; text-decoration-style: initial; widows: 2; word-spacing: 0px;">
<span style="font-family: "trebuchet ms" , sans-serif;"><b><u><span style="color: black;">5. Gold Loan</span></u></b><span style="color: black;"><o:p></o:p></span></span></div>
<div style="-webkit-text-stroke-width: 0px; font-variant-caps: normal; font-variant-ligatures: normal; margin-bottom: .0001pt; margin: 0cm; orphans: 2; text-decoration-color: initial; text-decoration-style: initial; widows: 2; word-spacing: 0px;">
<span style="font-family: "trebuchet ms" , sans-serif;"><span style="color: black;">Unlike unsecured loans like personal loans, gold loans takes gold
or gold jewelry as a collateral. While it is often taken due to some
financial need, one should probably also think of what use an asset like
gold is if you can't sell it during emergency & need to use it as a
collateral for loan. One reason could be emotional attachment of gold and
gold jewelry. Anything else?</span><span style="color: black;"><o:p></o:p></span></span></div>
<div style="-webkit-text-stroke-width: 0px; font-variant-caps: normal; font-variant-ligatures: normal; margin-bottom: .0001pt; margin: 0cm; orphans: 2; text-decoration-color: initial; text-decoration-style: initial; widows: 2; word-spacing: 0px;">
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span></div>
<div style="-webkit-text-stroke-width: 0px; font-variant-caps: normal; font-variant-ligatures: normal; margin-bottom: .0001pt; margin: 0cm; orphans: 2; text-decoration-color: initial; text-decoration-style: initial; widows: 2; word-spacing: 0px;">
<span style="font-family: "trebuchet ms" , sans-serif;"><b><u><span style="color: black;">6. Vehicle Loan</span></u></b><span style="color: black;"><o:p></o:p></span></span></div>
<div style="-webkit-text-stroke-width: 0px; font-variant-caps: normal; font-variant-ligatures: normal; margin-bottom: .0001pt; margin: 0cm; orphans: 2; text-decoration-color: initial; text-decoration-style: initial; widows: 2; word-spacing: 0px;">
<span style="font-family: "trebuchet ms" , sans-serif;"><span style="color: black;">While in some cases you may need a vehicle (2 or 3 wheeler) and
may really be short of money. But often vehicle loans, especially car loans are
a result of desire to upgrade your lifestyle and not having enough means to pay
upfront for it. And the "upgraded" car you are using is losing its
value continuously, in case you think of it as an asset.</span><span style="color: black;"><o:p></o:p></span></span></div>
<div style="-webkit-text-stroke-width: 0px; font-variant-caps: normal; font-variant-ligatures: normal; margin-bottom: .0001pt; margin: 0cm; orphans: 2; text-decoration-color: initial; text-decoration-style: initial; widows: 2; word-spacing: 0px;">
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<div style="-webkit-text-stroke-width: 0px; font-variant-caps: normal; font-variant-ligatures: normal; margin-bottom: .0001pt; margin: 0cm; orphans: 2; text-decoration-color: initial; text-decoration-style: initial; widows: 2; word-spacing: 0px;">
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span></div>
<div style="-webkit-text-stroke-width: 0px; font-variant-caps: normal; font-variant-ligatures: normal; margin-bottom: .0001pt; margin: 0cm; orphans: 2; text-decoration-color: initial; text-decoration-style: initial; widows: 2; word-spacing: 0px;">
<span style="font-family: "trebuchet ms" , sans-serif;"><span style="color: black;">While there may be instances where you may genuinely be in
need of money and don't have any at your disposal, usually the fact that you
are taking any of the above loans is an indication of you not living within
your means and getting into debt trap to fund lifestyle. </span>If uncontrolled,
this can be a never ending spiral.</span></div>
<div style="-webkit-text-stroke-width: 0px; font-variant-caps: normal; font-variant-ligatures: normal; margin-bottom: .0001pt; margin: 0cm; orphans: 2; text-decoration-color: initial; text-decoration-style: initial; widows: 2; word-spacing: 0px;">
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span></div>
<div style="-webkit-text-stroke-width: 0px; font-variant-caps: normal; font-variant-ligatures: normal; margin-bottom: .0001pt; margin: 0cm; orphans: 2; text-decoration-color: initial; text-decoration-style: initial; widows: 2; word-spacing: 0px;">
<span style="font-family: "trebuchet ms" , sans-serif;">What would you rather choose - gratification by means of availing different loans you are eligible for and spend a chunk of your life paying EMIs?</span></div>
<div style="-webkit-text-stroke-width: 0px; font-variant-caps: normal; font-variant-ligatures: normal; margin-bottom: .0001pt; margin: 0cm; orphans: 2; text-decoration-color: initial; text-decoration-style: initial; widows: 2; word-spacing: 0px;">
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span></div>
<div style="-webkit-text-stroke-width: 0px; font-variant-caps: normal; font-variant-ligatures: normal; margin-bottom: .0001pt; margin: 0cm; orphans: 2; text-decoration-color: initial; text-decoration-style: initial; widows: 2; word-spacing: 0px;">
<span style="font-family: "trebuchet ms" , sans-serif;">OR </span></div>
<div style="-webkit-text-stroke-width: 0px; font-variant-caps: normal; font-variant-ligatures: normal; margin-bottom: .0001pt; margin: 0cm; orphans: 2; text-decoration-color: initial; text-decoration-style: initial; widows: 2; word-spacing: 0px;">
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span></div>
<div style="margin: 0cm 0cm 0.0001pt; orphans: 2; text-decoration-color: initial; text-decoration-style: initial; widows: 2;">
<span style="font-family: "trebuchet ms" , sans-serif;"><span style="font-family: "trebuchet ms" , sans-serif;">Avoiding loans, investing diligently (and hopefully wisely) and trying to achieve financially freedom?</span></span></div>
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Nikesh Rathihttp://www.blogger.com/profile/02208012080532357303noreply@blogger.com0tag:blogger.com,1999:blog-28026042.post-35820184284944198542018-12-24T16:00:00.000+05:302018-12-24T16:00:48.448+05:30Basic principles of handling personal finance<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-family: "trebuchet ms" , sans-serif;">You can also read this on <a href="https://beingfinwise.com/2018/12/24/basic-principles-of-handling-personal-finance/">BeingFinWise</a></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">How you handle your personal finances, can go a long way in determining you overall financial well-being. If you are good at handling it, you can be on path to financial independence even with a decent (not necessarily high) income. Conversely, if you don't handle your personal finances well, you may end up never being financially independence even though you may be making tons of money. </span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">Much has been already written about the basic principles of personal finances that can help you move ahead in direction of your financial goals, and frankly, it is not a rocket science. </span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;">Here are my 2 cents on the principles of personal finance which can enable you reach closer to your financial goals. All seemingly obvious, yet often forgotten. </span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;"><b><u>1. Keep expenses less than earning </u></b></span><br />
<span style="font-family: "trebuchet ms" , sans-serif;">Pretty obvious. Isn't it? Yet many of us fail to follow it. If your expenses exceed your income, then soon you'll lend up in a debt trap (personal loan, credit card debt and so on) and may soon need a major lifestyle re-haul to escape it. And this may come at a cost - not just financial cost. </span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;"><b><u>2. Invest the difference</u></b></span><br />
<span style="font-family: "trebuchet ms" , sans-serif;">Assuming, you keep your expenses less than income, what do you do with the balance money? Hopefully, it is not lying idle in your savings account (barring some buffer amount which you must have for any unforeseen emergency). The difference amount should ideally be invested in some asset class which can give you good returns for the future. You can choose a mix of some of the following - equities, equity mutual funds, debt funds, PPF, real estate, gold and so on. Most of these investments come with their own merits and demerits, which you should evaluate before investing and take a informed decision. However, you should avoid putting all eggs in same basket and any long term investment must consist of a mix of different asset classes.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;"><b><u>3. Avoid debt</u></b></span><br />
<span style="font-family: "trebuchet ms" , sans-serif;">Debt is potentially a big money guzzler. And peace of mind guzzler too. While taking debt, especially the ones with higher interest rate like personal loans or credit card defaults, you are making compounding work against you. With debt end up paying much more than the cost of the stuff you are buying, and in all probability you are without the buffer to invest and take benefits of compounding over a long run. </span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;">Some forms of debt like housing loan may be OK (since you are buying an asset/ place of residence, and interest rates are not too high, plus they come with tax benefits), but for any other, you should rethink, and preferably avoid altogether. </span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><b><u>4. Beware of the instant gratification trap and impulse buying </u></b></span><br />
<span style="font-family: "trebuchet ms" , sans-serif;">We all seek gratification in some form or other. Isn't it? However, for most of us, seeking instant gratification can lead to some terrible consequences in personal finance. Be it buying the clothes or accessories you don't need (but hey, there is a sale!) to downing few expensive tequila shots for few minutes of thrill (and hours of hangover!) to seeking gratification in gaming zones and concerts frequently - they don't come cheap. </span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;">Of course, you should be enjoying things you like and enjoy, but constant pursuit of instant gratification comes at a cost. And you need to ask yourself the question - Are you ready to bear that cost?</span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;">One of the ways to reduce your expense of "gratification" can be the 24 hour rule (or a variation of it). If you want to buy something, don't buy it immediately. Wait for 24 hours, think over it and then take a decision whether to buy that thing or not. You'll be amazed at how many things you don't need.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;"><b><u>5. Manage risk</u></b></span><br />
<span style="font-family: "trebuchet ms" , sans-serif;">Think about how will you deal with sudden health issue. Or how will your family cope if the sole breadwinner is no more. Get adequately insured - a good health insurance and term insurance can be good points to start with. Be cognizant of different types of risks - risk to life, risk to health, risk to investments & its growth, risk of job loss and so on.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;">There are several approaches one can take to invest & grow money - and many of these ways can be correct. However, you can't grow and invest money with a negative or near-zero cash flow. T</span><span style="font-family: "trebuchet ms" , sans-serif;">o begin with, one needs to </span><span style="font-family: "trebuchet ms" , sans-serif;"> have a certain degree of control over personal finances. And ensuring that you follow some basic principles of personal finance can be a good starring point.</span><br />
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Nikesh Rathihttp://www.blogger.com/profile/02208012080532357303noreply@blogger.com1tag:blogger.com,1999:blog-28026042.post-49833352992256574862018-12-23T13:51:00.002+05:302018-12-23T13:51:32.301+05:30You should stop using credit cards now if ...<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;">You can also read this on <a href="https://beingfinwise.com/2018/12/22/you-should-stop-using-credit-cards-now-if/">BeingFinWise</a></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">Credit cards are often too attractive to resist. Many of them come loaded with some good welcome gifts, some good offers, a good credit period and the promise of enabling you fulfill your dreams via credit limit. Yet, for many people, especially first timers, this euphoria vanishes before few months. The underlying reason for most of them is - "I don't know how the money vanishes and I land up with so much of credit card bill". In other words, they are unable to control expenses.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;">Credit cards can be very helpful in organizing your expenses, getting rewarded via reward points and earning interest as you defer your payments by around a month on average. </span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;">However, use of credit cards, if indiscriminate, can soon backfire.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;">You need to stop using credit cards if -</span><br />
<ul style="text-align: left;">
<li>You are an impulse shopper and don't think twice before buying stuff worth thousands - with/ without any clearance sale.</li>
<li><span style="font-family: "trebuchet ms" , sans-serif;">When you are unable to pay your card and paying interest on your outstanding is more of a norm than exception.</span></li>
<li><span style="font-family: "trebuchet ms" , sans-serif;">If you tend to be swipe-happy when drunk or hungry. These are the times when one is likely too spend a lot only to regret later.</span></li>
<li><span style="font-family: "trebuchet ms" , sans-serif;">If credit cards are the only way you could make a big ticket purchase, and you couldn't afford it in cash</span></li>
<li><span style="font-family: "trebuchet ms" , sans-serif;">You don't care too much about interest free time period (not a big sum usually) or reward points (even debit cards have rewards) and find credit card a distraction. </span></li>
</ul>
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<span style="font-family: "trebuchet ms" , sans-serif;">One may argue that you may need to use credit cards in case of emergency. Fair point. In that case, probably you can keep your credit card (s) outside your wallet and not save it online, but still within your reach (e.g. locked inside an almirah). This is still the second best option - the best being being able to control your expenses and spending behavior.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;">You may also want to read -<a href="https://beingfinwise.com/2018/06/04/credit-cards-boon-or-bane/"> Credit Cards - Boon or Ban</a>e and - <a href="https://beingfinwise.com/2018/11/29/why-you-should-avoid-credit-card-debt/">Why should you avoid credit card debt.</a></span><br />
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Nikesh Rathihttp://www.blogger.com/profile/02208012080532357303noreply@blogger.com0tag:blogger.com,1999:blog-28026042.post-59448658697499540392018-12-19T07:00:00.000+05:302018-12-19T07:00:00.767+05:30Are you falling into a lifestyle trap?<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-family: "trebuchet ms" , sans-serif;">You can also read this on <a href="https://beingfinwise.com/2018/12/18/are-you-falling-into-a-lifestyle-trap/">BeingFinWise</a></span><br />
<span style="font-family: "trebuchet ms" , sans-serif;">__</span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;">Almost everyone wants to have an amazing lifestyle - with best possible food in best possible places, awesome travel destinations, a swanky car, few trending gadgets, elite memberships and many other symbols which can proudly announce- "I have arrived".</span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;">Yet a lot of us get so obsessed with chasing this lifestyle that before we realize, we are on a downward spiral and caught in the vortex of lifestyle trap. This becomes more pronounced when our income/ sources of earning fails to keep pace with lifestyle inflation led spending.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;">And this is a sure shot sign of you falling into lifestyle trap. The best step to avoid chasing lifestyle. The next best option is to realize that you are falling into this trap.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;">Here are five signs that you are falling into a lifestyle trap.</span><br />
<ul>
<li><span style="font-family: "trebuchet ms" , sans-serif;">You are looking to upgrade your "I have arrived" possessions like iPhone, car, Fitbit etc. rather too frequently. And often when you don't even need them or exiting one would more than suffice.</span></li>
<li><span style="font-family: "trebuchet ms" , sans-serif;">Your definition of affordability is characterized by easy access to loan. For instance you can "afford" to upgrade your car to Honda City because you are eligible for something like Rs. 999,999 car loan.</span></li>
<li><span style="font-family: "trebuchet ms" , sans-serif;">You have made more than half serious inquiry or even taken a personal loan for funding your day to day wants and desires, something you could have done without.</span></li>
<li><span style="font-family: "trebuchet ms" , sans-serif;">You are short of cash since few days before the salary day, thanks to the ongoing end of season fashion sale, eating out 5 days a week, attending expensive concerts etc. And alongside, you are also probably wondering how will you manage to pay your credit card bill in full.</span></li>
<li><span style="font-family: "trebuchet ms" , sans-serif;">Any rise in income is followed by a disproportionate increase in expenses because - you have "arrived" in life.</span></li>
</ul>
<span style="font-family: "trebuchet ms" , sans-serif;">While chasing a good lifestyle is not something that I should be sermonizing about, but if chasing this lifestyle has some serious long term financial implications, maybe you need to rethink.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;">It's better to prevent falling into lifestyle trap rather than looking for solutions when it is late and may come at a cost.</span></div>
Nikesh Rathihttp://www.blogger.com/profile/02208012080532357303noreply@blogger.com0tag:blogger.com,1999:blog-28026042.post-62319319478602822722018-12-16T09:00:00.000+05:302018-12-16T09:00:05.901+05:305 questions you should ask before investing<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-family: "trebuchet ms" , sans-serif;">Investing is a often a long journey, and to make the best out of it, one needs to follow the right process and have a clear sense of direction. There may be many ways in which one can follow the right approach (if there is any!), and all of them can be correct. </span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">However, as one embarks on this path it is important to ask the right questions and seek justified answers (which may or may not turn out to be correct, but at least there is a method and not madness in the approach.)</span><br />
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<b><u><span style="font-family: "trebuchet ms" , sans-serif;">1. What is your purpose of investing?</span></u></b><br />
<span style="font-family: "trebuchet ms" , sans-serif;">Asking this question is the beginning of your investment journey. Any systematic approach to investment entails knowing your goals (e.g. kids' education, your marriage, financial independence, buying a house, a comfortable lifestyle post retirement etc.) and aligning your approach towards it. And this goal should be more than just <i>"everyone is doing it</i>" or "<i>i have some spare cash"</i></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">(You may also be interested in - <a href="https://beingfinwise.com/2018/06/04/whats-the-purpose-of-investing/" target="_blank">What is the purpose of investing</a>?)</span><br />
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<b><u><span style="font-family: "trebuchet ms" , sans-serif;">2. How does this investment work - and why will it give good returns? </span></u></b><br />
<span style="font-family: "trebuchet ms" , sans-serif;">It is not uncommon to hear people claiming equities giving "15 percent annual returns in long run". Or people talking about doubling their money in short span of time via crypto currencies (at least till the year before). Or people claiming that graphite or FMCG stocks (or any ABC stock) will double your money in few years. Or investing a house being a "sure-shot" money-doubler in 3 years ...</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">Some or many of the above mentioned things may have happened/ may happen or may not have happened/ happen. However, while making a plunge in any kind of investment one must get some basic understanding of why that investment is expected to give returns, For instance, equities may give good returns due to growth in economy. Real estate may give good returns in some areas because of upcoming industries/ investments and so on.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">So, before anyone recommends you that XYZ is a good investment, apply your own reasoning why that XYZ may be a good investment. You may want to be an investor in XYZ because you think that it has a sound rationale behind giving returns, and not because of greater fool theory. </span><br />
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<b><u><span style="font-family: "trebuchet ms" , sans-serif;">3. What are the returns you are chasing (including costs & taxes)?</span></u></b><br />
<span style="font-family: "trebuchet ms" , sans-serif;">Are you chasing a high return, but are OK with associated risk and falling short?</span><br />
<span style="font-family: "trebuchet ms" , sans-serif;">Are you OK with less returns, but would not like to lose your initial capital?</span><br />
<span style="font-family: "trebuchet ms" , sans-serif;">You are OK with lock in period but want to save taxes by making use of tax-free provisions, like that in PF or PPF?</span><br />
<span style="font-family: "trebuchet ms" , sans-serif;">Are you effectively lowering your returns by getting into debt with hopes of better returns on investment? (e.g. taking personal loan for investing in equities)</span><br />
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<b><u><span style="font-family: "trebuchet ms" , sans-serif;">4. What is the downside of your investment?</span></u></b><br />
<span style="font-family: "trebuchet ms" , sans-serif;">Risk and returns are correlated. Higher the expected returns, more is usually the expected risk. So, if you are putting all your savings in equity mutual funds, you may be risking under performance or even negative returns, But on the upside, returns can be huge. With a fixed returns instrument like PPF the risk can be unlikely possibility of government default or a likely possibility of underperformance vis a vis equity mutual funds. </span><span style="font-family: "trebuchet ms" , sans-serif;"><br /></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">So, when you are chasing lofty returns, be aware of the returns that may not come, and be OK with it, since you have already factored in that possibility, rather than be shocked with low returns, if they happen. As the old adage says - hope for the best, but be prepared for the worst. </span><br />
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<u><b><span style="font-family: "trebuchet ms" , sans-serif;">5. Can you use it when in need?</span></b></u><br />
<span style="font-family: "trebuchet ms" , sans-serif;">Some investments are more liquid than others. You can withdraw a Fixed Deposit (FD) or liquid fund at a very short notice. You may even withdraw your equity investment at a very short notice, but returns may be subject to market vagaries at that point of time. For real estate, the process may probably take few months. For instruments with lock-in period, like PPF or NSC or ELSS, you may have to wait for the lock-in period to get over..</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">If you happen to be in urgent need of money, will you be able to access it immediately? </span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">If your investments don't help you when you are in need (despite having good returns) they may not be good investments at all.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">To sum up, start your investment journey by asking right questions and you may be on the right path. It may not guarantee you highest returns, but you'll be aware of what to expect (and what not to expect) and more importantly, align your investments to your financial goals.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">You can also read this on <a href="https://beingfinwise.com/2018/12/15/5-questions-you-should-ask-before-investing" target="_blank">BeingFinWise</a></span><br />
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Nikesh Rathihttp://www.blogger.com/profile/02208012080532357303noreply@blogger.com0tag:blogger.com,1999:blog-28026042.post-28779515532752917082018-12-13T19:48:00.001+05:302018-12-13T21:55:26.195+05:305 mistakes to avoid while buying a house<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-family: "trebuchet ms" , sans-serif;">You can also read this on <a href="https://beingfinwise.com/2018/12/13/5-mistakes-to-avoid-while-buying-a-house/" target="_blank">BeingFinWise</a> </span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">Buying a house is a big decision for most</span><span style="font-family: "trebuchet ms" , sans-serif;"> of the people. And more so for a first time buyer. And for someone who can afford it (with home loan and associated EMIs, most of the times) it is not an uncommon investment. In fact, lot of buyers buy homes as a investment, rather than as a place of residences.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">Given the amount of money one commits while buying a house which can be hefty 7 or 8 digit number (in Rupee terms) it is important to do a due diligence before taking the plunge and buying a house.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">Here are some of the common mistakes to avoid as you look to buy a house for living or just as an investment. For calculation & illustration I'll consider price of the house as Rs. 50 Lac. Of course, if you live in a metro city, you may wonder what you'll get for this amount!</span><br />
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<u><span style="font-family: "trebuchet ms" , sans-serif;">1. </span><b style="font-family: "Trebuchet MS", sans-serif;">Stretching too much with home loan</b></u><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">The fact that you are eligible for X amount of loan doesn't necessarily mean that you use the entire amount. Suppose your loan eligibility is Rs. 50 Lac, translating into EMI of Rs. 45,000, it doesn't necessarily mean that you take the home loan for the entire amount. You may need to factor in you regular expenses, contingency fund, future planned expenses (e.g. getting married or school fees of kid) and see if the numbers add up. Being in a situation where you have taken a home loan for the entire amount you were eligible for, but ended up struggling with regular expenses (unless you get good raise or some windfall gain) is not something you'll want to be.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;"><b><u>2. Not considering the cost of add-ons</u></b></span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;">Homes often come with a basic set of fittings, which usually falls short if one is looking to move into it. You may need to get electric and plumbing installations right, get some interiors redesigned to suit your taste (they need not be extravagant, but more often than not you'll need some work), get basic furnishings like cupboards & wardrobes ready and so on. In case you are looking to move it and not rent it out, you may also want to get air conditioning, refrigerator, kitchen cabinets, beds, washing machine etc. in place before moving in. This all may set you back by few lacs - usually more than you would have budgeted for. In addition, there may be few mandatory costs like society maintenance, clubhouse, parking charges etc.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;"><b><u>3. Not considering the impact of taxes and registration costs</u></b></span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;">As of now, if you are buying an under construction property, you need to pay GST. In addition, you need to get the papers right and spend some amount on stamp duty & registration process. And there may be brokerage also. Depending upon different factors, these costs may even come up to up to nearly 25 percent of property cost. For a Rs. 50 lac property, your landing cost may be upwards of Rs. 60 Lac. And if you are looking at real estate as an investment, you may (incorrectly) end up calculating returns on the base price and not the landing cost.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;"><br /><b><u>4. Not doing due diligence before buying</u></b></span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;">Before buying a house you need to check on lot of things. Sum of these are - checking if all paperwork is proper, is the title clear and without any controversy, are all facilities like access to proper electricity, water, approach roads etc. proper etc. One may often get carried away by great location and potential price appreciation and fail to do due diligence too ensure that at least basics are in place.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;"><br /><b><u>5. Taking all marketing claims at face value</u></b></span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;">It is often said that, while selling a property, you are not selling a property but selling a dream - usually of an enviable lifestyle. One often tends to get carried away by the glossy images of sample apartment, clubhouse, greenery along the proposed approach roads etc, and not contemplate that things may need to be taken with a pinch of salt. To top it up, agents and salesmen often misspell the dreams of "assured" returns and rental yields. The reality may be somewhat different.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;">There may be chances that you do not do your homework but end up getting an amazing home. But there are higher chances that you may end up falling in one of these pitfalls. </span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;">Looking to buy your dream house?</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;">It may pay to be not carried away by euphoria and be pragmatic about what you are entering into and ensure that avoid the common pitfalls. Unless, of course, if you have lot of money.</span><br />
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Nikesh Rathihttp://www.blogger.com/profile/02208012080532357303noreply@blogger.com0tag:blogger.com,1999:blog-28026042.post-73533870635155319472018-12-12T09:34:00.003+05:302018-12-12T09:34:51.301+05:30Why you should stay away from personal loans?<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-family: Trebuchet MS, sans-serif;">It is not uncommon to see people taking personal loans. It is also not uncommon to see banks & NBFCs pushing for personal loan. For the users, personal loans provide immediate cash to fulfill their requirements - e.g. funding a wedding, vacation, house construction or repairs, buying furniture, unforeseen medical emergency and so on. For banks, it provide a great way to increase profits, since the interest rate is usually higher, given the relative insecure nature of personal loans.</span><br />
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<span style="font-family: Trebuchet MS, sans-serif;">If you are a regular user of personal loan, then all may not be well. Personal loans come with its own set of problems, and are something one should ideally be staying away from it. Bankers may however disagree, and may sell you the idea of fulfilling your dreams using a personal loan and so on. But then, they make money out of it!</span><br />
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<span style="font-family: Trebuchet MS, sans-serif;">Here are few reasons why you should be avoiding personal loans.</span><br />
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<span style="font-family: Trebuchet MS, sans-serif; text-decoration-line: underline;"><strong>High interest rate</strong></span><br />
<span style="font-family: Trebuchet MS, sans-serif;">The rate of interest in personal loans is usually higher than other common type of loans like home loans or car loans. Currently most of the personal loans will carry upwards of 10% interest rate. This interest rate increases with a customer's risk profile & credit rating (e.g. CIBIlL Score). And someone telling you - "<i>Sir, take personal loan at 11% & keep your savings in equity markets which will give > 15% assured returns"</i> is either lying or overselling, or both.</span><br />
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<span style="font-family: Trebuchet MS, sans-serif; text-decoration-line: underline;"><strong>Hidden costs like processing fees</strong></span><br />
<span style="font-family: Trebuchet MS, sans-serif;">Most personal loans have a associated processing fees. Given the nature of personal loan, wherein loan amount is not huge, this may be a decent chunk of the loan amount, maybe 1-2% of the loan amount. This is often not factored while calculating rate of interest & expected outflow.</span><br />
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<span style="font-family: Trebuchet MS, sans-serif; text-decoration-line: underline;"><strong>Over-stretching your financial limits</strong></span><br />
<span style="font-family: Trebuchet MS, sans-serif;">Personal loans usually have a shorter duration for repayment, usually to the tune of 2-3 years and this can put severe pressure on your monthly cash outflows for the repayment period. And the fact that you have taken a personal loan is probably an indication of you unable to manage your regular expenses within your source(s) of income and hence this puts an additional pressure. Paying the loan off and getting rid of it may require some serious financial discipline.</span><br />
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<span style="font-family: Trebuchet MS, sans-serif; text-decoration-line: underline;"><strong>Long term financial planning</strong></span><br />
<span style="font-family: Trebuchet MS, sans-serif;">Having taken a personal loan indicates that you probably don't have much savings & investments and will be able to invest only once the loan has been reaped. This sets you back by few years in your investment journey. You also lose out on the <a href="https://beingfinwise.com/2018/12/07/how-can-compounding-work-wonders-for-your-financial-life/">power of compounding</a> & make compounding work against you. (but in favor of the bank or financial institution which gave you loan). In long run, you may be risking not just your financial Independence but even basic savings.</span><br />
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<span style="font-family: Trebuchet MS, sans-serif; text-decoration-line: underline;"><strong>Symptomatic of bigger issue</strong></span><br />
<span style="font-family: Trebuchet MS, sans-serif;">You having taken a personal loan is, in all likelihood, symptomatic of a larger issue - that you are unable to manage your finances, don't have much buffer amount and investments which can be encashed if need be. The question you need to answer is - what led you to this? Whether it is low income, high expenses, luxurious lifestyle, splurging on dining out too often, splurging too much on fashion & luxury - there can be many factors. Unless the root cause is address, things may keep repeating themselves and you may be unable to get out of the personal loan cycle.</span><br />
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<span style="font-family: Trebuchet MS, sans-serif;">So, if you are considering taking a personal loan in future, rethink on why you need to take personal loan. And what were the circumstances that led you to that. In some cases, these circumstances may be beyond your control. In most, it may be because of something that you didn't do correctly. And if not addressed, before soon, you may find yourself in this unending cycle of personal loans.</span><br />
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<span style="font-family: Trebuchet MS, sans-serif;">You may also want to read - <a href="https://beingfinwise.com/2018/06/04/the-story-behind-credit-card-debts-personal-loans/">The story behind credit card debts & personal loans.</a></span><br />
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You can also read this on <a href="https://t.co/Zf4LC0vQR5" target="_blank">BeingFinWise</a></div>
Nikesh Rathihttp://www.blogger.com/profile/02208012080532357303noreply@blogger.com0tag:blogger.com,1999:blog-28026042.post-30978979276099700802018-12-07T10:33:00.002+05:302018-12-15T16:03:44.329+05:30How can compounding work wonders for your financial life?<div dir="ltr" style="text-align: left;" trbidi="on">
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<span style="font-family: Trebuchet MS, sans-serif;">You can also read this article on <a href="https://beingfinwise.com/2018/12/07/how-can-compounding-work-wonders-for-your-financial-life" target="_blank">BeingFinWise</a></span></span><br />
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<span style="font-family: Trebuchet MS, sans-serif;">As Albert Einstein once famously said, compound interest is the eight wonder of the world. Whether it is a wonder of the world or not, it is surely an amazing concept. If you understand it, you can make it work for you (via investments). If not, if can work against you (via debts). That way, compounding can be a double edged sword.</span></div>
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<span style="font-family: Trebuchet MS, sans-serif;">One of the most well-known investment tactics that many people wish they had implemented (but seldom do) is the "start young" tactic. This investment approach assumes that rates of return are compounded. Yet, often the idea of compounding is assumed to come from income-paying investments - e.g. fixed deposits</span></div>
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<span style="font-family: Trebuchet MS, sans-serif;">On the contrary, compounding can also come in the different shapes & sizes - like profits in mutual funds, equities or other assets.</span></div>
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<span style="font-family: Trebuchet MS, sans-serif;">For example, suppose equity has gained an average of 12% in value every year could be said to have a compounded rate of return of 12%. This is an excellent rate of return, particularly over a long-term investment period.</span></div>
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<span style="font-family: Trebuchet MS, sans-serif;"><br /><span style="text-decoration-line: underline;"><strong>What is compounding?</strong></span></span></div>
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<span style="font-family: Trebuchet MS, sans-serif;"><img alt="How compound interest works in your favour?" height="523" src="https://blogger.googleusercontent.com/img/proxy/AVvXsEg8Uq1DyQY2cP3vxJueFAofR3Hi5KsEUuVXQ97fcSqJ4BMCyL9DzWDVh8Uv24GDjmnfUz0X9cR9BY8gRZu0aPb8gqT3T42ti_0g4pWp1eJ-04UFUzOMeSL2Hl86ccJlG9VN6Qok8Ha8FKq5N8c1YPmRw5H_bJSJObH9R563CETmSP9K_wc=s0-d-e1-ft" width="723" /></span></div>
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<span style="font-family: Trebuchet MS, sans-serif;">Compounding money is a simple concept, yet most of us fail to take its full advantage, partly due to lack of financial discipline.</span></div>
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<span style="font-family: Trebuchet MS, sans-serif;">Suppose you start with $1,000 to invest and over the year, you see a 10% investment on your return. That translates to $100 for a total return of $1,100. If you are taking advantage of the benefits of compounding money you'd then reinvest this entire $1,100. In the next year if you make another 10%, this time you'd make a total of $110, bringing your total to $1,210.</span></div>
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<span style="font-family: Trebuchet MS, sans-serif;">This can, over long run, create an avalanche effect. Because the benefits of early savings in life can be greatly increased by the effect of compounding, starting to save and invest can already make all the difference, so you can enjoy life without worrying about your finances.</span></div>
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<span style="font-family: Trebuchet MS, sans-serif;">If one starts early, hopefully one day one can even live without a salary. Can you imagine working in the future because you want it - NOT because you have to cover your current expenses?</span></div>
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<span style="font-family: Trebuchet MS, sans-serif;"><br /><span style="text-decoration-line: underline;"><strong>How compounding works in your favour?</strong></span><br />Investment is one of the most important ways in which compound interest plays to your advantage. Particularly if you have a large opening balance and a lot of time to grow it, compounding can do wonders for your money. Your money grows because you earn interest not only on your opening balance but also on your accrued interest. You will make interest on your interest, thanks to compound interest.</span></div>
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<span style="font-family: Trebuchet MS, sans-serif;">Investing in a systematic investment plan (SIP) in an equity fund, a public pension fund (PPF) or a national pension plan at an early stage (NPS) can help the investor build up a large investment fund. In investment funds, investing at an early stage of SIP can help help create long-term prosperity. To make compounding work in your favour, one should ideally invest in financial assets that offer a superior return. Yet, be aware of the risks they carry, and be diversified enough that you don't suffer a permanent loss of capital.</span></div>
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<span style="font-family: Trebuchet MS, sans-serif;"><br />What are key things you should consider while chasing compounding?</span></div>
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<li><span style="font-family: Trebuchet MS, sans-serif;"><strong>Regular investments - </strong>How much you can invest per month? Ideally you should spend what is left after investing and not the other way round.</span></li>
<li><span style="font-family: Trebuchet MS, sans-serif;"><strong>Investment time horizon</strong> - Enter the number of years your money should grow to help you achieve your financial goals. Time is one of the key success factors in making your investment grow.</span></li>
<li><span style="font-family: Trebuchet MS, sans-serif;"><strong>Expected rate of returns? -</strong> What is your expected return on investments - For equities it may be more (but with some risk). For fixed returns instruments it can be a bit less (but certain)</span></li>
</ul>
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<span style="font-family: Trebuchet MS, sans-serif;"><span style="text-decoration-line: underline;"><strong>Impact of the interest rate on compounding</strong></span><br />It is obvious that the higher the interest rate, the higher the return.</span></div>
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<span style="font-family: Trebuchet MS, sans-serif;">Suppose a parent makes an investment of 25 rupees per day, for his child with an interest of 4%. After 25 years the parent could have given his child a gift of only 3.81 lac. If, on the contrary, they invested in an instrument with 8.5%, the proceeds would have been 7.35 lac. While a 12 percent instrument would have given them a higher amount of Rs 12.65 lac.</span></div>
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<span style="font-family: Trebuchet MS, sans-serif;">However, as interest rates rise so does the risk.</span></div>
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<span style="font-family: Trebuchet MS, sans-serif;">Higher-yielding returns are possible typically from riskier instruments like equities. The problem with higher returns is that they are not steady and predictable and often give lumpy returns. Because of this element of unpredictability, it may be difficult to work in the context of short-term planning. There may be some years in which the return is negative, which would be counterproductive for your goals, if they are not long term enough.</span></div>
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<span style="font-family: Trebuchet MS, sans-serif;">Planning financial goals must be cost-effective and predictable. Starting to save early helps us be on course faster. It is more difficult for your savings to meet your needs if you invest later.</span></div>
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<span style="font-family: Trebuchet MS, sans-serif;"><br /><span style="text-decoration-line: underline;"><strong>To sum it up ...</strong></span></span></div>
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<span style="font-family: Trebuchet MS, sans-serif;">Compounding is a powerful concept. Knowing how it works can help you create wealth and better manage your debt, if any. Once you understand how compounding works can work for and against you, you can take control of your finances and make informed decisions.</span></div>
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<span style="font-family: Trebuchet MS, sans-serif;">An early start gives a head start on the investment process, thanks to that wonderful thing called "time". It must also be clear that the creation of wealth over time by making effective use of the power of capital, the switch from saving to investing is important. Spend time identifying your goals, link your long-term objectives to your long-term investments, use a mix of debt investment classes and equities for.</span></div>
<span style="background-color: white; color: #222222;"><span style="font-family: Trebuchet MS, sans-serif;">Start with investing to achieve each specific goal and let the compounding work its magic.</span></span></div>
Nikesh Rathihttp://www.blogger.com/profile/02208012080532357303noreply@blogger.com1tag:blogger.com,1999:blog-28026042.post-50355652069560695772018-11-30T10:59:00.001+05:302018-11-30T10:59:29.273+05:30How can you get cashback while shopping on Amazon?<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-family: "Trebuchet MS", sans-serif;">eCommerce is changing the way lot of us shop today. And websites/ Apps like Amazon, Flipkart, Myntra, Bigbasket etc. are now extremely popular among internet users in India. Most of these come up with regular sale & offers, often linked to a payment method (Amazon Pay, Credit Card, UPI etc). But there is something more that can help you squeeze a better deal - using affiliates to get cashbacks. (as discussed in one of the earlier articles) </span><br />
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<span style="font-family: Trebuchet MS, sans-serif;">Here is how you can get cashbacks on Amazon (and several other eCommerce sites)</span><br />
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<li><span style="font-family: Trebuchet MS, sans-serif;">Sign up with an affiliate partner. <a href="https://cashkaro.com/r=451557" target="_blank">Cashkaro</a>, <a href="https://www.gopaisa.com/" target="_blank">Gopaisa</a>, <a href="https://www.jiomoney.com/offers/cash-pe-cash.html" target="_blank">JioMoney</a>, <a href="https://www.jetprivilege.com/" target="_blank">Jetprivilage</a>, <a href="https://www.payback.in/" target="_blank">Payback </a>etc. are some of them. </span></li>
<li><span style="font-family: Trebuchet MS, sans-serif;">Use their website App to go to Amazon website (not Amazon mobile app)</span></li>
<li><span style="font-family: Trebuchet MS, sans-serif;">Shop normally, checkout and pay. Please ensure that your shopping cart is empty before shopping & your don't close the browsing session in between. </span></li>
<li><span style="font-family: Trebuchet MS, sans-serif;">Amazon gives a commission to these partners for referring traffic, and these partners pass on a good chunk of commission to you.</span></li>
<li><span style="font-family: Trebuchet MS, sans-serif;">Enjoy the cashback in your bank account or redeem them as gift vouchers!</span></li>
</ul>
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<span style="font-family: Trebuchet MS, sans-serif;">If one is making regular purchases on these eCommerce sites & regularly uses affiliates like above, the cashbacks can soon add up. The cashback rates can vary, and may even be up to 100% in few cases. But realistically, you can expect up to 4-5% cashbacks on popular websites like Amazon - usually higher cashback in high margin categories like fashion, and lower in case of low margin categories like mobile phones. </span></div>
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<span style="font-family: Trebuchet MS, sans-serif;"><br /></span></div>
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<span style="font-family: Trebuchet MS, sans-serif;">So, next time you shop at Amazon or Flipkart or Myntra or any other eCommerce portal, check out the ways you can get additional cashbacks. And this is over and above the regular ongoing deals. </span></div>
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<span style="font-family: Trebuchet MS, sans-serif;">You can also read this on <a href="https://beingfinwise.com/2018/11/30/how-can-you-get-cashback-while-shopping-on-amazon/" target="_blank">BeingFinWise</a></span></div>
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Nikesh Rathihttp://www.blogger.com/profile/02208012080532357303noreply@blogger.com0tag:blogger.com,1999:blog-28026042.post-22405085382103288492018-11-29T14:49:00.001+05:302018-11-29T14:49:26.026+05:30Why you should avoid credit card debt?<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-family: Trebuchet MS, sans-serif;">Credit card can be a wonderful thing. It can help you manage your cashflows, get some attractive deals and reward you with their loyalty program.</span><br />
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<span style="font-family: Trebuchet MS, sans-serif;">Yet, credit cards don't come without its share of problems. And most of these problems are not about credit cards, but human behaviour. If not managed properly, they can soon lead you into a downward financial spiral which entails a never ending series of interest payments, balance transfers, bad credit rating, mental stress and more. So, it is important to handle credit cards with care and avoid credit card debt like plague.<a name='more'></a></span><br />
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<span style="font-family: Trebuchet MS, sans-serif;">Here are some reasons you should avoid credit card debt.</span><br />
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<li><span style="font-family: Trebuchet MS, sans-serif;">Interest rates are really high - It can be as high as 4 percent per month (which comes to 48 percent per annum). And this is charged on the entire bill amount and not just the balance amount after you have paid it off partially. If not controlled, you can see yourself in a quicksand of interest payments. This can have a disastrous effect on your financial plans (if any, considering that you have landed into a credit card debt!)</span></li>
<li><span style="font-family: Trebuchet MS, sans-serif;">Not paying your credit card bill on time can dent your CIBIL score (or equivalent credit rating score in your country) and this can make you difficult to apply for loan (home loan, business loan, car loan etc.) in future or get not so favorable terms if you take the loan.</span></li>
<li><span style="font-family: Trebuchet MS, sans-serif;">Failure to pay your credit card bill on time is usually symptomatic of a deeper malaise - That of inability to control your finances. So, if you are unable to pay your credit card bill because your income doesn't match your expenses, this is unlikely to change unless your income increases your expenses decreases. And getting out of such lifestyle traps can often be difficult.</span></li>
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<span style="font-family: Trebuchet MS, sans-serif;">In addition to the above, getting into a spiral of credit card debt can have an adverse affect on your health, thanks stress that comes complimentary with credit card bills. This can severely impact your flexibility in life as you'll need to somehow keep servicing your credit card debt.</span><br />
<span style="font-family: Trebuchet MS, sans-serif;">So, how can you avoid getting into credit card debt trap. Here are few tips.</span><br />
<ul>
<li><span style="font-family: Trebuchet MS, sans-serif;">First and foremost, use credit cards only if you have some control over your expense and can avoid impulse buying to an extent. Else, debit card or good old cash should be good.</span></li>
<li><span style="font-family: Trebuchet MS, sans-serif;">Pay your credit card bill in full and on time. Always. Schedule the payments if you think you may forget making credit card payment.</span></li>
<li><span style="font-family: Trebuchet MS, sans-serif;">Use credit card only for the purchases you could have made anyway with cash. So, if you can't buy that swanky new DSLR camera with cash, avoid buying it on credit too. </span></li>
<li><span style="font-family: Trebuchet MS, sans-serif;">Avoid exhausting your credit limit. Your credit limit is usually dependent on your spending capacity, and that you are close to it may be indicative of you biting more than what you can chew. </span></li>
<li><span style="font-family: Trebuchet MS, sans-serif;">Keep a track of your purchases and avoid surprises when you see the bill. </span></li>
</ul>
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<span style="font-family: Trebuchet MS, sans-serif;">Credit card usage can be a double edged sword. If you use it judiciously, it can be a good servant. If not, it can be an awful master.</span><br />
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<span style="font-family: Trebuchet MS, sans-serif;">You can also read this on <a href="https://beingfinwise.com/why-you-should-avoid-credit-card-debt" target="_blank">BeingFinWise</a></span></div>
Nikesh Rathihttp://www.blogger.com/profile/02208012080532357303noreply@blogger.com0tag:blogger.com,1999:blog-28026042.post-754691319768403942018-11-28T14:24:00.001+05:302018-11-28T20:38:18.956+05:30How can lifestyle inflation derail your financial plan?<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-family: "trebuchet ms" , sans-serif;">Whether one admits it or not - most of our lifestyle needs are inflationary in nature. This is in addition to the inflation that affects our day to day lives.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">As life progresses one may feel the need to get better house, better cars, better facilities for kids, better vacations, more healthcare needs and so on. On few of the things where you were spending Rs. 100, you may be spending Rs. 200 two years later. And during this time the inflation may be like 5 percent.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;"><b><u>So, how does this translate into your financial plan?</u></b></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">Any projection of your finances need to take inflation into account. But what is the inflation number you need to consider?</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;">The inflation number that the government agencies release is based upon price of essentials like food and other daily needs. But your lifestyle may be more that just daily needs. If the inflation rate is, 5 percent, I'll be underestimating by expecting my lifestyle needs to grow at the same 5 percent. This number will probably be more like 10 percent (or some number in between, if you have control over some chunks of this expense.)</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;">And in case you don't have control over lifestyle expenses and your needs grow exponentially, so will your lifestyle inflation!</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">And yes, there can be medical emergencies too, which we often fail to account for. If you are uninsured or under-insured, there is a good probability that this can burn hole in your pocket considering better but more expensive healthcare facilities and your increasing age which increases likelihood of need for medical treatment. The medical insurance which may be sufficient now, may not be sufficient a decade later. </span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;">Coming to your monthly expenses, suppose you have an expense of Rs. 100k per month. If you assume it to grow at 5 percent per annum (normal inflation, if the recent history is a good indicator) then the monthly expense will become 200k in approx 14 - 15 years.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">But if your inflation is like 10 percent per annum, this number will swell to 400k in a similar time period. Which is the double of the number expected assuming 5 percent inflation.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;">For you to keep pace with this, your income needs to match this lifestyle inflation and probably a bit more if you are looking to increase your savings. </span><span style="font-family: "trebuchet ms" , sans-serif;">If you are unable to, then be ready to cut corners or hope for some amazing returns on investments!</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><b>Does your financial planning consider lifestyle inflation? </b></span><b style="font-family: "Trebuchet MS", sans-serif;">Think about it.</b><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">You can also read this on <a href="https://beingfinwise.com/2018/11/28/how-can-lifestyle-inflation-derail-your-financial-plan/" target="_blank">BeingFinWise</a></span>
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Nikesh Rathihttp://www.blogger.com/profile/02208012080532357303noreply@blogger.com0tag:blogger.com,1999:blog-28026042.post-64534627030039127142018-11-19T10:15:00.000+05:302018-11-19T10:15:27.881+05:30What will you do if you get a windfall gain?<div dir="ltr" style="text-align: left;" trbidi="on">
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What will you do if you get a windfall gain, of say USD 1 Million?<br />
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Will you continue working or will you retire?<br />
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Will keep working but be choosy?<br />
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Will you switch to something more "meaningful"?<br />
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Will you think of the next 9 million?<br />
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Will nothing change in your life?<br />
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Nikesh Rathihttp://www.blogger.com/profile/02208012080532357303noreply@blogger.com2tag:blogger.com,1999:blog-28026042.post-57918199378883457432018-11-19T10:09:00.002+05:302018-11-19T10:09:54.420+05:30House hunting for first-time homebuyers: Is there a right way?<div dir="ltr" style="text-align: left;" trbidi="on">
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<span style="font-family: didact gothic;"><i><span style="white-space: pre;"><a href="https://www.openlistings.com/blog/house-hunting-is-there-a-right-way/" target="_blank">Link to original post</a></span></i></span></div>
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<span style="background-color: transparent; color: black; font-family: "didact gothic"; font-size: 11pt; font-style: normal; font-variant: normal; font-weight: 400; text-decoration: none; vertical-align: baseline; white-space: pre;"><span style="color: #1a1919; font-size: 12pt; font-style: italic; vertical-align: baseline;"><br /></span></span></div>
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<span style="background-color: transparent; color: black; font-family: "didact gothic"; font-size: 11pt; font-style: normal; font-variant: normal; font-weight: 400; text-decoration: none; vertical-align: baseline; white-space: pre;"><img alt="House hunting for first-time homebuyers: is there a right way?" height="468" src="https://lh3.googleusercontent.com/XbIy1ZdO7ydOSyJNGPpy4tjUTlyK_VmEiB3Br8SfJn-M4x9A1nNzM1kK1iRvYeXfCMYw0DnugAK3qwDx05t1FLO_8294YdQPcArh0mMLC5kRM4qgcWghZqtaftmfmS2ngASpzg5H" style="border: none; transform: rotate(0rad);" width="624" /></span></div>
<h1 dir="ltr" style="line-height: 1.44; margin-bottom: 6pt; margin-top: 24pt;">
</h1>
<b id="docs-internal-guid-7b55a7db-7fff-e868-8bcf-025d90f5be03" style="font-weight: normal;"><br /></b>
<br />
<div dir="ltr" style="line-height: 2.4; margin-bottom: 0pt; margin-top: 0pt;">
<span style="background-color: transparent; color: #1a1919; font-family: "didact gothic"; font-size: 11.5pt; font-style: normal; font-variant: normal; font-weight: 400; text-decoration: none; vertical-align: baseline; white-space: pre;">A lot of buyers, especially first-timers, worry about whether or not they’re going about their home search the right way.</span></div>
<div dir="ltr" style="line-height: 2.4; margin-bottom: 0pt; margin-top: 0pt;">
<span style="background-color: transparent; color: #1a1919; font-family: "didact gothic"; font-size: 11.5pt; font-style: normal; font-variant: normal; font-weight: 400; text-decoration: none; vertical-align: baseline; white-space: pre;">On the one hand, buyers fret that if they find their "dream home" too early, they might be missing out on something better. But, on the other, if the process takes a while, they worry that they’ll never find a home that works for them. The FOMO is real.</span></div>
<div dir="ltr" style="line-height: 2.4; margin-bottom: 0pt; margin-top: 0pt;">
<span style="background-color: transparent; color: #1a1919; font-family: "didact gothic"; font-size: 11.5pt; font-style: normal; font-variant: normal; font-weight: 400; text-decoration: none; vertical-align: baseline; white-space: pre;">Keep reading to find out if you’re on track with your home search and what you should do if you find that you need to go back to the drawing board.</span></div>
<h2 dir="ltr" style="line-height: 1.44; margin-bottom: 4pt; margin-top: 18pt;">
<span style="background-color: transparent; color: #1a1919; font-family: "didact gothic"; font-size: 17.5pt; font-style: normal; font-variant: normal; font-weight: 700; text-decoration: none; vertical-align: baseline; white-space: pre;">How many homes should you see?</span></h2>
<div dir="ltr" style="line-height: 2.4; margin-bottom: 0pt; margin-top: 0pt;">
<span style="background-color: transparent; color: #1a1919; font-family: "didact gothic"; font-size: 11.5pt; font-style: normal; font-variant: normal; font-weight: 400; text-decoration: none; vertical-align: baseline; white-space: pre;">Honestly, that depends. While we understand the impulse to try and rely on hard-and-fast statistics, homebuying is a truly personal experience rather than a science.</span></div>
<div dir="ltr" style="line-height: 2.4; margin-bottom: 0pt; margin-top: 0pt;">
<span style="background-color: transparent; color: #1a1919; font-family: "didact gothic"; font-size: 11.5pt; font-style: normal; font-variant: normal; font-weight: 400; text-decoration: none; vertical-align: baseline; white-space: pre;">Trust your intuition. You know your needs, likes, and dislikes better than anyone else. You’ll know when you’ve landed on the property that makes the most sense for you to call home.</span></div>
<div dir="ltr" style="line-height: 2.4; margin-bottom: 0pt; margin-top: 0pt;">
<span style="background-color: transparent; color: #1a1919; font-family: "didact gothic"; font-size: 11.5pt; font-style: normal; font-variant: normal; font-weight: 400; text-decoration: none; vertical-align: baseline; white-space: pre;">That said, though, there are a few things you can do to help speed your search along:</span></div>
<div dir="ltr" style="line-height: 2.4; margin-bottom: 0pt; margin-top: 0pt;">
<span style="background-color: transparent; color: #1a1919; font-family: "didact gothic"; font-size: 11.5pt; font-style: normal; font-variant: normal; font-weight: 400; text-decoration: none; vertical-align: baseline; white-space: pre;">If you’ve been looking for a while and haven’t really found anything that meets your needs, it might be time to redefine search criteria. Sit down and take some time to think about which features you really need to have in your new home versus which are more nice-to-have, wishlist items.</span></div>
<h2 dir="ltr" style="line-height: 1.44; margin-bottom: 4pt; margin-top: 18pt;">
<span style="background-color: transparent; color: #1a1919; font-family: "didact gothic"; font-size: 17.5pt; font-style: normal; font-variant: normal; font-weight: 700; text-decoration: none; vertical-align: baseline; white-space: pre;">Narrowing your search</span></h2>
<div dir="ltr" style="line-height: 2.4; margin-bottom: 0pt; margin-top: 0pt;">
<span style="background-color: transparent; color: #1a1919; font-family: "didact gothic"; font-size: 11.5pt; font-style: normal; font-variant: normal; font-weight: 400; text-decoration: none; vertical-align: baseline; white-space: pre;">Sometimes, narrowing search criteria can get tricky. If you’re unsure of where to start, try using the following as a starting point.</span></div>
<div dir="ltr" style="line-height: 2.4; margin-bottom: 0pt; margin-top: 0pt;">
<span style="background-color: transparent; color: #1a1919; font-family: "didact gothic"; font-size: 11.5pt; font-style: normal; font-variant: normal; font-weight: 700; text-decoration: none; vertical-align: baseline; white-space: pre;">Neighborhoods</span></div>
<div dir="ltr" style="line-height: 2.4; margin-bottom: 0pt; margin-top: 0pt;">
<span style="background-color: transparent; color: #1a1919; font-family: "didact gothic"; font-size: 11.5pt; font-style: normal; font-variant: normal; font-weight: 400; text-decoration: none; vertical-align: baseline; white-space: pre;">Focusing in on a particular area is one of the easiest ways to refine your search. You can start by doing research into different neighborhoods by you. Think about what you commute to work will look like, if the area has amenities that you enjoy, the quality of the school district, and home values.</span></div>
<div dir="ltr" style="line-height: 2.4; margin-bottom: 0pt; margin-top: 0pt;">
<span style="background-color: transparent; color: #1a1919; font-family: "didact gothic"; font-size: 11.5pt; font-style: normal; font-variant: normal; font-weight: 400; text-decoration: none; vertical-align: baseline; white-space: pre;">With that in mind, though, you getting too hung up on a particular zip code can also limit your criteria. The key is keep an ideal location in mind while still staying open to possibility.</span></div>
<div dir="ltr" style="line-height: 2.4; margin-bottom: 0pt; margin-top: 0pt;">
<span style="background-color: transparent; color: #1a1919; font-family: "didact gothic"; font-size: 11.5pt; font-style: normal; font-variant: normal; font-weight: 700; text-decoration: none; vertical-align: baseline; white-space: pre;">Bedrooms & bathrooms</span></div>
<div dir="ltr" style="line-height: 2.4; margin-bottom: 0pt; margin-top: 0pt;">
<span style="background-color: transparent; color: #1a1919; font-family: "didact gothic"; font-size: 11.5pt; font-style: normal; font-variant: normal; font-weight: 400; text-decoration: none; vertical-align: baseline; white-space: pre;">When searching for a house, you should have a firm idea of how many bedrooms and bathrooms you’re after. Whether you’re just looking to accommodate yourself and the occasional guest, are thinking about starting a family in the near future, or want the option to convert a spare bedroom into an office, this information will surely help narrow your search.</span></div>
<div dir="ltr" style="line-height: 2.4; margin-bottom: 0pt; margin-top: 0pt;">
<span style="background-color: transparent; color: #1a1919; font-family: "didact gothic"; font-size: 11.5pt; font-style: normal; font-variant: normal; font-weight: 400; text-decoration: none; vertical-align: baseline; white-space: pre;">We advise against compromising on this feature because, while it is possible to put an addition on later, doing so takes a substantial amount of time and effort. More often than not, homeowners find that they would rather put their home on the market than go through the hassle of trying to renovate it to fit their changing needs.</span></div>
<div dir="ltr" style="line-height: 2.4; margin-bottom: 0pt; margin-top: 0pt;">
<span style="background-color: transparent; color: #1a1919; font-family: "didact gothic"; font-size: 11.5pt; font-style: normal; font-variant: normal; font-weight: 700; text-decoration: none; vertical-align: baseline; white-space: pre;">Sale price</span></div>
<div dir="ltr" style="line-height: 2.4; margin-bottom: 0pt; margin-top: 0pt;">
<span style="background-color: transparent; color: #1a1919; font-family: "didact gothic"; font-size: 11.5pt; font-style: normal; font-variant: normal; font-weight: 400; text-decoration: none; vertical-align: baseline; white-space: pre;">This is the big one. Once you have the above two details settled, it’s time to narrow your search results further to only those homes that you can truly afford. If you’ve already </span><a href="https://www.openlistings.com/blog/when-should-you-get-pre-approved-for-a-mortgage-loan/" style="text-decoration: none;"><span style="background-color: transparent; color: #fb9179; font-family: "didact gothic"; font-size: 11.5pt; font-style: normal; font-variant: normal; font-weight: 700; text-decoration: underline; vertical-align: baseline; white-space: pre;">applied for a pre-approval</span></a><span style="background-color: transparent; color: #1a1919; font-family: "didact gothic"; font-size: 11.5pt; font-style: normal; font-variant: normal; font-weight: 400; text-decoration: none; vertical-align: baseline; white-space: pre;">, that number can be a good place to start. However, remember that a pre-approval shows the maximum amount that you can ask for in a loan. You may not want to borrow up to that amount once you factor in the rest of your monthly expenses.</span></div>
<div dir="ltr" style="line-height: 2.4; margin-bottom: 0pt; margin-top: 0pt;">
<span style="background-color: transparent; color: #1a1919; font-family: "didact gothic"; font-size: 11.5pt; font-style: normal; font-variant: normal; font-weight: 400; text-decoration: none; vertical-align: baseline; white-space: pre;">To find a more comfortable sale price, we recommend using a </span><a href="https://www.bankrate.com/calculators/mortgages/mortgage-calculator.aspx" style="text-decoration: none;"><span style="background-color: transparent; color: #fb9179; font-family: "didact gothic"; font-size: 11.5pt; font-style: normal; font-variant: normal; font-weight: 700; text-decoration: underline; vertical-align: baseline; white-space: pre;">mortgage calculator</span></a><span style="background-color: transparent; color: #1a1919; font-family: "didact gothic"; font-size: 11.5pt; font-style: normal; font-variant: normal; font-weight: 400; text-decoration: none; vertical-align: baseline; white-space: pre;"> to get a sense of what your monthly payment could look like at various loan amounts and interest rates. Then, once you’ve landed on a number that works for you, try plugging that into your monthly budget to get a sense of how the payment will feel in addition to your other costs.</span></div>
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<span style="background-color: transparent; color: #1a1919; font-family: "didact gothic"; font-size: 17.5pt; font-style: normal; font-variant: normal; font-weight: 700; text-decoration: none; vertical-align: baseline; white-space: pre;">Now what?</span></h2>
<div dir="ltr" style="line-height: 2.4; margin-bottom: 0pt; margin-top: 0pt;">
<span style="background-color: transparent; color: #1a1919; font-family: "didact gothic"; font-size: 11.5pt; font-style: normal; font-variant: normal; font-weight: 400; text-decoration: none; vertical-align: baseline; white-space: pre;">The good news is that once you’ve narrowed your search down, your pool of available properties will likely be much smaller than it was before - and much more targeted to meet your needs. From here, your search will be about zeroing in on your perfect match on the basis of which property was the best fit for your personal tates.</span></div>
<div dir="ltr" style="line-height: 2.4; margin-bottom: 0pt; margin-top: 0pt;">
<span style="background-color: transparent; color: #1a1919; font-family: "didact gothic"; font-size: 11.5pt; font-style: normal; font-variant: normal; font-weight: 400; text-decoration: none; vertical-align: baseline; white-space: pre;">You’ll know when a property feels like it could become home versus when you’d be trying to make the best of an imperfect situation. Keep hunting until you find the former.</span></div>
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Nikesh Rathihttp://www.blogger.com/profile/02208012080532357303noreply@blogger.com1tag:blogger.com,1999:blog-28026042.post-55951431735362284272018-11-09T16:05:00.001+05:302018-11-10T06:47:46.709+05:30Things that matter ... or don't matter<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-family: "trebuchet ms" , sans-serif;">Read somewhere - "It is paradoxical that as our incomes rise, we find it more and more difficult to live within our means. </span><span style="background-color: #f5f8fa; color: #14171a; font-family: "trebuchet ms" , sans-serif; white-space: pre-wrap;">" (</span><a href="https://twitter.com/dmuthuk/status/1060337513036795904" style="font-family: "Trebuchet MS", sans-serif; white-space: pre-wrap;" target="_blank">Source</a><span style="background-color: #f5f8fa; color: #14171a; font-family: "trebuchet ms" , sans-serif; white-space: pre-wrap;">)</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">We live in the age of abundance, where, more often than not, we have lot of options, many of which hadn't even existed few decades back. Yes we are often unhappy and keep longing for more.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;">Got a car? Probably you'll want' a bigger one. And then even bigger, probably an SUV. And then probably a Audi or Mercedes or BMW ... </span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;">Wear a watch? You may want upgrade to a swanker one. And then probably something with a charismatic logo.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">With every increase in means, our goals also increase, usually disproportionately and our lifestyle upgrades. But at what cost?</span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;">Does chasing all these lifestyle goals matter? Or, to what extent does it matter? Rather what really matters? Do we often ignore the trade-offs?</span><span style="font-family: "trebuchet ms" , sans-serif;"><br /></span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;">Things or moments?</span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;">Lifestyle trap or freedom that arises from financial independence?</span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;">Showoff that five you adrenaline rush or relative anonymity with peace of mind?</span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;">Fashionable designer but uncomfortable clothes work 10K or a decent looking, comfortable non-descript clothes worth 3K?</span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;">New clothes every alternate month or less clutter in your wardrobe?</span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;">Alcohol with its aftereffects versus bland sobriety without aftereffects?</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">I don't have answers, but hope this provides food for thought ..</span><br />
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</div>
Nikesh Rathihttp://www.blogger.com/profile/02208012080532357303noreply@blogger.com0tag:blogger.com,1999:blog-28026042.post-51438471436915501692018-10-27T12:41:00.004+05:302018-10-27T12:41:43.084+05:30Understanding your appetite for financial risk<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-family: Trebuchet MS, sans-serif;">Chasing returns is a good goal, but ...</span><br />
<span style="font-family: Trebuchet MS, sans-serif;"><br /></span>
<span style="font-family: Trebuchet MS, sans-serif;">Are you underestimating the inherent risks while chasing lofty goals like - 18 percent annualized returns via equities?</span><br />
<span style="font-family: Trebuchet MS, sans-serif;"><br /></span>
<span style="font-family: Trebuchet MS, sans-serif;">Or doubling your property worth in 5 years via real estate?</span><br />
<span style="font-family: Trebuchet MS, sans-serif;"><br /></span>
<span style="font-family: Trebuchet MS, sans-serif;">Or hoping to double your money via cryptocurreny?</span><br />
<span style="font-family: Trebuchet MS, sans-serif;"><br /></span>
<span style="font-family: Trebuchet MS, sans-serif;">Are you someone who looks at fixed returns instruments like FD/ PPF etc as something that is for losers?</span><br />
<span style="font-family: Trebuchet MS, sans-serif;"><br /></span>
<span style="font-family: Trebuchet MS, sans-serif;">Well,</span><br />
<span style="font-family: Trebuchet MS, sans-serif;"><br /></span>
<span style="font-family: Trebuchet MS, sans-serif;">I am no one so say which asset class will give what returns (except fixed returns instruments) but when you are "sold" something with a "grantee" of "assured" x% returns, do you see the risks? Or is seeing risks is for the boring or losers or unexciting people?</span><br />
<span style="font-family: Trebuchet MS, sans-serif;"><br /></span>
<span style="font-family: Trebuchet MS, sans-serif;">When you are chasing 15 percent returns via equities, do you understand that there may be times when the returns may be higher but there may be times when returns may be lower, or even negatives. Historically it has always been good and will hopefully continue to be, but are you so over-enthusiastic that you even put your daily expenses or contingency fund at risk of permanent loss of capital because you chose to ignore the risk?</span><br />
<span style="font-family: Trebuchet MS, sans-serif;"><br /></span>
<span style="font-family: Trebuchet MS, sans-serif;">Or do you ignore the risk of liquidity (rather, lack of it) while investing in real estate to such an extent that you face a liquidity crunch if anything urgent comes up and you may be looking to do a distress sale of your fancy apartment?</span><br />
<span style="font-family: Trebuchet MS, sans-serif;"><br /></span>
<span style="font-family: Trebuchet MS, sans-serif;">Each of us have our own assumptions and expectations and capacity, but are we asking the right questions as far as risk appetite is concerned? </span><br />
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Nikesh Rathihttp://www.blogger.com/profile/02208012080532357303noreply@blogger.com2tag:blogger.com,1999:blog-28026042.post-35445116474578207892018-08-18T19:22:00.001+05:302018-08-23T16:11:48.853+05:30Can mini habits cause big changes?<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-family: "trebuchet ms" , sans-serif;">Some time back, I happened to read an amazing book called <a href="https://www.amazon.in/gp/product/1847946240/ref=as_li_tl?ie=UTF8&camp=3638&creative=24630&creativeASIN=1847946240&linkCode=as2&tag=rathinikesh-21&linkId=f4d64402565519c1beaa2b95ed074489" target="_blank">The Power OF Habit by Charles Duhigg</a>. Among many things he talks about in it, one is about different small cues/ triggers and mini-habits which can help shape up larger habits, hopefully for good.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;">Since last couple of years, I have made a constant endeavor to be <a href="https://rathinikesh.blogspot.com/2018/06/steps-i-took-to-be-healthier-than-before.html" target="_blank">healthier than before</a> and have cultivated some mini habits that have helped me achieve some of these goals. And I believe that these mini-habits have been quite helpful. </span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">Here are some of the mini habits I tried to adopt while trying to make my lifestyle healthier. Restricting this to 3 for the sake of brevity. </span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;">1. Since some time (guess 2-3 years) I have a kind of "permanent alarm"set for 6 AM in the morning (which I disable only if there is some really important). This, on most of the days ensures that I am in a position to get up early, and hence, do some kind of workout. At least, lack of time is not a stopping factor most of the days. So far, it has served me well. </span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;">2. Started brushing my teeth regularly post dinner (slightly different than brushing "before going to sleep"). This often helps me avoid that craving for post dinner junk or sweet.</span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;">3. Keeping several nuts/ dry fruits together and usually in plain sight so that I remember to soak them and eat (healthy!)</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">At the same time, there have been several cased where I haven't been able to cultivate mini-habits. Updating this blog regularly is one of them. De-cluttering my space is another. Reducing the social media usage is also somewhere in this list. And I haven't been able to cultivate any mini habit around these. </span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">Would love to hear suggestions on what can be these mini habits?</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">_</span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;">Realized that there are quite a few good books on mini habits. Hope to read some of them soon. </span></div>
Nikesh Rathihttp://www.blogger.com/profile/02208012080532357303noreply@blogger.com0tag:blogger.com,1999:blog-28026042.post-52947797287529342852018-06-07T19:28:00.002+05:302018-06-07T20:28:26.256+05:30Financial Independence - A goal worth aspiring for?<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-family: "trebuchet ms" , sans-serif;">"I want to save money and then travel the world"</span><br />
<span style="font-family: "trebuchet ms" , sans-serif;">"I want to live life in the hills, without any worries"</span><br />
<span style="font-family: "trebuchet ms" , sans-serif;">"I want to follow my passion, but my finances worry me"</span><br />
<span style="font-family: "trebuchet ms" , sans-serif;">"I want to join an NGO and work pro bono, but I need to secure my family's financial life"</span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;">What is the underlying thread connecting the above? </span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;">One of the possible answers is - the need for financial independence.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">One hears the term - "financial independence" not too infrequently these days, and this is often used very loosely. There are lot of people aspiring for it - some with all seriousness, some with half baked approach, many others with academic disinterest. And it is often uttered in the same breath as talking about home loans, car loans, personal loans etc.</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;"><b>How do you define financial independence?</b></span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">It can have different meanings for different people. But the underlying theme in all of these is reaching the level of wealth where investments will be sufficient to take care of all your expenses. Or at least a good chunk of it. (you may call the latter partial financial independence)</span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<b style="font-family: "Trebuchet MS", sans-serif;">And what that ideal amount to achieve financial independence is?</b><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;">There may not be any one right answer for this, but this amount, lest us say X, should be enough to meet your expenses - both planned as well as of unplanned nature. And thee amount will, in all probability, increase with time thanks to inflation (including lifestyle inflation!) and some major financial commitments (e.g. kids education, buying a house etc.). With around 5% inflation, your cost of living will become two-fold from current around 14-15 years down the line. With 7 % inflation, your cost of living will become two-fold in around 10 years. Factor in lifestyle inflation, these numbers can be worse. </span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;">So, for instance if your amount X, is say Rs. 50,000 a month then your investments should be able to generate that cashflow of at least Rs. 50,000 a month. If it is Rs. 500,000 per month, then your cashflow needs to generate that amount. And you need to account for inflation too. </span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;">Just to clear the confusion, financial independence is different from early retirement. In retirement you probably will not have a source of income apart from your investments. With financial independence, you can choose to work on what you like or are passionate amount even if the cashflow is limited. </span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span>
<span style="font-family: "trebuchet ms" , sans-serif;"><b>What all you need to achieve financial independence?</b></span><br />
<span style="font-family: "trebuchet ms" , sans-serif;"><b><br /></b></span>
<span style="font-family: "trebuchet ms" , sans-serif;">There is no rocket science about trying to achieve financial independence. If you have a decent source of income then it boils down to your behavioral traits. I'll limit myself to 3 points for the sake of brevity. </span><br />
<ul style="text-align: left;">
<li><span style="font-family: "trebuchet ms" , sans-serif;">Have a target amount for various goals in your life & their timelines and work towards that. Primarily this will involve securing monthly expenses considering your lifestyle, aspirations and inflation, your primary residence, goals related to children and your health and wellness. </span></li>
<li><span style="font-family: "trebuchet ms" , sans-serif;">Live below your means and invest money diligently (and this will mean staying off the EMIs as far as possible). Focus on both capital protection and capital growth. </span></li>
<li><span style="font-family: "trebuchet ms" , sans-serif;">Have yourself adequately covered for any eventuality, which will mostly involve being adequately insured - having a term plan & health insurance. </span></li>
</ul>
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<span style="font-family: "trebuchet ms" , sans-serif;">Like most of the things, there may not be one size fits all approach to financial independence but there are few basics one needs to adhere to. And this may not be everyone's cup of tea.</span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;"><br /></span></div>
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<span style="font-family: "trebuchet ms" , sans-serif;">What are your thoughts?</span></div>
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Nikesh Rathihttp://www.blogger.com/profile/02208012080532357303noreply@blogger.com0tag:blogger.com,1999:blog-28026042.post-60008423223055391192018-06-03T13:32:00.000+05:302018-06-03T23:03:54.804+05:30Steps I took to be healthier than before<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-family: "trebuchet ms" , sans-serif;">Over last 3 years or so, I have made conscious efforts to be in a better health and have taken some steps toward slowly reaching some milestones. There have been several small triggers for the same and several omens which pushed me towards pursuing a healthier lifestyle. While there is still a long road ahead, I believe that some habits which I have adopted are for good!</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">So, While my weight was in early-mid 90s back then (I stopped checking at around 93kg), it is now a shade under 80kg, and my BMI just under 25. From my peak to lowest in last few years, I must have shed 15 kg or so. </span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">Just sharing few thoughts on this journey & the steps I took:</span><br />
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<li><span style="font-family: "trebuchet ms" , sans-serif;">Overhauling the diet - I believe that there are several good tasting things available and I can't have them all. So one can prioritize such that healthier things get more space in diet! I didn't reduce eating as such, but I have, to an extent, changed what I eat. Some of them are elaborated below.</span></li>
<li><span style="font-family: "trebuchet ms" , sans-serif;">Reduced intake of sugar. Most of my (~99% of times) tea/ coffee consumption is without sugar. That I need to reduce tea/ coffee consumption is a different matter altogether! It took few days to get this into habit. Now I like sugarless tea/ coffee more.</span></li>
<li><span style="font-family: "trebuchet ms" , sans-serif;">More proteins (partly driven by generous quantity of dal/ lentil & dairy products). Less carbs.</span></li>
<li><span style="font-family: "trebuchet ms" , sans-serif;">More fruits & vegetables in diet. Usually a total of 4-5 serving of both combined.</span></li>
<li><span style="font-family: "trebuchet ms" , sans-serif;">Have regular intake of other healthy stuff like almonds, walnuts, figs, dates, sprouts etc. </span></li>
<li><span style="font-family: "trebuchet ms" , sans-serif;">Workouts - I started with walks, started slow jogs, and now I can run 10Km once a while. Still far from being even a first time half-marathoner, but hope to reach there eventually. I do some Suryanamaskar and a bit of other exercise once a while. Over next few months I intend to focus more on non-running components of workout & maybe take a break from running, so that there is good body infrastructure created for running! </span></li>
<li><span style="font-family: "trebuchet ms" , sans-serif;">Being more active. Try to walk more even while doing daily chores and other activities. </span></li>
<li><span style="font-family: "trebuchet ms" , sans-serif;">Reduced junk food. Reduced intake of processed food. Occasional indulgences are OK. And yes, my sweet intake has gone down but occasional craving of 5 pieces of sweets at one go doesn't go away!</span></li>
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<span style="font-family: "trebuchet ms" , sans-serif;">I didn't follow any specific diet like Atkins diet (also, it is difficult for a vegetarian!!) or take any gym membership. While that may have given faster results, I tried to make the above changes a part of my life. So I am OK with losing 7 kg or so in a year kind of weight loss gradually. And if asked, this is the approach i suggest, mostly to be ignored in favor of glamorous gym membership with personal trainer/ Atkins diet or something similar. Not that I have anything against these, but I would rather prefer changes as a part of life ...</span><br />
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<span style="font-family: "trebuchet ms" , sans-serif;">Hope to stay on course!</span></div>
Nikesh Rathihttp://www.blogger.com/profile/02208012080532357303noreply@blogger.com0